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"The Stockbridge-Munsee Casino Proposal And The Potential For An Economic Turnaround In Sullivan County" by Benjamin Kern

The Stockbridge-Munsee Casino Proposal And The Potential For An Economic Turnaround In Sullivan County

by Benjamin Kern

History of the Stockbridge-Munsee Mohican Tribe:

The Stockbridge-Munsee Tribe is a band of the Mohican Indian Nation. An understanding of their history, the circumstances of their arrival in New York State, and the Tribe's subsequent departure are important when examining the present-day land disputes surrounding the Sullivan County casino proposal.

The tribe originated in Massachusetts, but was forced to move shortly after the Revolutionary War when they lost their land to white settlers due to a series of unfair land deals. During the revolution they had befriended the Oneida tribe in New York after Indian tribes that were allied to the British burned their villages. After the war, the Oneida tribe rewarded the Stockbridge-Munsee Tribe with a township in what is today Madison County, New York.

By 1785, the majority of the Stockbridge tribe, at the time approximately 280 individuals, had made the move from Massachusetts to New York. Once established in Madison County, the tribe became committed to the Christian faith, established schools and other municipal buildings, and spread the faith to nearby tribes. Throughout the remainder of the 18th century, the tribe and the State had a cooperative, constructive relationship, with the tribe agreeing to abide by many laws passed by the state legislature during the period, and the state likewise providing resources for the tribe. The Stockbridge Tribe also maintained peaceful relations with the Oneida tribe during the period, from whom they resided only five miles away. Lion J. Miles, 1784-1829 - Part 1 - Establishing a Town, STOCKBRIDGE-MUNSEE COMMUNITY; BAND OF MOHICAN INDIANS, http://www.mohican-nsn.gov/Departments/Library-Museum/Mohican_History/1784-1829-part1.htm.

As the Stockbridge-Munsees entered the 19th century, the problems that would ultimately compel their departure from New York began to rear their heads. The first of these issues was the presence of alcohol and its affect on the tribe. Throughout the late 18th century, tribal leaders undertook steps in order to reduce the presence of alcohol, most notably rum, on tribal lands. Tribal leaders traveled to Albany throughout this period to appeal for strong laws forbidding the sale of liquor to the tribes, and ultimately were successful in 1800 when the state legislature passed an act prohibiting the sale of rum, brandy, gin, or spirits in the Mohican and Oneida lands. During this stretch of time when the fist signs of trouble were beginning to appear, more and more Mohicans from surrounding areas were nonetheless migrating to Madison County where the Stockbridge Indians were living. This migration, along with increased birth rates in the Tribe had brought the population of the Stockbridge-Munsees in New York to approximately 500 in 1816. Id.

The second major problem that began to foreshadow the tribe's departure from New York was the influx of white settlers from eastern parts of the state. After the Revolution, New York State offered bounty lands to war veterans, many of who then sold their rights to land speculators who as a result gained large tracts of real estate in areas surrounding the Stockbridge Tribe. Additionally, during the late 18th and early 19th century, New York began focusing on developing a modern transportation system. Construction of the Genesee Road was authorized in 1791 from Utica to the Genesee River running just north of the Stockbridge Tribe, and the Erie Canal, which was built between 1819 and 1825, allowed for massive economic and demographic expansion in the region. The combination of large tracts of available land and the emergence of modern transportation resulted in a population boom in the region over the early part of the 19th century. The population of Madison and Oneida Counties grew from 1,900 in 1790 to 93,000 in 1825. See Lion J. Miles, 1784-1829 - Part 2 - Pressures on the Tribe , STOCKBRIDGE-MUNSEE COMMUNITY; BAND OF MOHICAN INDIANS, http://www.mohican-nsn.gov/Departments/Library-Museum/Mohican_History/1784-1829-part2.htm.

Mindful of their experience with white settlers in Massachusetts, and having watched neighboring tribes - including the Oneidas - lose massive tracts of land to white speculators, the Mohican leadership and the Stockbridge Tribe successfully stood fast against leasing their land. However white settlers began to surround the tribe, and the increased availability and temptation of liquor, combined with a blatant disregard of the law passed in 1800 banning the sale of liquor to Indians, was taking an increasing toll. Eventually the tribe began to lease their land, starting with small portions to be rented off in order to pay for schools and other municipal needs. Soon after, the Tribe began selling increasing portions of their land to white settlers. By 1818, the Stockbridge Tribe had leased or sold more than 1,800 acres to white settlers and were only seeing the beginnings of the heaviest pressure to relinquish their land. By this time, many of the tribal leaders were beginning to feel that the time to leave New York for open land in the west had come. Id.

