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Cigarette Tax Poised to Return, Indians Vote to Hold State Casino Payments

Posted on August 31st, 2010

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A nation of Native Americans that operate a casino has voted to withhold paying casino revenues to the state of New York recently. This decision comes as quite a coincidence after a court resolution has sided with the New York State upholding its decision to impose taxes on cigarettes, to the disadvantage of Native American retailers. Now, it seems that since the retailers have lost the legal battle against the taxes, they feel a need for balance by not giving the state tax revenues from the casino their people operate. A Native American retailer, Carmella Crogan, was quick to criticize the state government by telling it to leave them alone and let them do their business. She adds, “They have no right coming out here whoever comes out here to tax them on our land. They have no right.” Ms. Crogan is one of the numerous Native American retailers who have expressed shock over the cigarette taxes as they continue their business at Smokin’ Joe’s on the Tuscarora Indian Reservation. This comes as customers of the casino were greeted with a $15 raise of the price of a pack of name brand cigarettes.

Indian retailers like Jennifer Amoia said that they feel like they are left in the dark. She claims that they were not given any explanations or any answers to their questions regarding the cigarette tax. Thus, all of them do not understand why prices of cigarettes would just suddenly go up in one day. Another retailer, Rich DiSalvo adds, “I mean, even though they just went up, I’m still saving $50 every time I buy a carton. It’d be a $100 buying them right by my house or it could be $45 here.” Native American retailers may already be getting ready as they are anticipating that as early as Wednesday this week, the State would already require all wholesalers of cigarettes to repay taxes that they should pay for their merchandise. Just last Monday afternoon, a justice for the supreme court of the state, Donna Siwek, has already lifted an injunction that had ceased the state from collecting cigarette taxes. This injunction was in place for four years. For the side of the Indian retailers, their attorney, Margaret Murphy asks, “It does appear that they are one step closer, but the issue clearly is, are they within their constitutional authority to enforce this law?”

On Tuesday, Atty. Murphy will have the chance to ask that question as Federal Judge Richard Arcara will be requested to renew a temporary restraining order that would stop the tax collection. The events of the day reached an explosive turn as the council of the Seneca Nation of Indians voted to stop casino payments to the state. The council claims that the state is in violation of the Gaming Compact agreed between them and the state. The state’s violation rose from its agreement to open a new casino facility in Hamburg, which would be in direct competition to the casinos that they are operating. The Gaming Compact, according to the Seneca Indians, has given them the rights to exclusively operate casinos in the area; thus, allowing competition would be against the agreement. The Gaming Compact, signed in 2001, has been violated according to the Seneca Nation of Indians Tribal Council, and thus, the council feels that they should be in no obligation to pay for future exclusivity rights. The Hamburg Casino would be in competition to the Class III casinos they are currently operating.

Payments made to the state by the Nation’s Seneca Gaming Corporation has totaled to $707.2 million. These payments came in the form of ’slot fees’ that has been agreed upon in the Compact. In 2009 alone, the Nation’s payments reached $58.2 million, and so far this year, payments for January to June reached $32 million. Since the state has sanctioned what the Nation calls “Moxie Mania” gaming in facilities like in Hamburg, the Nation feels that these are gaming operations and devices that are in competition with the facilities they have. Moreover, the fact that the state has approved the Hamburg Casino, Batavia Downs Casino and Finger Lakes Gaming and Racetrack only prove that they are not the exclusive casino operators of casinos in the area and therefore are in no obligation to pay for fees to the state anymore.