Does the Seneca Nation of Indians owe the state of New York hundreds of millions of dollars in slot machine revenue dating back to 2017?
An arbitration panel and a panel of federal judges each have found that the tribe should pay up — but now the Senecas may be gaining the upper hand.
The issue stems from a revenue-sharing agreement agreed to by the tribe and the state back in 2002. The 14-year term of the deal had the tribe paying graduating amounts of 18%, 22%, and then 25% of slot machine revenue to the state collected by the Seneca’s three western New York casinos.
But there also was a seven-year “renewal period” that would kick in “absent any objections from the parties.” Since neither objected, the agreement automatically renewed in December 2016.
In a split decision, the arbitration panel conceded that the terms of the renewal period were “ambiguous” — but nonetheless determined that the tribe should continue making the 25% payment as it had in years 8-14 of the agreement.
That decision — meaning that the tribe owes the state nearly $500 million — was upheld in U.S. District Court in 2019 and in the Second Circuit of the U.S. Court of Appeals earlier this year.
And it’s poised now to potentially reverse again.
Letter could be key for tribe
On Sept. 24, attorneys for the tribe submitted to a federal judge a Sept. 15 letter from Bryan Newland, the U.S. assistant interior secretary for Indian Affairs, to National Indian Gaming Commission Chairman W. Sequoyah Simermeyer. In the letter, Newland asked NIGC officials to review whether the renewal-period payments to the state would violate the terms of the Indian Gaming Regulatory Act, a 1988 law that holds sway over much of Native American gambling issues. NIGC is the agency that is charged with enforcement of those terms.
Six months ago, a top official with the U.S. Department of the Interior, in reaction to the appeals court ruling, expressed “serious concerns about extension of the revenue sharing beyond the 14-year initial term and the lack of certainty that the extension of the revenue sharing into the Compact’s 7-year renewal period complied with IGRA.”
Interior officials also questioned whether New York “offered any meaningful concessions” to the Senecas that would justify a continuation of the revenue-sharing payments.
The letter formalized those concerns by seeking to have NIGC enter the dispute.
Let’s make a deal — 2002 style
In the original deal, the tribe agreed to make the payments in exchange for exclusive rights to gambling in a large portion of western New York. There were no commercial casinos in New York state until four opened in 2016-17 — but none near the Seneca tribe’s region of exclusivity.
Two arbiters concluded that the exclusivity clause and the payments were “inextricably linked” — and that therefore the tribe had to continue to pay the state for the privilege.
Last week, attorneys for the state argued that the investigation “remains entirely speculative and hypothetical” — an assertion disputed by the tribe.
The core issue is whether the various findings that the tribe must continue the annual payments constitute a new ruling that thereby has to be approved by federal tribal agencies, or if they merely clarified the terms of the original deal.
“There is no basis for the NIGC to dispute the Panel’s interpretation of the Compact as requiring the Nation to continue making the revenue sharing payments, nor any legal basis for the NIGC to undermine or contest a valid, final, and binding judgment of a United States District Court,” attorneys for the state argued last week. “The Panel, this Court, and the Second Circuit have already determined there is nothing in IGRA or any other law that requires or gives the [Department of the Interior] or NIGC authority to review the Panel’s interpretation of the Compact. … It is past time for the Nation to honor its obligations.”
New York Gov. Kathy Hochul agreed back in 2019, when she was still serving as lieutenant governor.
Hochul said at the time of the tribe’s continuing monopoly on legal gaming in western New York, “The quid pro quo is that you have to share some of the revenue. Fair is fair.”
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