One of the tribe's leaders had spent time on the White River in Indiana during the first decades of the 19th century, hoping to obtain a permanent land tract there for the resettlement of the Stockbridge Tribe. When he returned to New York in 1815, he had secured land from tribes in Indiana for relocation of the Stockbridge-Munsees, and many of the tribe's families began preparing for a move westward. In order to raise money for the move, the tribe began a series of land sales with New York State. In August of 1818 approximately 60 to 70 Indians, about one quarter of the tribe, departed for a new life in Indiana. When the tribe arrived at the White River they found that the Delaware and Miami Tribes, who had previously promised the land to the Stockbridge Indians, had since sold the land to the United State Government at the Treaty of St. Mary's. The Tribe petitioned the federal government for the reinstatement of their Indiana lands, and in 1821 the United States paid the Tribe $2,000 in return for the relinquishment of their claim to the White River lands. See Lion J. Miles, 1784-1829 - Part 3 - The Tribe Leaves New York , STOCKBRIDGE-MUNSEE COMMUNITY; BAND OF MOHICAN INDIANS, http://www.mohican-nsn.gov/Departments/Library-Museum/Mohican_History/1784-1829-part3.htm.

After the Stockbridge Tribe's debacle on the White River, tribal leaders formed a delegation to travel to Green Bay with the objective of obtaining new land from the Menominee and Winnebago tribes in what is present-day Wisconsin. In August of 1921 they purchased two million acres along the Fox River. At this point the tribe began to sell their New York lands in earnest with the goal of permanently relocating to Wisconsin. The money earned from the sales was used to finance the move, and tribal members began to depart New York in waves. A group of 30 reached Green Bay in the summer of 1824, and another 50 left New York in 1825. By the 1840s, only one or two Stockbridge Indian families remained in New York, with the last land sale taking place in 1847, thus closing the final chapter of the Stockbridge Tribe's presence in New York. Id.

Legal History of Indian Gaming:

Any discussion of the legal issues surrounding Indian gaming should begin with a focus on the Indian Gaming Regulatory Act (IGRA), the main statute governing Indian gaming today. IGRA was enacted in 1988 in response to the United States Supreme Court decision in California v. Cabazon Band of Mission Indians. In that case, the Cabazon Band, a federally recognized band of Indians, sought declaratory and injunctive relief against the California County in which their reservation was located from enforcing gambling ordinances. The tribe was conducting bingo games pursuant to an ordinance approved by the Interior Department, as well as card games on the reservation. These games were a major source of employment for the tribe as well as their only source of income. The State of California intervened seeking to apply its own regulations of bingo games under state law.

In affirming the relief granted to the tribe in district court, the Supreme Court held that the laws of the state and county were preempted since the asserted state interest in preventing infiltration of the tribal games by organized crime was insufficient to escape the preemptive force of the federal and tribal interests in Indian self-government, including the goals of encouraging Indian self-sufficiency and economic development. Kurtis A. Kemper, Annotation, Preemption of State Law by Indian Gaming Regulatory Act, 27 A.L.R. Fed. 2d 93 (2008). The holding created a broad rule that if the state law's intent is to prohibit conduct, the law is thus criminal, and as a consequence the state may regulate conduct on Indian lands. However if the law is instead regulatory in nature - merely regulating conduct while providing separate criminal sections when the law is violated, the court held such laws do not permit a state to extend its enforcement powers to an Indian reservation. Because California's bingo statute merely regulated conduct it could not be legally enforced against the tribe. California v. Cabazon Band of Mission Indians, 480 U.S. 202, 107 S. Ct. 1083, 94 L. Ed. 2d 244 (1987).

IGRA created three different regulatory schemes for three different classes of gaming, identified as Class I, Class II, and Class III gaming. Class I gaming, which encompasses social games for prizes of minimal value and traditional forms of Indian gaming connected with tribal ceremonies or celebrations, is beyond the reach of both federal and state regulation. Class II gaming, which encompasses bingo and certain card games, can be regulated on Indian lands by states only if those games are prohibited for everyone under all circumstances. Class III gaming, which covers the major forms of gambling seen in typical casino settings (craps, roulette, and banked card games such as blackjack and slot machines) is the only avenue for significant state involvement in Indian gaming under IGRA. Id. IGRA states that class III gaming is lawful on Indian lands only if such activities are: (1) authorized by an ordinance or resolution of the Indian tribe, (2) located in a state that permits such gaming for any purpose by any person, organization, or entity, and (3) conducted in conformance with a tribal-state compact entered into by the tribe and the state. Indian Gaming Regulatory Act, 25 U.S.C.A. § 2710(d)(1)(1988).

