10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended September 30, 2006 OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                     to
	Commission file number 333-117633

SENECA GAMING CORPORATION

(Exact name of registrant as specified in its charter)

Not Applicable	54-2122988
(State of Incorporation)	(I.R.S. Employer Identification No.)

310 Fourth Street

Niagara Falls, New York (Seneca Nation Territory) 14303

(716) 299-1100

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  o  No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes  x  No  o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x  No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in any definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the act).

Large accerated filer  o        Accelerated filer  o        Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

Yes  o No  x

The registrant is a wholly-owned governmental instrumentality of the Seneca Nation of Indians.

DOCUMENTS INCORPORATED BY REFERENCE:     None

SENECA GAMING CORPORATION

Form 10-K

TABLE OF CONTENTS

PART I		3
Item 1.	Business	3
Item 1A.	Risk Factors	21
Item 1B.	Unresolved Staff Comments	33
Item 2.	Properties	33
Item 3.	Legal Proceedings	34
Item 4.	Submission of Matters to a Vote of Security Holders	36
PART II		36
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6.	Selected Financial Data	36
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	39
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 8.	Financial Statements and Supplementary Data	50
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	50
Item 9A.	Controls and Procedures	50
Item 9B.	Other Information	51
PART III		51
Item 10.	Directors and Executive Officers of the Registrant	51
Item 11.	Executive Compensation	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	58
Item 13.	Certain Relationships and Related Transactions	58
Item 14.	Principal Accountant Fees and Services	60
PART IV		60
Item 15.	Exhibits and Financial Statement Schedules	60
	Signatures	64

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.  The words “believe”, “anticipate”, “expect”, “estimate”, “intend”, “plan”, “project”, “will be”, “will continue”, “will likely result”, and similar expressions, as they relate to us or our management, indicate forward-looking statements.  Similarly, statements that describe our plans, business, strategy or goals are all forward-looking statements.  These forward-looking statements are subject to numerous risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed in or implied by these forward-looking statements.

Factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the risk factors set forth in Item 1A. of this Annual Report on Form 10-K and the risks discussed in our other filings with the Securities and Exchange Commission.   Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this filing.

We assume no obligation to update these forward-looking statements.

2

AVAILABLE INFORMATION

We make available, free of charge, through our internet website, www.senecagamingcorporation.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.  We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.

PART I

Item 1.            Business

Except as otherwise indicated by the context, in this Annual Report on Form 10-K, or this Annual Report, we refer to (1) Seneca Gaming Corporation as “SGC” or “the Company,” (2) Seneca Niagara Falls Gaming Corporation, a wholly owned subsidiary of SGC, as “SNFGC,” (3) Seneca Territory Gaming Corporation, a wholly owned subsidiary of SGC, as “STGC,” (4) Seneca Erie Gaming Corporation, a wholly owned subsidiary of SGC, as “SEGC,” (5) the Seneca Nation of Indians of New York, as “Nation”, “Seneca Nation” or “Seneca Nation of Indians,” (6) the Nation-State Gaming Compact between the Seneca Nation of Indians and New York State, dated August 18, 2002, as the “Compact”, and (7) SGC, SNFGC, STGC, and SEGC, collectively, as “we,” “our,” “ours” and “us.”  SNFGC, STGC and SEGC are sometimes collectively referred to as the “Guarantors”, based on their respective guarantees of SGC’s obligations under the senior notes.  Our fiscal year ends on September 30.  “Fiscal 2006” is defined as the fiscal year ended September 30, 2006, “Fiscal 2005” is defined as the fiscal year ended September 30, 2005, and fiscal years prior to 2005 are defined similarly within the context of this annual report on Form 10-K.

Overview

SGC is wholly owned by the Nation and chartered to develop, manage and direct all of the Nation’s Class III gaming operations on the Nation’s territories in Western New York. SGC was chartered by the Nation in August 2002.  In August 2002, the Nation entered into the Compact with New York State that provides the Nation with the right to establish and operate three Class III gaming facilities in Western New York.  We currently operate two Class III gaming facilities in Western New York—Seneca  Niagara Casino and Hotel, which is located in the City of Niagara Falls, New York (Niagara Territory) and operated by SNFGC, approximately 20 miles north of Buffalo, New York, and Seneca Allegany Casino, which is located in the City of Salamanca, New York (Allegany Territory) and operated by STGC, approximately 75 miles northeast of Erie, Pennsylvania. Seneca Niagara Casino and Hotel opened on December 31, 2002 (initially, as the Seneca Niagara Casino), and Seneca Allegany Casino opened on May 1, 2004.  Our two casinos are located on land held in restricted fee by the United States, which, together with the rights under the Compact, allows us to conduct Class III gaming operations in New York State and are the only gaming facilities in New York State to offer both Class III slot machines and table games.

Under the Compact, the Nation has the exclusive right (subject to certain limited exceptions) to establish and operate a third Class III gaming facility to be located in Erie County, New York.  On October 3, 2005, the Nation acquired approximately nine acres of land in the inner harbor district of Buffalo (Buffalo Creek Territory).  We commenced construction of the Seneca Buffalo Creek Casino on those nine acres on December 8, 2005.  The exclusive right, under the Compact, to establish and operate a third Class III gaming facility in Western New York may terminate if the Nation or SEGC fails to commence Class III gaming operations in Erie County by December 9, 2007.  We expect to open a temporary Class III gaming facility by May 31, 2007, which will fulfill the Nation’s Compact obligations for the third Class III gaming facility to be located in Erie County.  See our discussions below in “Seneca Buffalo Creek Casino” and “Item 3. - --- Legal Proceedings” for information regarding our plans for the temporary and permanent Seneca Buffalo Creek Casino and litigation related to this casino.

As of September 30, 2006, Seneca Niagara Casino and Hotel featured over 147,000 square feet of gaming space, with 4,289 slot machines and 99 table games and Seneca Allegany Casino featured over 55,000 square feet of gaming space with 2,003 slot machines and 24 table games.  As of September 30, 2006, we had approximately 1.2 million members in the Seneca Link Player’s Card database with an average of approximately 21,000 new members joining per month for the prior twelve months.  As of September 30, 2006, approximately 26% of the Seneca Link Player’s Card members lived in the Buffalo-Niagara area, and approximately 19%, 19% and 21% lived in Pennsylvania, Ohio and other areas of New York, respectively. For Fiscal 2006, we generated consolidated net revenue of $522.5 million.

