A 'Maginot Line' of casinos

George Pataki and Cyrus Schindler have something in common. They both see Indian gaming as a means toward economic recovery.

Governor George Pataki and the state legislature, in an attempt to ease New York's post-Sept. 11 fiscal problems, turned to Indian gaming to provide a financial injection into the state's coffers. He hopes to create jobs and financial stimulus in a region that has long been an inert economic graveyard.

Cyrus M. Schindler, President of the Seneca Nation of Indians, wants to improve the financial prospects of his people. According to the tribe's web site, its economic enterprises currently consist of a small chain of convenience stores, a pair of bingo halls and a campground.

Both Pataki and Schindler are counting on the fact that a reverse "Maginot Line" of casinos abutting the Canadian border will keep Americans and their gambling dollars in New York. The Seneca casinos will hopefully divert New Yorkers and others from crossing the frontier to Niagara Falls, Ontario, where Canadian casinos and a relatively weak Canadian dollar have drawn tens of thousands of American gamblers over the past few years. The state hopes that casinos in Buffalo and Niagara Falls will also attract private investment and spur economic growth in adjacent areas of these two ailing cities.

[The Maginot Line was a series of defensive fortifications built by France along its eastern border with Germany during the years prior to World War II. The Line was supposed to prevent and repel a German attack, however the Germans flanked the line by invading through Belgium and Luxembourg.]

Schindler and Pataki finally signed their Class III gaming compact at an Aug. 18 ceremony in Niagara Falls, N.Y. The two leaders readily touted the benefits of casinos for both their peoples.

"This is an important and historic step for our Nation," said Schindler in a press release. "We've gotten this far because my administration and the Tribal Council are determined to make casinos ? and the economic benefits they bring ? a reality for our people. Running our own casinos will bring economic sovereignty to our people."

The Seneca leadership had to overcome considerable casino opposition from within the tribe ? the compact was passed by a mere hundred votes out of approximately 2,000 cast on May 14. Estimates of the financial benefit to the tribe have varied from $1 billion to several billion dollars over the life of the deal. The tribe has approximately 6,700 enrolled members.

The 14-year agreement will allow the Senecas to build and operate three casinos in Western New York, one each in the cities of Buffalo and Niagara Falls and a third on a yet-to-be-determined site on one of the tribe's two reservations at Allegany and Cattaraugus. The Nation hopes to open its first temporary casino in Niagara Falls by the end of the year; the Buffalo casino would be the first casino wholly owned by an Indian tribe in a major U.S. city. The deal must still gain BIA approval before any gaming begins, and then still faces litigation challenging the compact's legality.

"By allowing us to compete with out Canadian neighbors, these casinos will provide a major boost to the Western New York economy ? creating thousands of new jobs, bringing thousands of tourists to the region and encouraging new private-sector investments from around the world," Pataki said in a press release.

The state will receive a sliding percentage of the casinos' slot-machine net drop (the amount in the machines after payout and before expenses) which it will share with local municipal and county governments to pay for infrastructure improvements and compensate for trust land taken off the tax rolls.

Indeed, the advent and continued development of the Indian gaming industry has created an economic engine that can create jobs, that can create a revenue stream for needy tribes, and that can stimulate economic development in nearby areas. This model, however, is not foolproof, as location is crucial to the success of any gaming enterprise. Obviously, a remotely located tribe will probably have a tough time attracting people to an out-of-the-way site. But the Niagara Frontier, as this region of Western New York is often called, holds considerable promise as a gaming location.

Niagara Falls itself is one of the world's premier tourist spots; though not all of the visitors will be gamblers, people will come and a significant percentage of them will probably find their way into a casino. Though the population on the U.S. side of the border has been in decline for several years, the area still has a strong local populace, some of whom will certainly patronize the new casinos.

On the American side of the border, Buffalo contains some 330,000 residents while Niagara Falls has another 55,000 or so. Rochester, an hour's drive to the east, has some 230,000 residents while Syracuse, a 2_-hour trip eastward, boasts about 160,000 inhabitants. Across the river in Canada, the nearby cites of St. Catherines and Hamilton have 300,000 and 619,000 inhabitants, respectively, while metropolitan Toronto, an hour-and-a-half drive around the western end of Lake Ontario, has almost 4.4 million residents. While it remains to be seen whether Canadian gamblers will bypass their "homegrown" casinos in favor of the Senecas' gaming emporia, the large number of autos and RVs sporting Canadian tags traveling upstate New York highways shows that our northern neighbors are at least not afraid to cross the border.

Both state and tribal officials both say that BIA approval will be granted and that litigation challenging the compact's constitutionality will not stop the Seneca casinos from opening. But they are not yet a done deal, despite all that is riding on them. Pataki, up for re-election in November, trumpets the compact as evidence that he is doing something about the region's moribund economy while creating revenue for the state Treasury.

Schindler, for his part, has gained for his people the possibility of a more financially secure future. Yet he must work with other pro-gaming Senecas to secure the future of the recently signed compact. The nation's constitution prevents Schindler from running for a second consecutive two-year term during tribal elections this November. As close as the May referendum was, it remains possible that an anti-gaming president and council could replace his administration.

If the U.S. economy doesn't completely tank, and if Pataki's and Schindler's reverse "Maginot Line" can keep Americans and other tourists (and their money) on the New York side of the border while letting Canadians (and their money) in, the Seneca Nation and the state both stand to gain tremendously. Time will tell.