The Editorial Board: As the Senecas try new tactic to evade their debt, New York’s doubts should rise

It seems, as one observer suggested, like a giant game of chicken. How aggressive can New York State and the Senecas be with each other, given the hundreds of millions of dollars on the table and the thousands of jobs provided by the tribe’s three Western New York casinos?

No one would have predicted this conflict when the gaming compact was signed 19 years ago. Then, except for those with a sensible concern about the rise of gambling, it seemed like a win-win proposition.

But that was before conflict erupted over intrusions on the zone of exclusivity the compact gave the Senecas, before New York bungled the 2017 extension of the compact and before the Senecas’ resulting decision that it would be good business practice to renege on its financial obligations as described in the initial compact and repeatedly affirmed by arbitrators and judges.

Now the Senecas’ efforts at evasion have moved from the courts to the U.S. Department of Interior's Bureau of Indian Affairs. The tribe asked the Biden administration to intervene on the theory that the compact they eagerly signed may conflict with the 1794 Treaty of Canandaigua, one of the earliest treaties between an Indian nation and the United States.

Upon research, federal officials have expressed concern that, because of changed economics, the renewal – which, recall, the Senecas wanted – may violate a requirement that the tribe must be the “primary” beneficiary of its casino operations. As a result of that federal worry, the Senecas have asked a federal court to halt enforcement of the rulings that it must, finally, pay up.

So, the Senecas, who demonstrably wanted the compact renewed and who have lost every time they tried to get out of paying the money they owe – now counting half-a-billion dollars and still rising – pitifully pleaded with a court to protect it from what it disingenuously calls “this attack” by New York State.

It doesn’t wash. In a “stop-me-before-I-kill-again” argument, the Senecas are asking the government to save them from their own success. They wanted the 2002 compact and its 2017 renewal as much as New York did. They made promises and, based on them, enough money to turn other business owners green with envy.

It’s possible, of course, that the Interior Department will find that the economics really have changed and that some revisions are in order. But if that view prevails, it should influence the wording of any possible future compact – itself a dubious proposition – not the one that both New York and the Senecas were happy to renew four years ago.

It’s true that the current standoff traces to New York’s inattention to detail in the renewal agreement, whose language made no mention of continuing payments by the tribe. That failure prompted the Senecas to withhold payments and to refer the matter of the binding arbitration, as the compact requires. They lost. So they went to the court. They lost again.

The Senecas’ refusal to make good on their obligation has harmed the state, the municipalities where they do business and, inevitably, their own good name. Maybe reputation doesn’t matter when so much money is at stake. The Senecas’ total unpaid debt is expected to reach $800 million by the time the compact expires. Greed can undermine anyone’s better judgment.

As the dispute drags on, it’s hard not to suspect that part of the Senecas’ strategy is to link the back payments to negotiations over a theoretical new compact after the current one expires in 2024.

But the Senecas’ unreliability needs to be prominent factor as the state contemplates the value of any new agreement. To be sure, there’s a fortune on the table, along with the jobs of some 4,000 casino workers, but what’s the point of striking a deal with a partner so determined to shirk its obligations? (The Senecas might make the same argument about New York, given the “racinos” that were allowed to intrude on their zone of exclusivity. But that only leads to the same conclusion.)

New York should be looking at the option of walking away. What it costs may be less bothersome than spending another 22 years dealing with an unreliable partner.

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