New York Governor recuses herself from Seneca Nation casino compact negotiations

Hochul is recusing herself from negotiating a renewal of the Seneca Nation compact because her husband, William Hochul, is senior vice president, general counsel and secretary at Delaware North, the global gaming and hospitality company that has an interest in two racinos that directly compete with the Seneca Nation’s three casinos.

In 2021, Hochul signed an agreement recusing herself from decisions on “any/all matters related to Delaware North.”

The compact negotiation is a unique situation, however, because no one besides Hochul can ultimately sign off on a deal with the sovereign nation.

In an interview Thursday, Seneca Nation President Rickey Armstrong Sr. said he believed the Hochul administration’s position was that two top aides – Director of State Operations Kathryn Garcia and Counsel Liz Fine – would have final authority to negotiate the deal, while Hochul would simply sign the agreement negotiated by her aides.

“I think those two ladies have the cards in their hands, at this point,” Armstrong said.

But Amstrong also said he suspects that Hochul will likely not be able to fully recuse herself from the negotiations.

Hochul’s office says the governor has delegated all negotiations to staff. Hochul chose to recuse herself to a degree beyond what is required by law in an effort to restore faith in state government, her office says.

“I don't know how they react in the state, but I don't sign nothing unless I know what I'm signing,” Armstrong said. “I think she has to know, to some degree, and agree, to some degree. I also think she's pushing the buttons behind the scenes. ... Those ladies (Garcia and Fine) – even though she has confidence in them, and they're calling the shots, and think she’s going to rely on them – at the same time, she has interaction with them, and she probably discusses (the negotiations). I just hope it stays fair on our end.”

Hochul’s press secretary, Hazel Crampton-Hays, added that staff from the Executive Chamber and the state Gaming Commission “have been having substantive negotiations with the Seneca Nation for 11 months. We are fully committed to continuing to meet, discuss and negotiate a compact, and we are confident that the process will continue in a way that best serves New Yorkers."

Armstrong's comments came as prominent Seneca officials, including several former presidents, held a rally on Thursday seeking a "fair compact" near their Seneca Buffalo Creek Casino in downtown Buffalo.

While the Seneca Nation has been meeting with more junior Hochul aides for months, direct discussions between Armstrong, Fine and Garcia began only earlier this month, Armstrong said. The legislative session in Albany is set to end June 8, and Armstrong is hoping that, before then, the Legislature will pass a bill authorizing the Nation to strike a new gaming compact with New York, as required.

The compact was originally signed between Gov. George Pataki and the Seneca Nation in 2002. In exchange for paying a portion of revenues on slot machines and other gaming devices to New York State, the Nation says it obtained the exclusive right to offer these devices west of State Route 14. But the Nation believes that three racinos that have since opened within that area – including two associated with Delaware North – are in violation of the agreement. 

The Senecas began in 2017 withholding from New York hundreds of millions of dollars in slot machine profits, saying the compact did not require the payments to continue. After three federal judges ruled against the Senecas, Hochul froze a Seneca bank account in March 2022. That prompted the Seneca Nation to pay the state nearly $565 million the courts ruled it owed.

The current compact expires in early December. Armstrong said about 80% to 85% of a new agreement has been hashed out, with the outstanding issues the most difficult.

Under the current agreement, the Nation has to pay 25% of the gaming revenue to New York State, a figure Armstrong believes should go down under the new agreement. He notes that the gaming marketplace in the northeast United States has become far more saturated since 2002, decreasing the value of the exclusivity zone.

In negotiating the tax issue, there are carrots that New York could dangle to the Nation. For instance, unlike New York’s casinos, the Nation’s casinos are not allowed to operate in the highly lucrative online sports betting market. Armstrong declined to comment on the specifics of the Nation’s negotiating positions, but said that generally, sports betting was an “attractive business that we would love to look at some point.”