Moody’s downgrades Seneca Gaming

When the Seneca are reported, I'm reminded of the community degradation caused that is ignored, reported here:

Not Economic Redevelopment

This summer, doing touristy things, asking tourists why they traveled to Massachusetts with their families, what their home communities were like (and knowing that more people visit Faneuil Hall than Disney World each year according to Forbes magazine), several volunteered that they were from the areas surrounding Seneca Slot Barns. They each described increased crime, gambling addiction, poverty and a general decline in their communities as gambling sucks discretionary income out of the local economy.

What a pity the Gambling Proponents on Beacon Hill aren't telling us that.


Moody’s downgrades Seneca Gaming


The dispute between the Seneca Nation of Indians and New York state over slot-machine operations at Upstate horse tracks has extended to Wall Street.

Moody's Investors Service has downgraded the bond rating of Seneca Gaming Corp. -- the casino operations arm of the Seneca Nation -- from Ba2 to B1. Moody's hinted that it may further cut Seneca Gaming's bond rating if the dispute continues.

At issue is the decision by Seneca leaders to withhold more than $214 million in payments to New York that were due under terms of a 2001 compact negotiated between the state and the tribe. The compact covers the Senecas’ operations of three local casinos: Seneca Niagara Casino & Hotel in Niagara Falls, Seneca Buffalo Creek Casino in downtown Buffalo and Seneca Allegany Casino & Hotel in Salamanca. The three casinos employ more than 4,000 people and attract more than 10 million visitors annually.

Under the terms of the compact, Seneca Gaming is obligated to pay New York 25 percent of its annual slot-machine revenues.

Seneca Gaming has withheld those payments since late last year in protest over the state allowing "Moxie Mania" machines to be installed at racinos at Batavia Downs and Fairgrounds Raceway in Hamburg.

The payments are also being withheld as part of the Senecas’ legal battle with New York over the state’s efforts to collect $4.35 in taxes on each pack of cigarettes sold on Indian territory. The tax, which went into effect on Sept. 1 for all tobacco sales in New York, is being challenged by the Senecas and two other tribes in federal court. New York hopes to collect $110 million with the new tobacco tax.

What has Moody's concerned is an Oct. 6 letter from Peter Kiernan, special counsel to Gov. David Paterson, that went to Barry Snyder Sr., Seneca Nation president, warning that unless the slot-machine revenue issue is resolved by Oct. 20, New York could terminate the compact. Such an action could put the Senecas’ gaming operations at risk.

The Senecas offered last Friday to make the payments directly to the host communities of Buffalo, Salamanca and Niagara Falls instead of New York. The state has not responded to the offer.

Seneca Gaming has $500 million in notes that are due for repayment in 2012, and Moody's analysts said that if the casino operations are terminated because of the dispute, the chance of making that payment would be minimal.

"In the extreme event that a settlement is not reached and the compact is terminated, the SGC's ability to operate a Class III gaming facility would be in jeopardy," Moody's report stated.

Moody's action is being questioned by Seneca Gaming leaders.

"Seneca Gaming Corp. has consistently produced some of the strongest financial results in the gaming industry," said Cathy Walker, Seneca Gaming president and CEO. "Our attention to responsible operations and management, bottom-line performance and the highest levels of customer service have helped set us apart from our peers. We are proud to be one of the strongest and most successful private employers in Western New York, and intend to remain focused on building upon that record."

Seneca Gaming, in its third quarter results, reported a $24.1 million profit with gaming revenues up two percent to $140 million, net slot-machine revenues up 3.2 percent to $126.6 million and non-gaming revenues up 2.8 percent to $26.7 million. The third quarter ended on June 30