The third provision involving the tribal-state compact is the key provision Congress created in order to balance the competing interests of the federal government, states, and the tribes. A tribe seeking to conduct class III gaming on their land must request that the state negotiate with them in order to develop a tribal-state compact. The state must negotiate in good faith to develop a tribal-state compact, and any compact agreed to is subject to approval by the National Indian Gaming Commissioner - the head of the National Indian Gaming Commission, an independent federal regulatory agency within the Department of the Interior created by the Act. By allowing to states to get involved in the compacting negotiations, IGRA allows states to have input into how class III gaming will be conducted.

However, if the state refuses or fails to negotiate in good faith, a tribe can circumvent the state by bringing suit in federal court. In federal court the parties are ordered to conclude a compact within a 60-day period, and if the parties do not agree to a compact, mediation is required. At that point if the state still does not agree to negotiate in good faith or invokes its 11th Amendment immunity, the negotiation process will exclude the state, and the Secretary of the Interior and tribe will decide upon procedures for conducting class III gaming. See Kemper, supra, at 93.

The provision of IGRA most applicable to the Stockbridge-Munsee Tribe's land claims in New York and their Casino aspirations involve section 2719 of the Act: gaming on lands acquired before October 17, 1988. Indian Gaming Regulatory Act, 25 U.S.C.A. § 2719 (1988). This provision establishes a general prohibition against gaming on lands acquired by the Secretary of the Interior in trust for the benefit of an Indian tribe after October 17, 1988. The provision does not apply if the lands are located within or adjacent to the boundaries of an already existing reservation, if the lands are in Oklahoma (and satisfy particular requirements), or if the lands are within the particular tribe's last recognized reservation within the State. Id.

However, the two main exceptions are found in subsection B of section 2719 of IGRA. The first of these exceptions is known as the "two-part determination" and provides that the prohibition on gaming will not apply if "the Secretary (of the Interior), after consultation with the Indian tribe and appropriate State and local officials, including officials of other nearby Indian tribes, determines that a gaming establishment on newly acquired lands would be in the best interest of the Indian tribe and its members," and "would not be detrimental to the surrounding community, but only if the Governor of the State in which the gaming activity is to be conducted concurs in the Secretary's determination." Id. (emphasis added). The successful utilization of the "two-part determination" exception has been limited, however. The exception has succeeded only five times resulting in three casinos, and in the eight-year period of the Bush administration there were only two approvals total.

The second main exception, which applies directly to the current Stockbridge-Munsee situation in New York, provides that the prohibition on gaming will not apply if "lands are taken into trust as part of - (i) a settlement of a land claim, (ii) the initial reservation of an Indian tribe acknowledged by the Secretary under the Federal acknowledgment process, or (iii) the restoration of lands for an Indian tribe that is restored to Federal recognition." Id.

There are two further legal developments, one administrative and one at common law, that must be addressed in order to give a complete picture of the current legal framework of Indian gaming. The first is the issue of "commutability," which was a de facto policy adopted by the Bureau of Indian Affairs in a 2008 memo which stated that tribes could develop casinos on land off their reservations only if it was within "commutable distance." The term "commutable distance" was not defined in the memo, however in testimony to Congress, Bureau of Indian Affairs officials indicated that 40 miles was the farthest a tribe could go from its reservation in developing an off-reservation casino. The day after the memo was issued the Bureau rejected 11 off-reservation casinos, including the St. Regis Mohawk Tribe who was in the final stages of approval for their own Catskill casino project. However in 2011, Assistant Secretary of Indian Affairs Larry Echo Hawk, also the head of the Bureau of Indian Affairs, rescinded the 2008 memo, ending the strict commutability rule. See Gale Courey Toensing, Bush-Era Commutable-Distance Gaming Rule Nixed , INDIAN COUNTRY TODAY MEDIA NETWORK, Jan. 19, 2011.

