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Clouds gather over Seneca gaming compact

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ALBANY, N.Y. - Clouds are gathering over a break-through gaming agreement between the Seneca Nation of Indians and the state of New York.

Although a bill endorsing the outlines of a compact zipped through the state Senate, Assembly Speaker Sheldon Silver is putting on the brakes. The Seneca Tribal Council is rethinking plans for an Aug. 7 referendum and critics reveal that FBI agents are asking questions about the tribe's existing finances.

These obstacles might not derail the compact, which would authorize up to three Class III (Las Vegas style) Seneca casinos in economically stagnant western New York. Going by terms so far revealed, spokesmen for other casino-owning tribes in the state say the Senecas have negotiated a very good deal.

"They negotiated a better compact than we have," said Rowena General, spokesman for the St. Regis Mohawk Tribal Council.

But the emerging demands for more information have stalled a bandwagon moving at astonishing speed.

Seneca Nation President Cyrus Schindler and New York Gov. George Pataki announced an agreement on a gaming compact including slot machines June 20. Just one day later, the state Senate passed a bill approving the deal, even though language of the compact is still being worked out.

Pataki and the Senate majority are Republican. Assembly Speaker Sheldon Silver, a Democrat, held up the bill in the lower body, citing concerns ranging from labor law to still pending Seneca land claims suits. The Assembly is in recess until July 10.

Although existing gaming compacts with the Oneida Nation and the St. Regis Mohawks were negotiated by the governor's office alone, a recent State Supreme Court decision held they needed legislative approval to be valid. The memorandum of understanding between Pataki and Schindler requires both the state and the Seneca Nation to lobby the Legislature for approval of the break-through "slot machine" provision.

The highly profitable coin-driven slots are currently barred from New York gaming and Speaker Silver has said a constitutional amendment might be necessary to allow them.

As copies of the memorandum circulated through the Seneca Nation and the Legislature, it appeared that the state made significant concessions. The six-page document made no mention of the land claims, including an emotionally charged suit over Grand Island in the Niagara River. It omitted any state claims of taxing authority and emphasized that discussions "constitute government-to-government talks between two sovereigns."

But the state is in line for a large share of the revenue from the slots. The deal hands over an estimated $830 million over 14 years, starting at 18 percent of the "net drop" in the first four years and growing to 25 percent in years 8 to 14. (The term refers to the total dropped into machines after winnings are paid out but before expenses.)

The compact would also repay the state its investment in the Niagara Falls Convention Center in the decaying downtown of Niagara Falls. In a complicated "lease-back" deal, the state would transfer title to the center and a nearby parcel called the "Splash Park" for one dollar. The nation winds up paying off $26 million in state bonds issued for the center.

The nation also commits to spending at least $30 million from its Settlement Act funds to buy this site and another parcel not yet determined in the city of Buffalo. It also has the option of building a third casino on reservation land.

The nation reserved $5 million from the Settlement Act appropriation to buy parcels for tribal housing projects. The memorandum limited these developments to land adjoining existing Seneca reservations or the two urban casino sites. It was not clear if the agreement limited any other expansion of sovereign Seneca territory.

It also provided for impact payments to the host cities from the state's share of slot revenues.

The western New York cities have eagerly sought casinos, hoping for a lift from their current stagnation. Local leaders say slot machines are necessary to counter competition from Canadian casinos across the river.

Explaining his surprising shift to support the compact, Senate Majority Leader Joseph Bruno called this region "probably the most devastated part of the state economically."

Pataki's push for the bill authorizing a compact has produced role reversals in both legislative chambers.

Two years earlier, Bruno killed a state constitutional amendment allowing gaming in economically depressed sections. At the time it was strongly supported by Assembly Speaker Silver who is now dragging his heels.

Skip Carrier, a spokesman for Silver, said that the powerful leader didn't want "to sign a blank check."

The speaker might call for hearings, he said, or insist that the final language of the compact go for a legislative vote.

Some tribal members are also trying to slow the deal. Bob Jones of the Cattaraugus Reservation has filed suit in tribal court asking for a restraining order to keep the council from signing a compact and to halt the proposed Aug. 7 referendum.

The FBI introduced another wild card. Its agents reportedly are conducting interviews of tribal leaders about the handling of the tribal investment fund derived from the settlement of the Salamanca lease controversy a decade earlier. Although a former chairman of the Investment Board strongly defends the propriety of the arrangements, critics say it makes them ask whether tribal institutions are presently up to the task of handling the large sums the casinos are expected to produce.