As the Wheel Turns
Legislature may have final say over casino

by Andrea Barrist Stern Saugerties Times May 19, 2005

How much control will Saugerties residents have over whether the Oklahoma-based Seneca-Cayuga tribe builds a four-million-square-foot, Las Vegas-style gambling casino in their town at the pristine 840-acre Winston Farm? Maybe a fair amount after all, assuming the Ulster County Legislature is listening to them.
That's the promise of New York state senator John Bonacic (R-Mt. Hope), who represents Saugerties and has the ear of Governor George Pataki and the state Senate majority. When Pataki releases his much anticipated legislation in the coming weeks to settle land claims with five Indian tribes, including the Seneca-Cayugas, in return for casinos, it will stipulate that a casino can only be built with the approval of the local county legislature, according to Bonacic, who said he has demanded this proviso and the governor has agreed. If the governor's legislation does not include such a condition, Bonacic said he would insist on an amendment to ensure local control. According to Bonacic, a service agreement between the Ulster County Legislature and the tribe would be required before the process could proceed further.
If the Oklahoma-based Seneca-Cayuga Indian tribe is successful in gaining approval to operate its casino in Saugerties, it would mark the first time in U.S. history that a tribe is permitted to do so outside of the state where its reservation is located. The reason this could happen in view of a 1941 U.S. Supreme Court decision to the contrary involves a tangled web of high-stakes speculation, the promise of lucrative rewards for developers who pair with tribes to build and operate casinos, well-documented cronyism on the part of New York State officials at the highest levels of state government, and the governor's unbridled determination to use gambling revenues to fund state coffers.
The Seneca-Cayuga tribe is proposing to build just under four million square feet of resort/casino/retail space, a 900-room hotel, a 750,000-square-foot convention center, a 20,000-seat sports and entertainment arena, a PGA-level golf course, and five parking garages to accommodate approximately 23,000 parking spaces, according to a May 12 meeting attended by Saugerties town and village officials and Paul Wilmot, son of developer Thomas Wilmot, whose family business Wilmorite, Inc. has an option on the Winston Farm and is partnering with the tribe. The casino would attract some 18,000 visitors daily, virtually doubling the population of Saugerties, and draw approximately one million gallons of water daily, the same amount now used by the village of Saugerties and the Glasco and Malden water districts.
Both Thomas and Paul Wilmot have ignored repeated requests for interviews with Ulster Publishing as have Seneca-Cayuga chief Roy Howard and tribal spokesperson Scott Wood.

PATAKI 'FLIP-FLOPPED'
In 1941, the U.S. Supreme Court ruled that when a tribe abandons its homelands and agrees to relocate to a new reservation, it relinquishes any claims to lands which it may have had outside of that new reservation. In seeking to become the first tribes to gain jurisdiction outside the states where they are based, the Seneca-Cayugas, along with the Oneidas of Wisconsin, two of the five tribes now negotiating land claim settlements with Pataki, can be expected to argue that they never abandoned their homelands but were forced to leave, according to Guy Martin, a partner with Perkins Coie, LLP, a national law firm specializing in the community- and government-side legal and political issues associated with Native American gaming operations. Since the Bureau of Indian Affairs (BIA) has never approved trust lands or a casino for a tribe in a state other than the one where the tribe received federal recognition, it is unclear how the BIA will view such a major shift in the way things have been done.
"A lot of what is going on is posturing," said Martin, who represented the state of Pennsylvania in similar matters involving three tribes threatening land claims. "[Pataki] may have chickened out but I think he may have decided that he would rather have the money than fight." In Pennsylvania, two of the three tribes eventually backed down when the governor there announced he would "take them on," and the Delaware Nation, which did pursue a lawsuit, lost, according to Martin.
In fact, Bonacic conceded this week that Pataki "flip-flopped" on his original opposition to settling claims with out-of-state tribes. In April 2003, Pataki and attorney general Eliot Spitzer, through their attorneys, wrote a letter to the federal government which stated that awarding jurisdiction to out-of-state tribes would "open a Pandora's box." The letter said, in part, "There are a number of out-of-state tribes that assert land claims in New York. If each of those tribes was allowed to assert jurisdictional rights in New York, the potential for inter-tribal disputes and disruption in surrounding communities would increase exponentially."
"The governor flip-flopped; that's exactly what he did," reiterated Bonacic, who believes Pataki has since come to view casino revenues as a means of funding a court-ordered increase in aid to New York City schools of some $26 billion over the next six years.
Pataki withdrew legislation in mid-April authorizing five casinos in the Catskills to settle land claims with the Seneca-Cayugas; the Wisconsin Oneidas; the Stockbridge-Munsees of Wisconsin (whose claim reportedly involves less than an acre of land); the landless Cayuga Nation of New York; and the Akwesasne Mohawks, whose land borders the Canadian provinces of Ontario and Quebec as well as New York State. Pataki spokesperson Todd Alhart has told Ulster Publishing that the state needed to revise the agreements in light of a March 29 U.S. Supreme Court ruling, which held that the New York Oneidas could not purchase property and operate it as tax-exempt holdings without going through the federal land-to-trust process. Federally approved Indian trust lands are considered sovereign, the reason Native Americans are able to operate casinos on them in states where gambling is otherwise illegal.
Sullivan County legislators have already voted by a margin of two to one in favor of casinos there, according to Bonacic, who believes the Seneca-Cayugas are "fishing" to "test the pulse" in Ulster County. "I'm not so sure the political climate is as receptive to casinos in Ulster County," he said.
While the town of Saugerties itself would have no authority over whether a casino could be built in its midst, the Ulster County Legislature would, according to Bonacic. (See accompanying box on the positions of Saugerties' county legislators.) He further said that the governor's anticipated legislation will not permit the state to enter into a compact with the tribe unless the county gives the green light.
Bonacic also said the tribe will have to adhere to the terms of the New York State Environmental Quality Review Act (SEQRA), and all state and federal laws during the permitting process and, if a casino is approved, the construction phase. Indian tribes are exempt from paying property taxes or having to abide by civil law on federally-designated trust lands, but the pending state legislation would require the Seneca-Cayugas to pay property tax on the trust land at Winston Farm excluding the casino-related improvements.
The measure would further establish a community fund - currently, $50 million a year is being discussed - to be split between the host counties based on the number of casinos within their boundaries. This money would pay for such extra expenses as those incurred by the counties and local communities for law enforcement, school districts, housing, transportation and health care as a result of the casinos, he said. In addition, the tribe has offered to pay Ulster County $15 million per year for seven years. The contract would be renewed at seven-year intervals.
The state is under a court order to settle its land claim with the Cayuga Nation. The Seneca-Cayugas are a party to that lawsuit and they have agreed to drop their claims in return for a casino. Following an appeals process, the Federal District Court awarded the Cayugas a $250 million judgment and 64,000 acres of land. The state will have to pay interest on that amount until the settlement is concluded.