The final development, which unlike the commutability issue is still a very relevant and substantial focal point in Indian gaming law, is the consequences of the Supreme Court's ruling in Carcieri v. Salazar . 555 U.S. 379, 129 S. Ct. 1058, 172 L. Ed. 2d 791 (2009). The Court in Carcieri held that to qualify for the benefits of Section 5 of the Indian Reorganization Act (IRA), which authorizes the Secretary of the Interior to acquire and hold land in trust for the purpose of providing land for Indians, tribes must show they were under federal jurisdiction at the time the IRA was enacted in 1934. See generally Sarah Washburn, Distinguishing Carcieri v. Salazar: Why the Supreme Court Got It Wrong and How Congress and Courts Should Respond to Preserve Tribal and Federal Interests in the Ira's Trust-Land Provisions, 85 WASH. L. REV. 603 (2010).

In other words, the Court held that if a tribe was not federally recognized before the IRA was passed in 1934, that tribe does not qualify to have the federal government take land into trust for it. The obvious consequence of the Carcieri decision is that because tribes recognized after 1934 cannot have the federal government take land into trust for them, pursuant to Section 2719 (discussed above) which requires the Bureau of Indian Affairs to take land into trust to authorize off reservation gambling, these tribes cannot build casinos off their reservation. Since the Carcieri decision in 2009, there has been considerable discussion about Congress passing a "Carcieri Fix" to remedy this limitation written into the statute by the Court. However, this fix has not yet happened, and because of competing interests both within the Indian gaming community and the gambling industry generally, it is uncertain whether Congress will take action.

Stockbridge-Munsee New York Land Claims and Casino Proposal:

Today the Stockbridge-Munsee tribe calls Bowler, Wisconsin, home - where its 22,000-acre reservation is located. The tribe owns and operates a successful casino called the North Star Mohican Resort Casino on their reservation in Wisconsin. The tribe has long held a land claim to 23,000 acres in Madison County where they resided in the late-18th and early-19th century after leaving Massachusetts and before their departure to Wisconsin. The land claim is based on New York's acquisition of the lands, which have been ruled as unconstitutionally acquired from the tribe without United States Senate ratification. Gale Courey Toensing, Seneca Upset Over N.Y. Casino Agreement , INDIAN COUNTRY TODAY MEDIA NETWORK, Jan. 26, 2011.

In November 2010, during the waning days of Governor Paterson's administration, the Administration, Tribe, Madison County, and the Town of Stockbridge brokered a deal settling the claims in New York. The land claim settlement agreement ended the Stockbridge-Munsee's claim over the 23,000 acres of land in Madison County by transferring rights to 1.84 acres of land in Madison County, and 330 acres of land in Sullivan County to be conveyed to the Federal Government, thus allowing the land in Sullivan County to be taken into trust on behalf of the Tribe. Press Release, Executive Chamber Governor David A. Paterson, Governor Paterson Announces Land Claim Settlement Agreement , Nov. 22, 2010.

The deal also provided for the development of a Class III gaming complex on the land to be taken into trust in the Town of Thompson, which would include a hotel, restaurants, and retail outlets. The project was predicted to generate more than $1.3 billion in economic activity during the construction phase, and once operational - had projections of $900 million in revenue annually for the State economy. The gaming complex was also estimated to create over 6,700 direct and indirect jobs for the region. In additional to the provisions above, the Tribe agreed to comply with all requirements of a law passed by the State Legislature in 2001 authorizing up to three Indian casinos in the Catskills, which included the payment of 25 percent of slot revenue to the State. The Tribe also entered into a local services agreement with local municipalities in Sullivan County under which they would provide $15 million per year to mitigate any potentially adverse impacts from the project. Press Release, Executive Chamber Governor David A. Paterson, Governor Paterson Signs Economic Development Compact to Revitalize Catskill Region, Nov. 22, 2010.

In February 2011, the federal government rejected the proposal, which nullified the deal reached late in the previous year between the Paterson Administration and the Tribe. The Interior Department, the agency overseeing matters involving tribes, turned down the proposal for the casino stating that it had concerns whether the gambling compact agreed to and signed by the Tribe and the State, along with the related land settlement, complied with federal law. Charles V. Bagli, Plan for Indian Casino in the Catskills Is Rejected, N.Y. TIMES, Feb. 18, 2011. In the letter to the Tribe, Department of Interior Solicitor Hilary Tompkins said the agreement could not be approved because Indian Trade and Intercourse Act requires congressional consent when a tribe seeks to relinquish ownership of land that has been subject to dispute, and that Department of the Interior approval of the agreement would not have been sufficient to validate the transfer of ownership of Indian-owned land. The letter stated that a specific act of Congress would have to pass for the settlement to be approved. Caitlin Traynor, Stockbridge-Munsee Band of Mohican Indians Hasn't Given Up On Casino Plan; Tribe Still Owns Madison County Land , THE ONEIDA DAILY DISPATCH, Mar. 9, 2011.

