Buffalo's future is in Judge Skretny's hands

This week’s headlines in southern Ohio have an eerily familiar ring to Western New Yorkers. Promoters of casino gambling are promising 5,000 good-paying jobs with benefits to a struggling community. What makes the promise so hot today is that a big employer in Columbus is threatening to leave town and take 6,000 to 9,000 jobs with it.

In a state-wide referendum in 2006, Ohio voters rejected a proposed change in state law to allow casino gambling. But the pro-casino forces are once again mounting a sophisticated campaign that challenges the business establishment, a popular new governor, and the electorate itself to revisit the issue. Ohio voters rejected a call to install a few thousand slot machines in existing racetracks notwithstanding a benign-sounding appeal based on pledges to dedicate the revenue to education. The current campaign has a different focus: job-creation in a state that is losing factory jobs fast.

Be sure to turn the volume down on your computer when you go to www.MyOhioNow.com, which automatically launches a stern-voiced man’s declaiming loudly that every state around Ohio has gambling, that gambling will create thousands of jobs, and that gambling will flood local governments with new revenue, to which the alternative is big tax increases.

We know the words to this song.

Meanwhile, over in Chester, Pennsylvania, which used to be the port for Philadelphia, the Las Vegas casino operator Harrah’s is already operating a huge, sprawling casino complex on what was once the site of a huge, sprawling steel complex. The casino is throwing off enough revenue to plug gaps in Chester’s budget. It’s pumping money to the state, too. In nearby Valley Forge, the convention and visitors bureau of the town once known for struggling Revolutionary War soldiers is petitioning the Commonwealth of Pennsylvania for a Valley Forge casino. Casinos will throw off $3 billion in revenue to Pennsylvania in 2008.

There are casinos in Detroit. There are casinos in West Virginia and Indiana, and of course in New Jersey, with casinos owned by Native Americans in Connecticut and in New York State.

Meanwhile, back in Buffalo, politicians who are just as hungry as Chester and Detroit officials were for new revenues and, for jobs to replace lost industrial jobs, eagerly await US Federal District Judge William Skretny’s decision in the Buffalo casino case, which he will release on July 8. Informal discussions with many senior attorneys who practice before Skretny, and who remember his 2007 “non-decision decision” in the Seneca Gaming Corporation case, suggest that many in the local bar do not expect the judge to rebuke the Bush administration’s own “non-decision decision” that let the Senecas build the Buffalo casino they’re now operating.

The fight here

The Bush administration is arguing that the Senecas can operate a casino on the nine-acre parcel they bought in Buffalo because that parcel has the same status as Seneca reservation land.

The folks who oppose a Buffalo casino say that the nine-acre parcel is absolutely not the same as reservation land. They also complain that Gale Norton, Bush’s former secretary of the interior, ignored the specific intent of the bill sponsored by former Western New York Representatives John LaFalce and Amo Houghton, whose bill compensated the Seneca Nation of Indians for a century of inadequate lease payments from the City of Salamanca, but which was expressly worded so that it couldn’t be construed to enable an off-reservation casino.

There used to be another plaintiff in the case: you, the Erie County citizen. Former County Executive Joel Giambra joined the case against the casino in 2006, arguing that both the State of New York and the federal government had failed to do an environmental impact statement—including an economic impact study—to count up the impact on local businesses, the impact of a host of new social services cases from all the problems that gambling casinos are documented to produce, plus an accounting of lost tax revenues from a tax-exempt casino-retail complex that will draw local customers away from locally owned businesses. In its papers, the Giambra administration cited the Seneca Gaming Corporation’s own plans for a big retail, restaurant, entertainment, and hotel complex—all tax-exempt—that is targeted specifically to local customers whose spending now helps to sustain local public services.

Giambra’s successor Chris Collins withdrew Erie County from the lawsuit, arguing—without any economic impact statement or any other evidence—that the tax-exempt Seneca casino-retail-entertainment complex would be good for the economy.

But that’s not the issue in the case before Judge Skretny. Those are the issues for the community—and, unless Skretny clearly finds that the Department of the Interior acted improperly and that the whole complex currently under construction should stop—the community could still face those issues after July 8.

What to expect

Skretny could find that the Department of the Interior violated federal law and federal administrative procedures as well, and he could order the Department of the Interior to go through the process it skipped—a process that, if the Indian Gaming Regulatory Act is still written in English, would necessarily deny the Seneca Gaming Corporation or anybody else any permission to operate a casino on the nine-acre Buffalo parcel. This is because the nine-acre parcel—even if by some miracle someone successfully argues that it’s got the same status as reservation land—was purchased and put to casino use long after the Gaming Act closed off any new off-reservation casinos. If Skretny so finds, then the current casino would have to close, and the new one wouldn’t be built.

Skretny could also conceivably find that Gale Norton and her lawyers were doing God’s work, and that all is well for casinos in Buffalo Creek Territory, which would please the Seneca Gaming Corporation and its legions of well-connected lawyers and lobbyists—including Republican powerhouse Bill Paxon, the onetime candidate for Speaker of the House of Representatives who held the congressional seat now held by Tom Reynolds. Such a decision would doubtless be appealed if the anti-casino coalition still has the support of the Margaret L. Wendt Foundation, which has spent more than a million dollars underwriting the anti-casino case.

(The lawyers in town refer to this latter potential outcome as “kicking it up” to the Second Circuit Court of Appeals.)

Between those two possible outcomes is a range of potential outcomes, all of them bad if you believe, as the Seneca Gaming Corporation admits that it believes, that the market for its tax-exempt restaurant-nightclub-entertainment-retail-hotel complex is local.

Why negative? Because a tax-exempt business is in a better competitive position than a tax-paying business. A casino-subsidized nightclub can pay twice or three times the fee that a local nightclub can pay a comedian, singer, or band. A casino-subsidized restaurant can serve better or cheaper and still make money. And let’s face it: For a year after the new complex opens, it will thrive on its own novelty, as the restaurant trade migrates from old to new. This could happen even while the casino issue is litigated further.

What many expect is that Skretny’s decision won’t be clear-cut, and that the Seneca Gaming Corporation will go forward with building the big complex, and will generate as much revenue as it possibly can, and draw out the litigation as long as necessary.

Unlike in Ohio, where citizens voted casino gambling down, the people of the State of New York won’t get to vote on whether or not to have a casino in their second-largest city. The New York State Legislature won’t have to vote on the issue.

There will be a political fight, for sure—a tussle over who gets to take credit for the jobs that building and operating the complex will certainly create.

We can expect that politicians will not, however, fight for the opportunity to explain the loss of jobs in existing businesses, and the closure of some of those businesses, as has happened everywhere casino-entertainment complexes have opened.

In sum, though the lawyer language will be complex, the issue is devastatingly simple: Either Skretny’s decision on July 8 will close the casino, or the casino and some version of the tax-exempt retail complex will go forward.

If as a result of Skretny’s decision the current casino closes, pro-casino voices can be expected to lament the further demise of Buffalo.

If Skretny’s decision allows the current casino to remain open, say goodbye to many local restaurants, bars, and nightclubs, and watch occupancy at existing hotels slump, and for the caseloads at Erie County Social Services and at the problem-gambling treatment outfits like Jewish Family Services to grow.

With gas at $5 a gallon, don’t expect out-of-staters to flock to the Buffalo casino. This operation will be just like Seneca Gaming Corporation said in its official documents in 2005: a purely local affair.