Hopes Rise With Casino at Niagara Falls

For years the Niagara Falls Convention Center was a squat eyesore in the middle of town, a symbol of steady economic decline in a resort city that once billed itself as the honeymoon capital of the world.

But on New Year’s Eve, the old arena with a leaky roof will be transformed into a glittering, Las Vegas-style casino, the largest Indian-run gambling emporium to open in a U.S. city.

Niagara Falls is betting that slot machines and roulette wheels will spur the revival that decades of redevelopment failed to achieve. And it hopes to fire a warning shot across the river, where a rival city with a similar name -- and a bustling casino -- is raking in millions.

“People never thought a casino would happen here, because we’ve seen so many plans go up in smoke,” said Brian Potter, a Niagara Falls waiter who, like many, has grown accustomed to a sense of urban failure. “But now it’s going to open and the feeling is, let’s give it a shot. Have you got any better ideas?”

The story of how Niagara Falls wagered its future on gambling shows the lengths to which a declining city will go to jump on the Indian gaming bandwagon, a booming $14-billion industry. And it highlights a new willingness by states to shore up their sagging economies with profits from Indian casinos.

As gaming fever grows, more tribes are attempting to gain a foothold in or near heavily populated areas. And even though the Niagara Falls case is something of a quirk -- because of special federal legislation passed on behalf of the Seneca Indian Nation that owns the casino -- it is being closely watched nationwide as a harbinger of similar deals elsewhere.

In West Sacramento, for example, the Upper Lake Pomo tribe has been battling to put a casino on a 67-acre plot more than 80 miles from its ancestral home on the shores of Clear Lake. Other tribes throughout the nation also are eyeing urban casinos.

But critics charge that Indian gaming is a front for big corporations and other investors, and that only a handful of Native Americans actually benefit from gambling profits. Nonetheless, the rush to expand Indian gambling shows no signs of slowing down. And the biggest prizes of all are the huge casinos that, like Niagara Falls, offer slot machines, gaming tables and complimentary alcohol to customers, unlike the smaller facilities on reservations that are often far from cities.

If all goes according to plan, the new Niagara Falls casino will be followed by a Seneca-run facility in the heart of nearby Buffalo, as well as a third casino on tribal land. Meanwhile, New York Gov. George Pataki is pushing to open three casinos in the Catskills region near New York City, a long-stalled development that could generate large profits.

If all six open, the governor has estimated that New York’s casinos could generate $300 million to $400 million annually in public revenue. The state will pocket 25% of the profits generated by 2,625 slot machines in Niagara Falls.

As sponsors put finishing touches on the facility -- ripping the plastic wrapping off hundreds of green felt blackjack tables as they’re unloaded from trucks -- officials in Massachusetts, Connecticut and Rhode Island are debating whether to open new casinos. Fearing competition, civic leaders in Atlantic City, N.J., are drawing up plans for new malls on the fabled boardwalk, as well as blueprints for new hotel-casinos.

All of this activity sparks angry criticism in Niagara Falls that the city has, for all practical purposes, sold itself down the river. Columnist S.K. Smith asked in the Niagara Falls Reporter: “Why in the world would a gambling tourist travel to Niagara Falls, N.Y., to lose his or her shirt? ... We’ll get gamblers, people we know and perhaps love, who bet the mortgage payment and sentence their kids to eating macaroni and cheese for a month.”

Yet others say a casino is the last, best hope for a city that was once a teeming resort and busy manufacturing center, but is now a shell of itself. Perched on New York’s western tip, just south of Lake Ontario and a stone’s throw from the majestic, surging falls, the community gained a reputation as a honeymoon mecca in the 19th century.

The city’s economy was also based on industry, however, and more than 40% of Niagara Falls’ manufacturing jobs have disappeared since 1976, the victim of a faltering upstate economy. Amid this decline, Mayor Irene Elia and others predict that gambling will generate 2,000 jobs, pump $40 million annually into state coffers and $10 million into the city. Already, they note, the casino is spurring talk of hotels, restaurants and malls in a city where the jobless rate is 10.4%.

Any economic miracle, though, will come at a price.

