Thursday, May 6, 2010

Oneida Nation Plans Massive Changes To N.Y. Resort-Casino In Order To Serve Liquor

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This installment of The Tribes In The Media is a Syracuse Post Standard article on the Seneca Indian Tribe's plans to lease out their upstate New York Turning Stone resort, except for retail space and the gaming floor, to an outside company so that a state-imposed liquor ban can be circumvented.

How Turning Stone plans to get around its lack of a liquor license
By Glenn Coin
The Post-Standard
May 06, 2010

Verona, NY - The Oneida Indian Nation has tried and failed for more than a decade to get a liquor license at Turning Stone Resort and Casino.

Frustrated by the state’s refusal to grant a license, the nation worked a deal with Beeches Restaurant, of Rome, to serve alcohol at the resort in Verona. Since 2007, Beeches has obtained about 6,000 one-time-only permits from the state to serve alcohol at the resort’s restaurants, ballrooms and nightclub.

Today, a Beeches spinoff will ask the state to approve a new plan: Let the family-owned restaurant take over nearly the entire resort — including golf courses, hotels and more than 1,200 employees — and serve food and alcohol under a standard license.

In the long, tortured saga of alcohol at Turning Stone, the new Beeches proposal would be the most radical.

It would end the cumbersome, expensive process of filing thousands of one-time permits that critics say is simply a way to circumvent the law. It would also, for the first time, put alcohol in the hands of gamblers and on the room service menu of the hotel’s 648 rooms.

The new plan would on paper cede control of most of New York’s first Indian-run casino resort to a family-run business that has operated an inn and restaurant for decades, but nothing on the scale of a resort with annual revenues of more than $300 million.

And it would instantly turn 1,260 Turning Stone workers — including 226 chefs — into employees of CD, while doing the jobs they did before when their checks came from the Oneida nation. CD, a company formed four months ago, would instantly have about as many employees as Welch Allyn or L.&J.G. Stickley.

The permit system and the new Beeches agreement illustrate how important alcohol is to the growth and profitability of Turning Stone, and the measures the Oneidas will go to serve it.

The old way

In 2003, the Oneidas began working with Beeches, whose co-owner, Chris Destito, was the husband of state Assemblywoman RoAnn Destito. (Chris Destito died of cancer earlier this year, but his family continues to run Beeches.)

Beeches used the liquor authority’s off-site catering permit system, intended to allow caterers to provide food and alcohol at weddings and other one-time events, to start serving alcohol at Turning Stone on a regular basis.

The use of the permits grew steadily and then, last year, exponentially. Beeches began serving alcohol every night of the week at the resort’s five fine-dining restaurants, nightclub, lounges and private clubs. The liquor authority granted 941 permits to Beeches for Turning Stone in 2007, and 2,410 last year.

Since 2007, the state has issued a total of 5,953 caterer permits to Beeches. That’s about 19 percent of all such permits issued in the entire state, and far more than any other single business, said Kerri O’Brien, deputy commissioner of licensing at the liquor authority.

While applicants can file electronically, O’Brien said, Beeches chooses to send paper copies of the seven-page application for each permit. That’s generated nearly 42,000 pages since 2007 and has taken about 1,000 person-hours of authority staff time to review. In return, Beeches has paid the authority $48 for each permit — a total of nearly $286,000.

Caterer permits are granted for one particular bar in one particular part of the resort for one particular day. If Beeches is serving alcohol at a wedding, several restaurants, the night club and the showroom at Turning Stone all on the same night, each of those requires at least one permit.

Critics say Beeches and Turning Stone have abused the intent of the permits.

“It’s just an end-around the law,” said Brad Dixon, president of the Madison County chapter of the Empire State Restaurant & Tavern Association. The Madison, Oneida and Herkimer chapters sued the state in November to stop the authority from granting permits. A hearing is scheduled for May 13; the groups’ attorney has amended the lawsuit to try to stop the new CD application, too.

The new way

In January, 10 days before Chris Destito died, Beeches formed CD Food & Beverage. The owners are two of Destito’s brothers, Frank and Orlando, and a cousin, Dominick; they also own Beeches.

Under the new plan to be reviewed today by the state liquor authority board, CD will lease the entire casino except gambling areas and retail spaces. Under a pair of agreements not yet submitted to the liquor authority but outlined in a letter from the Oneida nation, Turning Stone will essentially turn over the entire resort to CD.

“Basically speaking, CD will lease from Turning Stone virtually all of the premises that Turning Stone Resort and Casino occupies in both Verona and Vernon,” CD’s lawyer, Mitchell Katz, told the liquor authority board last week.

The exceptions, he said, are retail areas such as the souvenir shop and “a very narrow bandwidth that concerns itself with gaming operations. All other spaces and places within the resort complex will be leased to CD. CD will control all of those premises and will control the sales of alcohol on all aspects of the leased premises.”

CD would stock and serve 44 bars in the main resort, and several roaming golf carts at the resort’s three main golf courses. The Oneida nation would set the menus and prices, provide food and lease employees to CD, according to a letter filed with the liquor authority by nation lawyer Peter Carmen. CD would pay 10 percent of gross sales as rent and also pay a variety of charges for maintenance and administration.

CD’s operations will generate about $4 million in sales taxes, Katz told the authority. At the sales tax rate of 8.25 percent, that means CD expects to do about $50 million worth of business a year.

Oneida nation spokesman Mark Emery declined comment. The Destitos could not be reached.

Gambling and hospitality experts say alcohol brings more people to the resort and entices gamblers to spend more once they get there.

“It’s important — there’s no question about that,” said Rupert Spies, a professor of hospitality management at Cornell University. “If you’re going to have a nice meal, if you’re going to have a relaxing weekend, if you’re going to go on a getaway, and someone tells you that you can’t have an alcoholic beverage, you’re going to say thanks but no thanks.”

“Gamblers like to drink and it lowers their inhibitions so they gamble more,” said William Thompson, a University of Nevada-Las Vegas professor who has studied the social costs of gambling. “Our casinos give away alcohol not to be nice guys, but because gamblers will gamble more if they get a good feeling from alcohol.”

When Turning Stone opened in 1993, Oneida nation leader Ray Halbritter said he would put “principles above profits” and not serve alcohol.

Within a few years, however, the nation started the first in a series of plans to bring alcohol to the growing resort. The nation tried setting up an independent company owned by resort employees and even, in 2007, applied for a liquor license outright. The state Liquor Authority board said no. The state and the Oneidas have longstanding unresolved issues over land claims and taxation.

While the Oneida nation is generally immune from state controls, liquor is a different story. In 1983, the U.S. Supreme Court ruled that states can control how alcohol is served and distributed on Indian lands.