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LET THE GAMES BEGIN; Catskill casinos; Four out of three or five?

George Pataki has thrown a pair of monkey wrenches into the mixed-up mess
that is the Great New York Indian Casino Follies. In a few short weeks,
we've seen Catskill casino negotiations explode from a seemingly paralyzed
stand-still to a frenzy of deal-making that, as the dust settles, reveals
more tribes with settlement deals than available casinos.

Several times in this space, we have praised New York's Republican governor
for his insistence upon government-to-government negotiations with the
state's tribal governments as the correct means for resolving their
differences. Despite repeated clamor from municipal governments to clamp
down on Indian sovereignty and from local anti-Indian groups to force
tribal businesses to collect and remit state sales and excise taxes, Pataki
remained committed to negotiated solutions.

In October 2003, after repeated insistence that he would "never" negotiate
with out-of-state tribes, Pataki switched gears, saying he welcomed the
opportunity to bring other tribes into the mix. At the time, we thought
that this was little more than a ploy to get the New York tribes to come to
the bargaining table.

But pressure on Pataki has continued to build from several angles:
Localities who wanted land claim and tax issues settled; Catskill
communities awaiting the casino onslaught and legislators insisting on
sales tax collection from Indian country. These constituencies all demanded
action - as did a multi-billion-dollar state budget deficit and a federal
mandate to increase state aid to New York City's ailing and flailing public
schools.

The most recent fruits of Pataki's negotiations, three
land-claim-settlement-for-casino deals with tribes based outside of New
York, strongly test established relationships and threaten long-standing
precedent. By playing the out-of-state card, Pataki is desperately trying
to put in place the casino revenue stream envisioned by the original
authorizing legislation of October 2001. He also appears to be trying to
shock the New York tribes into settling their land claims and making some
sort of concession on the sales tax issue. The soundness of his motives and
tactics are questionable.

On Nov. 12, Pataki announced a land-claim-for-casino settlement with the
Seneca-Cayuga Tribe of Oklahoma; within a week, he released details of an
agreement with the Cayuga Nation of New York. These two deals, which
purport to settle the 25-year-old Cayuga land claim case, differ in rather
marked ways. [See "Let the Games Begin - Catskill Casinos: Two out of
three?" (Vol. 24, Iss. 26)]

As expected, the Seneca-Cayuga deal raised the most eyebrows. IGRA makes no
mention of tribes' crossing state lines to establish gaming operations. No
tribe has successfully done so, though the Seneca-Cayuga, who already
operate a Class II facility in Oklahoma, have been on the leading edge of
that push.

Tribal attempts to open a Class II gaming hall in Aurelius, N.Y. remain
stalled in court. In return for a Class III Catskill casino, the
Seneca-Cayuga agreed to halt the Aurelius effort, to collect and remit
state sales taxes, give up its undetermined financial share of the land
claim award and indemnify Albany for the final judgment paid to the Cayuga
Nation, up to $350 million. In addition, revenue sharing would be part of a
future compact, presumably structured on a sliding scale similar to the
current Seneca compacts, which max out at 25 percent of slot win after
eight years.

Subsequent announcement of land-claim-for-casino deals with the Oneida
Tribe of Wisconsin and the Stockbridge-Munsee Band of Mohicans raise more
questions than they answer. One - with two of the three authorized Catskill
casinos presumably taken, how can there be two more deals for only one
remaining casino? Pataki now says that the Catskills can actually absorb
five casinos; he plans to ask state legislators to up the authorization by
two.

Two - how do these deals actually settle the Oneida land claim case, as
Albany claims, without the participation of the New York Oneidas? A 2002
deal that didn't include all the parties eventually collapsed.

The Seneca Nation and Oneida Nation of New York have been outspoken in
their criticism of Pataki's deals with the "out-of-state" tribes. The
Senecas, whose two larger reservations support thriving fuel and tobacco
retailers, see tribal concessions on tax collection as a threat to their
sovereignty. The New York Oneidas insist that funds from tribal casinos
operated by the Oklahoma and Wisconsin tribes will be taken out of New
York.

(This is a valid point: Although the "out-of-state" tribes will create some
jobs and revenue for New York, a significant chunk of their casino revenue
will be spent in their home states. This is because IGRA mandates that
casino monies be used for housing, education, health care, cultural
programs, etc. These are all activities that take place at the tribes'
population centers - reservations in Oklahoma or Wisconsin. It is hard to
quantify this amount, but it is no doubt huge.)

The lucrative potential of a Catskill casino proved a strong enough
temptation for the Seneca-Cayuga to agree to a slew of concessions that
perhaps under other circumstances would not have been ceded so readily. The
Wisconsin Oneidas and the Stockbridge Munsees also agreed to drop their
land claims and collect state sales taxes, something the New York tribes
have adamantly refused for years. Pataki effectively pulled the rug out
from under the New York tribes by going "out-of-state." But none of these
deals can be seen as anywhere close to a sure thing.

Even if Pataki gets the General Assembly to authorize two more Catskill
casinos, and that's a mighty big IF, there's still the requisite federal
approvals of all of these proposed deals to consider. Federal policy seems
to frown on tribes gaining gaming rights in states other than of their
recognition, but there seems to have been little public discourse on the
subject.

In mid-December, reports surfaced in several Upstate media questioning the
ability of Cayuga spokesmen Clint Halftown and Timothy Twoguns to negotiate
on behalf of the nation.

Meanwhile, the Cayuga land claim remains under appeal with the Second
Circuit in Manhattan slated to issue an opinion "soon;" the U.S. Supreme
Court will hear the City of Sherrill v. Oneida Nation taxation case and
other legal challenges to Indian gaming remain active in New York courts.
The Oneida land claim case continues to loom over a large piece of Upstate
New York and will continue to do so despite Pataki's deal with the
Wisconsin Oneidas.

By going "out-of-state," Pataki could be signaling that he has lost his
patience with the New York tribes, but all he has done is to further muddy
some already cloudy waters. By offering more casinos than he is legally
permitted to several tribes that may, in the end, be prohibited from
crossing state lines for gaming, he also could be signaling his desperation
for a workable deal. By making such an audacious move into uncharted
territory, however, Pataki will in the end only prolong the process and
delay the ultimate startup of Indian gaming in the Catskills.