3

Factors contributing to our success include:

·    since their openings, our ability to successfully market Seneca Niagara Casino and Hotel and Seneca Allegany Casino to our primary and secondary target markets;

·    with the addition of our luxury hotel in Niagara Falls, the ability to increase patron count, length of stay and attract higher-end gaming guests from a broader geographic area;

·    our ability to enroll approximately 1.2 million patrons in our cross-property Seneca Link Player’s Card program, which has increased our ability to use effective direct mail and targeted marketing programs to establish patron loyalty to the Seneca brand at a profitable level;

·    our entertainment options, offering varied quality acts to our patrons;

·    our mix of slot machines, which we believe is superior to our competition and includes the latest product introductions by leading United States and international slot manufacturers;

·    our use of current information technology, including “ticket-in/ticket-out” slot machines, automated jackpot payment machines, ticket redemption units, electronic slot bonusing and database programs to increase operating efficiencies;

·    our ability to operate at a high margin, which we achieve through the careful monitoring and control of labor costs and the effective use of our marketing and advertising expenditures;

·    our continued expansion at and reinvestment in Seneca Niagara Casino and Hotel and Seneca Allegany Casino; and

·    our experienced senior management team, which has over 100 years of combined gaming experience.

Under the Compact, the Nation has the exclusive right to establish and operate a third Class III gaming facility in Erie County, New York.  For further discussion of the Erie County gaming facility, see “Seneca Buffalo Creek Casino” discussion, below, and “Item 2.—Properties.”

Our principal executive offices are located at Seneca Niagara Casino and Hotel, 310 Fourth Street, Niagara Falls, New York (Nation Territory) 14303, and our telephone number is (716) 299-1100.  Our website is www.senecagamingcorporation.com.  The websites for our Seneca Niagara Casino and Hotel and Seneca Allegany Casino are located at www.snfgc.com and www.senecaalleganycasino.com, respectively. The Nation also furnishes information about Seneca Niagara Casino and Hotel and Seneca Allegany Casino at www.sni.org.   The information on these websites is not part of this Annual Report.

Seneca Niagara Casino and logo, Bear’s Den, Eight Clans, Seneca Link and logo, The Western Door, Thunder Mountain Buffet and logo and Turtle Island logos are registered trademarks in the U.S.  All other trademarks, trade names and service marks appearing in this Annual Report are the property of their respective holders.

Seneca Niagara Casino and Hotel

Seneca Niagara Casino and Hotel is located on approximately 24 acres on the Nation’s Territory in the City of Niagara Falls, New York, and offers gaming, entertainment and related amenities, with over 147,000 square feet of gaming space.  Seneca Niagara Casino and Hotel is open 24 hours per day, seven days per week and is our flagship gaming facility.  We opened our original Niagara Falls gaming facility on December 31, 2002 after 100 days of extensive remodeling and renovation of the former Niagara Falls Convention and Civic Center.  The initial capital invested to open was approximately $95.2 million. Since then, we have continued to invest in facilities and equipment at this property.  On December 15, 2005, we opened our expanded gaming floor, which added approximately 950 slot machines and 20 table games.  On December 30, 2005, we officially opened the first ten of 26 floors of rooms at our luxury hotel, along with several new restaurants.  On March 31, 2006, we completely opened all rooms at our luxury hotel, along with all other amenities, as described below.  Total cost of constructing and equipping our luxury hotel and expansion project was $234.0 million.   Since opening on December 30, 2005, Seneca Niagara Casino and Hotel has achieved strong financial and operating results.  For Fiscal 2006, Seneca Niagara Casino and Hotel generated net revenue of $365.8 million.

4

As of September 30, 2006, Seneca Niagara Casino and Hotel featured:

·    over 147,000 square feet of Class III gaming space with 4,289 slot machines, 99 table games, including blackjack, craps and roulette, and keno;

·   604 hotel rooms, including 118 suites of various sizes;

·   a full-service luxury spa and salon;

·   the Thunder Falls Buffet, a 400-seat international buffet;

·   Western Door, a steakhouse with approximately 160 dining seats and a 36-seat bar and lounge area;

·   La Cascata, a 120-seat Italian fine dining restaurant, which opened on December 27, 2005;

·   Three Sisters Café, a 24-hour casual dining restaurant with seating for more than 200, which opened on December 23, 2005;

·   Koi, a 70-seat fine dining restaurant featuring a Pan-Asian menu, which opened on January 28, 2006;

·   Morrie’s Express, a walk-up delicatessen with seating for 30, which opened on December 15, 2005;

·   Five retail stores, three of which opened in December 2005;

·   the Seneca Events Center, a 25,200 square-foot multi-purpose entertainment/event facility, which can seat up to 2,200 (for entertainment events) and which opened on December 31, 2005;

·   8,000 square feet of conference and banquet space, which opened on December 31, 2005;

·    a 2,300-space parking garage, with 11 bus bays;

·    additional surface parking for over 1,400 vehicles;

·    the Bear’s Den, a 468-seat theater; and

·    a snack bar.

We believe several competitive factors contribute to our current success, including:

·    an underserved local market with limited gaming and entertainment options;

·    a favorable demographic mix;

·    limited competition; and

·    easy access by major interstate highways.

Accommodations.      Seneca Niagara Casino and Hotel partially opened its 604-room luxury hotel tower on December 30, 2005, with the full opening occurring on March 31, 2006. Located adjacent to, and connected to our original gaming facility, the hotel currently features 486 well-appointed rooms, 86 corner suites, 22 one-bedroom suites, and 10 penthouse suites. The third floor at Seneca Niagara Casino and Hotel features a full-service spa and salon, fitness room and swimming pool. The addition of the luxury hotel has allowed us to market Seneca Niagara Casino & Hotel to patrons with higher gaming budgets, patrons from further distances that will stay overnight, and additional patrons from within our immediate market area.

Food and Beverage Facilities   Seneca Niagara Casino and Hotel features five restaurants, three bars, a walk-up deli, a nightclub and one snack bar. The Western Door is a steakhouse which seats approximately 160 patrons in the dining room, with seating for an additional 36 patrons in the bar and lounge. La Cascata is a fine dining Italian restaurant which provides dining and seats for approximately 120 patrons, while Koi, located adjacent to La Cascata, offers Pan-Asian cuisine with seating for approximately 70 patrons. Three Sisters Café is open 24 hours per day, seven days per week, and offers seating for

5

200 patrons, with counter seating for an additional 8 patrons. Thunder Falls Buffet offers an expansive international selection at a buffet style restaurant with seating for approximately 400 patrons.

