May 1, 2002
What's in George Pataki's compact?
by Bruce Jackson
Public space, private deals
Lyndon B. Johnson was notorious for controlling when and by whom things got announced. On more than one occasion he killed a program because someone leaked its existence before he had his press conference on the subject.
I don't know if George Pataki is as vindictive as Lyndon about losing control of distribution of information, but I do know that he is the most secretive Governor we've had in decades. You may remember a little less than a year ago when he called a great-backdrop press conference in Niagara Falls to announce the deal he'd worked out in secret with the Senecas for three new casinos—one in Niagara Falls, one in Buffalo, the third somewhere on Seneca land. Behind him, Joel Giambria, Anthony Masiello, and Niagara Falls officials grinned for the cameras, as if they had been central to the negotiations.
They weren't. Pataki and the Indians formulated the deal and then told everyone else what it would be. Tony Masiello signed on enthusiastically, even though anyone who could count quickly pointed out that Buffalo's share of the take would be far less than what Buffalo would lose. Almost immediately after Pataki's press conference, Masiello and his friend Carl Paladino got the Buffalo Place board to endorse the deal in a telephone vote, even though no one voting had the slightest idea of the long-term consequences for Buffalo’s economy of a gambling joint on Niagara Square.
The draw of casino money—not from running it, which money would go to the Senecas and their operator partners; but rather, from construction of it and associated buildings and the possible land sales—fired up Buffalo's developers and builders. Paladino was instrumental in bringing together a group that came up with a whole new city plan. Cannon Design president Mark Mendel says the heart of that plan is the rehabilitation of Genessee Street, which would help reunify the two sides of Main Street and, more important, would provide access to the waterfront blocked for years by the New York State Thruway. Maybe so. But if you don't have Mendel next to you saying that, if you just look at the designs, the plans, the maps and the drawings, you'd probably conclude that the heart of the plan, the economic driver of the plan, is a casino operation and a new convention center.
A year ago, another group of developers – Statler hotel owner Gerald A. Buchheit, Jr., Atlantic City gambling lawyer and former Foxwood casino president G. Michael Brown and Malaysian billionaire Dato K.T. Lim – pushed for a different configuration. Their preferred casino would go into the Buffalo convention center and the lower floors of the Statler. This year, Brown is representing the Senecas in their negotiations with the State and it’s not clear if there are two potential operators and developers – Buchheit on one side and Brown and Lim on the other – or if they’re all still connected but deploying their forces in a slightly more complex fashion. In any case, Buchheit has taken options on seven downtown properties (at least one of them owned by Paladino) in anticipation of a casino being built on Niagara Square.
Location and configuration will be decided later. First, the Governor and the Senecas have to finalize a deal, and that's what is going on right now.
Pataki’s private compact
On May 14, a maximum of 4561 members of the Seneca nation will go to the polls to vote on a gambling compact worked out between Seneca officials and their representatives and Governor George Pataki and his lawyers. If the Senecas vote to accept it, there will be in place a legal instrument permitting establishment of gambling casinos in Buffalo, Niagara Falls, and on Seneca land.
The document is titled "Nation-State Gaming Compact Between the Seneca Nation of Indians and the State of New York.” It consists of an unnumbered title page, table of contents, and list of appendices), 22 numbered pages of text, and 684 numbered pages of appendices. Typed in the upper left corner of the title page is the phrase "Privileged and Confidential." The page is dated April 12, 2002.
The appendices are largely mechanical and procedural: names of the approved games and how they are played, how employees get licensed, line items that should go into the chart of accounts, tort claims procedures, location of the Niagara Falls facility, and so forth. There are elements in there that the rest of us should worry about, but most of our concerns are manifest in that 22-page statement of the Compact.
Pataki has thus far refused to release the Compact to the public. A few copies are available for inspection on the Seneca reservation, but you have to be a Seneca voter to look at them. Pataki is handling this like a private deal between his office and the 4561 voting Senecas, as if the consequences to the rest of us mattered not a bit, which, from his point of view, they may not.
Calls to Governor Pataki's office the week of April 22 got responses like, "We're still working on it," and "Our version isn't ready yet." That's really odd. Surely the Senecas wouldn't be voting on a compact the Governor's office hasn't finished writing, and people wouldn't be coming up with vote-yes-bribes estimated to range from $500 to $2000 on a document that doesn't exist. Maybe the people taking the call at the Governor's office just forgot that their version and the Seneca version were exactly the same, and that they both were finished long ago. Yeah, that’s it: they just forgot.
