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Let the games begin; Catskill casinos: Two out of three?

Oklahoma tribe's deal results in a lesser deal for a NY tribe

After months of public inactivity, the great New York state casino follies
have all of a sudden gained renewed momentum.

In the second such development within a week, Gov. George Pataki and Cayuga
Nation of New York spokesman Clint Halftown on Nov. 18 announced an
agreement between state and tribe aimed at resolving the long-standing
Cayuga land claim and awarding a Catskill casino to the long-landless
nation.

In return for a casino in Monticello, some 90 miles northwest of
metropolitan New York City and the prospect of re-acquiring land within its
land claim area, the Cayuga Nation would drop its $1.7 billion cross-appeal
in the land claim case. The nation would commit to negotiating a tax parity
agreement with Albany, and would shutter its two small Class II gaming
facilities within two years of opening a Catskill casino, unless local
authorities agree to keep them open.

Two counties within the land claim area would receive $3 million annually
apiece from both state and tribe to mitigate the loss of property tax
revenue. The nation would adopt and enforce its own building codes, to be
no less stringent than acceptable international standards. The nation would
negotiate with local authorities for the provision of fire, police and
other municipal services.

The pending appeal in the land claim case, currently at the Second Circuit
Court of Appeals in Manhattan, remains in play, but only for Albany. If the
final judgment in the land claim case goes against the state, the nation
could acquire and exercise sovereignty over up to 10,000 acres from willing
sellers within the claim area and would receive $150 million ($15 million
annually for 10 years) from Albany. If the judgment is less than $150
million, the nation would receive the amount in 10 annual payments, and
would be able to acquire the same 10,000 acres.

If, however, the land claim judgment goes against the tribe, Albany pays
nothing and the Cayuga Nation would only be permitted to exercise
sovereignty over 2,500 acres in no more than three tracts in which all land
within each tract would be contiguous.

The Cayuga announcement came but six days after Pataki and Chief LeRoy
Howard announced a land-claim-settlement-for-casino deal between Albany and
the Seneca-Cayuga Tribe of Oklahoma.

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The Seneca-Cayuga agreed to relinquish their interest in the land claim
case and terminate all other litigation with between the tribe and Albany.
They also pledged to indemnify the state for any final monetary judgment
awarded to the Cayuga Nation in the land claim, up to $350 million.
Finally, the Seneca-Cayuga agreed to collect and remit state sales taxes
from fuel and tobacco sales to non-Indian customers. In return, the tribe
will negotiate with Albany for a Class III compact for a coveted Catskill
casino.

According to a Nov. 12 press release from the governor's office, the two
parties hope to secure all the necessary state and federal approvals by
Sept. 1, 2005.

Neither deal, like all of the other fits and starts in the ongoing Catskill
casino follies, can yet be seen as a sure thing. Approvals must be gleaned
from state and federal legislators as well as from the Interior Department.
The fact that the Seneca-Cayuga are an "out-of-state" tribe will definitely
throw a monkey wrench into things. Allowing the Oklahoma tribe to exercise
sovereignty in New York for gaming purposes will open up a Pandora's box,
from which dozens of other tribes will emerge to seek gaming rights in
their ancestral territories.

CAYUGA CAPITULATION

Until he flip-flopped in October 2003, the governor insisted that he would
never deal with "out-of-state" tribes. By drawing the Seneca-Cayuga into
the mix, however, Pataki skillfully co-opted the Oklahoma tribe's
willingness to collect state sales taxes, pay for the land claim
settlement, and to waive acquisition rights in the claim area into a
tentative agreement.

Because Pataki and the Oklahoma tribe were able to forge a deal, the Cayuga
Nation was ultimately forced to accede to provisions it likely would not
have accepted otherwise. One is dropping their appeal to the land claim
award while the state is allowed to continue its appeal. Pataki's previous
attempt to force this down the nation's collective throat caused the
collapse of the June 2004 Memorandum of Understanding that would have given
the Cayuga Nation a more advantageous deal than this one.

The next concession is puzzling. Under the June MOU, the Cayuga would have
received the full $247.9 million awarded by a district court judge in the
land claim case. Now, however, they are limited to $150 million, even if
the eventual award exceeds that amount. This hardly seems fair. While the
Cayuga Nation will, if this deal ultimately comes to fruition, be able to
operate a Catskill casino and exercise sovereignty in the land claim
territory, they still seem to be getting the short end of the stick. If the
Seneca-Cayuga agreed to pay up to $350 million to settle the land claim,
why is the Cayuga maximum be only $150 million?

Pataki has now definitely set the tone for how the third authorized
Catskill casino will be awarded. Because the Seneca-Cayuga are willing to
act as tax collection agents for Albany, any tribe wanting a piece of
Catskill gaming is going to have to agree to tax parity. While "Let the
Games Begin" has in the past credited Pataki for his consistent willingness
to negotiate tax issues with the New York tribes, bringing in an Oklahoma
tribe to help him do his dirty work is hardly an honorable tactic. Remember
- New York's Cayuga, Mohawk and Oneida tribes have all repeatedly said that
they would talk tax parity.

Other tribes believed to be in the running include New York's Oneida Nation
(who are so miffed at the Seneca-Cayuga deal that they are running TV ads
denouncing it) and St. Regis Mohawk Tribe, and two Wisconsin tribes - the
Stockbridge-Munsee Band of Mahicans and the Oneida Tribe. We have
previously said that the "in-state" tribes have a definite advantage in the
Catskills, but by throwing the Oklahomans into the mix, all bets are now
off.