Seneca Niagara Casino and Hotel has an upscale nightclub, Hush, and four bars: Club 101, located at the center of the original gaming floor; The Lobby Bar, located in the hotel lobby; Aces Bar, located in the expanded gaming floor; and the Keno bar, located adjacent to our Keno lounge.

For Fiscal 2006, food and beverage sales accounted for approximately 8.8% of our gross revenue at Seneca Niagara Casino and Hotel.

Entertainment Facilities  With the opening of the luxury hotel tower, Seneca Niagara Casino and Hotel added a new entertainment venue, the Seneca Events Center. Located on the luxury hotel’s second floor, the Seneca Events Center opened on December 31, 2005 and can seat up to 2,200 for performances, and can also be used for banquets, dinner performances and gatherings of many sizes. Since opening on December 31, 2005, the Seneca Events Center has hosted numerous well-known performers and acts, including Aretha Franklin, Brooks & Dunn, Bill Cosby, Duran Duran and Jewel.  In addition to entertainment, the multi-purpose room can hold up to 150 trade show booths.

The 468-seat Bear’s Den Showroom provides patrons with the opportunity to see quality entertainment in an intimate setting. The Bear’s Den has hosted such headliners as the Charlie Daniels Band, 10,000 Maniacs, Natalie Cole, Gregg Allman and David Sanborn.

In addition to the Seneca Events Center and The Bear’s Den Showroom, Seneca Niagara Casino and Hotel features live entertainment at Club 101 every weekend.

Retail.  Seneca Niagara Casino and Hotel’s five retail shops offer a wide variety of merchandise. The Men’s Logo Shop offers official Seneca Niagara Casino and Hotel merchandise for men. The Newsstand offers a variety of reading material, snacks and soft drinks, as well as other personal items for our patrons. Sky Boutique features official Seneca Niagara Casino and Hotel merchandise for women and a wide selection of high-end merchandise, including jewelry, purses and jeweled accessories. The Eight Clans Gift Shop features authentic Native American items, including Native American jewelry, Native American style blankets and bags, soapstone sculptures and sweet grass baskets. The Players Club Store offers an inventory of products and merchandise at various price ranges, including state-of-the-art and high-end merchandise such as electronics, golf clubs, cameras and diamond jewelry. It is primarily used to support our Seneca Players Club Card rewards program.

Full-Service Luxury Spa.     Seneca Niagara Casino and Hotel also incorporates an 18,000 square foot full-service luxury spa.  The luxury spa offers a wide range of services, including massage treatments, facials and wraps, as well as saunas, a swimming pool, an exercise room and a salon.

Parking and Transportation Facilities.  Since most of Seneca Niagara Casino and Hotel’s patrons arrive by automobile, we endeavor to provide ample space for parking. We have approximately 3,700 available parking spaces, including a 2,300-space parking garage. Seneca Niagara Casino & Hotel offers all valet and self-parking services free of charge. We believe our parking facilities are adequate to service the parking needs of our patrons.   Seneca Niagara Casino and Hotel also has 11 bus bays and a bus program that has accounted for approximately 400 patrons per day to Seneca Niagara Casino during Fiscal 2006.

Niagara Falls Real Estate Acquisitions

We continue to move forward with the acquisition of the remaining acreage of the approximately 50-acre footprint in the City of Niagara Falls, New York, designated by New York State under the Compact for ownership by the Nation.

Acquisitions have increased our total acquired land in Niagara Falls to approximately 44 acres.  In December 2005, we acquired, for $7.9 million, approximately 2 acres of land and a hotel property, which we have since demolished in preparation for anticipated future development.  In July 2006, we acquired approximately 18 acres of land, along with related fixtures for an aggregate initial advanced payment of $18.0 million.

In Niagara Falls, the appraised value of the land and fixtures that have been acquired by us through the condemnation process is subject to challenge under New York state law. If a court determines that the value for the land and fixtures is higher than the appraised value we paid to a condemnee, then we may be liable to the condemnee for the difference and potentially also responsible for certain additional costs and payments to the condemnee, such as attorneys’ fees.

In July 2006, the Nation agreed to waive its right to acquire approximately two acres of land described in the Compact.  The parcels are owned by End Time Handmaidens, Inc., a religious organization.  In return for the waiver, the Nation obtained a right of first negotiation and refusal with respect to the future sale of the parcels.  As a result of the Nation’s waiver, the total acreage of the Niagara Territory upon completion of the condemnation process is anticipated to be approximately 48 acres.

6

We have commenced a master planning process with respect to development and utilization of the full 48-acre Niagara Territory footprint described above and integration of the Niagara Falls facilities with those on or planned for the Allegany and Buffalo Creek Territories.  As we develop our facilities, we intend to have them complement each other, offering diverse hotel, entertainment and gaming options to our guests.

Seneca Allegany Casino

Seneca Allegany Casino, our second Class III gaming facility occupying approximately 120,460 square feet in total in a temporary building, opened on May 1, 2004. Seneca Allegany Casino is located on the Nation’s Territory in the City of Salamanca, New York.  Seneca Allegany Casino offers Class III gaming, entertainment and related amenities.  Seneca Allegany Casino caters primarily to middle-market, drive-in patrons from its primary and secondary markets and is open 24 hours per day, seven days per week.  For Fiscal 2006, Seneca Allegany Casino generated net revenue of $156.7 million.

The cost to develop and open the 120,460 square-foot temporary Seneca Allegany Casino was funded entirely from Seneca Niagara Casino and Hotel’s free cash flow in the form of inter-company loans from SGC.

As of September 30, 2006, Seneca Allegany Casino featured:

·    over 55,000 square feet of gaming space with approximately 2,000 slot machines and 24 table games, including blackjack, craps and roulette;

·    a parking garage for approximately 1,850 vehicles;

·    surface parking for approximately 1,830 vehicles;

·    the Thunder Mountain Buffet, an international buffet; and

·    a snack bar, retail store and bar and lounge.

