Hochul's Stadium Swindle

The New York governor’s billion-dollar subsidy deal for a new Buffalo Bills stadium could reward her husband—and is the latest example of the state squeezing the Seneca Nation.

Hochul's Stadium Swindle
New York Gov. Kathy Hochul debates in the race for governor at TV studios, June 16, 2022 in New York City.

New York Gov. Kathy Hochul (D) recently orchestrated one of the biggest taxpayer stadium subsidy deals of all time—using tribal funds to finance the pact, which could ultimately benefit her husband’s employer.

The arrangement doesn’t merely illustrate Hochul’s penchant for prioritizing business interests over marginalized New Yorkers. It is also the latest iteration of New York siphoning revenues from the Seneca Nation and trampling the tribe’s exclusive gaming rights.

In the New York state budget passed in April, Hochul earmarked more than a billion dollars in public funding to build a new stadium for her home city football team, the Buffalo Bills. The deal, struck between Hochul and the billionaire Pegula family that owns the team, will be the second-largest taxpayer contribution to a sports stadium in history. Of the project’s $1.4 billion in projected construction costs, New York’s government is putting up $850 million, or 60 percent of the total. Hundreds of millions of dollars more were inked for upkeep of the stadium throughout its 30-year lease, bringing the public’s total projected expense to be more than $1.1 billion.

Hochul’s household could benefit handsomely from the deal. Her husband, William Hochul, is general counsel and senior vice president at Delaware North, the Buffalo-based hospitality giant that has operated concessions at the Bills stadium for the past 30 years. While the new stadium does not yet have a hospitality vendor attached, Delaware North’s longtime management position puts it on the inside track to score the contract.

During the last primary debate for governor, conservative Democratic Rep. Tom Suozzi and progressive New York City Public Advocate Jumaane Williams repeatedly slammed Hochul over the high price tag for the Bills stadium deal—and the potential profits for her husband’s company. 

What has received less attention is that the arrangement came at a steep cost to the Seneca Nation, a democratic government of 8,000 citizens and several territories located in Western New York. To get the stadium deal done, the Hochul administration forced the Seneca Nation to make a payment of nearly $565 million to the state by freezing the tribe’s bank accounts. The tribe had been holding the money in escrow, arising from a years-long legal dispute with the state over revenue sharing from tribal casinos, and its members decried what they called the state’s “overreaching” actions in freezing their finances. 

“In one breath, New York’s hostile and shameless greed was laid bare for the world to see,” said Seneca Nation President Matthew Pagels in a statement.

Rise of the Racino

The Seneca Nation’s three casinos in Western New York were established by a 2002 gaming compact, signed with then-Gov. George Pataki (R), that was intended to make up lost tax revenue from the financial and social upheaval caused by the 9/11 terrorist attacks. 

Tribal casinos are required to have gaming compacts with states according to the 1998 Indian Gaming Regulatory Act, which also created the federal National Indian Gaming Commission. Under the compact, the Seneca Nation is supposed to send 25 percent of the revenue from its casino slot machines to the state, after payouts but before deducting operating expenses. 

In exchange, the Senecas were granted an exclusive right in Western New York, the area of the state west of State Route 14, to host “Class III” gaming, which encompasses Vegas-style slot machines and table games like blackjack and craps. 

But since then, the state has continually expanded in-person and digital gaming, diminishing the value of the Seneca Nation’s exclusivity rights—while still demanding a hefty cut of the tribe’s gaming revenue.

In January 2004, for example, the first of what were called “racinos” were allowed to open across the state. These racetracks host video lottery terminals—technically, “Class II” machines—that offer a similar playing experience to traditional slots, alongside harness racing betting and casino-like hospitality offerings. 

Three racinos were located inside the Senecas’ exclusivity zone, including Finger Lakes Gaming & Racetrack, owned and operated by Delaware North, and Hamburg Gaming, which is managed by Delaware North.

