By Staff Reporter
NIAGARA FALLS — For almost three years, the Seneca Nation has been paying a quarter of its slot machine take into a bank account that neither the Nation nor New York can touch. The cities that host the Nation’s casinos, Niagara Falls, Buffalo and Salamanca, have built their budgets around that money for two decades. Now the Nation’s president says a new compact is coming that would end the payments for good, and the document both governments signed in 2023 says what happens next.
If a new compact without exclusivity is approved, the escrowed money does not go to the state, and it does not go back to the Nation either. It goes to arbitration.
That clause, in an extension agreement signed by Gov. Kathy Hochul and then-Seneca President Rickey L. Armstrong Sr. on Dec. 1, 2023, sits at the center of a dispute that has spilled into the governor’s race. It raises a question no one in Albany has answered in public: how much is in the account, and who gets it.
What the 2023 agreement says
The original 2002 compact was set to expire on Dec. 9, 2023. Eight days earlier the two governments signed a short “Nation-State Gaming Compact Extension Agreement,” which the Interior Department approved in a Dec. 18, 2023 letter and announced in the Federal Register on Dec. 22.
The agreement extended the compact through March 31, 2024, “automatically extended in three-month increments” after that. Under that schedule, the current term runs through Dec. 31. It kept the Nation’s “present State Contribution rate of 25 percent” but required the money to be “set aside in an escrow account” at a bank in New York instead of being paid to Albany.
Then it laid out what happens to the money. If a new compact with a state payment for exclusivity is approved, the escrow agent applies the new rate to the escrowed funds, pays the state, and releases “any residue” to the Nation. But if a new compact is approved “without a negotiated State contribution for exclusivity,” the escrowed funds “shall be distributed following the Party Dispute Resolution process,” the binding arbitration clause in Paragraph 14 of the 2002 compact.
That is the kind of deal Seneca Nation President J. Conrad Seneca described on Oct. 1.
“We negotiated an agreement in principle that, right now, contains no revenue sharing provision with New York State,” he said, according to Buffalo Toronto Public Media. “We expect this agreement will be finalized and sent to the New York State Legislature sometime in the spring. That is the path New York and Governor [Kathy] Hochul chose.”
The framework would also include no exclusivity, WGRZ reported. If it holds, the 2023 agreement points to another arbitration over the escrow account, the second in a decade.
How much money is at stake
Neither government has said publicly how much is in the account. The Nation’s 25% payments have run about $100 million a year, according to state Sen. George Borrello, a Republican whose district includes the Seneca Allegany casino, as reported by Spectrum News. If payments have stayed near that level since Dec. 10, 2023, the account would hold on the order of $275 million or more by now, before interest. That is the Chronicle’s estimate, not a disclosed figure.
The local stakes are easier to pin down. Under State Finance Law Section 99-h, the municipal governments that host a Seneca casino in Erie, Niagara or Cattaraugus counties must “collectively receive a minimum of twenty-five percent” of the state’s share of the slot revenue from that casino. Another 10% of the state’s receipts goes per capita to the other counties in the exclusivity zone that do not host one.
Niagara Falls Mayor Robert Restaino has said the city gets $11 million to $13 million a year.
“If you think about the fact that the city’s budget is $100 million or so, and if you think about the fact that we have an amount in the budget [for casino revenue] that is almost 10%, you’re thinking about a substantial gap to fill,” Mr. Restaino told reporters on Oct. 2, according to BTPM. He said he had not heard from the governor’s office about the talks.
Buffalo budgeted a projected $11 million from the agreement in its 2023-24 fiscal year, a city spokesperson told Spectrum News in June 2024, when the city said it was owed $5.5 million. In Niagara Falls the money is split among the city and institutions including the school district, the Niagara Falls Memorial Medical Center, the Underground Railroad Heritage Commission, the housing authority and the NFTA, the Niagara Gazette reported.
Since the escrow began, the state has been covering the cities out of its own pocket. In October 2024, after Spectrum News asked her about it, Ms. Hochul said the cities would be paid. Her staff said the payments would be based on estimated compact payments from Dec. 10, 2023 through the end of June 2024, Spectrum reported.