Seneca Allegany Casino Expansion

In July 2005, we opened our 1,850-space parking garage, which cost $32.2 million, and we are constructing a 212-room hotel and permanent casino at the Seneca Allegany Territory, pursuant to a construction management agreement with the Seneca Construction Management Corporation (SCMC), a wholly owned entity of the Seneca Nation.  We expect to open the permanent casino area of the hotel by the end of December 2006, which will provide us with approximately 92,000 square feet of gaming space with an additional 200 slot machines and 16 table games.  We expect to open the hotel, two fine dining restaurants, retail and all related amenities by late March 2007.  We currently expect the total cost to complete the hotel, including the cost of furniture, fixtures and equipment for the hotel and permanent gaming floor, will be from $156.0 million to $167.0 million.  After transitioning the existing gaming space from the temporary facility to the newly constructed hotel gaming area, we expect to convert the temporary facility into an event center with a capacity for 1,700 people, along with additional administrative and support space.  By adding the 1,850-space covered parking structure with an enclosed connector into the facility, the 212-room hotel and casino and the event center, we expect to create a first-class gaming experience for our customers and maintain a strong competitive position against potential future competition from Pennsylvania operators.  We expect to fund this expansion project primarily from cash flow of Seneca Allegany Casino and the balance from intercompany loans from SGC.  As of September 30, 2006, we have capitalized approximately $98.9 million of costs on this expansion.

Seneca Buffalo Creek Casino

In addition to Seneca Niagara Casino and Hotel and Seneca Allegany Casino, the Nation has the exclusive right to construct our third Class III gaming facility in Erie County, New York. This new Class III gaming facility is referred to as Seneca Buffalo Creek Casino.  On October 3, 2005 the Nation acquired approximately nine acres of land in the inner-harbor district of downtown Buffalo, which constitutes the Nation’s Buffalo Creek Territory.  Initially, the nine acre parcel was bisected by a two block section of a street owned  by the City of Buffalo (Fulton Street).  In November 2006, we acquired the two block section of Fulton Street from the City of Buffalo for a purchase price of $631,600.  Reference is made to the discussion below “Material Agreements - Buffalo Creek Agreement” for additional information regarding the Fulton Street purchase and sale.

7

On December 8, 2005, we commenced construction of our Erie County, New York gaming facility on the Nation’s Buffalo Creek Territory. The Nation’s exclusive right under the Compact with New York State to establish and operate a Class III gaming facility in Erie County, New York, could have terminated if the Nation had failed to commence construction of a Class III gaming facility in Erie County by December 9, 2005  and may terminate if the Nation fails to commence Class III gaming operations in Erie County by December 9, 2007.  In order to meet the requirements of the Compact, we began construction of a temporary Class III gaming facility on the Seneca Buffalo Creek Territory.  This temporary facility is expected to be approximately 6,000 square feet, and will feature approximately 125 slot machines and a snack bar.  We expect to open the temporary Seneca Buffalo Creek Casino in May 2007, but no later than the December 9, 2007 Compact deadline.

In addition, we continue to finalize our plans for a permanent casino on the Seneca Buffalo Creek Territory.  The timing of the opening of both the temporary and permanent Seneca Buffalo Creek Casinos will depend on various factors.  See “Item 3 - Legal Proceedings” for a discussion of existing legal challenges regarding our Seneca Buffalo Creek Casino.  In the event that we are able to open a casino in Erie County, this casino will be owned and operated by SEGC.

The permanent Seneca Buffalo Creek Casino is expected, at a minimum, to initially feature:

·    1,900 to 2,200 slot machines;

·    30 to 50 table games;

·    a specialty restaurant;

·    a buffet restaurant;

·    a multi-function room

·    a retail store; and

·    a 2,500-space parking garage.

We intend to operate the permanent Seneca Buffalo Creek Casino in a manner that will complement both Seneca Niagara Casino and Hotel and Seneca Allegany Casino.

Status of Former Class II Operations

As of January 1, 2005, we transferred all Class II gaming operations to the Nation, which included our poker operations at the Seneca Niagara Casino and Seneca Allegany Casino.   The Nation, through its wholly owned business enterprise, Seneca Gaming & Entertainment, currently operates two Class II gaming facilities located on the Nation’s Territory in the City of Salamanca and Irving, New York, respectively, and the Class II poker operations at Seneca Niagara Casino and Hotel and Seneca Allegany Casino.  The transfer of the Class II operations as of January 1, 2005 was consistent with our understanding of the Nation’s Council’s (the Nation’s legislative body) intent that we manage and operate the Nation’s Class III operations and that Council directly manage and operate the Nation’s Class II operations.

Lewiston, NY Golf Course Development

In March 2006, we acquired 257 acres of land with the intent to design and build a championship level golf course in Lewiston, New York, approximately eight miles from Seneca Niagara Casino and Hotel.  We have selected the Robert Trent Jones II firm to design the golf course.  This land and the development project is intended to be sold to Seneca Management Development Corporation (SMDC), an entity wholly owned and organized by the Nation for the purpose of pursuing ownership, development, operation and management of the Lewiston, NY golf course development project and other Nation economic development projects.  The purchase of the land and development rights is expected to be financed by SMDC through a loan provided by SGC.  We anticipate construction of the golf course to commence in April 2007, with an anticipated opening in May 2009.

Business and Marketing Strategy

Our business strategy is to complete the development of three premier Class III gaming facilities in Western New York.  By March 31, 2006, we had completed and fully opened our 604-room luxury tower at our Seneca Niagara Casino and Hotel.  We are presently constructing our permanent casino in a 212-room resort hotel tower at Seneca Allegany Territory, which we plan to fully open by March 31, 2007.  In May 2007, we intend to open our temporary gaming facility on the Nation’s Buffalo Creek Territory

8

while we construct a permanent Class III casino on the Nation’s Buffalo Creek Territory.  We believe this strategy will enable us to maintain our position as the premier gaming operator in the Western New York region, including areas in northern Pennsylvania and Ohio within our primary and secondary markets.  We intend for all of our gaming facilities to provide a high-quality and diverse gaming experience that we believe will add to our patron base and strengthen patron loyalty in each segment of the gaming market.  In order to maximize our income from operations, we will coordinate our advertising, promotions, entertainment and special events to minimize competition among our gaming facilities, and integrate our administrative and information technology functions.  As our slot play currently represents approximately 87% of our consolidated gross gaming revenues, we also strive to offer the most current selection of slot machines in order to provide cutting-edge options for our guests, and to differentiate ourselves from the regional competition.  We will continue to brand the Seneca name through advertising and promotion of our Seneca Link Player’s Card, which is accepted at all of our facilities.

The key components of our integrated marketing plan include the following:

·    Promote the Seneca Brand Name.     The successful operation of Seneca Niagara Casino and Hotel and Seneca Allegany Casino has established Seneca as a leading gaming brand in the region.  We plan to capitalize on this brand recognition by prominently incorporating the Seneca name at all of our gaming and entertainment facilities.

