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State appellate court rules for legislative compact input

ALBANY, N.Y. ? In a move that could have potential consequences for existing and future Indian casinos in the state, the Appellate Division of the New York Supreme Court ruled unanimously that all gaming compacts negotiated with Indian tribes by the governor must be approved by the state Legislature.

On May 2, the five-member court ruled invalid both a 1993 casino compact negotiated by then-Gov. Mario Cuomo with the St. Regis Mohawk Tribe and its 1999 extension, which allowed electronic slot machines, signed by current Gov. George Pataki. The judges said that because legislative input is required in matters of public policy, the governor must include the Legislature in the compact approval process.

"We hold that because the basic policy decisions underlying the governor's action have not been made by the State Legislature, the governor did not have the authority to bind the state by executing the compact or the amendment," Justice Thomas E. Mercure wrote in the court's decision.

A second suit making the same argument is working its way through the courts, with openly acknowledged financial support from Donald Trump, the Atlantic City casino mogul. Trump is widely believed to fear competition from New York State casinos within range of his primary market.

The Appellate Division's ruling upheld an earlier decision by state Supreme Court Judge Joseph C. Teresi, who in April 2001 ruled on the illegality of both the 1993 compact and subsequent slot-machine amendment.

"We conclude that the commercialized Las Vegas-style gambling authorized by the compact is the antithesis of the highly restricted and 'rigidly regulated' forms of gambling permitted by the New York constitution and statutory law and New York's established public policy disfavoring gambling," the Appellate Division said in its decision. Casino-style gaming, particularly slot machines, is not permitted under the state constitution.

Gov. Pataki's office is reportedly planning an appeal of the appellate decision.

New York currently boasts two Indian casinos, the Akwesasne Mohawk casino operated by the St. Regis tribe at its reservation on the St. Lawrence River, and the Oneida Indian Nation's Turning Stone casino in Verona. Neither of the compacts governing these two gaming facilities was ratified by the Legislature. The ruling did not close the Akwesasne casino and did not address the compact governing Turning Stone.

[Indian Country Today is owned by Four Directions Media Inc., an enterprise of the Oneida Indian Nation of New York.]

In October, Gov. Pataki, a Republican, signed a law authorizing six new Indian casinos in the state, three in the Catskill Mountain region and three more in the western part of the state. The Legislature in ratifying this legislation, automatically signed off in advance on any future compact negotiated between the governor and any Indian tribe.

On May 14, members of the Seneca Nation of Indians in western New York are scheduled to vote on a proposed compact which would allow them to build and operate casinos in the cities of Buffalo and Niagara Falls, as well as another on one of their reservations. Sentiments run high in both the pro- and anti-casino camps within the tribe, making the outcome of that balloting tough to predict.

The state of New Mexico and various tribes there experienced a similar legal scenario in their efforts to establish Indian gaming in the late 1990s.

When IGRA became law in 1988, several New Mexico tribes sought to negotiate gaming compacts with the state, according to Peggy Roberts, the State Gaming Representative for the New Mexico Gaming Control Board. She serves as liaison between the board and the state's various gaming tribes. It was not until 1995, however, that Gov. Gary E. Johnson, a Republican, signed compacts with several of the pueblos; the Department of the Interior approved these agreements. But in July of that year, the state Supreme Court ruled, in New Mexico ex. Rel Clark v. Johnson, that the governor could not legally sign compacts without legislative approval, Roberts told Indian Country Today.

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In 1997, new compacts were signed, which the state legislature approved by only one vote, Roberts said. Bruce Babbitt, then Secretary of the Interior, refused to sign the compacts within 45 days, which, under IGRA, allowed them to take effect anyway. Babbitt believed that both the deal's regulatory fee structure and its revenue-sharing provisions, under which the tribes had to pay the state 16 percent of net winnings, were excessive and thus impermissible under IGRA.

Roberts said that litigation by various parties continued into 2002, when 11 of the pueblos withdrew their court challenges and signed a compact negotiated in 2001 with the state. The deal was described as "the last and best hope of resolution of this issue" by negotiator David E. McCumber. All of these tribes currently operate gaming facilities under the 2001 compact, which among other provisions, generally requires a revenue-sharing payment to the state of eight percent of net win. Two other pueblos are still fighting the state in court over compact provisions.

The state of Michigan has experienced legal skirmishes as well in regard to the legality of casino compacts there, said Keith Roberts [no relation to Peggy Roberts], an Assistant Attorney General in charge of lotteries and racing for the state. The problem there, however, concerns the method in which the legislature approved the compacts.

In 1993 and again in 1998, the Michigan legislature voted by resolution to conclude seven and then four casino compacts, respectively, with various state tribes. Litigation by a Michigan taxpayers' group challenged the validity of the 1998 compacts in federal court; the case was referred to a state trial court, which ultimately ruled that the proper mechanism to conclude gaming compacts is via a legislative bill rather than a resolution. Thus, Roberts said, the judge did not explicitly vacate the compacts, but implicitly found them invalid in regard to the means by which they were enacted.

"The state has appealed this decision and trial remains pending in the Michigan Court of Appeals," Roberts explained. "Briefs have been filed and the case awaits oral argument."

Regardless of the outcome of this trial, it is almost a certainty that the state Supreme Court will eventually hear the case, Roberts added.

"We have a total of 11 compacts in Michigan, and four of them have been successfully challenged, but the implementation has not been curtailed," Roberts said. "These tribes are still running casinos. The earlier set of compacts were not part of this challenge, but the same legal argument and ruling would be presumably applicable to them because essentially the same means was used to put them in place. There is a cloud over these compacts, but the facilities themselves are still operating and probably will be for at least another year or two."

"Does anyone really want these things to come apart?" Roberts asked rhetorically, noting that both the Michigan tribes and the state have a vested interest in keeping some sort of arrangement in place, "because there's a source of revenue here. So we have some taxpayers who are challenging the thing and if they succeed, the state government will lose the revenue, the tribes will lose the operation of the casinos."

Many people employed at the state's casinos could lose their jobs as well, if the facilities closed.

What could all this mean for the New York tribes, both those with compacts and those seeking them? A number of factors come into play.

The state currently has a budget shortfall in excess of $1 billion, while the legislature has yet to pass a financial authorization bill for the current fiscal year. The state continues to reel financially from the effects of Sept. 11, 2001, as well. These two factors make the prospect of increased gaming revenue a welcome one.

Gov. Pataki, who enjoys widespread popularity in the wake of his Sept. 11 leadership, also recently announced a bid for re-election to a third term. That fact, and because the Legislature had previously rubber-stamped the governor's lastest compacts prior to their negotiation, may bode well for expanded tribal gaming within the state.

The Upstate Citizens for Equality, however, also has a lawsuit pending in state court. The group's complaint alleges that the compact governing the Oneidas' casino in Verona is invalid for the same reasons that the Mohawk compact was annulled.

Finally, the May 2 decision could affect the May 14 Seneca vote. Many tribal members are reportedly skeptical if not downright distrustful of the state government. Any legislative movement perceived to alter the compact negotiated with Pataki (the one to be voted upon) in favor of the state could produce a negative vote.