Then, in 2013, New York voters approved a constitutional amendment that allowed for seven new casinos, which the legislature directed to open upstate and away from New York City. A dispute with the Seneca Nation over the encroachment of commercial casinos—one of which, del Lago Resort & Casino, opened just nine miles outside the tribe’s exclusivity zone—was settled that year with $209 million in gaming earnings retained by the Seneca Nation. 

The Seneca Nation’s gaming income was further squeezed as New York has thrown open its doors to app-based gaming. Last year, then-Gov. Andrew Cuomo (D) signed a bill legalizing online sports betting, as neighboring states had already approved. Since the apps went live in January, sports betting has resulted in $6 billion worth of wagers, bringing in nearly $217 million in tax revenue. The Gaming Commission has also approved digital lottery tickets on mobile devices, which launched this past January using a third-party app. 

In January 2022, the Seneca Nation agreed to drop a five-year battle over the legality of the revenue sharing and resume making payments to the state government, having put the funds in escrow while seeking federal review of the compact terms. The tribe had been sending an average of $117.5 million annually to the state, which was distributed to municipalities. 

The breakthrough agreement, however, was not favored by some tribal members, and was paused by a Seneca Nation Council resolution in February. On March 18, the Seneca Nation received a letter from the National Indian Gaming Commission closing its months-long investigation into the dispute without taking a position on the legality of the revenue sharing.

On March 24, the Hochul administration filed court motions and issued a subpoena asking KeyBank to freeze the Seneca Nation’s bank accounts in order to force the tribe’s hand. The Seneca Nation’s President Pegels said in a statement, “The accounts were unjustly targeted and frozen in an act of blatant aggression by New York State late last week, despite the State’s knowledge that the Nation’s secured account held more than sufficient funds to satisfy any Compact-related matters.”

Days later, on March 28, the Seneca Nation agreed to release the $565 million to the state—much of which Hochul immediately declared would be used to pay for part of the stadium deal, telling the Buffalo News she had “started playing hardball.” The Seneca Nation’s Pegels said, “Governor Hochul couldn’t contain her excitement to boast about using her Seneca ransom money for a new stadium.” 

That so-called “ransom money” had far-reaching consequences—especially since the state claimed that the escrow account used by the Seneca Nation commingled funding in such a way that the freeze impacted community members’ bank accounts more widely. The Seneca Nation sent out a call to the public to not deposit any checks they had received from the tribe—but tribal leaders say that some checks still bounced due to the bank freeze, disrupting payments for basic services.

“When you shut down that account, you shut down the entire nation, you shut down services to the people here, everything from clinics to the education and senior living spaces,” said John Kane, host of the radio show Let’s Talk Native and an activist who lives in the Seneca Nation’s Cattaraugus territory, in a phone interview.

In April, Seneca Nation members and allies rallied in Buffalo’s Niagara Square to protest what the Mothers of the Seneca Nation had called the governor’s “strong-arm coercive tactics.”

“The governor took this money that is supposed to go to things like education—it’s not her own private cash to give to the billionaire Pegulas,” Kane said. 

In response to a question about the use of state law to freeze the tribe’s bank accounts, a spokesperson for the governor said, “Governor Hochul has worked to resolve this issue amicably since the beginning of her administration and receive the funds the state and local governments are owed. The courts have consistently ruled in the state’s favor, and the state has negotiated in good faith and met every hurdle. Time and again, the Nation failed to fulfill their court-ordered obligations. After the Nation once again failed to make payments under the terms of an amicable agreement, the state had to take action to enforce the judgment, and we are pleased to have finally secured these long-overdue funds for Western New York communities.” 

‘A Billionaire Giveaway

Hochul trumpeted the Bills stadium public-private partnership as the biggest-ever construction project in Western New York, with a promise of 10,000 jobs, though economists argue that many of the construction jobs will be short-term and that research has found that sports stadiums “have no consistent, positive impact on jobs, income, and tax revenues.”