Unlike most Indian tribes, the Senecas did not have to go through years of governmental review to open a casino on non-reservation land. Like many Native Americans, they had a history of broken promises, land grabs and forced relocations at the hands of the U.S. government. But they also had unique leverage because the city of Salamanca, N.Y., and other villages had signed a 100-year lease in 1882 for the privilege of existing on Seneca Reservation land. Back then, the tribe had to accept an annual payment of $1 for such leases.

To make amends, Congress gave the Senecas $35 million in 1990 to renew the leases for 40 years, and it also gave them the power to build casinos on land beyond their reservation. The 7,000-member tribe was allowed to buy real estate in “aboriginal” areas that it is thought to have occupied hundreds of years ago, and this new land instantly became Indian territory.

A state law passed in 2001 earmarked the Niagara Falls Convention Center as the first site of three planned casinos. As a result, the 55 downtown acres are now sovereign Seneca land, exempt from many local regulations including the obligation to pay property taxes. The city of 56,000 is essentially at the mercy of a tribe that insists it will be a good neighbor and wants to spur economic growth.

“We have been welcomed with open arms and we don’t go where we’re not wanted,” said Rick Armstrong, president of the Seneca Nation. “This casino will provide immense benefit to Niagara Falls, and it will also generate $5 million monthly to help our own people with housing construction, schooling, new roads and the like.”

Yet the Senecas are also taking an economic risk. To win financing and meet a New Year’s Eve opening deadline, the Niagara Falls casino secured a five-year, $80-million loan from Malaysia’s Genting Corp. at an eye-popping 29% annual rate. The tribe’s bid for financing was turned down by 23 banks, Armstrong noted, because lending institutions are reluctant to bankroll projects on Indian land where they are not legally able to repossess a property, should there be a default.

The Genting Berhad Corp., which operates the largest casino in Asia and bankrolled the Foxwoods Casino in Connecticut, insisted on these onerous terms because of the risk inherent in the Niagara Falls gambling project.

But boosters look on the bright side. Although scores of Indian tribes across the country have sought similar casino financing from the Malaysian firm, the company picked Niagara Falls.

“They loaned us the money because there is tremendous potential in this area for a new casino, and we’re going to break new ground,” said G. Michael “Mickey” Brown, head of Seneca Niagara Falls Gaming Corp.

“And you can bet that what we do here will have a ripple effect in the region, especially when the money starts rolling in and people see how successful we are.”

Brown predicts that the new casino will lure customers from the Canadian city of Niagara Falls, where 10 million visitors flock each year to a government-run casino. Housed temporarily in an old shopping mall, Casino Niagara has become one of Canada’s top attractions since opening in 1996.

Casino Niagara’s red neon lights glitter across the border each night, and the city’s skyline is dotted with construction cranes -- an affront to those on the New York side, where there is no construction activity other than the casino. They are eager to win back a U.S. share of the immense gambling booty that Brown said “is being sucked out” of Western New York onto the other side of the surging falls.

“You can’t blame the Americans for being jealous of what’s going on here,” Casino Niagara blackjack dealer Sal Canatello said. “In the summer especially, the crowds pouring in here are amazing. Some nights, you can’t even get a seat at the tables.”

Beyond gambling profits, Canatello and other employees said Casino Niagara has made a difference in their lives. The chance to become a dealer “gives me a much better salary than I had before, and the chance to build a career,” said Canatello, who had been studying computer programming before.

Across the river, hopes are similarly high. The Seneca Niagara Casino recently graduated its first class of blackjack dealers, 315 strong, and many believe casino jobs have rescued them from low-paying work. More than 8,500 people applied for 2,000 jobs, according to Mary Beth Defazio, vice president in charge of human resources.

“I’ll be making from $40,000 as a dealer, and that doubles my previous salary,” said Jessica Posluszny, a mother of two young children who worked for eight years as a waitress in nearby Williamsville. “I wanted stability, better benefits, and I got them here. I’ll get to work an overnight shift, and spend some more time with my kids.”

But Defazio cautions against the belief that gambling alone can help a hard-pressed city turn the corner.

“A casino is like a gold mine,” she said, “but like any gold mine, you have to work it with a pick and shovel.

“You have to make things happen around the casino, you have to grab the opportunity. And that, more than anything, will be the biggest challenge for a city like Niagara Falls.”