(Reuters) - New York State and the Seneca Nation have reached a deal that would pump $140 million of Indian casino revenue into three struggling Western New York cities, the state said on Thursday.
Niagara Falls, which had been on track to run out of cash this year, will receive $89 million under the agreement. The nearby city of Salamanca will receive $34.5 million and Buffalo will get $15.5 million, according to a statement from New York Governor Andrew Cuomo.
The state will get nearly $270 million and the Senecas will retain about $209 million of the disputed funds.
The money had been tied up for three years in a dispute about gambling revenues between New York State and the Seneca Nation, which operates casinos in the three cities.
In order to operate the casinos, the Senecas agreed to share some of the revenue with the state and local communities. In return, the state agreed to allow no other casinos in the region.
The Senecas believe the state violated the agreement by allowing video lottery terminals at nearby racetracks and began withholding payments.
Seneca Nation President Barry Snyder Sr. said in a statement that he was pleased the dispute was resolved and that local governments would once again benefit from casino revenue.
Niagara Falls was downgraded two notches to Baa3 by Moody's Investors Service last month because the ongoing fight over casino revenue left the city cash-strapped.
The city of about 50,000 people also suffers from high unemployment, poverty and elevated debt levels, Moody's said in May.
Under the agreement announced on Thursday, the Seneca Nation will also resume making payments totaling about $135 million annually to the state from casino operations.
Cuomo agreed that the Seneca Nation would get an exclusive gaming zone in Western New York, while the Senecas agreed to let existing video lotteries at area racetracks remain.
(Reporting by Hilary Russ in New York; Editing by Lisa Shumaker)