Arbitration Panel Rules Seneca Nation Must Resume Annual Casino Payments

In 2017, the Seneca Nation stopped making its annual payments based on casino revenue agreements in New York, despite its compact with the state. An arbitration panel has now voted on the matter, ruling that the tribe must continue making its payments on revenues from slot machines earned from three casinos located in the western region of the state.

Pay up

The major financial dispute between the state and the tribe has been ongoing since 2017. The Seneca National stopped paying over $100m in annual payments after the state began working on its yearly budget in the spring of 2017.

The Seneca Nation claimed that the compact with the state did not explicitly list a payment percentage for the revenues earned via slot machines that the tribe was sending each year. The tribe operates the Seneca Allegany Casino & Hotel, the Seneca Buffalo Creek Casino and the Seneca Niagara Casino & Hotel.

In the original compact, the tribe was given exclusive rights for casino gambling in a broad manner. In exchange, the tribe was asked to provide 25% of its slots revenues to the state. The money would then be used in local communities, including Niagara Falls. These communities have been provided the funds for many years and have come to count on them.

An arbitration panel was created to try and settle the financial dispute. The panel ruled with a 2:1 vote that the tribe must continue making its annual payments. It is unclear whether the Seneca Nation will be required to make any back payments, but as much as $200m may be owed to the state.

The tribe is not in agreement with the panel’s ruling and feels that the financial obligations of the compact were met, and the agreement ended in 2017.

Seneca Nation President Rickey Armstrong Sr. said: “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. As is often the case, the courts, and apparently arbitration panels, do not always decide cases on the law, even their law.

“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.”

Governor approves

New York Governor Andrew Cuomo’s administration approves the ruling by the panel. Cuomo has believed from the very beginning that the tribe was in breach of its casino compact terms.

The administration is “thankful” for the hearing’s outcome and feels that, according to the compact, the process of arbitration was available to settle any conflicts. With that process concluded, it is asking the Seneca Nation to stop any delays and continue making payments.

The tribe and state are to follow the decision by the arbitration panel. However, the terms of the compact from 2002 allow each side to appeal the decision in federal court. The Seneca Nation has yet to make it known if it will appeal.

Two to one vote

Two panel members ruled in favor of the state: Henry Gutman and William Bassler. Gutman is an attorney in New York and was appointed to the panel via the Cuomo administration. Bassler has served as a federal judge in the state and works as a mediator and arbitrator.

The compact between the state and the Seneca Nation was signed in 2002 and was set to expire by the end of 2016. However, the compact was renewed automatically for an additional seven years because neither party objected to the renewal.

Both panel members agreed with the state that there was some ambiguity with the terms in the agreement about what was to take place after payments had been made over a 14-year time frame.

Federal and state laws were cited by the two members of the panel during the hearing, stating that the renewal time frame after the 14th year of the compact signing indicates that the compact should continue on the same conditions and terms, which includes the revenue-sharing percentage for exclusivity.

The ruling concluded that to decide otherwise would have meant that the Seneca Nation would have exclusivity to the casino games without having to share revenue and several provisions in the compact would be meaningless, essentially ignoring the agreement between the parties and creating a result that is commercially unreasonable.

In the decision, which was 56 pages long, the tribe was ordered to pay all the quarterly payments that it had skipped and continue making payments in the future.