Deal Struck to Bring Casinos to Western New York

New York Gov. George Pataki and the Seneca Indian Nation have struck a deal to bring three Las Vegas-style casinos to western New York in a bid to directly compete with a casino and racetrack with slot machines in nearby Canada.

The agreement, the first to allow slot machines in New York, still needs state and federal approval, and critics, including gambling foes and nervous competitors, are eyeing ways to stop or at least slow the opening of the planned casinos.

Pataki and Seneca leaders, after years of private talks, agreed to locate casinos in downtown Buffalo, located across the river from Ontario's Fort Erie Race Track, and Niagara Falls, located near the successful Canadian Casino Niagara facility. A third casino would be permitted somewhere on one of the Seneca's two reservations located south of Buffalo.

"These casinos will provide a major boost to the economy of western New York by allowing us to compete with our Canadian neighbors, bringing thousands of new jobs to the region while encouraging private-sector investment from around the world," Pataki said.

Though the casinos would pose a competitive threat to the region's Thoroughbred and Standardbred racetracks, racing insiders were beaming, because the casino deal with the Indians would make their task of selling a racetrack video lottery terminal proposal much easier.

The racing industry, in a show of unusual camaraderie, has formally released a study that shows thousands of VLTs scattered around the state's tracks, with the exception of the New York Racing Association's Saratoga, would generate $2.7 billion in revenue.

Racing lobbyists said they will push a fairness argument with lawmakers. There are now two Indian casinos in New York, one near Utica and the other in far northern New York. Both of them have VLTs.

The Seneca casino deal includes some exclusivity arrangements designed to protect new casinos from competition. Though details on that provision are still elusive, it could hamper the push for VLTs at racetracks, insiders said. At the very least, it would put Magna Entertainment's plans to open a racetrack near Niagara Falls in doubt.

In return for slot machines and their exclusive arrangements, the Senecas will give up a portion of revenues to the state. By the seventh year of the 14-year agreement, one-fourth of the drop from the devices would go to the state.

Seneca officials expect the Niagara casino to open in April 2002, with the Buffalo facility up and running by later that fall. Even casino supporters call that timetable optimistic.

Under a recent court order, Pataki must get approval from the state legislature for the deal to move ahead. Critics were already lining up in the two houses, charging that Pataki cut a sour deal because it did not solve a major land claims lawsuit filed some years ago by the Senecas for a portion of territory in western New York. Moreover, they claim the state constitution bars slot machines.

Still, legislative approval is likely, given the political and economic pressures behind the casino deal. The federal Bureau of Indian Affairs would then need to give its approval; it has only approved two off-reservation casino sites in the United States.