After appeals from the Tribe, state, and federal officials, it was reported in April 2012 year that the Stockbridge-Munsee's casino plan is under reconsidation. Interior Department officials reportedly notified local governments that they resumed the environmental review of the proposed casino. Victor Whitman, Feds Again Considering Bridgeville Casino Plan, THE TIMES HERALD RECORD, Apr. 27, 2012. Having twice been written off as dead, first in 2008 when the Bush Administration commutability policy went into effect, and then after the 2011 Interior Department rejection of the plan, the Stockbridge-Munsee casino plan once again had some life injected into it.

Analysis of Casino Impact - Should the Proposal Move Forward?

An analysis of the Stockbridge-Munsee casino proposal should begin by recognizing some of the underlying forces behind the push for approval of the casino plan and the reasons why there is broad support for the project among elected officials. The most obvious catalyst for the project is Sullivan County's economy, which has faced a long period of economic decline in recent times and is in desperate need for economic revitalization.

Sullivan County was for a long time a destination for New Yorkers looking for an escape from city life. During the tail end of the 19th century, the first vacationers began to flock to the county to the enjoy country life and small hotels began to pop up to accommodate them. Soon after, the era of the seasonal influx of New York City-based Jewish immigrant vacationers had begun. Jewish immigrant families began buying up struggling hotels from the prior era, which provided the Jewish vacationers, who were unwelcome in many other resort areas, a place to spend their free time in the company of other Jews. Jewish immigrants began to build larger hotels in the cities of Fallsburg, Liberty, and Livingston Manor ushering in Sullivan County's golden age of the Borsch Belt. By the 1940's over 300 hotels were in operation in the county and by 1953 the New York Times reported there were 538 hotels, including two of the most famous resorts in the world at the time - Grossinger's in Liberty and The Concord in Kiamesha Lake. The "Golden Age" of the Borsch Belt in Sullivan County would last for about 25 years until approximately 1965. John Conway, County History; Timber, Tanning and Tourism , SULLIVAN COUNTY HISTORICAL SOC'Y (2009).

Many factors can be attributed to the decline of the Catskill resorts in Sullivan County. The growth of the suburban lifestyle in the greater New York City area and the invention of air condition diminished the necessity for New Yorkers for find refuge in the Catskills during the summer. In addition, the proliferation of inexpensive air travel also opened up many more options for middle and working class people looking to vacation. Finally, Jewish families became more assimilated over time. By the 1970s, the great Borsch Belt hotels were shuttered and Sullivan County had fallen on hard economic times - and in many ways has never recovered. Id.

The evidence of this economic decline can still be seen today by putting Sullivan County's economic indicators are put side-by-side with both New York State as a whole and the neighboring counties. Sullivan County's per capita income at $23,422, and median household income at $48,103 fall far below the New York State average which stands at $30,948 and $55,603 respectively. The county's median household income disparity is even starker when compared with neighboring Ulster and Orange Counties, which have a median household income of $57,584 and $69,523, respectively.

As discussed earlier, the casino project in Sullivan County was projected to have a major impact on the local economy, with initial projections estimating the project to generate more than $1.3 billion in economic activity during the construction phase, and projections of $900 million in revenue annually for the state economy once operational. That is in addition to an estimated 6,700 direct and indirect jobs to be created for the region. These types of numbers could spark an economic sea change in a county with only approximately 48,000 working age residents and an unemployment rate of 9.3%. Id.

The two biggest political players with regard to the Stockbridge-Munsee casino project are State Senator John Bonacic (R,C - Mount Hope) and United States Senator Charles Schumer (D-NY), both of whom have been active, vocal supporters of the project. Bonacic, a powerful member of the State Senate, has long advocated for casino gaming as a solution to his home county's economic problems. Senator Bonacic, Chair of the Senate Judiciary Committee, was also appointed as Chair of the State Senate's Racing, Gaming, and Wagering Committee in early 2011. Mid-Hudson News Network, Sen. Bonacic to Head Gambling Oversight Panel, THE DAILY FREEMAN, Jan. 13, 2011.

