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As a deadline looms for reaching a gambling deal with the Seneca Nation of Indians, Gov. Kathy Hochul’s office tried to give the tribe a new casino near Rochester. It backfired.
By Jay Root
For months, talks over a new casino deal between New York State and the Seneca Nation of Indians have been at an impasse, with the two sides deadlocked over the size of the state’s cut of hundreds of millions of dollars in gambling revenue, and what the tribe would get in return.
With a few precious hours left before state lawmakers were set to break for the year, that suddenly seemed set to change: Gov. Kathy Hochul, who has faced questions over her husband’s ties to commercial gambling interests, tried to fast-track a bill that would have given her administration blanket authority to negotiate a new compact with the Native American nation — and cut out the scrutiny that accompanied the old one.
But now the effort, marked as it was by secrecy and a lack of consultation with virtually anyone besides tribal leaders, has backfired spectacularly. It has alienated local officials and gambling and labor interests that are powerful forces in New York State politics and left the state and the Senecas no closer to a new casino compact.
Although Ms. Hochul’s office kept private all the crucial details of what was negotiated with the tribe, one element in particular proved fatal in the legislature: an agreement to allow the Senecas to build a casino, the tribe’s fourth, in or near Rochester, part of an upstate market that the state’s own study had called “saturated” with gambling options.
The Senate passed the bill nearly unanimously, but, as word spread about the proposed Rochester casino, opposition mounted and the Assembly shelved its vote, sending the negotiators back to the bargaining table.
Legislators in both parties said they had been unaware of what was in the deal they were asked to vote on. Even some sponsors of Seneca-related legislation said they had not been briefed on it by the governor’s office. Neither had Senator Liz Krueger of Manhattan, a Democrat who leads the Senate Finance Committee.
“We sort of got hoodwinked,” she said.
Back-room deals are common in Albany, but few have involved issues as contentious as the location of a new casino. With commercial casinos, such decisions typically require layers of approval and hundreds of millions of dollars in licensing and application fees.
The process for striking a gambling compact with a Native American tribe is different, requiring federal approval but not adherence to the regulations and laws that commercial casino operators must follow.
Federal law also requires the state to provide something of value to the tribe — such as a ban on nearby gambling competition or a new casino — if the state wishes to claim a share of the revenue as part of a new compact. Under the current deal, ratified more than 20 years ago, the state receives 25 percent of the casino’s take from slot machines, one of the steepest rates paid by any tribe in the United States.
The new compact would have provided for a lower rate in addition to the opening of the Rochester-area casino, according to four people with knowledge of the matter, who spoke on condition of anonymity to disclose details of ongoing negotiations.
The failed attempt at getting blanket authority from the legislature was the culmination of nearly a year of talks over a new compact, which would have remained in force for 20 years after the current deal expires in December.
As with the first Seneca compact, billions of dollars in gambling revenue were at stake. But unlike during the earlier negotiations, legislators and voters were given no basic information about what was in the deal.
When details of the deal did emerge, they were panned by Democrats and Republicans alike, especially in the Rochester area, not far from where Ms. Hochul was raised, where she was first elected, and where she still lives.
“How dare someone think they can do something in the city of Rochester and not contact the mayor of the city?” Mayor Malik Evans of Rochester said at a recent news conference. “I have a serious problem with that.”
Rachel Barnhart, an elected member of the legislature of Monroe County, which encompasses Rochester, said she and other Democrats felt “very betrayed.”
“How could she allow something to get this far without informing our community?” said Ms. Barnhart, who opposes a casino. “This is a big deal.”
U.S. Representative Joseph D. Morelle, a Democrat who represents Rochester, said that he is asking the U.S. Interior Department, which reviews Native American gambling compacts, to ensure local input in any new casino deal.
“I cannot remember an instance where something this important could be done with virtually not only no debate, but no knowledge of what you’re even being asked to vote on,” he said.
Others, too, expressed frustration over the administration’s secretive behavior. When lobbyists and lawmakers including Assemblyman Harry Bronson, a Rochester-area Democrat, reached out to the governor’s office for details, they were told that members of the team that negotiated the deal were bound to secrecy under a nondisclosure agreement, they said. (Ms. Hochul’s office later said no nondisclosure agreements were signed as part of the negotiations.)
Any decision involving gambling in New York State is fraught for Ms. Hochul. Her husband, William Hochul, is senior vice president and general counsel for Delaware North, which operates more than 2,000 slot machines in New York and is a major competitor of the Seneca Nation. The relationship led the governor to say she is recusing herself from the compact renewal negotiations.
Even so, Ms. Hochul has taken actions that align with Delaware North’s interests. But her aides have said that the decision to allow the Senecas to build a casino in or near Rochester showed that Delaware North was receiving no special treatment.
Indeed, on June 14, Ms. Hochul’s office made a last-ditch effort to explain the Rochester proposal on a closed Zoom call led by a top Hochul aide, Kathryn Garcia, with Rochester-area Democratic legislators, participants said.
The governor’s team cited a study it said supported the feasibility of a casino near Rochester, participants said — a conclusion that differed from the one reached in a 2021 state gaming commission report that called that market “saturated.” But the administration declined to release the study to the lawmakers, according to one of the legislators on the call, State Senator Jeremy Cooney. Ms. Hochul’s office also declined to release the study to The New York Times.
Mr. Cooney was among the few senators who voted against the bill that would have given the governor broad powers to reach a deal with the Senecas. He said he had suspicions about a new Seneca-run casino in Rochester, an idea that had stirred controversy in 2014, but also called the lack of transparency and failure to communicate about the proposal “alarming.”
After the bill died in the Assembly, the president of the Seneca Nation, Rickey L. Armstrong Sr., issued a statement accusing Ms. Hochul’s staff of deliberately scuttling the deal to benefit Ms. Hochul’s husband’s company.
“Governor Hochul may have recused herself from negotiations, but apparently could not recuse her own staff from the expectation that they prioritize corporate interests, Delaware North first and foremost, over those of a sovereign Native Nation,” said Mr. Armstrong, who previously had sought protections from the Legislature in part over fears that Delaware North might influence the outcome of compact negotiations.
Hochul spokeswoman Julie Wood called the statement from the Seneca president “unfair and untrue.”
“We have negotiated in good faith for months, advocated strongly with the legislature to pass the bill, and worked around the clock to resolve concerns” of all interested parties, she said.
Sen. George Borrello, a Republican whose district includes the main Seneca territories, said the bungled compact deal and Ms. Hochul’s recusal policy, which includes no enforcement mechanism, underscore the need to bring in an “objective third party” to oversee the negotiations. He proposed the independently elected state comptroller for the job.
“It’s the only common sense way to restore any faith in this process,” Mr. Borrello said.
The Assembly ended its session last week, and Ms. Hochul might have to call a special session of the Legislature to approve a new Seneca compact before the old one expires — a power that cannot be delegated despite her recusal policy.
The window for a Seneca-run casino in Rochester, part of the tribe’s original homeland but not a part of its current territories south of Buffalo, might have closed. The tribe has dropped its insistence on getting one, according to the people with knowledge of the negotiations.
Without the new casino, though, the state is likely to see a decrease in revenue from the Senecas’ three existing casinos in Western New York, as the latest plan calls for a reduction in the amount of gambling revenue it receives from the tribe. Seneca leaders have ruled out paying the 25 percent rate in a new compact deal. The shortfall might set up still more clashes over the compact before the next one is signed.
The Senecas and the governor’s office have vowed to work toward a new deal nonetheless.
Jay Root is an investigative reporter based in Albany, N.Y. More about Jay Root
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