The people who don’t get to vote
The most important aspect of the Compact is the participants, or, rather, who is not among the participants.
Page 22 provides for the signatures of the president of the Seneca Nation and the governor of the State of New York. The citizens of Buffalo and Niagara Falls, the two communities the character of which will be radically altered should all of this come to pass, have, according to this compact, no voice in any of this.
The rules of operation and division of the pie are decided by Albany and the Senecas. The Compact gives the Senecas the right to chose where they want their new casinos to go. A location is described for Niagara Falls (it is detailed in Appendix I); no site is specified for Buffalo. The Compact says the Governor will use eminent domain to get the Senecas the land they want in Niagara Falls; it does not specify what weapons of state power he will use in Buffalo.
That is probably because, under current circumstances, they won't need any. Buffalo Mayor Masiello has fallen over backwards in the passionate hope that casino operators will be allowed to ravish the city. He has been like a teenager, desperate for true love to strike, crying "Take me, please take me," without the slightest notion that these fits of submission and passion can have consequences beyond the next five minutes of rapture. If Masiello and Statler owner Gerald A. Buchheit, Jr., have their way (and Joel Giambra and Jack Quinn are hot in line behind them), and if the Senecas want to plant a gambling joint across Niagara Square from City Hall, there will be a gambling joint across Niagara Square from City Hill.
With a governor who designed this deal, a mayor ready to do anything to be able to look out his office window and see the blinking lights of a casino's marquee, and a county executive asking no questions and ready to sign should any of the key documents reach his office, which they probably won't, who is looking out for the rest of us?
The only Buffalo pols who have vigorously and openly campaigned for sanity and reason in this whole bizarre project are John LaFalce, Sam Hoyt and Arthur Eve. And the governor and his lawyers have crafted this deal so they will have as little voice in the result as possible.
It’s not the Senecas who should worry about losing sovereignty
The Senecas were concerned about losing sovereignty. If this Compact sticks, they have nothing to worry about. The only policing or any other kind of oversight within the gambling joint mentioned in the Compact is under the auspices of the Seneca Gaming Authority (SGA). The State has power to check the books, but only to make sure it is getting its contracted slice. All the inspectors are in the employ of the SGA.
The SGA is obligated to "make immediately available to the SGO [State Gaming Officials] all patron complaints, incident reports, gaming violations, surveillance logs, and security reports. If a report indicated that a complaint, violation or incident has not been resolved, the report shall state what remedial steps have been or will be taken to resolve the matter."
That means the SGA polices itself, then reports to the State on how well it likes what it did. There is nothing in the Compact about patrons having the right to make complaints, report on incidents, or suggesting gaming violations to anyone but the operators of the casino.
Indeed, State officials are prohibited from even observing what is going on in the casino unless they wear clearly visible color-coded identification badges. State officials have to pick up the badges when they begin work and turn them in when they're done. They are not allowed in money-counting areas unless "accompanied by SGA personnel, or when SGA otherwise provides permission."
When the State receives notification of violations of the Compact, "The State shall promptly notify the Nation and the SGA of any alleged violations of this Compact with sufficient detail to allow the SGA to investigate and if necessary rectify the alleged violation." The State is pretty much limited to sending notes saying, "Look at this, please."
The boys in Vegas and Atlantic City would think they died and went to gamblers' heaven with a self-policing deal like this.
A new model in cultural studies: unilateral exchange
Section 6(j) Cultural Exchange specifies “The State agrees and understands that the Nation possesses its own unique social customs, traditions, laws, and history. In order to make SGO and State personnel working at, or in conjunction with, a Gaming Facility more aware of the Nation's culture, traditions, laws and history and for purposes of fostering an environment that is consistent therewith, the Nation may conduct periodic cultural seminars in a manner of its choosing for all such personnel. It shall be the policy of the Nation and the State that such employees attend such seminars."
An exchange that surely is not. Exchanges are bilateral, they go two ways; this goes in one direction only. When the Senecas decide the palefaces need cultural conditioning, when the palefaces aren’t getting the point, the palefaces must attend whatever seminars the Senecas decide to offer. Given the massive ignorance of Indian culture in the larger culture, this contractual bit of enforced anthropology is probably a good thing. But we should recognize it for what it is: if the Chinese government, say, insisted that all Americans taking part in commercial or governmental work there take seminars whenever there were disagreements, we'd probably have a name for it other than "cultural exchange."