·    Incorporate the Seneca Link Player’s Card.     We encourage guests to sign up for a Seneca Link Player’s Card (“Card”), and to use the Card at their game of choice.  Guests accumulate points at our facilities and may redeem them at any of our casinos.  Our player’s club card program enables us to understand our guest preferences by providing us with valuable information about our patrons’ gaming activity and use of our facilities’ various non-gaming amenities.  As of September 30, 2006, we had approximately 1.2 million members in the Seneca Link Player’s Card database with an average of approximately 21,000 new members joining per month for Fiscal 2006.

·    Expand Target Markets and Patron Base.     The completion of our luxury hotel at our Seneca Niagara Casino and Hotel has enabled us to expand our marketing efforts to higher-value gaming patrons from a wider geographic area.  We believe the completion of our resort hotel at our Seneca Allegany Casino will provide similar opportunities to aggressively expand our marketing efforts.  We continue to evaluate our marketing programs and have increased our efforts to attract more guests from the region, including New York, Pennsylvania and Ohio, as well as higher value patrons from Connecticut, Massachusetts and Toronto, Canada.  We intend to market to these areas by offering various promotions, including special events for preferred gaming patrons, use of commissioned, independent representatives or splinter arrangements, air charters, motor coach tours and organized package group visits.  We have recently hired a player development staff to attract higher-end gaming guests.  In addition, with the opening of our Seneca Events Center at our Seneca Niagara Casino and Hotel, we have expanded our entertainment offerings to further brand our properties and to attract repeat visits, encourage loyalty and attract higher-end gaming guests.

·    Offer Diversified Gaming Experience to Broadest Customer Base.    We intend to operate each of our gaming facilities in a manner that will be complementary. Seneca Niagara Casino and Hotel is our flagship resort property catering to mid to high value gaming guests looking for a full service gaming resort destination. Seneca Allegany Casino currently targets mid-level gaming patrons with frequent visits.  With the planned opening of the permanent casino and the 212-room resort hotel at this facility, we will expand our marketing efforts to attract guests with higher gaming budgets.  Upon the opening of our permanent Seneca Buffalo Creek Casino, we intend to integrate the marketing of this facility, as explained below, to guests of our Niagara and Allegany casinos.  This will offer our guests a variety of gaming and entertainment options.

·    Utilize an Integrated Marketing Strategy.    Our marketing strategy relies on the high quality of our facilities, the personal service level of our employees, and an integrated approach of targeted direct mail, radio, print and outdoor advertising, promotions, slot and table tournaments, special events, bussing, entertainment and player development staff, to attract and retain our patrons and to brand the Seneca name as the premier gaming and entertainment experience in Western New York. We coordinate our marketing events and the amenities of our facilities to maximize the quality and length of stay of patron visits and, currently and in the future, to minimize competition among our gaming facilities. Our patron tracking system through the Seneca Link Player’s Card is sophisticated and scaleable and provides us with the ability to analyze our guests’ gaming preferences.  In addition, we have redesigned the levels of player club options, each based on the level of each guest’s gaming activity, to ensure each level is properly recognized based upon their gaming activity.  Starting in May 2004, we began using a “promotional credit” program that provides slot credits to our patrons based on the amount of  their gaming at our facilities. These credits are available on the patron’s Seneca Link Player’s Card when they return for visits. These credits must be played and cannot be redeemed for cash, which we believe will encourage repeat business.

9

·    Reinvest in and Expand our Gaming Facilities.    We believe our commitment to develop and reinvest in each of our gaming facilities is critical to our continued success and future growth. We intend to reinvest in and expand our gaming facilities to ensure their attractiveness to our patrons. To achieve maximum profitability we intend to continue to upgrade our slot machines with the most popular products in order to create a more exciting gaming experience for our patrons. We have also invested in technology, including slot machine “ticket-in/ticket-out” technology, automated ticket redemption machines, player tracking system enhancements and the development of a Seneca brand inter-property progressive link. Reinvestment in our gaming facilities will help to ensure that our patrons have an enjoyable entertainment experience.  In Fiscal 2006 and 2005, we have spent $241.7 million and $172.7 million, respectively, in the expansion of our facilities, the acquisition of land, upgrades to our facilities, and the purchase of equipment.

·    Offer the Highest Quality Service.    We believe that we can distinguish our gaming facilities with consistent superior patron service, which is a fundamental component of our business and marketing strategy. We attribute our success at Seneca Niagara Casino and Hotel and Seneca Allegany Casino to our employees’ ability to provide efficient and friendly service.  During Fiscal 2006, we made an investment of approximately $1.0 million in a service program provided to all our employees, developing our expectation of the guest service experience to be provided by each employee.  Each new employee participates in this service training as part of their orientation.  It is our intention to continue to invest in providing the highest level of guest service, as we believe that offering our patrons the highest standard of service is an integral component of our long-term financial success.

Market and Competition

Market.    Seneca Niagara Casino and Hotel is conveniently located on the Nation’s Territory in the City of Niagara Falls, New York, approximately 20 miles north of Buffalo and approximately 90 miles west of Rochester. Our primary market for this casino includes the cities of Buffalo and Niagara Falls and covers the area in the United States within an estimated 50 miles of Seneca Niagara Casino and Hotel.  Our secondary market includes the City of Rochester and covers the area in the United States within an estimated 51 to 100 miles of Seneca Niagara Casino and Hotel.  Our outer markets include Erie and Pittsburgh, Pennsylvania, Ohio, other areas of New York and Ontario, Canada.  With the opening of our 604-room luxury hotel, we are expanding our geographic reach with targeted marketing efforts for higher-end gaming patrons in the New York City area, Connecticut,  Massachusetts, and Toronto, Canada.  In addition, Niagara Falls is a major tourist destination.  Seneca Allegany Casino is located immediately off Interstate 86 in southwestern New York. Since its opening in May 2004, the primary market for this casino has been the area within 75 miles of Seneca Allegany Casino, which includes Erie, Pennsylvania, and the secondary market has been the area within 75 to 175 miles of Seneca Allegany Casino, which includes Cleveland and Akron, Ohio and Pittsburgh, Pennsylvania. Seneca Allegany Casino caters primarily to middle-market, drive-in patrons from its primary and secondary markets.  With the opening of our 212-room resort hotel at Seneca Allegany Casino, expected to be opened by March 31, 2007, we plan to implement additional targeted marketing programs focused on expanding our geographic reach.  Seneca Buffalo Creek Casino will be located in the inner-harbor district of Buffalo.  Until the permanent Seneca Buffalo Creek Casino is constructed, planned for 2008, the temporary facility is expected to have a limited market due to its small size.