“When the Senecas stopped making the payments that they were legally required to make in the past, the State of New York stepped up,” Ms. Hochul said in Buffalo on Oct. 5, according to WBEN. “We continue to step up and support financially Niagara Falls, Buffalo, and Salamanca, because we do not want them to be adversely impacted.”
State budget documents don’t make that support easy to follow. The New York State Association of Counties’ county impact report on the 2027 budget says projected tribal compact gaming revenues for local aid rose from $251 million in fiscal 2026 to $306 million in fiscal 2027. NYSAC cautions that these figures “often include additional room if funds become available and do not guarantee an increased distribution.” Those totals cover all of the state’s tribal compacts, not only the Seneca compact, and do not break out how much has gone to each host city while the Seneca money sits in escrow.
Two governments, two stories
The governor’s office says there is no deal at all.
“Currently, there is no agreement,” Ms. Hochul said on Oct. 5, according to WBEN. “Negotiations are ongoing, and we’ve been involved in productive discussions for some time. It’s a complicated issue, and we’ll let you know when there’s an agreement.” WBEN reported that her chief counsel, Brian Mahanna, leads the state’s negotiations.
A spokesperson told BTPM that state officials “have been engaged in productive discussions with the Seneca Nation on a new gaming compact that would be fair for all parties,” and that “any public discussion of specific terms and details is premature.”
The Nation says the state gave it nothing to bargain for. “The Seneca Nation was willing to discuss a fair revenue share agreement as a part of a new compact, but New York was unwilling to provide us any market protections or opportunities to grow and generate more revenue for us and for the local community,” Mr. Seneca said. “Instead, Governor Hochul just wanted to keep taking advantage of the Seneca Nation and taking money the state isn’t entitled to.”
He also said the Nation had tried to protect the host cities directly. “Throughout our prolonged negotiations, the Seneca Nation has consistently advocated to protect the cities of Buffalo, Niagara Falls and Salamanca to ensure that funding would continue to come to them under a new agreement,” he said, according to BTPM. “New York State told us that wasn’t any of our business.”
In his Oct. 16 message to the Nation, Mr. Seneca wrote that at a White House tribal leadership conference in late September he “demanded that the federal government intervene in forcing the State of New York to address long outstanding issues, including our gaming Compact.” He also repeated the Nation’s claim that in the last compact fight Washington “allowed Governor Hochul to steal more than $800 million from the Seneca people – money that the state was not and is not entitled to receive.” He added, “I made it clear that we want our money back.” The state has said the courts consistently sided with it in that dispute.
How Western New York got here
The 2002 compact was a simple trade, as the U.S. Court of Appeals for the Second Circuit described it in a February 2021 opinion. The Nation got “exclusive rights to maintain certain gaming machines in a large portion of Western New York,” and the state got graduated payments: 18% of net drop in years one through four, 22% in years five through seven, and 25% in years eight through 14.
The friction started early. The state began authorizing video lottery terminals inside the exclusivity zone in 2004, including at the tracks in Hamburg and Batavia, and so collected payments only on the Nation’s slot machines, the court said. Even so, New York received “more than $1.4 billion in payments through 2016,” and the Nation’s gaming revenue over that period was about $6.5 billion.
The compact renewed automatically for seven years on Dec. 9, 2016, but it said nothing about payments during the renewal. In March 2017, then-President Todd Gates told Gov. Andrew Cuomo that the payment for the last quarter of 2016 would be the Nation’s last. New York demanded arbitration. The panel ruled that the 25% rate continued, and the court recorded the parties’ figure for 2017 and 2018 alone: $255,877,747.44. The Second Circuit upheld the award.
The Nation finally paid in March 2022. “The courts have consistently ruled in the State’s favor, yet no payments were made,” Ms. Hochul said then, announcing that “the full $564 million has been received by New York.” She sent the state’s share, more than $418 million, to the new Buffalo Bills stadium. The rest went to Western New York counties and cities. Buffalo alone projected up to $38.5 million.
“These funds need to be reserved to cover potential budget shortfalls in out-year projections,” Buffalo Comptroller Barbara Miller-Williams cautioned at the time.