OUT OF THE SHADOWS
The home rule provisions being proposed by Bonacic are not inconsequential in view of federal law. According to George Skibine, director of the Office of Indian Gaming in Washington, D.C., land settlements such as the one the Seneca-Cayuga are negotiating would enable a tribe to bypass community sentiment. The Secretary of the Interior normally has considerable discretion in terms of weighing a community's attitude in the final decision regarding a casino, but a land claim settlement rather than the awarding of original homelands requires the secretary "to take the land in trust, making it a mandatory rather than a discretionary acquisition," said Skibine. Assuming Bonacic's home rule provision is included in Pataki's legislation, it appears the casino proposal should never get as far as Washington without the approval of the county legislature.
At least twelve Indian tribes, including the Seneca-Cayugas, are now seeking to move across state lines to take advantage of lucrative gaming markets, according to the March 10 testimony of New York Oneida representative George Halbritter before several state assembly committees. "In most cases, these efforts are being funded by shadowy developers who underwrite the litigation expenses, lobbyist fees, and even the cost of land in exchange for a cut of the profits," he said. "This kind of reservation shopping runs contrary to the intent of IGRA [the federal Indian Gaming Regulatory Act of 1988 that provides a regulatory structure for Native American gaming operations] and well-established federal Indian policies."
The basic idea of IGRA was to protect the governmental rights of tribes over their lands while assuring regulation of casino gaming, according to Halbritter, but, in most cases, the tribes and the developers associated with them are using the threat of land claims to promote casinos in "far-off places." Added the New York Oneida representative, "In these instances, Indian gaming is not being used as a tool by tribes to promote economic activities on their lands; rather it is being used as a tool by developers who simply need Indian tribes as window-dressing to make their casino deals work ... If even one of these deals if approved, the floodgates for this kind of reservation shopping will open in New York and in other states."
At least one U.S. senator, John McCain of Arizona, chairman of the Senate Indian Affairs Committee, is taking the problem seriously. McCain held a Senate hearing on Wednesday morning on the issue of trust lands, where he said, "It is time we review a 17-year-old piece of legislation and ... an $18.5 billion and continuing to grow industry that none of us ever believed would grow to this size when we passed the [IGRA] legislation in 1988."