Bonacic's initial efforts had been to focus on moving the Stockbridge-Munsee casino proposal through the current framework of tribal, state, and federal cooperation. He was perceived to be a major player in the 2010 landmark deal brokered between the Paterson Administration and the Stockbridge-Munsee's. However since the 2011 rejection of that deal by the Interior Department, the Senator has shifted to a more parallel focus - continuing to work on the tribal gaming approach while also seeking to amend the State Constitution to allow for casino development by non-tribal parties. James M. Odato, Scoring Casino Game, ALBANY TIMES UNION, Sept. 5, 2011. In March 2012, with the support of Governor Cuomo, Bonacic sponsored an agreement to begin the process of amending the state constitution to allow casino gaming in New York. The original agreement called for no more than seven privately owned commercial casinos in the state. Press Release, Executive Chamber Governor Andrew M. Cuomo, Governor Cuomo, Majority Leader Skelos, and Speaker Silver Announce Landmark Agreement to Begin Process of Amending State Constitution to Allow Casino Gaming in New York , Mar. 14, 2012. The State Assembly and Senate passed the amendment the same month. James M. Odato, Bonacic: It's Possible to Boost Casino Number, ALBANY TIMES UNION CAPITOL CONFIDENTIAL BLOG, Aug. 15, 2012. The constitutionally required second approval by the legislature took place at the end of the 2013 legislative session, thus paving the way for a constitutional referendum to be put to the voters in November. The final agreement asks voters to authorize as many as seven new casinos, although for the next seven years only four will be developed in either the Catskills, the Albany area, or the Southern Tier region. Thomas Kaplan & Jesse McKinley, Casino Referendum Planned by New York Leaders, N.Y. TIMES, June 19, 2013.

A final potential hurdle that stood in the way of the referendum was a lawsuit brought in the fall of 2013, objecting to the positive descriptive language in the measure's ballot abstract, which describes the referendum as "promoting job growth, increasing aid to schools and permitting local governments to lower property taxes." The State Board of Elections approved the language in late July after consultation with the Governor's administration. This suit was dismissed just weeks before Election Day by the State Supreme Court which said the legal challenge over the measure's wording was "untimely and lacking in legal merit." Jesse McKinley, Judge Rejects Suit to Block Vote on Casinos, N.Y. TIMES, Oct. 16, 2013.

Senator Schumer has also been consistently outspoken in his desire to see casino gaming in Sullivan County, stating that the Stockbridge-Munsee project "would be a huge boost for the economy that will include job growth and tourism, in a region that has been struggling for decades to get back on its feet." Danny Hakim, Paterson Is Set to Approve Deal on an Indian-Run Casino in the Catskills, N.Y TIMES, Nov. 16, 2010. Schumer, like Bonacic, was seen as a major player in the 2010 negotiations between Governor Paterson and the Stockbridge Munsee's. More recently, Schumer was a crucial advocate in the reversal of the commutability rule, having urged the Obama Administration to change the Interior Department policy adopted during the Bush years. Scoring Casino Game, supra . Because of his outspoken support for the Stockbridge-Munsee casino project in Sullivan County, the Senator has taken significant heat from the Oneida Indian Nation and other Western New York tribes who see his work as "backroom deal-making" that violates current state and federal law. Mid-Hudson News Network, Oneida Indian Nation Raps Schumer On Casino Deal, THE DAILY FREEMAN, Feb. 7, 2011.

It is beyond debate that Sullivan County has been a shadow of its former self for decades and that any attempts up to this point to inject life into the County economy have fallen woefully short. A cursory glance at the County's economic indicators show that it is underachieving economically both compared to the State as a whole, and its neighboring counties. Those with ears closest to the ground and with the largest stake in the county's success have wholeheartedly bought into the idea that the Stockbridge-Munsee casino is the solution to the county's economic woes. However with the proliferation of casino gambling in the Mid-Atlantic states and New England, it is worth reflecting on whether the construction of a casino in Sullivan County is the panacea that it is widely perceived to be.

