Seneca Nation To Resume Gaming Payments To New York Amid Federal Probe

February 9, 2022
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Even though federal regulators continue to investigate whether the tribe's Indian gaming compact is legal, the Seneca Nation plans to pay the state of New York hundreds of millions of dollars to settle its dispute with the state.

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Even though federal regulators continue to investigate whether the tribe's Indian gaming compact is legal, the Seneca Nation plans to pay the state of New York hundreds of millions of dollars to settle its dispute with the state.

On the night of January 13, Seneca Nation president Matthew Pagels released a video statement announcing the settlement.

Pagels said it was time to move on after four years of unsuccessful legal challenges related to the gaming compact which began in 2002 and is set to expire in 2023.

“We believe it’s in the best interests of the Seneca Nation to address those important concerns through negotiation of a [new] compact that will provide clarity on our obligations, and equally as important, the obligations New York State has to the Seneca Nation in return,” Pagels said.

New York Governor Kathy Hochul, a Democrat, expressed relief about the settlement, saying in a prepared statement: “I look forward to beginning discussions toward a new compact.”

The first 14 years of the current gaming compact included graduated revenue sharing payments from the Senecas to New York.

The final seven years would be automatically renewed.

From years one through four of the compact, the Senecas paid 18 percent of the “net drop” from certain gaming machines at their three casinos in western New York.

The payment increased to 22 percent for years five through seven and to 25 percent for years eight through 14.

The compact does not address how much should be paid during the last seven years, and the Senecas and the state of New York could not reach an agreement on the amount, with the tribe arguing its revenue-sharing obligations ended altogether.

In a split decision by a three-judge arbitration panel in 2019, the Senecas were ordered to continue paying 25 percent of their gaming revenue to New York for the final seven years of the compact.

Federal courts in New York upheld the arbitration panel’s ruling.

Under last month’s settlement, the amount the Seneca Nation will pay New York could range from $450m to more than $800m.

Some Seneca Nation members already are criticizing the settlement and preparing to air their grievances on Saturday (February 12) when Pagels and the Seneca Council are scheduled to meet.

“We are being extorted by the state of New York and the federal government is not doing anything to fulfill its responsibility to protect us,” Ross John, the lone member of the Seneca Nation Council who opposed the agreement, told VIXIO GamblingCompliance in a phone interview on Tuesday (February 8).

“What we have is a president that is making decisions, entering into agreements of tremendous magnitude, committing monies beyond the scope of arbitrations, all with a lasting and profound impact on the Seneca people,” said Marie E. Williams, former executive member of the Seneca Gaming Authority.

“He has acted without proper council authorization and without the informed consent of the people,” Williams said in an article which appeared Tuesday in the Jamestown, New York Post-Journal.

Pagels did not immediately respond to a request for comment on Tuesday from VIXIO GamblingCompliance.

On September 1, 2021, less than five months before announcing the settlement, Pagels wrote a letter to the National Indian Gaming Commission (NIGC) asking if the payments by the Senecas to New York complied with the Indian Gaming Regulatory Act of 1988 (IGRA).

“The [Seneca] Nation is concerned because violations of IGRA potentially subject the nation to enforcement consequences from the commission,” Pagels wrote in the three-page letter to NIGC chairman Sequoyah Simermeyer.

Two weeks later on September 15, Bryan Newland, assistant secretary for Indian Affairs at the U.S. Department of the Interior, also sent a letter to Simermeyer expressing “serious concern” about payments by the Senecas during the last seven years of the compact with New York.

While acknowledging the NIGC has discretion to make its own judgment on the legality of the payments, Simermeyer said there could be a violation of IGRA’s requirement that gaming tribes “maintain the sole proprietary interest in its gaming operations and be the primary beneficiary of its gaming enterprise.”

On the next day, September 16, NIGC chief compliance officer Thomas Cunningham sent a letter to Seneca president Pagels saying “we are conducting an inquiry into whether the revenue share payment is consistent with the requirements of IGRA.”

In response to a request for comment from VIXIO GamblingCompliance on Tuesday, NIGC communications specialist Mavis Harris said: “The National Indian Gaming Commission does not review, approve, or enforce compacts. We, therefore, do not comment with regard to these regulatory areas.”

Gambling compacts, Harris said, “are the sole responsibility of the Department of the Interior, Bureau of Indian Affairs [and] Office of Indian Gaming.”

Brandon Ashley, chief public affairs officer for the NIGC, acknowledged Cunningham wrote the September 16 letter.

“Since this is an ongoing review, we do not have a comment at this time,” Ashley said.

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