Vegas firm could benefit from Pataki casino pact

David Strow

Thursday, June 21, 2001 | 11:02 a.m.

Park Place Entertainment Corp.'s hopes of opening a massive casino in the Catskills of New York may have taken a step forward with Gov. Pataki's casino deal Wednesday, Park Place officials and industry observers say.

The St. Regis Mohawk tribe has spent the last year in talks with federal officials and Pataki's office in an effort to open a Las Vegas Strip-sized casino in Monticello, N.Y., located about 100 miles northwest of New York City. The Park Place-operated casino would be located near Kutsher's, one of the biggest hotels in the area.

Las Vegas-based Park Place will spend at least $500 million on the project. It has proposed building a property with at least 500 hotel rooms, 3,000 gaming machines, 85 table games, 5,000 parking spaces and a 1,500-seat theater.

The Mohawk tribe does not have a reservation at that site. So to build a casino, the federal Bureau of Indian Affairs must take the land and place it in a trust for the benefit of the tribe -- something that hasn't been done in New York before.

Now, however, Gov. Pataki is proposing to use the same method to allow the Seneca Nation to build casinos in the Niagara Falls Convention Center and somewhere in Buffalo.

The New York State Supreme Court has ruled Pataki must take any gaming compacts to the Legislature for its approval. Still, the fact that Pataki is willing to support such a deal is seen as favorable for Park Place.

"I think it's a good thing, because it shows there's precedent for additional Indian casinos in the state of New York," said Kim Sinatra, senior vice president and deputy general counsel for Park Place.

Observers agree with Sinatra.

"If this was to go forward, Park Place would have a heightened chance of moving forward with their Indian casino in the Catskills," said William Schmitt, gaming analyst with CIBC World Markets. "They'll be placing the land in trust (for the Seneca tribe) ... certainly this could be used to (the Mohawks') advantage."

What the Seneca deal isn't seen as is competition, primarily because Monticello is 300 miles southeast of Buffalo and Niagara Falls.

"Buffalo and Niagara Falls are very different geographic markets, and we don't see them as competition," said Tom Gallagher, Park Place chief executive.

Sinatra said Park Place has been involved in the tribe's discussions with Pataki officials to secure a compact for the Sullivan County site.

"They've been willing and negotiating in good faith, so we feel pretty good about it," Sinatra said. "It's going along fine."

If Park Place was successful in landing compacts with New York State and the BIA by the end of this year, it could open the casino by 2004, Sinatra said.

"The 'if' is the very important part," Sinatra said. "We're working as hard as we can to get where we need to be."

Park Place must also be licensed by the National Indian Gaming Commission. The company also faces a lawsuit from Catskill Development, the tribe's former partner. The Mohawks abruptly dumped Catskill in favor of Park Place last year; that company is seeking $2.1 billion in damages from Park Place for alleged interference with a business relationship. That lawsuit is pending in a New York City federal court.

A Mohawk tribal court separately ordered Park Place to pay a dissident group of Mohawks $1.8 billion for allegedly inducing several Mohawk chiefs to break off the Catskill pact. Park Place says this judgment is not enforceable, though the plaintiffs have indicated they will head to New Jersey and Nevada courts to attempt to collect on the judgment.

Tribal gaming is limited in New York, the largest market for the casinos of Atlantic City and Connecticut. Just two tribes now operate casinos in the state: the Oneida Nation, which operates the Turning Stone Casino between Syracuse and Utica; and the Mohawk tribe, which operates the smaller Akwesasne Casino near the Canadian border in northeastern New York. In March, Park Place signed a deal to become a consultant for the Akwesasne Casino. But the Catskills casino would be far closer to New York City than any other New York tribal property.

Pataki's decision to sign the Akwesasne compact without legislative approval led to the Supreme Court's decision barring him from acting alone; Pataki is appealing this decision, but will go to the Legislature for its approval of the Seneca deal.

One key element behind Pataki's support of the Buffalo-Niagara Falls casinos is a desire to revitalize that area's economy. Sinatra said the Catskills face a similar situation.

"The area has suffered from total economic paralysis over the last 20 years," Sinatra said. "It's the same thing ... we're trying to jumpstart an economy that's incredibly depressed, and area that's not dissimilar from an economic situation (to Buffalo). We feel casino gaming can be that engine."

That's driven strong local support for the project, Sinatra said. And that's going to be critical if Park Place hopes to succeed.

"(Pataki) is a politician, and all politics are local," said Shannon Bybee, executive director of the International Gaming Institute at UNLV. "I would expect those people who favor one in the Catskills will start moving, talking more, and pushing more for it because of (the Seneca announcement)."

The Seneca casino may also be an economic opportunity for an established gaming company, as the Seneca tribe has issued a request for proposals in an effort to find a partner for its two casinos.

But Sinatra said that partner won't be Park Place.

"We're concentrating on the Mohawks," Sinatra said. "I don't think they'll have any trouble finding (a partner)."

Harrah's Entertainment Inc. has been the most active Las Vegas company in Indian gaming, and operates numerous casinos nationwide in partnership with tribes. Company officials couldn't be reached for comment on whether Harrah's would be interested in the Seneca casinos.