Seneca Nation and New York State Casino Dispute Continues

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Sunday, April 16th, 2017 | Written by Adam Brown

One of the biggest reasons that states adopt gaming regulations and issue casino licenses is to generate consistent revenues for their coffers, but the recent expansion of casino gambling in New York has cost the state and several communities around its western portion an already existing revenue stream.

In a statement issued in late March, the Seneca Nation said that they will no longer pay $110 million in taxes to Albany every year. The hefty sum is the amount that the tribal nation has paid out of its gross gaming revenues from its casinos located in Salamanca, Buffalo and Niagara Falls. Being that the proposed 2017 budget for the state already has that $110 million added into its income, New York lawmakers will now have to negotiate an amicable settlement to the dispute, or else find alternate ways to balance the budget.

Terms of Gaming Compact

The Seneca Nation’s ability to simply stop paying taxes is said to be outlined in the gaming compact that the tribal group signed with the New York government back in 2002. Since its inception, the tribal nation has paid more than $1.5 billion in total tax revenues. However, under U.S. federal law, tribal lands are considered sovereign, and as a result, tribal nations are free to establish casinos at will, provided they enter into a compact with the states in which they are located.

According to federal law, states are permitted to impose taxes on tribal casinos in order to cover the costs of regulating them. In addition, the rules make it possible for lawmakers to assess additional taxes, provided they make concessions to the tribal nations, such as guaranteeing that there will be no rivals for them from competitng casinos.

Private Casino Licenses a Catalyst

Although the Seneca Nation has not come out and said so, many industry insiders believe that their decision to stop paying taxes stems from the fact that New York has now issued casino licenses to private companies to operate competitor properties in the state. In the meantime, competition has been ever expanding for the tribe, and as stated in the Niagara Gazette recently:

“The Del Lago opened up in Waterloo recently. Batavia Downs recently expanded and added a new hotel. There’s also the Rivers Casino in Schenectady. The $1 billion dollar Montreign Casino in the Catskills is set to open next year. There are now 16 casinos or racetracks with video-lottery terminals north of New York City.”

Blow to Budgets

While the New York state government will miss the tax revenues they have received from the Seneca Nation, local communities will bear the brunt of the move. The tax money that the tribal nation pays to Albany is partially returned to the local communities that surround the casinos, while in the case of Niagara Falls, the $16 million that the city receives every year from gaming taxes makes up a good portion of its overall budget. With that money gone, the community will subsequently have a difficult time continuing regular operations.

Niagara Falls Budget

Niagara Falls City Councilman, Andrew Touma, has called for a 90-day moratorium on Seneca’s casino revenues, which make up a hefty 10% of its annual general budget. In 2015, for instance, Niagara Falls recieved around $16 million that was then used to support the police, schools, and the Niagara Falls Memorial Hospital, amongst other services. Specific communities like Cataract City will necessarily be hit hardest, and as Touma explains:

“It becomes a serious problem because we average about $4 million per quarter that we receive from the Senecas so this is going to change the playing field of what we do and how we do it.”

Continue Working with Local Community

In their official statement, the Seneca Nation appears aware of the impact the cessation of tax payments will have on their neighboring communities. The press release stated that the tribal nation intends to work directly with local communities to support the economic development of Western New York. How exactly the Seneca Nation will provide economic support is unclear.

Legal Challenge

A statement from the office of Governor Andrew Cuomo also suggests that the New York government intends to fight the Seneca Nation. In it, a representative said that the governor’s office believes the tribal nation has misinterpreted the terms of the gaming compact and is not lawfully able to discontinue tax payments at will. In the meantime, negotiations to reach an amicable resolution continues, and as Niagara Falls Mayor Paul Dyster explains:

“As I have stated previously, it has been and continues to be our understanding that the payment structure put into place under the compact and 2013 MOU is to be continued. The City of Niagara Falls has received assurances from the State of New York that any assertions to the contrary are categorically incorrect. My administration looks forward to working with all parties to reach a solution.”