The Seneca Nation’s casino-rev share payments to the City of Niagara Falls have dried up, and the city will be broke by December, according to an audit published by the state Comptroller’s Office.

City of Niagara Falls Mayor Paul Dyster

City of Niagara Falls Mayor Paul Dyster said he believed the financial situation is not as troubling as the auditors’ report suggests and that expects the payments to resume in due course. (Image: Alchetron)

The audit has urged city officials to “take immediate action to address the city’s fiscal problems” in the absence of the host community payments from the Senaca Niagara Casino.

The Senacas are embroiled in a contractual dispute with New York and are refusing to pay the state its usual cut of slot revenues from any of its three casinos. Niagara Falls is caught in the middle of the dispute, from which neither party is prepared to back down.

According to the auditors’ report, the city has been using about $9 million in casino revenue each year since 2014 to plug holes in its budget but it has done little to readjust its finances since payments stopped.

The amount Niagara Falls usually receives from the tribe fluctuates, because it is a cut of annual slot revenues. In 2013, it received $14.2 million, for example, but only $12.3 million last year.

Bold Legal Claim

The Senecas, who also operate the Seneca Allegany Casino in Salamanca and the Seneca Buffalo Creek Casino in downtown Buffalo, have long been aggrieved by gambling expansion in the state.

In 2009, they froze payments in protest of New York’s authorization of casino gaming at racinos in areas where they claimed exclusivity, which resulted in a four-year stand-off before the state finally backed down and admitted culpability.

But six months ago, the tribe once again stopped the payments, this time because it believed it was under no obligation to make them, under the terms of its compact.

Its initial compact was signed in 2002 and expired last year. A clause in the 2002 agreement stipulated it would, after 15 years, automatically be extended for another seven years, provided there was no objection from either party.

There wasn’t, and the agreement rolled over, but the tribe is now making a bold legal claim: that the original agreement contained no specific stipulation that revenue share payments would continue beyond 2016.

The state says there is “no legitimacy” to these claims and last week declared the tribe to be in violation of its compact, serving it with an 11-page demand for legally binding arbitration.

Future Payments “Uncertain”

The tribe reassured its host communities in June that its argument is with the state and that it remains “committed” to financially supporting them, but three months later, the Comptroller’s office isn’t so sure.

“Due to the current impasse with the Nation, it is uncertain whether the city will receive any future casino revenue,” wrote its auditors.

But the city’s mayor, Paul Dyster, denied the it was in such dire straits and hinted that the dispute would be resolved and payments would resume.

“While the City of Niagara Falls is not in the same [healthier] financial position as the previous time the Seneca Nation of Indians suspended payments required under the compact to New York state, we believe we have adequate reserves in place to last over the course of this current dispute,” he wrote in a letter to auditors, dated September 8.