Deal With NY Tribe Limits Casino Locations

Three large areas of upstate New York are now out of the running for commercial casino development after Gov. Andrew Cuomo struck a deal with the Seneca Nation of Indians to resolve a four-year-old dispute with the state.

The agreement comes after Cuomo in the past month closed deals with two other tribes providing new or restored revenue sharing agreements from Indian casinos in return for creating or ensuring exclusivity zones where no new casinos can be located as competition for existing tribal casinos. The June 13 agreement with the Seneca Nation now means a plan to permit up to seven new Class III casinos in New York will ban huge sections of western, central, and northern parts of the state from participating in any gambling expansion efforts.

The governor and lawmakers are negotiating a gambling package in hopes of passage by the end of next week before the scheduled end of the 2013 session. If the constitutional amendment plan is approved, voters this fall will consider the proposal in a statewide referendum.

With the Seneca deal, the remaining areas of upstate under the Cuomo plan that could be in the running for a casino are now in the southern tier area near Binghamton, the greater Albany area that would include Saratoga Springs, and the lower to mid-Hudson Valley including the Catskills resort areas. Cuomo has said he does not want casinos being located in New York City, and that any other casinos downstate could not open until at least five years after the first upstate facility is opened.  A number of alternative ideas are being pushed by some lawmakers, including permitting VLT parlors on Long Island and allowing casinos to be located in some parts of New York City at a later date.

The latest deal means that attempts by Western Regional Off-Track Betting Corp. to open a Class III casino at its Batavia harness track racino are now over because it falls within the Seneca gambling exclusivity zone that was first approved in a 2002 compact with the state. Finger Lakes racetrack would also be banned from trying to expand its VLT parlors to Las Vegas-style casinos with table games and real slot machines.

In addition, the racinos at Finger Lakes, Batavia, and the harness track at Hamburg in the Buffalo suburbs will be facing new marketing restrictions under the agreement Cuomo made with the Seneca tribe. They can no longer call themselves "casinos'' on signs or advertisements, nor can they call their VLT devices "slot machines.'' Track officials say the change will hurt marketing efforts to bring in future customers.

The deal announced June 13 calls for the Seneca Nation to keep $210 million of the $560 million it has withheld in slot machine revenue sharing payments to the state since 2009, when it accused the state of violating the terms of its exclusivity agreement. In part, the tribe said the state illegally let the three racinos market themselves as casinos. The state will get $210 million and three local casino "host'' communities will share in $140 million.

The casino talks at the Capitol are keeping lobbyists busy, as existing racino operators now banned from getting full, Class III licenses push to lower their current tax rates. Other racinos, such as at Saratoga and Monticello, are making last-ditch efforts to get special carve-outs to ensure they are first in line for any new Class III facilities.

One racino executive was underwhelmed by the deals cut so far by the Cuomo administration.

"The racinos did so well. So far four are knocked out from ever having table games and they have to change from being called casinos to racinos. Over 60% of the counties in the state are ineligible and three upstate regions to have a casino. The benefits to the racinos in New York state are gone,'' said Gary Greenberg, a minority owner at Vernon Downs racetrack.

That track lost its chance for a Class III license when Cuomo recently made an agreement with the Oneida Indian nation to protect its Turning Stone casino from new competition in return for new revenue sharing payments to the state.

The governor, however, is slowly peeling away potential opposition from deep-pocket Indian casino operators that were ready to pump money into an anti-casino referendum in the fall.