As of September 30, 2006, approximately 26% of the approximate 1.2 million Seneca Link Player’s Card members lived in the Buffalo-Niagara area, and approximately 19%, 19% and 21% lived in Pennsylvania, Ohio and other areas of New York, respectively.

Competition - - General.    The United States and Canadian gaming industries are highly regulated and the overall number of casino operations in the Northeast is limited. In recent years, there has been a trend to relax the legal restrictions on entry and to permit the development of additional gaming operations.  Currently, there are two casino resorts, Casino Niagara and Niagara Fallsview Casino Resort, and five racetrack facilities with gaming, Finger Lakes Gaming and Racetrack, Fairgrounds Gaming and  Raceway, Batavia Downs Gaming and Raceway, Fort Erie Racetrack and Slots and Woodbine Racetrack, within the 100-mile radius that constitutes Seneca Niagara Casino and Hotel’s secondary market.  Fairgrounds Gaming and Raceway, a racetrack facility within Seneca Allegany Casino’s primary market which offers approximately 1,000 Video Gaming Machines (VGMs), is the only direct competition in this casino’s primary market. Existing gaming facilities within each of our casinos’ primary market area, as well as potentially new market entrants, have and will have a direct effect on our operations. In addition, casinos and gaming-related operations in the broader regional market may also affect us and may reduce our ability to draw patrons.

10

Canadian Competition.    Seneca Niagara Casino and Hotel competes with Casino Niagara and Niagara Fallsview Casino Resort which are located in Niagara Falls, Ontario, and are both within two miles of Seneca Niagara Casino and Hotel. Casino Niagara and Niagara Fallsview Casino Resort are owned and operated by the Province of Ontario and managed by the Hyatt-led Falls Management Company. Casino Niagara offers over 95,000 square feet of gaming space including more than 1,800 slot machines, 80 table games, three restaurants, and three bars. Niagara Fallsview Casino Resort opened in June 2004. Niagara Fallsview Casino Resort features 180,000 square feet of gaming space that includes over 3,000 slots, 150 table games, a 374-room Hyatt hotel, a spa and various restaurant and entertainment venues. Nordic Gaming Corporation also operates a racetrack and gaming facility located in Fort Erie, Ontario. This facility features approximately 1,200 slot machines and is located approximately 22 miles from Seneca Niagara Casino and Hotel.  To a lesser extent, we compete with Casino Rama, which is north of Toronto and approximately 150 miles north of Seneca Niagara Casino and Hotel and is located on the Chippewas of Mnjikaning (Rama) First Nation’s Territory.

New York State Competition.   Despite the exclusivity in Western New York provided by the Compact, our casinos face competition in New York State from both Indian and non-Indian gaming operations. The Compact allows New York State to permit the Tuscarora Indian Nation and the Tonawanda Band of Seneca Indians to obtain the right to include gaming devices in a compact without abrogating the exclusivity provisions of the Compact, so long as either tribe locates its proposed gaming facility either on its existing reservations or more than 25 miles from a Nation Gaming Facility. In addition, New York State could allow other Indian gaming facilities to be located within our area of exclusivity, in which case it would forfeit its right to receive exclusivity fees for the types of Class III games in such competitor’s facility on which the Nation pays an exclusivity fee under the Compact. Of the seven federally recognized Indian tribes or nations in New York other than the Nation, only the St. Regis Mohawk Tribe and the Oneida Indian Nation of New York have signed compacts with New York State to open casinos.

The St. Regis Mohawk Tribe currently operates a small casino facility near Hogansburg, New York, approximately 350 miles and 390 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively, and the Oneida Indian Nation operates a gaming facility resort near Syracuse, New York, approximately 190 miles and 235 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively. In October 2001, New York State authorized six new casinos to be run by Native Americans in the state, each of which was to be permitted to feature Class III slot machines. The State’s legislation authorizing the six new Indian casinos was recently upheld by the New York Court of Appeals in Dalton v. Pataki, et al., and Karr v. Pataki, et al. Three of these authorized casinos are or will be operated by us (Seneca Niagara Casino and Hotel, Seneca Allegany Casino and Seneca Buffalo Creek Casino). It was expected that the other three casinos would be located in Sullivan and Ulster Counties in the Catskill region, approximately 330 miles and 320 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively.

The Governor previously reached settlement agreements, subject to numerous contingencies, with the following tribes for Class III gaming operations to be located in Sullivan or Ulster Counties in the Catskills region: the St. Regis Mohawk Tribe, the Seneca-Cayuga Tribe of Oklahoma, the Cayuga Nation of New York, the Oneida Nation of Wisconsin, and the Stockbridge Munsee Community.  However, as a result of the United States Supreme Court’s recent decision in City of Sherrill, NY v. Oneida Indian Nation of New York, 125 S. Ct. 1478 (March 29, 2005), the Governor withdrew pending legislation and land claim settlements with the Seneca-Cayuga Tribe of Oklahoma, the Cayuga Nation of New York, the Oneida Nation of Wisconsin, and the Stockbridge Munsee Community. In light of this decision and subsequent events the only casino development that we believe to be imminent in Sullivan or Ulster County, New York, is the development planned by the St. Regis Mohawks.  The St. Regis Mohawks have entered into a development agreement with Empire Resorts for the purpose of constructing a $500 million Class III gaming facility immediately adjacent to Monticello Raceway.

In 2001, eight racetracks in New York State were awarded licenses to operate VGMs. In January 2004, Sportsystems (now known as Delaware North Gaming & Entertainment) opened a 1,300 machine video gaming facility at Saratoga Raceway in Saratoga Springs, New York, approximately 325 miles and 340 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively. Shortly thereafter, in February 2004, Finger Lakes Gaming and Race Track in Farmington, New York, approximately 100 miles and 140 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively, operates over 1,000 VGMs in a video gaming facility. Fairgrounds Gaming and Raceway in Hamburg, New York, approximately 30 miles and 50 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively, opened a 27,000 square foot gaming facility in March 2004 and offers nearly 1,000 VGMs. Monticello Raceway in Monticello, New York, approximately 325 miles and 280 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively, opened a gaming facility on June 30, 2004, with nearly 1,800 VGMs.