The federal government has been skeptical of the payments all along. In approving the 2023 extension, Assistant Secretary for Indian Affairs Bryan Newland added a footnote saying the department still viewed the compact’s revenue sharing as “only in effect for the initial 14-year term” and as given “in exchange for geographic exclusivity over certain games, transfer of the Niagara Falls Convention Center to the Nation, and other valuable benefits.” He warned that his approval “should not be construed as a pre-approval of a future revenue sharing rate.” Under federal law, any payments in a new compact will need the Interior secretary’s review.
For the cities, that matters: without something valuable in exchange, such as real market protection, Washington may not approve a revenue share like the old one.
The governor’s race
The compact is now a campaign issue. Mr. Seneca hosted a fundraiser for Republican gubernatorial nominee Bruce Blakeman at the Seneca Niagara casino on Oct. 5, NY Gaming Review reported, citing City & State New York.
“I think their biggest issue is the state won’t negotiate with them. The state won’t bargain with them. The state has been incredibly disrespectful,” Mr. Blakeman said in Buffalo’s Old First Ward that day, according to WBEN. He did not say whether he would back a compact without revenue sharing, NY Gaming Review reported.
About a dozen Seneca citizens protested outside the casino, according to the same report. The protest was organized by Mothers of the Seneca Nation, and protesters objected to the Nation hosting a partisan fundraiser and to Mr. Blakeman’s support for prediction markets. Mr. Seneca’s two-year term is ending, and Tina Abrams is set to become the Nation’s first woman president after its Nov. 3 election, the outlet reported.
Mr. Borrello, for his part, called the loss of revenue sharing a slap in the face for his district. “While the state government has saturated the gaming market here in New York State, reduced the revenue that that is coming to the Seneca Nation and others, and now the ultimate slap in the face going to take away that revenue from those local governments that rely on it to provide vital services to the people they represent,” he told WGRZ.
Who is accountable
Three governments share the responsibility, and their roles are written down.
The governor negotiates. The 2023 extension, with its arbitration clause, carries her signature, and her office has not said how much it has paid the host cities or from which appropriation.
The Legislature ratifies. As Mr. Seneca described the process, a finished compact goes to Albany “sometime in the spring.” Spectrum News has reported that Seneca citizens would also vote on it by referendum before it goes to Washington. The Assembly and Senate members from Western New York will have to vote on whatever comes back, with the host cities’ budgets riding on it.
Washington approves. Interior has already put in writing that it will scrutinize any new revenue share, and the Nation is now asking federal officials to step in.
What could fix it
Some options are already on the table, or on the record.
Disclose the escrow. The extension says the account sits at a New York bank and pays out on notice from either party. Publishing the balance and the quarterly deposits would let host cities and lawmakers plan around real numbers instead of estimates.
Put the backfill in law. Ms. Hochul says the state will keep supporting the three cities. A line-item appropriation, or an amendment to Section 99-h guaranteeing host payments while the escrow is unresolved, would turn a promise into a commitment the next governor inherits, whoever wins on Nov. 3.
Pay the cities directly. Mr. Seneca says the Nation pushed for payments that go straight to the host cities. Any such agreement would need both governments and the Interior Department to sign off, but it would separate the cities’ budgets from the state-Nation fight.
Rework the local formula. A proposal floated last year to amend the 99-h distribution would have let Niagara Falls keep 80% of its casino money for economic development, neighborhoods, public safety and infrastructure, splitting the rest among local institutions, the Niagara Gazette reported.
Settle the escrow before arbitration. The extension lets the two sides “jointly agree” on how to distribute the money. A negotiated split would avoid another multiyear arbitration, the kind that, the last time, ended with the state receiving $564 million at once and sending most of it to a football stadium.
The Buffalo Chronicle has asked the governor’s office for the escrow balance and the amounts paid to each host city since December 2023, and has asked the Seneca Nation and the mayors of Niagara Falls, Buffalo and Salamanca for comment. This story will be updated with their responses.
Featured photo: The Seneca Niagara Resort & Casino hotel tower in Niagara Falls. Whpq / Wikimedia Commons, CC BY-SA 3.0.
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