The secret deal for a tribal casino and why it imploded

For months, talks over a new casino deal between New York State and the Seneca Nation of Indians have been deadlocked, with the two sides deadlocked over the size of the state’s rebate of hundreds of millions of dollars in gambling revenue, and what the tribe will do in would get an exchange.

With a few precious hours left before state lawmakers break for the year, that suddenly seemed to change: Gov. Kathy Hochul, who has faced questions about her husband’s ties to commercial gambling interests, sought to speed up a bill that would overthrow her administration. given the general authority to negotiate a new pact with the Indian nation — and remove the surveillance that accompanied the old.

But now the attempt, characterized by secrecy and a lack of consultation with virtually anyone but tribal leaders, has failed spectacularly. It has alienated local officials and gambling and labor interests that are powerful forces in New York State politics and has failed to move the state and the Senecas closer to a new casino pact.

While Mrs. Hochul’s office kept private all the crucial details of what had been negotiated with the tribe, one element in particular proved fatal in the legislature: an agreement to allow the Senecas to build a casino, part four of the tribe, in or near Rochester, part of an upstate market that the state’s own study found was “saturated” with gambling options.

The Senate passed the bill almost unanimously, but as news of the proposed Rochester Casino spread, opposition mounted and the Assembly stopped voting, returning the negotiators to the negotiating table.

Lawmakers from both parties said they didn’t know what was in the deal to vote on. Even some sponsors of Seneca-related legislation said they were not told about it by the governor’s office. Nor did Senator Liz Krueger of Manhattan, a Democrat who heads the Senate Finance Committee.

“We’ve kind of been fooled,” she said.

Backroom deals are common in Albany, but few involve issues as controversial as the location of a new casino. At commercial casinos, such decisions typically require multiple layers of approval and hundreds of millions of dollars in licensing and application fees.

The process for making a gambling pact with a Native American tribe is different, requiring federal approval, but not compliance with the rules and laws that commercial casino operators must follow.

Federal law also requires the state to provide something of value to the tribe — such as a ban on neighborhood gambling or a new casino — if the state wants to claim a share of the revenue as part of a new pact. Under the current deal, which was ratified more than 20 years ago, the state receives 25 percent of the casino’s revenue from slot machines, one of the highest rates paid by any tribe in the United States.

According to four people in the know, who spoke on condition of anonymity to disclose details of ongoing negotiations, the new pact would have resulted in a lower rate in addition to the opening of the Rochester-area casino.

The failed attempt to gain general authority from the legislature was the culmination of nearly a year of talks about a new pact, which would remain in place 20 years after the current deal expires in December.

As with the first Seneca compact, billions of dollars in gambling revenue were at stake. But unlike the previous negotiations, lawmakers and voters were not given basic information about what was in the deal.

When the details of the deal emerged, they were panned by Democrats and Republicans alike, especially in the Rochester area, not far from where Ms. Hochul grew up, where she was first elected and where she still lives.

“How dare anyone think they can do anything in the city of Rochester and not contact the mayor of the city?” Rochester Mayor Malik Evans said at a recent press conference. “I have a serious problem with that.”

Rachel Barnhart, an elected member of the Monroe County legislature, which includes Rochester, said she and other Democrats felt “deeply betrayed.”

“How could she allow something to get this far without informing our community?” said Mrs. Barnhart, who is against a casino. “This is a big problem.”

U.S. Representative Joseph D. Morelle, a Democrat representing Rochester, said he is asking the U.S. Department of the Interior, which reviews Native American gambling deals, for local input into any new casino deal.

“I can’t recall a case where something so important could be done without virtually not only debate, but without knowing what you are being asked to vote for,” he said.

Others also expressed frustration at the secretive behavior of the administration. When lobbyists and lawmakers, including Councilman Harry Bronson, a Democrat from the Rochester area, contacted the governor’s office for details, they were told that members of the team negotiating the deal were bound by secrecy under federal law. a non-disclosure agreement, they said. (Ms. Hochul’s office later said no non-disclosure agreements were signed as part of the negotiations.)

Every decision related to gambling in New York State is fraught for Ms. Hochul. Her husband, William Hochul, is senior vice president and general counsel of Delaware North, which operates more than 2,000 slot machines in New York and is a major competitor to the Seneca Nation. The relationship prompted the governor to say she is withdrawing from the compact renewal negotiations.

Nevertheless, Ms. Hochul has taken measures that are in line with the interests of Delaware North. But her aides have said the decision to allow the Senecas to build a casino in or near Rochester showed that Delaware North was not getting any special treatment.

Indeed, on June 14, Ms. Hochul’s office made a last-ditch effort to shut down Rochester’s proposal. Zoom call led by a top Hochul aide, Kathryn Garcia, with Democratic lawmakers in the Rochester area, participants said.

The governor’s team cited a study they say supported the feasibility of a casino near Rochester, participants said — a conclusion that differed from that in a 2021 state report of the Gaming Commission who called that market ‘saturated’. But the administration refused to release the study to lawmakers, according to one of the lawmakers on the call, Senator Jeremy Cooney. Ms. Hochul’s office also refused to release the study to The New York Times.

Mr. Cooney was one of the few senators to vote against the bill that would have given the governor broad powers to reach an agreement with the Senecas. He said he had suspicions about a new Seneca-run casino in Rochester, an idea he had stirred controversy in 2014, but also called the lack of transparency and failure to communicate about the proposal “alarming”.

After the bill was approved in the General Assembly, Seneca Nation President Rickey L. Armstrong Sr. issued a statement accusing Ms. Hochul’s staff of deliberately sinking the deal to take the company from the Mrs. Hochul’s husband.

“Governor Hochul may have withdrawn from negotiations, but apparently she could not withdraw her own staff from the expectation that they would put corporate interests, Delaware North first and foremost, ahead of those of a sovereign Native Nation,” said Mr. Armstrong, who had previously said, sought protection from the legislature in part because of fears that Delaware North could influence the outcome of compact negotiations.

Hochul spokeswoman Julie Wood called the Seneca president’s statement “unfair and untrue.”

“We spent months negotiating in good faith, advocating strongly for the legislature to pass the bill and working around the clock to address the concerns of all parties involved,” she said.

Senator George Borrello, a Republican whose district includes key Seneca territories, said Ms. Hochul’s failed compact deal and challenge policy, which lacks an enforcement mechanism, underlines the need to bring in an “objective third party” to provide oversight. hold on to the negotiations. He suggested the independently elected state comptroller for the job.

“It is the only common sense way to restore confidence in this process,” Mr Borrello said.

The General Assembly ended its session last week, and Ms. Hochul might need to convene a special session of the legislature to approve a new Seneca pact before the old one expires — a power that cannot be delegated despite her revocation policy.

The window to a Seneca-run casino in Rochester, part of the tribe’s original homeland but not part of today’s territories south of Buffalo, may have been closed. The tribe has let go of its insistence on getting one, said those with knowledge of the negotiations.

However, without the new casino, the state is likely to see a drop in revenue from the Senecas’ three existing casinos in western New York, as the latest plan calls for a reduction in the amount of gambling revenue it takes from the tribe receives. Seneca leaders have ruled out paying the 25 percent rate in a new compact deal. The shortfall could lead to even more clashes over the deal before the next one is signed.

The Senecas and the governor’s office have vowed to work on a new deal nonetheless.