Lockport Union-Sun & Journal Online

May 19, 2013

HOPKINS: Cuomo's Oneida deal not so great

Lockport Union-Sun & Journal

Lockport Union-Sun & Journal — There was big news from Albany last week when Gov. Andrew Cuomo announced a casino agreement had been reached with the Oneida Indian Nation. Cuomo and Ray Halbritter, an Oneida Indian Nation representative, naturally spoke very positively about the deal.

But, as they say, the devil lies in the details.

Under the agreement, the Oneidas have “exclusive gaming rights” across a wide swath of Central New York. Vernon Downs, three miles away from the Oneida-operated Turning Stone Casino, will still keep its racino, but it will not expand. The Oneidas have dropped land claims that have been in various forms of litigation since the 1970s.

New York state will receive one quarter of the Turning Stone casino’s net revenue from slots, which is expected to net the state $50 million annually. Some of that money will end up – rightly so – in the coffers of Oneida and Madison counties.

The big part of this deal is the Oneidas have agreed to charge prices for cigarettes that are comparable to non-Indian merchants.

I’m not sure who’s fooling who here. Is Gov. Cuomo fooling us or are the Oneidas fooling Cuomo.

Everything in this deal sounds like a win-win situation. The Oneidas get exclusive gaming rights, the state gets $50 million per year and costly litigation connected to land claims comes to an end.

But then there’s the cigarette portion of the agreement. The idea in this portion of the agreement is that the playing field will be leveled for non-Indian merchants, who say they can’t compete against the tax-free Oneidas. Note that the Oneidas will charge prices comparable to non-Indian merchants. That doesn’t mean that they are going to suddenly start paying cigarette taxes to New York state.

Naturally, Cuomo’s administration left out that pesky little detail.

Why is it “pesky?” Because what the Oneidas will do is raise their cigarette prices to the levels charged by merchants who pay the state sales tax. But the Indians will simply pocket the additional revenue.

New York state and local cigarette taxes are $4.35 per pack. That’s $43.50 per carton. How many cartons do the Oneidas sell in a year? I don’t have an answer for that, but if it were 100,000 (that would be a realistic 274 per day) then we’re talking $4.35 million.

Suddenly, that $50 million deal is down to $45 million. And New York state won’t see a penny of it.

The Oneidas pulled a similar play with gasoline tax. Merchants complained that they couldn’t compete with gas prices that were 30-35 cents cheaper at Oneida-owned facilities. The state (run at the time by George Pataki) put pressure on the Oneidas. Finally, the Oneidas agreed to raise their prices. They pocketed the difference.

Who lost out? The residents. We always do.

In the meantime, there’s been a new development with the Oneidas. According to Utica television station WKTV, the Oneidas plan to produce and sell more of their own brand of cigarettes by mid-September. Of course, they’ll also stop purchasing name-brand cigarettes that carry the New York state sales tax.

“The federal law preempts state efforts to tax products manufactured and sold on Indian nations,” said Oneida Indian Nation C.O.O. Peter Carmen.

Well played.

This announcement means that the agreement to charge similar prices for cigarettes is meaningless.

I think we’ve all been fooled.

Put that in your pipe and smoke it.