By JAMES FINK
jfink@bizjournals.com | 716-541-1611

The legal tug of war between the Seneca Nation of Indians and New York state concerning casino revenue payments has taken another turn.

Seneca Nation of Indians President Robert Odawi Porter asked Gov. Andrew Cuomo to agree to an arbitration hearing that could resolve how the tribe makes more than $388 million in casino revenue payments to the state and three local host communities where it operates a trio of gaming venues: Niagara Falls, Salamanca and Buffalo.

New York has yet to respond.

The Senecas say they would prefer to make the payments directly to the host municipalities; New York wants to funnel the funds through Albany.

The Senecas have withheld casino revenue payments - putting them in an escrow account - while attempting to resolve their differences with New York over issues that they say violates a 2002 compact. The agreement allowed for the development of Seneca Niagara Casino & Hotel, Seneca Allegany Casino & Hotel and Seneca Buffalo Creek Casino.

Seneca leaders point to the development of video lottery terminals or slot machine-like VLTs at racetracks around the state, including the Fairgrounds Raceway in Hamburg, and also allowing other forms of electronic gaming devices such as Moxie Mania terminals at bars and restaurants around New York.

"The state has yet to meaningfully respond to the Nation's proposed terms or, alternatively, to provide the Nation with a good-faith offer to settle the matter," Porter said in a letter to Howard Glaser, Cuomo's director of state operations and chief negotiator with the Senecas.

A tentative deal was close to being completed last week that would have seen the Seneca Nation release approximately $70 million in payments to Buffalo, Niagara Falls and Salamanca. Niagara Falls was due to receive an estimated $50 million of the payments. From 2002 to 2008, the Seneca Nation paid New York and the three host communities $476 million.

Porter said he believes state leaders are unfairly laying the blame on the Senecas for failure to resolve the situation, which has dragged on for years. Last December, then-Gov. David Paterson suggested arbitration might be the best route to resolve the issue.

Seneca leaders said they would prefer to make casino revenue payments directly to Buffalo, Niagara Falls and Salamanca. New York has been cool to that offer.

"Our preference would be that we make these payments directly to the host communities so that these dollars are immediately made available to the host communities in Western New York and benefit our fellow Western New Yorkers, as we've sought all along," Porter said.

"The Nation and the local host communities have endured delay after delay by the state. We have waited long enough for this problem to be negotiated by the governor's office for the last two years. An expedited arbitration process will at least provide the possibility of relief in the very near future," he said.

The casino revenue payments issue is one of several legal matters facing the Seneca Nation, including one by anti-gaming forces that want to see the Seneca Buffalo Creek Casino closed and a separate battle with New York concerning attempts by the state to collect taxes on tobacco sales made by tribal businesses to non-Indians. Both cases are in federal court.