Batavia Downs, in Batavia, New York, approximately 50 miles from Seneca Niagara Casino and Hotel, opened on May 18, 2005, with 580 VGMs. The New York Racing Association granted a right to operate VGMs at the Aqueduct racetrack in Queens, New York, approximately 425 miles and 380 miles from Seneca Niagara Casino and Hotel and Seneca Allegany

11

Casino, respectively. After suspending work on the 4,500 video gaming machine facility from August to December 2003, the project was scheduled for completion by mid-2005; however, as of September 30, 2006 , the project had been stopped again and VGMs were not in operation at the Aqueduct racetrack. In October 2006, Vernon Downs Racetrack in Vernon, New York, approximately 200 miles and 245 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively, commenced operation of a gaming facility housing 1,000 VGM’s.  On July 4, 2006, Tioga Downs, located approximately 190 miles and 160 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively, opened a 750 VGM facility in central New York.  Both Vernon Downs and Tioga Downs are operated by Nevada Gold, Inc.  Yonkers Raceway near Manhattan, New York, completed construction of a gaming facility in October 2006.  Initially, the facility will feature approximately 1,870 VGM’s, and upon completion of additional construction, the facility will feature approximately 5,500 VGM’s.  In April 2005, Governor Pataki signed a law providing race tracks with a larger share of proceeds from VGMs and extending VGM authorization through 2017. This law also allows for up to eight additional VGM venues in New York State.  These eight licenses would be awarded in a competitive bid process to the state-owned Off-Track Betting Corporation or other operators which may be located in our primary and secondary markets.

Other proposed gaming operations in New York State include a Cayuga tribe development in Union Springs, New York, approximately 140 miles from Seneca Niagara Casino and Hotel, which has been approved for a Class II gaming license; a proposed high stakes bingo hall in Aurelius, New York, approximately 150 miles from Seneca Niagara Casino and Hotel, which is being pursued by the Seneca-Cayuga Tribe of Oklahoma; and a proposed casino in Hampton Bays, New York, approximately 530 miles from Seneca Niagara Casino and Hotel, which is being pursued by the Shinnecock Tribe. The likelihood and timing of these projects is uncertain at this point in time.

There are also several federally recognized Indian tribes and unrecognized Indian groups that are pursuing casino projects in New York State and other northeastern states, which, if successful and completed, could compete with us.

Pennsylvania.  On July 5, 2004, the governor of Pennsylvania signed a bill permitting up to an aggregate of 61,000 slot machines at 14 locations in Pennsylvania.  The Pennsylvania legislation permits up to 5,000 slot machines at seven proposed or existing racetracks, five stand alone gaming facilities with up to 5,000 slot machines each, and 500 slot machines at two existing resorts.  As of October 26, 2006 the Pennsylvania Gaming Control Board had approved six category 1 (awarded to existing/proposed racetracks) licenses, one of which will allow MTR Gaming Group, which owns and operates Mountaineer Park in Chester, West Virginia, to build and operate Presque Isle Downs in Erie, Pennsylvania.  This facility is expected to open in February 2007, operating approximately 2,000 slots.  Presque Isle Downs will be located approximately 120 and 80 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectfully.  Presque Isle Downs will compete directly with Seneca Allegany Casino and indirectly with Seneca Niagara Casino and Hotel.  It is expected that, of the five stand-alone gaming facilities authorized by Pennsylvania, at least one facility will be located in the Pittsburgh, Pennsylvania area, a secondary market for Seneca Allegany Casino, and an outer market for Seneca Niagara Casino and Hotel.

Other Competitive Regional Gaming Operations.    Foxwoods Resort Casino and the Mohegan Sun Casino are located in southeastern Connecticut (approximately 460 miles and 480 miles from Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively), and are operated by the Mashantucket Pequot Tribe of Connecticut and the Mohegan Indian Tribe of Connecticut, respectively. There are also numerous casinos in Atlantic City, New Jersey (approximately 480 miles and 430 miles from the Seneca Niagara Casino and Hotel and Seneca Allegany Casino, respectively) with which we compete.  We also face competition from other non-gaming leisure activities and destinations.

If we are unable to compete successfully, our business, financial condition and results of operations could be materially adversely affected. For more detail on this risk, please see “Item 1A. - Risk Factors—We compete with casinos, other forms of gaming and other resort properties. If we are unable to compete successfully, we may not be able to generate sufficient cash flow to fund our operations or service our debt.”

Class III Gaming Compact

The Nation’s Compact with New York State provides the Nation with the right to establish and operate three Class III gaming facilities in Western New York. The Compact grants the Nation the exclusive right to operate specifically defined gaming devices, including slot machines, within a 10,500 square-mile, geographic area in Western New York, beginning on Route 14, approximately 30 miles East of Rochester, and extending westerly throughout New York State. In exchange for this exclusivity, the Nation pays exclusivity fees to New York State based on a percentage of the slot machine net drop (money dropped into the machines after payout but before our expenses). The exclusivity payment is 18% for the first four years, 22% for years 5-7 (beginning January 1, 2007), and 25% for the remainder of the term (beginning January 1, 2010). The exclusivity payment to New York State was approximately $68.3 million for calendar year 2005, $57.1 million for calendar year 2004 and $39.0 million for calendar year 2003. If New York State breaches the exclusivity arrangement by, for example, allowing a

12

person or entity to operate Class III slot machines within the zone of exclusivity, then the State forfeits the exclusivity fees as to Class III slot machines. The Compact allows New York State to permit the Tuscarora Indian Nation and the Tonawanda Band of Seneca Indians to obtain the right to include gaming devices in a compact without abrogating the exclusivity provisions of the Compact, so long as either tribe locates its proposed gaming facility either on its existing reservations or more than 25 miles from a gaming facility site authorized by the Compact. The Compact provides that the Nation may acquire property and establish a gaming facility in the City of Niagara Falls within an approximate 50 acre area designated as land to be developed by the Nation. Seneca Niagara Casino is located on land within this designated area on lands held in restricted fee pursuant to the Seneca Nation Lands Claim Settlement Act of 1990 (SNLCSA). The two additional Class III gaming facilities include the Seneca Allegany Casino on the Nation’s Allegany Territory, and a third facility in Erie County.  The Nation’s exclusivity to establish a Class III gaming facility in Erie County could have expired on December 9, 2005, if we had not commenced construction of the facility by December 9, 2005 and may expire on December 9, 2007, if we fail to commence Class III Gaming operations by December 9, 2007.  See “Seneca Buffalo Creek Casino” discussion above.  The Compact expires in December 2016 and may be renewed by the Nation and the State of New York for an additional seven-year period.

