Federal officials seek probe into dispute between New York, Seneca Nation over casino pact

The U.S. Department of the Interior has called for an investigation into a long-standing legal battle regarding the gaming compact between the Seneca Nation of Indians and the state of New York, claiming that a $470 million judgment placed against the tribal nation violates federal laws.

In a filing Friday in a federal court in New York, lawyers for the Senecas submitted a copy of a Sept. 15 letter by Assistant Interior Secretary for Indian Affairs Bryan Newland to E. Sequoyah Simermeyer, who chairs the National Indian Gaming Commission (NIGC).

In February, the U.S. Second Circuit Court of Appeals upheld a lower court’s decision siding with New York. The three-judge panel ruled that the nation was required to continue making payments as part of the gaming compact between the parties.

Newland cited the Indian Gaming Regulatory Act (IGRA) in the letter and the NIGC’s role in investigating potential violations of the law.

“… 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,” Newland wrote.

That letter confirms a claim lawyers for the Senecas made last week regarding the matter, as it’s seeking to have the judgment set aside.

IGRA allows tribal nations to operate gaming on their sovereign lands. However, for Class III casino gaming – which includes slot machines and such table games as blackjack, roulette and, since 2018, sports betting – the tribal entity must enter into a compact with the state. That agreement also must be approved by Interior officials.

Through Seneca Gaming Corp., the nation operates three Class III casinos in Niagara Falls, Buffalo and Salamanca.

At question in the case was whether the Seneca were required to continue making payments to the state. The compact approved in 2002 lasted for 14 years and included an automatic seven-year extension.

However, tribal leaders said the agreement only called for payments to the state for the base years. New York countered that the 25% revenue-sharing agreement was part of the extension. After an arbitration panel ruled in favor of the state, the tribal nation took the matter to the federal courts.

Tribal leaders did not ask the U.S. Supreme Court to consider taking up the case after the Second Circuit’s ruling. Instead, they asked the U.S. District Court for New York’s Western District to set aside its ruling in April after Interior officials notified them that the office never gave its initial approval to make payments for the extended period.

Lawyers for the Senecas notified U.S. District Judge William M. Skretny on Sept. 16 that it received a letter that same day from Thomas Cunningham, the chief compliance officer for the NIGC. That letter indicated the commission was reviewing whether the payment was “permissible” under IGRA, and that investigation stemmed from the referral it received the day before from Newland.

Cunningham said the 25% split with the state was also a concern. He also noted that the federal law keeps states from simply taxing tribal gaming operations aside from recouping costs to regulate. If the state wants more money, then it has to offer the tribal entity something in return.

When the compact was signed in 2002, Cunningham noted that the state offered such benefits as an exclusive gaming zone in the western part of the state, the sale of the Niagara Falls Convention Center for $1 and help with developing gaming facilities.

“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,” Cunningham wrote.

The submission of Cunningham’s letter led to a sharp response Wednesday from lawyers representing New York in the case, claiming the new “manufactured” evidence was a delay tactic.

“It is past time for the Nation to honor its obligations under the DOI-approved Compact and the Judgment,” wrote Gregory M. Starner with White & Case LLP. “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.”

A spokesperson for Gov. Kathy Hochul issued a similar comment to The Buffalo News on Friday after reports of Newland’s letter surfaced.


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