The Interior Department has rejected a proposal to build an Indian casino in the Catskills, which was part of a deal between former Gov. David A. Paterson and the Stockbridge-Munsee Community Band of Mohicans, foregoing its claims to 23,000 acres in upstate Madison County. The Indian nation has roots in New York, and although based in Wisconsin, had agreed to develop the $560 million Las Vegas-style casino near Monticello, N.Y.

Kimberly Vele, president of the Stockbridge-Munsee Community Band of Mohicans, said that the federal decision was a setback for the tribe, the state and the Catskills, adding that the Interior Department had “done an 11th-hour about-face by failing to support and finalize the agreements. While we believe the department’s rationale is weak, we are committed to resolving the issues about the land.”

The Federal decision has come at a time when there are several land disputes between New York State and other Indian tribes and will revive the fight over the land and other Indian related issues, which includes disputes on the status of the electronic slot machines and do not qualify as slot machines under the compact at three Seneca racetracks in an area where the state had granted the tribe exclusive rights.

The Senecas have said that the state had violated the terms of its gambling compact, which gave it exclusive rights to operate slot machines in a seven-county area, turning a blind eye to slot machines operating at the Ganienkeh Territorial Bingo hall in Altona, about 90 miles east of the Mohawk reservation.

The dispute has caused the state is at odds with the more than US $235 million in revenue-sharing payments from the Senecas and St. Regis Mohawks. On the other hand, Gov. Andrew M. Cuomo is demanding that Indian retailers pay excise taxes on cigarettes sold on their reservations to non-Indians, which could generate some US $200 million a year for the state.

Meanwhile, local communities, which receive 25% of the revenue-sharing funds, are upset about the state’s hard-line stance. Assemblyman Joseph Giglio, representing the Cattaraugas County, the Seneca reservation and one of the tribe’s casinos, said: “Some of the host communities are dependent on that revenue to function. There are a lot of jobs in this district created by Native American industries. They’ve been good neighbors and good friends. This is an issue of sovereignty.” (E-02.22.11)

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