Crime and cops
"Section 7. LAW ENFORCEMENT MATTERS" has two parts,"(a) Jurisdiction" ("Nothing in this Compact shall affect the law enforcement jurisdiction of the Nation or the State over the Nation's lands as provided by applicable law") and (b) Nation Gaming Operation security personnel ("The Nation Gaming Operation shall provide security personnel to protect each Gaming Facility, its employees, patrons and their property").
When there is violence or other crime in the casino or its attached property—a serious fight in the casino bar, say, or a burglary in an office on an upper floor of the converted Statler—who has jurisdiction? Is it just the Seneca Gaming Authority’s hired guards, Buffalo police, sheriff's deputies, state troopers? What if it's serious violence involving people who work at the casino? Buffalo Police HQ is a few blocks away from the proposed site and the State police are based in Cheektowaga, and they’re mostly going up and down the highway anyway.
What if someone suffers what he or she says is a criminal act inside the gambling joint and goes outside to call the cops on another telephone? What if someone calls to say, "Someone is getting hurt in there and the guards are doing nothing to stop it?" Whose turf is that territory?
Maybe the Senecas and Governor know, but the rest of us don't, and this document doesn't help one bit. Territorial control was one of the key elements in some Senecas’ opposition to this Compact, so the vagueness here may be deliberate: more Senecas will vote for it if they think city, county and state police and other officials can't meddle with what goes on in the casinos and their attached and included offices, ramps, restaurants, bars, hotel rooms, and whatever. That inadequate prose may solve the problem for Pataki and the gambling interests, but it doesn’t do the rest of us any good.
Personal injury (other than to the customers' wallets, which is assumed)
What if someone is injured in the casino? The Compact provides that the Nation Gaming Operation get liability insurance that will "provide coverage of no less than five million dollars ($5,000,000.00) per person and five million dollars ($5,000,000.00) per occurrence, and shall cover both negligent and intentional torts."
But then what? "The Nation agrees that it will establish procedures applicable to the Gaming Facilities to govern the resolution of claims against the Nation Gaming Operations, its employees and agents that are covered by the insurance required.... The procedures that the Nation will establish are set forth in Appendix H. It is understood that the Nation's agreement to this provision is not intended to and does not constitute waiver of its sovereign immunity from suit with respect to any such claim."
What are the implications of that for the rest of us? Can we sue them in state court? What if they decide a case is of no interest?
According to Appendix H, visitors to the proposed Buffalo casino will have far fewer rights at law than visitors to any casino in Atlantic City or Las Vegas.
Claims are to be decided by a tribal Claims Commission, the members of which are appointed by the Tribal Council (H.3.2). “The Nation does not by enacting this Ordinance waive in any respect its sovereign immunity, or that of its agents, in any manner, under any law, for any purpose, in any place.” (H.5.1). Furthermore, “This Ordinance does not create any right, cause of action or benefit enforceable at law or in equity by any person against the Nation, its agencies, its officers or employees, or any other person (H.5.2)
So what happens if you think you got a bad decision and you want to appeal? You go to the same people whose decision you’re appealing: “Appeal from an adverse decision by the Commission may be taken in accordance with such procedures as established by the Nation. Any decision under this ordinance is not subject to review, enforcement or modification in any state or federal court or by any authority outside the Nation. (H.5.3)
Does it get any sweeter than that?
And who pays for the mess?
What about the huge cost of having an enterprise like this in the heart of town? Gambling casinos create a lot of garbage, they have a lot of big trucks delivering stuff, they cause huge law enforcement problems. Who is to pay for all that? Section 11 (d) provides:
“The Parties agree that host municipalities should be compensated to be able to adjust to the economic development expected to result from the Gaming Facilities authorized under this Compact. Consistent with this goal, the State shall reach financial agreements with the host municipal governments, and any payments made pursuant to such agreements shall be made by the State.”
I’d take “adjust to the economic development” to mean, in ordinary English, “cope with the mess an operation like this will surely cause.” First off, it will take certain property off the tax rolls. If Buffalo is like most other economically weak towns that have installed casinos, surrounding property will not increase in value enough to compensate for that loss. The primary moneymakers will be the casino operators, the people who sell property to the casino developers at prices greater than they would otherwise get, and the people who manage to set up or operate business services occasioned but not provided by the casinos: bankruptcy lawyers, hockshops, whores and pimps, etc.
