With fears of nuclear war with North Korea looming over U.S. allies in East Asia, and in the continental United States, as well, along with fighting words from both President Donald J. Trump of the United States and from Kim Jong Un, leader of North Korea, the newscycle is now anything but slow. Taking top priority for this blog writer, Nicholas Patti, however, are the growing pains felt by our society in New York State regarding the recent growth in casino gambling, as part of the broader tourism industry in New York State, particularly in Upstate New York. Nothing is certain in life except death and taxes, but some Seneca Indian owners of two casinos in Western New York would like not to think so.
Should the Seneca Indian casino owners be forced to pay New York State for their moderate, yet significant corporate profits, or should they not have to pay?
At stake is $31. million in "payments to the state," according to the New York Times (9/20/2017, p. A19), as requested by New York State in a September 7 demand for arbitration to settle the current dispute with the Seneca Indian tribe. The Seneca do not want to pay.
A law passed in New York in 2013 authorized seven new casinos statewide, including, for the first time, from non-Indian owners. The Seneca, Oneida, and Saint Regis Mohawk tribes currently operate five full-scale casinos in Upstate New York. Previously, non-Indian casino owners in New York State were allowed to operate only racinos, which are scaled-back casinos directly connected with horse racing, also legal in New York State, but prohibited from operating any full-scale casinos, according to the New York Times (9/20/2017).
Numbers from the New York Times (9/20/2017) article are impressive to me, contrary to the editorial spin of the paper, which headlined the article, "Glittering Casinos. Lackluster Results."
Two examples are cited by Jesse McKinley, author of the New York Times (9/20/2017) article. First, there is Rivers Casino and Resort in downtown Schenectady, NY. They earned $81.8 million in gross revenue since opening this February 8. Those revenues, not net profits, fall short of Wall Street expectations. That figure, as projected by Jesse McKinley of the New York Times, would represent only 77 percent of the low-ball estimate for annual revenues, which had been targeted at $181.5 million.
The owners of the Rivers Casino and Resort in Schenectady, NY, are happy with the results so far, however. They are reported to have been "satisfied with the casino's financial performance," in a paraphrase, according to the New York Times (9/20/2017).
Not so on Wall Street. "Not overly impressive," said Colin A. Mansfield, a director and gaming analyst with Fitch Ratings, aka Wall Street, in reference to the early results and projections from Rivers Casino and Del Lago Resort & Casino, near Rochester, NY, another new casino under the 2013 State law. Del Lago Casino officials reserved comment, according to the New York Times (9/20/2017).
I wish the owners, staff, management, and above all, the players at the Rivers Casino, much good fortune. Remember, the losses of the gamblers in the casino by the players themselves build the numbers we see reflected as tens or hundreds of millions of dollars of "gross revenue," and then, after expenses, "corporate profit." But I digress.
Del Lago Casino & Resort is the more important subject for the topic of my commentary, however, not Rivers Casino. Del Lago Casino, you see, is near Rochester, NY. That qualifies as part of the Western New York region of New York State.
The existence of this new Casino brings us back to the details of the dispute between the Seneca Indians and New York State over the growth of gambling in New York State under the 2013 law, and in particular, in Western New York since 2002, when the compact was agreed to by the Seneca and New York State regarding the opening of their first casino in Niagara Falls, NY, in the famous and historic resort and tourist destination of Niagara Falls, shared by both the U.S. and Canada.
The Seneca have done well with their casino in Niagara Falls, NY, obviously, I think, since they opened a second casino in Buffalo, NY, within the past few years. The Seneca "have continued to thrive," according to the New York Times (9/20/2017).
The crux of the dispute between the Seneca Indian casino owners and New York State government regarding "payments" to New York State government revolves around total corporate profits derived from gamblers' losses in the growing Seneca casino corporate empire, and the relationship between Indian tribes in general with New York State government.
It's an Indian business. Why should they have to pay taxes to a foreign, U.S. government, on the land they share with New York State? Never mind for a moment that the business is open to all, as it should be, and derives profit (thankfully) from all players who lose money while receiving their entertainment at the Seneca facility. You can win, after all, when gambling at casinos, both at the Seneca casinos, and in general, too, I must point out.
I should know about casino corporate profits. I have gambled in the Seneca Casino in Niagara Falls, NY, and I enjoyed the experience, overall, in reflection, even though I, too, lost money. I was a responsible gambler, however, and did not gamble or lose too much.
