New York Casino Deal Made With Upstate Tribe

Agreement blocks casino competition in return for land claim issue settlement.

New York Gov. Andrew Cuomo announced a deal with an upstate Native American tribe to block any new casino competition from a large geographic area in return for settlement of long-standing land claim issues and the state getting a share of tribal casino's slot machine revenues.

The deal by the state and the Oneida Indian Nation, located east of Utica, increases the odds for casino expansion in other upstate areas, including at or near racetrack-based casinos in the Catskills and Saratoga Springs.

The state is considering a change in the constitution to permit up to seven Class III casinos on non-Indian lands. In a first phase, Cuomo is proposing that six upstate regions be eligible for the first three casino developments. Of those six regions, three would be eliminated from the eligibility list if tribes that now operate Las Vegas-style casinos cut deals with the Cuomo administration to end longstanding issues with the state.

The announcement by Cuomo and Oneida Representative Ray Halbritter May 16 means a large area of central New York will be eliminated from any casino expansion plan as envisioned by Cuomo. (The overall statewide casino plan still needs state legislative approval and by voters in a referendum that could occur as early as this November).

Under the terms of the agreement, Vernon Downs, a harness track located near the tribe's massive Turning Stone Casino, can continue to operate its existing racino operation. But the racino would be bannedif the Cuomo/Oneida Indian agreement is approved by local governments, the state Legislature, and the federal governmentfrom getting a full Class III license if the state does change the constitution to permit the seven new casinos.

"Vernon Downs is a racino, and it can continue as is,'' Cuomo said.

The deal between Cuomo and the Oneidas left many industry insiders scratching their heads because few could figure out why the tribe would make the agreement. There has been little evidence that any major casino company was seriously considering locating anywhere near the tribe's Turning Stone casino. There is some speculation the Oneidas could make a try to bid on rights to be one of the developers of casinos in other parts of the state now being eyed by Cuomo and lawmakers.

Under the agreement, the Oneida Nation will turn over 25% of its slot machine proceeds to the state. Cuomo estimated that would be about $50 million a year, part of which would be shared with counties in the region. The tribe, localities, and state would also settle some land claims issues, and there is a deal, vague as it is, for the Oneidas to boost prices on cigarette and gasoline salesa source of long controversy by non-Indian retailers who had to compete with the tax-free Indian sales. The tribe would impose its own sales tax on cigarette and gasoline sales, as well as on its hotel rooms; the tribe would keep the proceeds.

The Oneida tribe first cut a casino deal in 1993 with then-Gov. Mario Cuomo, the current governor's father. In that deal, the tribe became open to a Class III Native American casino in New York, and unlike subsequent deals with other tribes the Oneidas did not have to share any of its proceeds with the state.

Word of the deal comes as the Associated Press reported negotiators are also discussing a plan to permit off-track betting corporations on Long Island to offer video lottery terminals. Within hours of the story, though, the head of the Nassau Off-Track Betting Corp. reversed himself and said the idea is not a part of closed-door casino talks at the Capitol.