THAT'S WHAT FRIENDS ARE FOR
Pataki may have other motives swaying his hand in addition to a need to raise money. According to testimony on April 5 before three state assembly committees by Keller George, president of the United South and Eastern Tribes, Inc., a non-profit organization of 24 federally-recognized tribes, the Seneca-Cayugas have a history of pairing with close Pataki associates and fundraisers.
When it was still contemplating a casino at the former Concord Resort in Sullivan County prior to being lured to Saugerties by Thomas Wilmot, who has an option on the Winston Farm, the tribe had entered into a development agreement with Empire Resorts, Inc., a New York-based development company formed out of the restructuring of Alpha Hospitality Corporation in August, 2004. Charles Gargano, a significant Pataki fundraiser, according to George's assembly testimony, was a director of Alpha Hospitality until 1995, when he resigned to head Empire State Development Corporation, the New York State agency that provides assistance to businesses in order to encourage economic investment in the state. Following his appointment, Gargano's investments in Alpha Hospitality were reportedly placed in a blind trust, but his disclosure filings covering his investments from 1997 through 2004 do not include any investment trusts for which he is either a trustee or a beneficiary, stated George.
In 1998, Gargano disclosed that he owned shares in Grand Casinos, Inc., then a Minnesota-based casino development company founded by Dave Anderson, who until recently was the assistant secretary of the Bureau of Indian Affairs, according to George's recent testimony. In late 1998, Grand Casinos merged with Hilton Hotels to form Park Place Entertainment. Less than two years after the merger, in April 2000, Park Place signed a casino development agreement with the St. Regis Mohawk tribe, another New York State tribe with a proposed Catskills casino. Prior to its agreement with Park Place, the St. Regis Mohawks had a development agreement with Catskill Development LLC, another of Empire's predecessor entities.
In November 2004, less than a week after the Seneca-Cayuga tribe signed its earlier settlement agreement with the state for a casino in Sullivan County, Empire Resorts retained Mercury Public Affairs as its New York lobbyist, according to George's assembly testimony. Kieran Mahoney, a former U.S. Senator Alfonse D'Amato's chief-of-staff and a political advisor to Pataki, is a founding partner of Mercury Public Affairs. Thomas Doherty, Pataki's former deputy secretary for appointments and now a Mercury lobbyist, is also lobbying for Empire Resorts.
In a related matter, in April 2002, Stanley Tollman, the former chairman and co-chief executive of Alpha Hospitality Corporation, the predecessor of Empire Resorts, was indicted on 22 counts of bank fraud and tax evasion in federal court in Manhattan for allegedly defrauding several banks of $42 million while restructuring debt accumulated from his failed acquisition and operation of Days Inn, George stated. Tollman is a fugitive from justice and has not been arraigned. Numerous other individuals were indicted and convicted in connection with the matter.
And still one more interesting tidbit from George's testimony: In January of this year, the New York Racing Association announced it would end its betting and broadcasting arrangement with the Coeur d'Alene Casino, which is run by Empire Resorts chairman David Matheson, and nine other off-track betting outlets allegedly utilized by an illegal gambling operation run by the Gambino crime family.
"Indian gaming is supposed to benefit Indian tribes on their own lands," testified George on behalf of the organization of 24 tribes, which operate major casino enterprises in their states on federally-recognized lands. "It is not supposed to make Indian tribes pawns in the hands of developers with dubious professional experience who want to move Indian governments around the country to establish casinos in states where these tribes do not now exist."

A TRIBE APART
It is not surprising that the New York Oneidas belong to George's organization, which has taken a stand against extending jurisdiction to out-of-state tribes. The Wisconsin Oneidas with some 16,000 members are one of the five tribes currently negotiating settlements with Pataki. The New York Oneidas, by comparison, have just 1,000 members, although New York Oneida spokesperson Mark Emery said the Wisconsin tribe uses different standards for determining lineage.
The New York Oneidas also have a specific interest in keeping the Seneca-Cayugas out of Ulster County. The New York Oneidas reportedly have an option on the former IBM recreation facility in Lake Katrine. New York Oneida spokesperson Mark Emery said the tribe has studied the economic feasibility of opening gaming operations in the Catskills. "There has been no definitive statement but they are still saying they are interested," said Emery. "The nation pursues new businesses if they present themselves but makes a practice of not commenting on such dealings," was the terse response from the tribe's leadership in answer to a request from Ulster Publishing for further information.
The Oneidas would appear to have more immediate concerns in terms of their casino operations, however. The tribe is currently seeking trust status for its Turning Stone Casino in Oneida and Madison counties near Syracuse, where the New York Oneidas recently poured $343 million into an expansion, according to Emery. The tribe had been purchasing land and treating it as tax-exempt, sovereign holdings prior to the U.S. Supreme Court decision in March. Bonacic said the reason the governor is not closing the casino down in the wake of the high court ruling in March is the 4,000 jobs that are at stake.
"I don't understand how [the New York Oneidas] could be operating a casino on non-trust lands, said tribal issues attorney Guy Martin of the situation. "They are not allowed to do that but no one is challenging them. The politics in New York State are amazing."

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