Aug. 28, 2008 - -The halt of casino-related construction at Seneca Gaming Corp. sites in Buffalo and Salamanca comes as a nationwide slump in gambling revenues has caused casino profits to drop and other casino projects to be cut back or suspended.

A report by Moody's Investors Service earlier this month gave a negative rating to the U. S. gambling industry and also concluded that "Native American casino operators are not immune."

"The weakening U. S. economy is pressuring the casino business as consumers pare back discretionary travel and entertainment spending," said the report written by Moody's analyst Jacques Ouazana.

The Seneca Buffalo Creek Casino is also in jeopardy because of the continued success of the lawsuit by those who oppose the casino in Buffalo's Cobblestone District.

Wednesday afternoon's suspension in building the $333 million casino and hotel in Buffalo, as well as the $130 million expansion of the hotel at the Seneca Allegany Hotel and Casino in Salamanca, followed the opposition's latest victory in U. S. District Court.

Seneca Gaming Corp. spokesman Philip J. Pantano, however, said the Senecas have been looking at slowing their gambling expansion for some time, even before filing a report with the Securities and Exchange Commission earlier this month foreshadowing the halt.

The Senecas cited the economy, capital market conditions, greater demands on the company's available cash, increased competition and construction costs as they announced they were suspending building.

"We have kept a close eye on the state of the economy and the impact it has continued to have on every person and every industry across the country," Barry E. Snyder Sr., chairman of Seneca Gaming and a past president of the Seneca Nation of Indians, said in announcing the suspension.

Pantano said that the time-out will allow Seneca Gaming to regroup and that company officials look forward to resuming construction in the future.

Gambling will continue at both locations -- Seneca Buffalo Creek has a limited slot machine operation in a blue metal building -- and the halt will not affect operations at Seneca Niagara Casino & Hotel in Niagara Falls.

Buffalo Mayor Byron W. Brown, a casino backer, issued a statement from the Democratic National Convention in Denver.

"I respect the decision of the Seneca Nation of Indians based on the information provided to me," Brown said. "I still believe that this $333 million project, which will create over 1,000 jobs, will be a benefit to the City of Buffalo, and I look forward to working with the Seneca Nation to get the project back up and running."

Pantano said that Seneca Gaming officials will preserve what has already been completed, and none of the structural steel at the Buffalo or Salamanca sites will be removed.

The immediate effect will be felt in the local construction industry.

Besides the 150 construction jobs, the Buffalo casino has promised 1,300 permanent jobs once the new casino and hotel are erected.

Opponents of the casino see the construction halt as a possible way to start talks with the Senecas on settling the lawsuit.

"Perhaps this decision is the beginning of a discussion we can have with the Senecas over the disposition of this lawsuit," said Richard J. Lippes, one of the attorneys representing Citizens for a Better Buffalo.

Lippes would not speculate on the timing of the announcement but said he found it curious that it was just a day after the latest court decision.

U. S. District Judge William M. Skretny ruled Tuesday that gambling remains illegal on the Seneca land, and he instructed the National Indian Gaming Commission to do its job and issue violations to the Senecas for gambling without authority. Opponents say this would shutter the casino.

Wednesday afternoon, Lippes' co-counsel, Albany attorney Cornelius D. Murray, wrote to the U. S. attorney's office in Buffalo to demand that the gambling commission enforce Skretny's ruling.

Skretny's decision will likely be appealed, and the Senecas at a news conference Tuesday vowed to continue the project unless there is a final court decision saying they can't.

That was less than 24 hours before Seneca Gaming made the announcement it was halting construction in both Buffalo and Salamanca.

"In keeping with our financial commitments to our owner, the Seneca Nation of Indians, and with our obligations to our bondholders," Seneca Gaming's Snyder said, "we have decided that it is our responsibility to suspend our construction activities at this time, as we endeavor to preserve the continuing strength and vitality of our company."

The decision was foreshadowed earlier in the month when Seneca Gaming filed its third-quarter report with the Securities and Exchange Commission.

Seneca Gaming has borrowed $500 million to finance construction of its casinos, which began with its temporary casino in Niagara Falls in 2002. The gambling corporation is also building the $25.5 million Hickory Stick golf club in Niagara County.

Seneca Gaming warned in its Aug. 14 filing with the SEC that it was taking a close look at the expansion of its casinos because of the economy.

Despite the caution, Snyder said in remarks tied to the SEC filing that net revenues for Seneca Gaming had climbed 11 percent since the same quarter last year. The third-quarter filing showed that Seneca Gaming had net revenues of $165.7 million, an increase of $16.5 million from a year ago.

It's been a hard month for the gambling business.

On Aug. 1, Boyd Gaming Corp. announced it would stop work for nine months to a year on its $4.8 billion Echelon casino development in Las Vegas.

In Atlantic City, N. J., the city's 11 casinos announced in August that slots players would no longer enjoy free meals or complimentary hotel rooms. High rollers continue to get the comps.

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