Senecas face casino cash revenue ruling

Feb. 24—Mayor Robert Restaino called the ruling "not unexpected," but welcome, as a panel of judges from the U.S. Court of Appeals for the Second Circuit, in New York City, unanimously upheld the decision of a Buffalo-based federal judge who ruled that the Seneca Nation of Indians was required to make revenue sharing payments to New York state during the renewal period of the gaming compact between the nation and the state.

"It was anticipated. It's nice, it's done," Restaino said of the ruling.

While noting that the Senecas could still seek an appeal to the U.S. Supreme Court, the mayor said he would not expect the high court to hear the case.

"While I respect every parties option to exhaust their appeals," Restaino said Tuesday, "I don't know whether the U.S. Supreme Court would weigh in on this local issue."

A spokesperson for the Senecas released a statement that said simply, "The Seneca Nation is reviewing the decision and discussing all of our options at this time."

Gov. Andrew Cuomo, reacting to the appeals court ruling, said it was time for the Seneca Nation to pay "what they owe."

The dispute between the state and the Senecas erupted over the terms of the contract (referred to to as the Gaming Compact) that allowed the sovereign nation to operate gaming casinos in three locations including Niagara Falls. The compact was for an initial term of 14 years (beginning in December 2002) and provided for an automatic seven year renewal at the end of the initial term if neither the Senecas nor the state objected.

Without object from either party to the compact, that renewal term began in December 2016.

The compact called for the Senecas to have exclusive rights to operate certain types of slot machines in Western New York. In return, the state was to receive a percentage share (from 18% to 25%) of the revenue generated by those slot machines.

The state then shared a percentage of those casino revenues with the local host municipalities where the gaming operations took place. Specifically, in the Falls, Buffalo and Salamanca.

In March 2017, Seneca Nation President Todd Gates told Cuomo that the the revenue sharing payments would stop because they were not required under the compact after the first 14 years. In that initial 14 years, the state had received $1.4 billion in payments.

Under the terms of the compact, the state took the Senecas to binding arbitration to determine whether the revenue sharing was required to continue. A panel of three arbitrators, voting 2 to 1, determined that the Senecas were liable for continued revenue sharing payments and ordered that the payments be resumed.

In it's ruling the arbitration panel found that it would be unreasonable and against common sense to conclude the Senecas were not liable for the revenue sharing during the extended term of the compact.

Both the nation and the state then went to federal court in Buffalo, where the nation asked for the arbitrator's decision to be thrown out and that asked for the decision to be enforced.

Senior U.S. District Court Judge William Skretny ruled in Nov. 2019 that the arbitration panel's decision was valid and directed the Senecas to make payment to the state. The nation appealed the case to the Second Circuit.

The appeals court ruled in its decision that "the arbitral panel did not manifestly disregard governing law" and that the courts did not need to send to the matter to the U.S. Secretary of the Interior for review, because the interpretation of terms of contracts is a matter left to the courts.

"This morning the U.S. Second Circuit Court of Appeals again affirmed the need for the Seneca Nation to fulfill their obligations and pay what they owe in exchange for those gaming rights," Cuomo said. "The court's decision was clear, and after years of delay, multiple appeals, and multiple court losses it is high time the Seneca Nation follows the law and pays what they owe, and it is significant funding, especially for the communities involved, as well as the state."

State officials said they believe that the Seneca Nation owes about $435 million, more than $100 million of that allocated for local governments.

Since the revenue sharing payments were suspended, the state government has been providing advances of that cash to the Falls city government. If the Senecas resume the payments, those cash advances will be withheld by the state.

"Whatever (the Senecas owe the state) and whatever the distribution is to the host communities, the state has been advancing a portion of the casino share to the city," Restaino said. "A portion of the Falls distribution will be to pay back the state."

The mayor added that in addition to the Second Circuit ruling on the revenue sharing payments, the state and the Senecas face another dilemma.

"The Seneca Nation has a decision on how we get to the end of this (revenue sharing stalemate)," Restaino said. "And far greater, we have to start talking about a new agreement."

The current gaming compact expires in December 2023.

"We've been living with this for 20 years," Restaino said. "There might be some things we can do better."