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Editorial: Senecas should immediately honor arbitrators’ ruling on casino payments

Setting aside, for the moment, the matter of New York’s incompetence, it’s good news for struggling communities in Western New York the Senecas have been ordered to resume making revenue-sharing payments to Albany and to make good on the payments they have withheld for almost two years.

If the Senecas refuse to comply, the compact empowers the state to take the matter to federal district court. That shouldn’t happen. Too much money flows from these casinos for anyone to be greedy.

Even with the payments, the Senecas are making a fortune. They are rolling in hundreds of millions of dollars because the agreement granted them exclusivity in the region.

The order was issued this week by an arbitration panel that ruled, 2-1, that the Senecas violated the terms of the 2002 agreement by withholding the payments. The nation, which operates casinos in Niagara Falls, Salamanca and Buffalo, took that provocative step by exploiting an oversight in the agreement, which was extended to 2023 but speaks of payments only for the first 14 years.

Given the state’s mind-boggling failure in drafting and reviewing a critical legal document that deals with billions of dollars, it was no sure thing that the arbitrators would rule in the state’s favor, regardless of the compact’s spirit or the intent of its language. New York’s carelessness could have cost it, and the three municipalities, hundreds of millions of dollars.

But the panel did rule that way and, however the Senecas may construe the agreement, neither its spirit nor its intent are doubt. The state granted the Senecas exclusivity in exchange for a cut of the profits. That’s a fact.

The original agreement was set to expire in 2016 but was automatically extended for seven years when neither side objected to its continuation. But, as even the two arbitrators who sided with the state acknowledged, the agreement’s silence about payments after the first 14 years created an ambiguity that the Senecas happily milked.

Nevertheless, the panel’s ruling was well grounded and, to any fair-minded person, inarguable. Citing both state and federal laws, the majority concluded that the seven-year renewal following 2016 “means that the compact was continued on the same terms and conditions that were in place” when the original term ended.

Specifically, the arbitrators said, the Senecas’ obligation to pay the state 25 percent of its annual slot machine revenues remained in force, despite the agreement’s sloppy silence on that issue.

“To conclude otherwise and interpret ‘renew’ to mean that the Nation gets exclusivity without sharing revenue would render several provisions of the compact meaningless, ignore the purpose of the parties’ agreement, challenge common sense and produce a commercially unreasonable result,” according to the decision.

The Senecas got something of tremendous value in exchange for something equaling a fraction of that amount. It’s time to call this to an end, for the Senecas to honor their obligation and for the resulting stresses of their host cities, especially Salamanca and Niagara Falls, to be relieved. It’s time not to be greedy.

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