The U.S. Department of the Interior is siding with the Seneca Nation of New York in its legal dispute with New York state over its state tribal gaming compact.
The federal government has called for an investigation of the dispute and the state’s claim the tribe owes $470 million. The tribe operates three casinos in Niagara Falls, Buffalo and Salamanca.
Armed with a recent letter by the Assistant Interior Secretary for Indian Affairs Bryan Newland to National Indian Gaming Commission (NIGC) Chairman E. Sequoyah Simermeyer the tribe filed a motion in federal court in New York to halt enforcement of payments.
In February the U.S. 2nd Circuit Court of Appeals upheld a judgement that the tribe was required to pay the state as part of its gaming compact. Since then the tribe has sought to have the judgment set aside.
In Newland’s letter to Simermeyer he wrote, “… The Department shares its serious concern about the panel’s extension of the revenue sharing provision … and whether this agreement may violate the Seneca Nation’s ordinance requirement that it maintain sole proprietary interest in its gaming operations and be the primary beneficiary of its gaming enterprise.”
The Indian Gaming Regulatory Act (IGRA) created the framework by which tribes operate Class III gaming. Including the requirement that a compact be negotiated between tribe and state and the Department of the Interior must approve the compact.
The tribe and state dispute how long the initial 2002 compact requires the Seneca to make 25 percent of slots revenue sharing payments. The 14 year compact had an automatic seven-year extension. The tribe argues that its requirement to pay ended after 14 years. The state counters that the payment should continue with the extension. The tribe stopped payments in 2017 although it put the nearly $500 million in an escrow account.
The ruling by the three-judge panel of the Appeals Court upheld the state.
The tribe notes— and the Interior Department confirms—that the Bureau never signed off on the payments continuing for the seven-year extension.
On September 16 the tribe filed the letter with U.S. District Judge William M. Skretny, noting that Thomas Cunningham, chief compliance officer for the NIGC, is reviewing whether the extended payment is allowed. Cunningham says the 25 percent revenue sharing is problematic because federal law doesn’t allow states to tax tribal earnings. The tribe must get something in return.
Originally the tribe was given exclusivity in gaming in the western part of the state, assistance in developing casinos and the sale of the Niagara Falls Convention Center for $1.
Cunningham wrote, “Here, the state’s actions and the agreed upon 14-year period within which the tribe was to compensate it for them appear to be long since complete, yet the percentage of revenues the nation is required to pay the state remain unchanged.”
He added, “The state appears to be receiving a revenue share that equates to a significant percentage of the Nation’s net revenues. In light of this, we are conducting an inquiry into whether the revenue share payment is consistent with the requirements of IGRA.”
Attorneys for the state called the new evidence “manufactured.” They wrote, “It is past time for the Nation to honor its obligations under the DOI-approved Compact and the Judgment. With the Nation now having exhausted all of its appeals (and having declined to seek review by the United States Supreme Court), the Judgment is final and fully enforceable, and the Nation’s efforts to manufacture an extrajudicial avenue for delay cannot be used to circumvent the Judgment or avoid its clear obligations under the law.”
