A federal judge has upheld an arbitrators’ ruling ordering New York’s Seneca Indian Nation to pay the state $255 million in casino revenue-sharing withheld by the tribe in a dispute over the terms of the tribe’s longstanding agreement with Albany governing its gaming operations.
Judge William Skretny of U.S. District Court for the Western District of New York agreed with the 2-1 decision the arbitration panel issued in January that the tribe owes the money𑁋representing 25 percent of the annual win in 2017-18 from the slot machines at its three casinos𑁋ruling that the arbitrators’ decision was reached in accordance with federal law and the terms of the tribal-state agreement, known as a compact.
“The nation and state agreed to resolve disputes arising from or related to the compact through binding arbitration,” Skretny wrote in his 30-page decision. “A majority of the arbitration panel assigned to the dispute definitively held in the state’s favor.”
The $255 million covered by the decision does not include another $100 million owed for 2019.
A spokesman for Governor Andrew Cuomo said the ruling vindicates the administration’s position that the Senecas violated the agreement by unilaterally ceasing the payments when the original compact expired at the end of 2016.
“The court confirmed what we’ve said all along: the Seneca Nation needs to fulfill their obligations, make their neighbors and the state whole, and pay what they owe in exchange for their exclusive gaming rights,” said Rich Azzopardi. “It is our hope that they end this charade, stop using the courts to delay, and pay what they owe.”
The original compact was signed in 2002, with the Senecas agreeing to the 25 percent share in exchange for an exclusive right to operate casinos across most of western New York. Through the end of 2016, when the tribe halted the payments, the state had collected more than $1 billion, a portion of which the state shares with local governments in the exclusivity zone.
But the definition of what constitutes exclusivity has long been a sore point between the Senecas and the state as the latter began sanctioning more and more commercially operated gaming over the years, starting with racetrack casinos, which are restricted to slot-style lottery machines, and culminating in the last few years with the legalization of four full-scale casinos, one of which opened in 2017 just east of the exclusivity zone and began competing for players on both sides of the zone.
The tribe had halted the payments once before to protest the incursion of the racinos, several of which operate within its zone. This led to protracted negotiations that resulted in an agreement to extend the compact for another seven years past its 2016 expiration, albeit without specific language governing revenue-sharing. On this basis, the tribe claimed the obligation was no longer in force after 2016. The state argued that by agreeing to extend the original compact the tribe agreed to the extension of its terms.
Seneca Nation President Rickey Armstrong Sr. said the tribe plans to review the decision before determining its next step.
“We understood the reality that the arbitration and court proceedings may not ultimately uphold the language of the compact as written,” he said. “Yet, it is our obligation to defend our agreements, so they are not compromised for the benefit of others.”
The Senecas, meanwhile, are preparing to the join the commercial casinos and the state’s other Indian casinos in offering in person sports wagering at their casinos in Buffalo, Niagara Falls and Salamanca.
The tribe has entered into a joint venture with Malta-based gaming services providers Kambi Group and Bragg Gaming Group of Toronto that is expected to allow the books to be up and running by year’s end.
Kambi, well-known as a B2B provider in the international i-gaming space, will provide technology and trading management. Bragg will provide marketing, operations and player account management through a proprietary platform that also includes a large portfolio of casino, betting and lottery games with land-based, online and mobile applications.
The openings will bring the number of New York sports books to 11, all limited to in-person wagering under the state’s current regulatory scheme. The others are at the Oneida Indian Nation’s three casinos north and east of Syracuse and the four commercially owned casinos in Schenectady, in the Finger Lakes, in Monticello in the Catskills and in the south near Binghamton close to the Pennsylvania border. A gaming resort owned by the St. Regis Mohawk Tribe near the Canadian border in the northeast also plans to open a book this fall.
