An arbitration panel has ruled against New York’s Seneca Indian Nation in a dispute with the administration of Governor Andrew Cuomo over casino revenue-sharing that has cost the state more than $100 million.
The two sides entered arbitration last year after the Seneca unilaterally halted the payments in 2017, claiming it had fulfilled the obligation under the terms of its federally mandated compact with the state.
The compact, originally concluded in 2002, gave the tribe a monopoly on casino gaming in the west of the state in exchange for 25 percent of the slot machines revenues from its casinos in Buffalo, Niagara Falls and Salamanca. The compact was to expire in 2016 but was renewed in 2013 with an extension to 2023 after lengthy negotiations were held with the state to address the emergence of competitive machine gaming at racetracks in western New York. The state maintained the payments were meant to carry through for the length of the extended compact, a position on which two of the three arbitrators concurred. In halting the payments the tribe said the revenue-sharing obligation ended with the expiration of the original compact at the end of 2016, a position that appears tied to the arrival that same year of commercial casinos in New York, including one in the Finger Lakes region bordering the tribe’s exclusivity zone.
The ruling came as a relief to a host of western New York municipalities, which came to rely heavily on a share of the payments.
Niagara Falls Mayor Paul Dyster professed himself “thankful.”
“We felt very confident there would be a positive result in the arbitration. I can’t say I’m surprised by this,” he said.
Buffalo Mayor Byron W. Brown said he is confident the city will receive about $17 million as a result of the ruling.
“I would suspect that it will work with the state’s fiscal year, which will be good timing for the city of Buffalo and will come into the city according to our budgetary projections,” he said.
In a 59-page decision citing a combination of state and federal laws, Henry Gutman, a New York City lawyer who was the Cuomo administration’s appointee to the panel, and William Bassler, a professional arbitrator and mediator who once served as a federal judge in New Jersey, ruled that the seven-year renewal “means that the compact was continued on the same terms and conditions that were in place immediately prior to the expiration of the compact’s initial term which entailed revenue-sharing for exclusivity.”
In other words, the tribe’s obligation to pay the state 25 percent of its annual slot machine revenues remained in force once the compact was automatically renewed at the end of 2016.
“To conclude otherwise, and interpret ‘renew’ to mean that the Nation gets exclusivity without sharing revenue would render several provisions of the compact meaningless, ignore the purpose of the parties’ agreement, challenge common sense and produce a commercially unreasonable result,” the ruling states.
The decision, which is binding, orders the tribe to pay all quarterly payments skipped since early 2017 and to continue paying going forward, a sum that could total around $200 million. It said the state and the tribe should meet before February 9 to discuss what the panel called a “remedial order.”
The tribe’s appointee, Kevin Washburn, an Oklahoma Chickasaw Indian and a former top official at the U.S. Bureau of Indian Affairs under the Obama administration, issued a dissenting statement, saying, “The panel’s new provision rewrites the compact in a way that harms the (Seneca) Nation and provides an unjustified windfall to the state.”
Seneca President Rickey Armstrong Sr., also dismissed the panel’s ruling, insisting the tribe’s interpretation of the compact is still correct.
“While we know we are right on the law, we also knew that making that argument to an arbitration panel gave no assurance of an opinion in our favor. We have prepared for this circumstance, and, now that the panel has issued its opinion, we will take the appropriate time to review and respond to the opinion, and move forward.”
What that may involve he didn’t say. If the tribe does not comply with the order the terms of the 2002 compact provide the “prevailing party,” which in this case means the state, with recourse to the federal courts to force compliance.
“It was clear to us that the nation had an obligation to continue payments—period,” a spokesman for the governor said. “According to the compact, this arbitration process was prescribed to resolve conflicts, and now that it’s concluded, we ask that the nation cease any further delays, make the state and local communities whole, and resume payments.”