Second, there will be the almost-certain decline in downtown spending of discretionary income in places not hooked up with the gambling joint. Shea’s will take a huge hit, the Market Arcade will probably be killed outright, the restaurants and bars on Chippewa and Franklin will find themselves in direct competition with casino-operated restaurants and bars, which don’t need the same profit margin because they’ll be operating on tax exempt land and they can serve at a discount because they'll be making the really big bucks on those diners and drinkers in the big rooms down the hall.
If you’ve been to Las Vegas or Atlantic City you’ve perhaps noticed that the restaurants and bars and shops in the casinos are crowded, but ordinary restaurants and bars and shops are not. You have gone to restaurants and bars and shops outside the casinos when you’ve been Las Vegas and Atlantic City, haven’t you? Sure you have.
So the State will give the towns something to make up for all of this loss in municipal and business revenue, and general degradation of downtown life. Will it be enough to compensate for the loss? Will it reduce what the towns would otherwise get from the State, just as money from the Lottery has reduced what the State contributes to education? Will, in other words, Buffalo make out or be screwed by all of this?
And how much of the mess do they pay for?
12 (b) is titled State Contribution, but it is in fact exactly the opposite: it is what the State gets, not what the State contributes.
The section details what the casino operators will contribute to the State in exchange for the exclusive right to operate certain kinds of “Gaming Devices” in this kind of gambling joint in this area. Years 1-4, the State gets 18% of the “net drop” (which is the “money dropped into machines, after payout but before expense”). That goes up to 22% in years 5-7 and 25% for years 8-14.
Curiously, there is nothing in the Compact about the State’s share of non-machine gambling, such as baccarat, blackjack, craps, and poker, all of which are described in the list of permissible gambling operations in the casinos.
The Compact says nothing about what Buffalo and Niagara Falls will get because what Buffalo and Niagara Falls gets is not the casino operators’ problem; it’s Buffalo’s and Niagara Falls’s problem. The State gets compensated for the costs it incurs doing oversight (Appendix G) but there is nothing about the City of Buffalo or the City of Niagara Falls being compensated.
Niagara Falls is in such desperate condition it seems ready to accept anything to divert some traffic from the glitz factory the other side of the Rainbow Bridge. I don’t know anyone who has heard anything of Buffalo’s mayor saying to the Governor, “Not in our town unless you make it worth our while.” It’s more on the order of, “I know you’ll love me in the morning. I just know it.”
The real payoffs
I know what Governor Pataki is getting out of this compact: it’s an election year and some Senecas and a lot of people in Niagara Falls will love him for this. As well they should. The gambling guys have been spreading money around Albany for some time, so we have a vague idea about why the Albany pols rolled over so quietly and quickly for the legislation that made this compact possible.
Statler owner Gerald A. Buchheit, Jr., and Atlantic City lawyer G. Michael Brown and Malasian billionaire Dato K.T. Lim, would make out pretty well, as will the owners of the tracts of land that would be bought up to make it all a singular entity, out of public control, out of the tax base, out of anything but the machine that moves gamblers' money to the pockets of gambling operators.
The rest of us? The city of Buffalo? If you all knew Yiddish I’d say, “We get bupkis.” Bupkis is difficult to translate. It means nothing, but nothing with an edge. It's like nothing written in Day-Glo. I guess the closest in English is, We get fucked, that’s what we get.
No wonder George Pataki didn’t want us to see what was in his compact.
P.S.:I wrote three earlier articles detailing some of the games the pols and gambling operators are playing on us, who will really make money on all of this, and how much the city of Buffalo is likely to be harmed if it comes to pass:
Pataki's Running Game (Artvoice 28 June 2001)
Buffalo's Casino: Sure thing or sucker bet? (Artvoice 19July 2001)
Casino Follies: Gambling With Other People's Money (Blue Dog 23 August 2001)
I'd recommend "Two Vastly Different Plans for Buffalo and Niagara Falls Casinos," an unsigned article datelined Atlantic City, N.J., but not dated, that appeared in Gambling News. It's got some interesting details about Brown, Kim, and Buchheit, and the ownership by Carl Paladino and three others of the land they hope to develop.
©2002 Buffalo Report, Inc.