Seneca Nation Compact Negotiations Entering Unprecedented Stage

Written By Derek Helling on November 9, 2023
seneca allegheny casino exterior

A month remains until the current gaming compact between the Seneca Nation, the state of New York, and the US Dept. of the Interior expires. At this point, it’s essentially too late to get a new agreement in place before that expiration occurs.

While that expiration may prove mostly innocuous, as far as the day-to-day operations go at Seneca Nation casinos, the bigger question is which side of the compact negotiations could benefit from the current compact expiring. In the end, the answer might be no one.

New York, Seneca Nation in apparent standstill

For almost five months, public activity regarding negotiations on a new compact between New York and the Seneca Nation has been minimal. In June, there was an agreement in principle between New York Gov. Kathy Hochul‘s office and the Seneca Nation.

However, the New York Legislature also has to approve any gaming compact. When legislators reviewed the agreement, they discovered it included an option for the Seneca Nation to develop a fourth casino near Rochester.

Legislators found that tenet of the deal untenable. The deal was off at that point. Since then, you could almost hear a pin drop on this issue. The silence has become quite deafening with the expiration of the current compact set for Dec. 9.

Also giving the situation a “screaming into the void” vibe is the fact that the machinations necessary to install a new compact simply cannot take place over a month. At this point, it’s essentially a foregone conclusion that the compact will expire.

Thus, the conversation shifts to what will happen when it does.

Compact expiration may not disrupt casinos’ operation

Whether the expiration of the compact will shut down the Seneca Nation’s three casinos is an unlikely scenario. Federal law allows New York and the Seneca Nation to extend the current framework without approval from the US Dept. of the Interior.

While there are legal questions about whether the casinos can continue to offer gambling during an extension period, that ambiguity could work in the Seneca Nation’s favor. For that to become an issue, the state has to ask a court to intervene.

That seems unlikely with the strained relationship between Hochul and the Seneca Nation. For example, Chris Bragg of The Buffalo News reports Hochul herself has declined invitations to meet in person with Seneca Nation leadership.

As an extension of the current compact seems inevitable, discussion of the pertinent matters will continue. As is usually the case, the most pertinent comes down to money.

Sides at odds over duration and size of revenue-sharing payments

Under the current compact since 2002, the Seneca Nation pays 25% of its win from slot play to New York. Amid these negotiations, the Seneca Nation has been trying to lower that percentage.

Hochul’s administration made the Rochester casino a concession in exchange for the Seneca Nation agreeing to pay 19.5% of slots revenue to the state. With that off the table again, though, the debate on the rate is an issue.

Also playing a part in the stalemate is the duration of a new compact. The June agreement featured another 20-year framework. However, the Seneca Nation would ideally like a shorter term. That allows the Seneca Nation to adapt the charter to market changes more rapidly.

A shorter term for a new compact could be a concession that the New York Legislature would accept in exchange for lower revenue-sharing payments. The Seneca Nation enjoys some local support in the communities its casinos inhabit.

The bottom line is that negotiations on a new compact could continue into 2024. Those negotiations have never taken place amid an expired compact. The ramifications of that situation are the very epitome of an unknown quantity.

Photo by AP Photo
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Derek Helling

Derek Helling is the assistant managing editor of PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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