Seneca Nation calls for gaming arbitration

Porter letter seeks fastest way to help three casino host communities

Seneca Nation of Indians President Robert Odawi Porter wrote Wednesday to the Cuomo administration scolding it for what he described as not negotiating in good faith about gaming money withheld from the state and casino host communities. However, Porter also agreed to waive the negotiation process required under the state gaming compact and proposed an expedited arbitration process to quickly resolve the issue.

Porter noted that he wrote to Gov. Andrew Cuomo nearly nine months ago. In that letter, the president proposed an alternative so the Nation could pay directly to Niagara Falls, Buffalo, Salamanca and other casino host communities tens of millions of dollars the Nation withheld because New York state allegedly violated the Nation's exclusivity rights under its casino gaming compact.

"The state has yet to meaningfully respond to the Nation's proposed terms, or alternatively, to provide the Nation with a good-faith offer to settle the matter," Porter wrote to Howard Glaser, Cuomo's director of state operations.

The crux of the disagreement, the Nation said, is that the compact granted Seneca casinos exclusive right to offer gaming devices, but then the state allowed and promoted those machines at taverns, restaurants and three Western New York "racinos" within the Nation's "exclusivity zone."

Writing to Glaser Porter continued:

"Thank you for your letter yesterday, responding to my (Feb. 8, 2011,) letter on the governor's behalf and confirming the state's position that it is now willing to facilitate 'through legislation or otherwise' the Nation's ability to restore the flow of funds to the host communities through a direct-payment system."

Under the compact, the state's breach of the exclusivity provisions releases the Nation from any continuing obligation to make exclusivity payments to the state.

The state has used approximately 25 percent of these exclusivity payments to compensate the casino host communities to enable them to adjust to the impacts of the Nation's casino gaming activities under the compact.

More than a year ago, the Nation suggested that the state facilitate a process whereby the Nation could make payments directly to the host communities while the state and Nation work toward resolving their disputes.

The administration of former Gov. David Paterson denied the request. The Nation reiterated its proposal to the Cuomo administration in the Feb. 8 letter. In Tuesday's letter from Glaser to Porter, the Cuomo administration confirmed its willingness to support the Nation's proposal to help the host communities.

"I must point out, however, that I was surprised to see the reference in your letter to the purported commencement of arbitration by the state some 11 months ago," Porter wrote. "As we discussed at our August 2, 2011 meeting, the state has yet to meet and negotiate with the Nation in good faith concerning the exclusivity dispute - a mandatory requirement under the compact before proceeding to arbitration - and has never provided the Nation with a written analysis of its position on the exclusivity breach issue, notwithstanding the state's commitment to the Nation to provide this written analysis back in October 2010."

"During our call last Thursday, (Oct. 27) you presented some conceptual terms geared towards a possible settlement of the matter and promised to get those terms to us in writing the following day, but you have yet to do so," Porter wrote.

For months, the Nation was prepared to release directly to the casino host communities the amounts that would have otherwise been provided to them sans a state violation of the exclusivity provisions of the compact. The Nation said it has always viewed the host communities as blameless in the larger disputes with the state for violations of the compact.

The Seneca Nation paid the state and the three host communities a total of $476 million from 2002 through 2008 under its 2002 compact with New York. Of that, about 25 percent already flowed to the three communities during that time under various formulas.

Under the compact, only the Nation has the right to offer slots and video lottery gaming devices within a geographic zone of exclusivity. The compact defines the Nation's exclusivity zone as everything in the state west of Route 14.

According to the Nation, the exclusivity violations since 2003 under the compact include introduction of the following:

• Video lottery devices at Hamburg Fairgrounds, Batavia Downs and Finger Lakes Raceway through the state Lottery;

• "Moxie Mania" slot machines in taverns and restaurants in the exclusivity zone through the state Liquor Authority;

• And, casino-branded facilities offering "slots" at the three racetracks through the state Lottery.

Nonetheless, the president wrote to Glaser:

"Because we remain concerned about the issue languishing and the continued lack of meaningful progress in negotiations, coupled with the adverse impacts to the host communities, we are willing to waive the requirement for good faith negotiations to allow the matter to proceed swiftly to arbitration."

In 2009, the Nation began placing the otherwise due amounts in escrow pending a resolution of the issue with New York. To date, the Nation has placed $333.4 million in the escrow account.

"The Seneca Nation made $476 million in exclusivity payments to the state, and has held another $333 million in escrow," said Council Chairman Richard Nephew. "The Nation has reached out repeatedly to two administrations for meaningful, substantive dialogue to resolve the compact dispute.

"We continue to seek that dialogue and continue to propose ways in which we can fulfill our end of the bargain, according to the terms of the 2002 compact, despite the state breach of the compact since the arrival of VLTs and slots at the racetracks, and 'Moxie Mania' at taverns and restaurants in our exclusivity zone.

"We will fight vigorously to defend the terms of the compact and hold New York state to the agreement it made with the Seneca Nation back in 2002, an agreement that is still a matter of law," he explained.

Porter reiterated the Nation's long-time desire to directly pay the local hosts.

"Our preference would be that we make these payments directly to the host communities so that these dollars are immediately made available to the host communities in Western New York and benefit our fellow Western New Yorkers, as we've sought all along."

In late 2010, the Nation asked the Paterson administration to allow it to directly pay the three communities. That request was denied. There have been multiple discussions with the Cuomo administration on these and related issues, but without resolution.

"The Nation and the local host communities have endured delay after delay by the state. We have waited long enough for this problem to be negotiated by the governor's office the last two years," Porter concluded in his letter to Glaser. "An expedited arbitration process will at least provide the possibility of relief in the very near future."

The money provides the communities a means to cover expenses directly related to the casinos, as well as needed funds to support economic development and other initiatives in the local community. Among the uses for the money are covering the cost of tourism promotion, education, and municipal services such as police, fire, water, sewer, garbage collection and other services affected by the casinos, all of which are on sovereign territory.

Previously, the Nation supported state legislation that would have permitted direct Nation payments to the host cities, removing the state as the "middle man." State Sen. Catharine M. Young, R-Olean, State Sen. George D. Maziarz, R-Newfane, and Assemblyman Joseph Giglio, R-Gowanda, supported the bill, but it did not pass the state Legislature.