Backstory on Buffalo Creek Construction Hiatus

28 Aug

It seems that many of our local reporters, bloggers, and commenters feel the suspension of construction at the Seneca Buffalo Creek Casino was related to the ongoing lawsuit between the federal government and the Citizens Against Casino Gambling in Erie County.

While the timing of the announcement might lead one to that conclusion, the Seneca Gaming Corporation announced the following in an August 14th SEC Filing:

In light of greater demands on our available cash, increased competition and challenging economic and capital market conditions, the Company, in consultation with the Nation, continues to evaluate the scope, phasing and timing of its expansion plans on the Allegany and Buffalo Creek territories, and is reassessing the scaling and scope of its clubhouse design for the Seneca Hickory Stick Golf Course. The Company believes that it is early enough in the design and construction process to accommodate appropriate changes to its plans, if necessary.

Evidently, due to poor market conditions, the ongoing mortgage crisis which is causing capital problems for many large scale commercial projects, the Buffalo Creek Casino and expansion of Seneca Allegany have been put on hold.  The SGC warned in its filings that this was a possibility and if the closure was related to the lawsuit, why would they also halt construction on the Allegany project?

This isn’t the only casino project which is facing a funding crunch from financial institutions and a weak economy.  Construction on Boyd Gaming’s $4.8BN Echelon Casino in Las Vegas was recently suspended due to the continuing capital market crunch as was the construction of Pinnacle Casino in Atlantic City.

It is interesting that many would think that the SGC would make an overnight decision to halt construction on a $333MM project based on a court document which is not explicit in its intent to permanently stop the project.  I’m no lawyer, but I did stay at a Holiday Inn Express last night…and it would appear that Judge Skretny does not have the power to order a temporary or permanent closure of the casino.  Nor does the Chairman of the NIGC, it takes a vote of the full board.

In laymans terms, if the NIGC rules that gambling can take place on this sovereign Indian land, it will happen.  According to Judge Skretny, this is Indian Land and according to new regulations put forth by the NIGC prior to the inital order from Judge Skretny, the land is considered eligible for gambling.

From Skretny’s ruling:

“the Secretary, 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.”

It would appear that if the NIGC votes in the affirmative and the Secretary of The Interior and David Paterson all agree, we’ll be playing Pai Gow Poker in 2010 on Fulton Street.  If I’m missing something after reading the decision, I’d appreciate someone setting me straight.  It’s difficult to determine who “wins” when both sides claim victory and our local reporters can’t seem to find an independent legal expert to lend an opinion on the matter.

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