Buffalo-area gamblers probably never thought that some of the money they poured into slot machines at the Seneca Nation's casinos could end up helping to pay for a new Buffalo Bills stadium, but that's exactly what could happen.
And plenty of gamblers, not to mention Bills fans, must be wondering: How could this be?
Like every legal battle between the state of New York and the Seneca Nation, it's complicated.
Here's an attempt to unwind all that legal complexity. It's a series of questions and answers about the legal battles over the Senecas' slot machine revenues, Gov. Kathy Hochul's surprising move to force the Senecas to pay up and the prospects that gambling money could dramatically lower the cost taxpayers have to pay for that new $1.4 billion Bills stadium in Orchard Park:
What exactly have the Senecas and the state been fighting about?
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The fight, which dates back in one form or another to at least 2009, is over how much the state should benefit from the Senecas' three casinos.
The original answer to that question can be found in a deal the Senecas and the state struck in 2001, when quarterback Josh Allen was 5 years old. Called a "compact," it's the agreement that led to the construction of the Senecas' casinos in Niagara Falls, Buffalo and Salamanca.
Under federal law, Indian nations are allowed to build casinos on their reservations – and on land provided to them – so long as the state agrees. And the state agreed to that deal for a reason: It stood to benefit from it.Â
The Senecas vowed to give the state up to 25% of its slot machine revenues:Â an unusually high amount that promised to bring the state hundreds of millions in revenue over the 14-year life of the agreement.
The Senecas got something in return for what they gave, or at least they thought they got something: exclusive rights to operate gambling halls in Western New York. But that was before the state allowed video lottery terminals to be installed at Buffalo Raceway and similar facilities – a move that prompted the Senecas to start withholding their payment of slot-machine revenues to the state in 2009.
The state and the Senecas resolved that dispute, sort of, in 2013; but many Senecas were never happy about sharing their profits with the state. And those Senecas could delight in a flaw in that 2001 compact: While the deal said an automatic seven-year renewal of the compact could take effect in 2017, it was silent about whether the Senecas had to continue contributing a quarter of its slot revenues to the state.
The state said it did, but the Senecas said it didn't. And so began a protracted legal battle.
What's happened in the legal battle so far?
The Senecas are on a losing streak.
The 2001 deal between the state and the Senecas called for disputes to be resolved through arbitration, and an arbitration panel ruled in early 2019 that the Seneca Nation had to pay the state the slot revenues that it owed for 2017 and 2018.
The Senecas challenged that arbitration ruling in court, only to lose again. U.S. District Court Judge William M. Skretny ruled in November 2019 that the Senecas had to abide by the arbitrators' ruling – and start paying the state what the Senecas owed – because they said they'd do just that in the 2001 compact.
The Senecas appealed, but the U.S. Second Circuit Court of Appeals rejected that appeal in February 2021.
So the Senecas went back to Skretny with a new argument: that they didn't have to abide by the arbitrators' ruling because the U.S. Department of the Interior never reviewed the seven-year compact extension.
Skretny rejected that argument last December, saying the Interior Department's concerns about the payments to the state "are not on solid ground."
So the Senecas' legal record on the issue stands at 0-3.
If the courts said the Senecas had to pay up, why did they resist doing so?
Because plenty of Senecas still oppose giving the state any money.
Seneca Nation President Matthew Pagels announced in January that the Senecas would pay back debt to the state and resume sending quarterly payments to Albany – but Pagels' announcement met with a rebellion. Under pressure from a longstanding group called the Seneca Mothers of the Nation, the Seneca Nation Council in February passed a resolution calling for not paying the state until the National Indian Gaming Commission reviewed whether the payments are legal under the federal Indian Gaming Regulatory Act.
"What was becoming more and more clear is that the community and the Mothers of the Nation continued to push and ask that more time be given" before the Senecas paid the state, said Leslie Logan, a leading member of the Mothers.
How did the state manage to freeze the Senecas' bank accounts and force them to turn over the money?
By doing something creditors can do under state law to force delinquent debtors to pay up.
Late in the week of March 21, lawyers for the state served legal papers on KeyBank, which holds the Senecas' bank accounts. The legal papers forced KeyBank to put a hold on the Senecas' bank accounts.Â
The move had an immediate and dramatic effect on the Senecas' reservations. People couldn't get cash out of ATMs. The operating accounts of all the Senecas' businesses – not just the casinos – stopped operating. The Senecas couldn't even meet payroll.
That being the case, the Seneca Nation Council voted last Monday to pay the state the $584.6 million in back payments.
"Our counselors and executives agreed that the Seneca Nation simply could not stand by while New York State intentionally attempted economic coercion by holding Seneca people and thousands of Western New Yorkers hostage," Pagels said in a video statement.
What does all this mean for the new Buffalo Bills stadium?
Hochul seems to think it's pretty simple.
After the Seneca payment landed in the state's account, she said: "These funds were generated in Western New York, and I am directing the state's share, which is more than $418 million, to the new Buffalo Bills stadium. This will ensure the Bills remain in New York State and support 10,000 construction jobs."
The remainder of the funds will go to the communities that host the Senecas' casinos, as called for under the gaming compact.
A spokesman for the Senecas said there's nothing the Senecas can do to stop Hochul from spending that money on the Bills stadium, but the plan for the $1.4 billion football field still must pass muster with the State Legislature.
So far, Hochul's plan to tie the Seneca funds to the stadium costs has generated little attention from state legislators locked in a budget battle over the state's controversial bail reform law and other issues.Â
Meanwhile, Hochul's opponents in the June Democratic primary for governor have been lashing out at her stadium plan as a giveaway to the Bills' billionaire owners, Terry and Kim Pegula.
In response, Hochul can now argue that the stadium is really a takeaway from the Senecas, who have been stiffing the state for years and who can certainly afford to pay up.
After all, the state says the Seneca Nation has earned $7.3 billion from its casinos since the first one opened in December 2002 – which is enough to build five new stadiums for the Bills.
