New York State Facing Seneca Gaming Compact Investigation

  • The US Department of the Interior believes a judgment against the tribe violates federal laws
  • The US Second Circuit Court of Appeals upheld the judgment in February this year
  • Seneca Nation maintains it no longer has to pay the state after the original compact expired
  • New York state lawyers believe the tribe is delaying after exhausting all avenues for appeal
investigations folder
The US Interior Department maintains that a $470m judgment against the Seneca Nation and favoring New York state regarding a gaming compact is in violation of federal laws. [Image:]

Potential violation of federal laws

The US Department of the Interior has called for an investigation into the long-running legal battle between the state of New York and the Seneca Nation of Indians over their gaming compact. The federal body believes that a recent $470m judgment against the tribe regarding the compact is in violation of federal laws.

tribe had to keep sending payments to the state as per the original agreement

The US Second Circuit Court of Appeals in February upheld a lower court decision on the gaming compact, favoring New York. The three-judge panel at the time determined that the tribe had to keep sending payments to the state as per the original agreement.

On Friday, Seneca Nation lawyers submitted through a federal court filing in New York a copy of a letter dated September 15. The Assistant Interior Secretary for Indian Affairs, Bryan Newland, sent the document to the National Indian Gaming Commission (NIGC) chairman, E. Sequoyah Simermeyer.

Differences in interpreting compact terms

The letter from Newland expresses the Interior Department’s “serious concern” about the decision from the court of appeals. It cites the Indian Gaming Regulatory Act (IGRA) while questioning “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.”

As per the IGRA, tribal nations are able to offer gaming on sovereign land. However, Class III casino gaming, which includes slot machines, blackjack, roulette, and sports betting, requires tribes to have a compact with the respective state. Interior officials also have to approve this compact.

The tribe currently operates three Class III casinos in New York through Seneca Gaming Corporation. The facilities are in Salamanca, Buffalo, and Niagara Falls. The main area of dispute is whether or not the tribe still needs to make revenue-sharing payments to the state. The compact that was signed in 2002 carried a 14-year term and an automatic seven-year extension.

Tribal leaders believe the agreement only meant that the tribe had to make payments for the base years of the compact. Meanwhile, the state maintains that the 25% revenue share was also necessary as part of the extension period.

The tribe stopped making its payments in 2017, leading to the state beginning legal proceedings. An initial arbitration panel favored the state, which is why the tribe then went to the federal courts.

Battle lines drawn

On September 16, Seneca Nation lawyers informed US District Judge William M. Skretny that the tribe had received a letter that day from NIGC chief compliance officer Thomas Cunningham. The document stated that the commission was conducting a review of whether the revenue-sharing payments were allowable as per the IGRA. The investigation originated from the referral it had obtained from Newland the previous day.

federal law prevents states from taxing tribal gaming operators

Cunningham noted that the 25% split was another concern. He stated that federal law prevents states from taxing tribal gaming operators, except for recouping regulatory costs. If the state is seeking more revenue, it must provide something in return to the tribal entity. He referred to how the benefits the state offered as part of the original compact in 2002 have long been complete, but the revenue percentage the tribe has to pay remains the same.  

Lawyers working on behalf of the state of New York responded strongly to Cunningham’s letter on Wednesday last week. White & Case LLP’s Gregory M. Starner said: “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 similar comment was made to The Buffalo News on Friday by a spokesperson of New York Governor Kathy Hochul, following the reporting of details about Newland’s letter.

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