I believe the Seneca Casino in Niagara Falls, NY, and casinos, in general, when run well, are a nice place for gambling and entertainment, and the Casino in Niagara Falls adds value in dollar terms, and in general, to the tourism industry of New York State. The Senecas benefit Niagara Falls and New York State by running their casino there.
Governor Andrew M. Cuomo has been sponsoring the growth of the gaming industry in New York State, both for taxation purposes, general economic health, and to create jobs in Upstate New York. I support that effort--to a point.
Under the 2002 compact, the Seneca Indians were allowed to open their casino in Niagara Falls, NY, with a monopoly guaranteed by New York State in their market, in exchange for "payments" to New York State, from their corporate profits.
Since then, there has been growth, and the monopoly status has been threatened, but not directly challenged, in the Western New York region of New York State. Specifically, the existence of the new Del Lago Casino, near Rochester, NY, also in Western New York, by non-Indian owners under the 2013 New York State law, threatens but does not directly challenge the monopoly of the Seneca in Western New York, namely in Niagara Falls, NY, North of Buffalo, NY, along the Niagara River, at the border with Canada. What we are left with is a grey area.
On the one hand, there has been growth, including by the Seneca, themselves, in the gaming industry in Western New York. On the other hand, under the specific terms of the original 2002 compact, between the Seneca, in this case, and New York State government, their monopoly status has been abated by a new, non-Indian casino near Rochester, NY, also a part of the Western New York region.
The Seneca do not want to continue their "payments" to New York State, at this time. They claim to be fulfilling their obligations, currently, under the ongoing 2002 agreement, which, I hesitate to point out, is no longer an agreement, but more of a set of guidelines for continuing to run businesses worth hundreds of millions of dollars in New York State on land essentially shared with the Seneca, but New York State land (mostly), nonetheless. The business, it should be pointed out, is not a New York State, nor United States business. It is an Indian business, an operation owned and controlled by the Seneca. The "payments" to New York State for their Indian business are, as you can see, delicately, and in this case quite painfully, negotiated.
I am a happy New York State gambler who loves the Seneca Casino in Niagara Falls, New York, and who would like to win money there, next time I visit. For now, however, this gambler and writer cannot rightly see how the owners of this Casino, Indian or not, can really get away, rightfully, with not paying New York State, as originally agreed, for their ongoing corporate profits in a growing corporate, gaming empire.
The Seneca want their monopoly in Niagara Falls and Buffalo to continue to be protected and authorized, locally and regionally, by New York State government. I agree. Beyond the growth that has already happened and been authorized under the 2013 law, I think growth should be limited, from here on. The monopoly of the Seneca, historically an Indian monopoly granted by New York State government since 2002, should continue in Western New York. No more casino growth in the industry should be allowed at this time, I think, by New York State. The Seneca monopoly should be allowed to continue, even if it already has been threatened by Del Lago Casino near Rochester, NY, but not directly undermined. The Governor is not challenging that monopoly, at this time.
What the governor is doing, of course, is trying to continue to collect from the Seneca while letting other people into the business of making profits from casino gambling in New York State. It is a delicate balancing act. In New York State, the Indian tribes were granted a monopoly, and that is being/ has been removed. I hope that monopoly will continue, as much as possible, at this point. The Seneca, along with the other Indian tribes of New York State, should not have their monopolies removed by a free-for-all, and a run on, essentially, their successful businesses.
Therefor, I am not against Governor Cuomo's efforts to collect "payments" at this time, and in the future, as long as those casinos are, in fact, profitable. New York State should be careful in the amount it chooses to collect, however, so as not to threaten the underlying Indian businesses with "payments" to New York State government.
I do not know the scale of the operations at the Seneca casinos in Niagara Falls, NY, and Buffalo. Therefor, I cannot arrive at an informed decision about the exact amount, regarding the requested figure, $31. million.
I think it is fair, however, for New York State and Governor Andrew Cuomo to collect the "payments" at this time from the Seneca full-scale casinos. Further, and this point needs to be stressed, no growth in the gaming industry should be allowed, beyond the limits set forth in the 2013 law. What is left of the Indian monopolies--now essentially an oligopoly with the new, non-Indian casino owners--should be protected, at this time and into the future.
Go ahead and collect those "payments" from the Seneca, in particular, on those successful casinos in New York State (mostly). Just leave those Seneca alone, however, to continue to run those casinos in peace.
And for gamblers, like myself, play on! May you find much luck in your gambles, although take note, however, that the house always wins.
—Nicholas Patti
Albany, NY
