Seneca Nation Announces It Will Stop Paying $110 Million in Gaming Taxes to New York

The Seneca Nation announced it would stop paying $110 million a year in gaming taxes to the State of New York. That $110 million figure is a portion of the gaming taxes owed each year from the Seneca Nation’s casinos in Niagara Falls, Buffalo, and Salamanca.

The Native American tribe say they are abiding by the terms of a 2002 gaming compact signed with the State of New York. In that compact, the Seneca Nation agreed to share 25% of their slot machine revenues with the state.

Under the terms of gaming compacts, accredited Native American tribe are allowed to build casinos on the reservations, which are considered sovereign land. The only stipulation is the tribe must reach an accommodation with state regulators. The state can collect tax revenues from the gaming, but only enough to pay for the cost of regulation. This stipulation has one exception: the state can access higher taxes, but only if they give the tribe concessions, such as a monopoly for gaming in an area.

2002 Gaming Compact with New York State

Since 2002, the Seneca Nation has paid over $1.5 billion in gaming taxes to the state. In recent years, though, the state has begun licensing more private casinos in the state, which the tribal casinos see as a threat to their own gaming ventures. When New York’s gaming regulators licensed 4 new private casinos operations in Decemeber 2015, it made the Seneca and other tribes nervous.

While the Seneca have not said their decision to stop paying the state is tied to the licensing of the casinos, it is a sure way to show displeasure — and perhaps gain concessions from New York State.

The casino which caused the Seneca to withhold taxes is the Del Lago Resort & Casino in Seneca County. Del Lago is located between Syracuse and Rochester, and the Seneca Nation’s leaders believe the gaming operation is going to hurt their revenues.

Todd Gates Statement

Todd Gates, president of the Seneca Nation, said in a statement on Wednesday night, “The Seneca Nation has followed the terms of our gaming compact since 2002 and we will continue to do so until it expires in 2023. As written in the compact, the Nation provided a share of our revenue to the state through the end of last year.”

Effect on Buffalo, Niagara Falls, Salamanca

Of the three communities affected by the decision, Niagara Falls appears to be the one most deeply affected. Niagara Falls receives about $20 million of the $110 million paid by the Seneca. Niagara Falls has under 50,000 residents according to the 2010 U.S. Census, while Buffalo has 258,000 residents. Due to the smaller population, the $20 million payment represents a far larger percentage of the city’s budget each year.

Niagara Falls Mayor Paul Dyster was not available for comment on the lack of payment. Buffalo Mayor Byron W. Brown said through a spokesman that the decision was being reviewed at the moment.

Seneca Revenue Sharing with Cities

Mr. Gates said in his statement that he hoped an accommodation could be reached with the local communities near their casinos. A percentage of state gaming taxes are sent back to the local communities, so the lack of payment to the state would affect the communities near Buffalo, Niagara Falls, and Salamanca.

The Seneca Nation president added, “Although the revenue share has ended, we remain committed to being good neighbors in the communities where we have gaming facilities and we look forward to working directly with them to continue the economic progress of Western New York.”

Andrew Cuomo Statement

New York Governor Andrew Cuomo disagrees with the tribe’s interpretation. Gov. Cuomo believes the agreement remains in effect, due to a 2013 memorandum of understanding signed by the governor and the tribe’s leaders. The 2013 memorandum was signed by Todd Gates’ predecessor as president of the Seneca Nation, though.

Cuomo spokesman Richard Azzopardi released a statement in reply to Seneca’s announcement. Azzopardi referred to the 2013 memorandum of understanding and said, “It’s clear this payment structure remains in place.”

2017-2018 New York State Budget

The announcement could not have come at a worse time for the state, because Governor Cuomo is putting the final touches on his 2017-2018 budget. The Senena Nation’s $110 million in payments were factored into the budget. The governor’s spokesman said, “If the new leadership of the nation has questions, or a different interpretation of this, they haven’t shared them with us, but we’re willing to meet and discuss any issues.”

One Seneca representative said the state should have seen this decision coming, despite their surprise. The anonymous representative said, “This is nothing new. It’s what the compact says in black and white language.“