Similar to real estate, an important determining factor for the value of a casino is location. Likewise, the most important ingredient in the potential success of the Stockbridge-Munsee casino is its proximity to the New York City. The Town of Thompson, where the proposed casino is to be located, is approximately 90 miles north of the City. In recent history the closest major casinos to New York were Foxwoods and Mohegan Sun Casinos in Connecticut, and of course Atlantic City - all of which are approximately 140 miles away, putting a casino in Thompson in relatively advantageous position. However there has been a recent proliferation of legalized gambling on the East Coast with states such as Delaware, Pennsylvania, and Maryland having opened their borders to casino development in the last five years. See Howard Stutz, Analysts See East Coast Gaming at Tipping Point , CASINO CITY TIMES, Nov. 26, 2012. Today the closest casinos to New York City are in Pennsylvania - the Sands Casino in Bethlehem and the Mount Airy Casino Resort in Mount Pocono, both approximately 80 miles away.

This recent proliferation is in many ways just the tip of the iceberg. Maryland could have six Las Vegas-style casinos in the near future, including a $400 million gambling hall in downtown Baltimore and an $800 million resort south of Capitol Hill on the Potomac River. Pennsylvania gaming regulators are investigating six separate offers to build a $500 million to $700 million hotel-casino in downtown Philadelphia, and Massachusetts authorities are weighing casino proposals for Boston and Springfield. Id. While none of these projects have broken ground yet, gaming experts are already discussing whether the northeast has reached, or will soon reach a casino saturation point. According to Deutsche Bank analyst Andrew Zarnett, revenue and cash flow from older casinos will likely decline as new resorts open, with the number of slot machines having grown rapidly along the Atlantic Coast just in the past five months.

The major problem analysts see with the proliferation of major casinos in the region is that these facilities increase the gaming supply, but do not necessarily add more gamblers - and the numbers have begun to support this proposition. Zarnett has calculated that for the 12 months that ended September 30, 2012, when factoring out revenues from casinos that opened in the past year, the Atlantic Coast casino market revenues declined 3.4 percent for existing operators. Atlantic City has been hardest hit as they try to fend off new competition from neighboring states. Between 2006 and 2011, gaming revenues have fallen 38 percent, from $5.3 billion to $3.3 billion. If all casino projects currently being proposed are ultimately built, Zarnett believes the Northeast and Atlantic Coast market will increase its number of slot machines and gaming tables by almost 18 percent over the next five years. Id.

Over the period of time from when the Stockbridge-Munsee's first began talks with the state and federal governments to acquire land in trust in Sullivan County to where we stand today, seemingly every option has been put on the table - including no casino at all. Although the market for gaming in the northeast corridor has become very competitive in just the last few years, and only stands to become more competitive, the greater New York City market remains relatively untapped. Even when taking into account new plans to build casinos currently in place and moving forward, a Sullivan County casino would stand shoulder-to-shoulder with the Bethlehem and Mount Airy casinos in eastern Pennsylvania as the only casinos within 100 miles of New York City. While the "golden age" of seasonal vacationing in the Catskills is long gone, weekend getaways to the Catskills are very much still in the DNA of New Yorkers and a large-scale casino less than an hour-and-a-half north of Manhattan could prove very successful.

The major decision that Governor Cuomo and the New York State government has in front of them is how they will move forward if the gates to non-tribal gaming are opened in the state. This discussion becomes moot of course if the general public rejects the gaming referendum when it comes up for a vote this November. If the constitutional amendment is ultimately approved it will have major implications on the Stockbridge-Munsee casino proposal.

The approval of non-tribal gaming in the context of the current framework negotiated by the Governor, Legislature, and the various third parties, will almost certainly mean the development a major casino in either Ulster Country, Sullivan County, or both. If this were to happen it would essentially beat the Stockbridge-Munsee Tribe to the punch, and would ostensibly kill the Tribe's interest in the development of a casino on their land in Sullivan County. All stakeholders will have to take a wait-and-see approach for now, with the Stockbridge-Munsee tribe standing to reap the greatest benefit from a situation where the constitutional referendum fails and the casino project is approved by the Interior - and non-tribal casino companies and the New York State tax roll standing to reap the greatest benefit from passage of the referendum, and a second rejection of the Stockbridge-Munsee project by the Interior Department.

Benjamin Kern is a graduate of Albany Law School currently living in Albany, N.Y. Benjamin grew up in Ulster County and lived in Germany before attending American University, where he majored in U.S. Foreign Policy. Benjamin's experiences in both Washington and Albany include work at the House of Representatives, the Department of Justice, the law firm Jones Day, the Cuomo Administration, and most recently the New York Democratic Senate Campaign Committee.

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This page contains a single entry from the blog posted on November 13, 2013 4:12 PM.

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