Employees

As of September 30, 2006, SGC employed 3,868 employees.  Of those, Seneca Niagara Casino and Hotel employed 2,905 employees, including 999 casino staff, 804 food and beverage employees, 257 hotel employees, 150 security staff, 540 administrative employees, 117 parking and transportation employees and a management team of 38, and Seneca Allegany Casino employed 963 employees, including 368 casino staff, 248 food and beverage employees, 85 security staff, 203 administrative employees, 51 parking and transportation employees and a management team of eight.

We consider relations with our employees to be good. None of our employees are currently members of any labor union or similar organization.

Seneca Gaming Corporation and the Nation

Seneca Gaming Corporation.  SGC was established by the Nation in August 2002 for the purpose of developing, constructing, leasing, operating, managing, maintaining, promoting and financing Nation gaming facilities, including without limitation any Class III gaming facilities established in accordance with the Compact.  Our Class II operations were transferred to the Nation as of January 1, 2005.  For further discussion of our former Class II operations, see “Status of Former Class II Operations”, above.  SGC is a governmental instrumentality of the Nation and was established by the Nation pursuant to Nation law by a duly enacted resolution of the Council. SGC is wholly owned by the Nation for economic and governmental purposes and shares in the Nation’s sovereign immunity, which can be waived if the board of directors adopts a resolution waiving immunity in a specific situation and such waiver is approved by the Nation’s Council. SGC is managed by a board of directors with seven members, not less than five of whom must be enrolled members of the Nation. The Nation’s Council alone has the power to appoint and remove SGC’s directors.

There are three subsidiaries under the control, operation and management of SGC: Seneca Niagara Falls Gaming Corporation, established in August 2002 to finance, develop, and operate the Nation’s gaming facility in downtown Niagara Falls, New York; Seneca Erie Gaming Corporation, established in August 2003 to finance, develop, and operate the Nation’s gaming facility in Erie County, New York; and Seneca Territory Gaming Corporation, established in September 2003 to finance, develop, and operate the Nation’s gaming facilities on the Nation’s Allegany or Cattaraugus Territories. SNFGC operates the  Seneca Niagara Casino and Hotel located on the Nation’s Niagara Falls Territory in Niagara Falls, New York. STGC operates the Nation’s Seneca Allegany Casino, located in the City of Salamanca, New York on the Nation’s Allegany Territory. SEGC is engaged in the development and construction of the gaming facility to be located on the Nation’s Buffalo Creek Territory.  Each of SGC’s subsidiaries is required to make periodic financial reports and submit an annual report to the SGC board of directors. The SGC board of directors is required to make quarterly and annual reports to the Council regarding the financial condition of the companies, including but not limited to, significant problems and accomplishments, future plans, and such other information as the Council deems pertinent. The members of the boards of directors of SGC and its subsidiaries are the same.

Seneca Gaming Authority.  SGC’s gaming operations are subject to the supervision and regulation of the Seneca Gaming Authority, or SGA, which was established by Nation ordinance and is responsible for overseeing regulation of all of the Nation’s gaming operations. The Nation’s gaming ordinance which provides regulatory authority to SGA for the Nation’s Class III gaming was originally adopted on August 1, 2002, subsequently amended on November 16, 2002 and approved by the National Indian Gaming Commission (NIGC) on November 26, 2002. The Nation amended the gaming ordinance to extend SGA’s regulatory authority to include jurisdiction over Class II gaming. The amended ordinance was further amended in August 2006 to incorporate certain clarifications into the ordinance.  This amendment was approved by the NIGC as of November 6, 2006. The SGA consists of five commissioners selected by the Nation and is responsible for, among other things,

13

monitoring and regulating the standards of operation and standards of management of all authorized Class III gaming, protecting the assets and integrity of casino operations, overseeing casino security and surveillance, monitoring the compliance of the Nation’s gaming activities with external accounting and audit control procedures, and supervising the licensure of all employees and vendors of the Nation’s gaming activities. SGA’s authority does not extend to activities that are not directly related to Class III gaming undertaken by the Nation under the Compact, such as ownership and operation of our hotels and other amenities, or our golf course development activities.  The SGA functions independently and autonomously from the Council in all matters within its purview. While the SGA is responsible for regulatory matters relating to the Nation’s gaming activities, SGC (or one of its subsidiaries) is responsible for the day-to-day management and operation of the Nation’s Class III gaming activities.  For further discussion of the Seneca Gaming Authority, see “Regulation of the Nation, Seneca Gaming Corporation and its Subsidiaries”, below.

The Nation.   The Seneca Nation of Indians is a federally recognized, self-governing Indian nation operating under a Constitution originally adopted in 1848 and most recently amended in 1993. The Nation’s current total enrollment population is approximately 7,500. The Seneca Nation is one of the Six Nations of the Iroquois Confederacy that consists of the Seneca, Cayuga, Onondaga, Oneida, Mohawk and Tuscarora nations. The members of the Nation originally lived in the area between the Genesee River and Seneca Lake in the Finger Lakes region of New York. Today, the Seneca Nation holds title to five distinct Territories in Western New York State, including land in Niagara Falls and Buffalo and land set aside by the 1794 Treaty of Canandaigua: the Allegany, Cattaraugus and Oil Spring Territories. These three Territories designated by the Treaty encompass parts of four counties in New York State: Allegany, Cattaraugus, Chautauqua, and Erie counties. The Oil Springs Territory is 640 acres, or one square mile, of land located 43 miles southeast of the Cattaraugus Territory and 24 miles east of the Allegany Territory. The Allegany Territory is composed of 31,097 acres and includes the City of Salamanca which is located within its territorial boundaries. The Cattaraugus Territory is 35 miles north of Allegany and encompasses 22,012 acres of land. In addition, approximately 24 acres of land (of the approximate 50 acre parcel identified in Appendix I of the Compact) in Niagara Falls and approximately nine acres of land in Erie County have been converted into restricted fee lands pursuant to the  SNLCSA. By operation of federal law, these lands and other parcels that may be acquired in the future pursuant to the SNLCSA, whether in Niagara Falls or Erie County, are subject to restrictions against alienation, constitute Indian country subject to the jurisdiction of the Nation, and qualify as gaming eligible Indian lands pursuant to the Indian Gaming Regulatory Act (IGRA).  For further discussion of land acquisitions in Niagara Falls, New York, see “Niagara Falls Real Estate Acquisitions”, above.

Nation Governance.  The Nation came into formal existence in 1848 when the chief system was replaced by a constitution with elected officials. The Nation’s Constitution provides for three branches of government: executive, legislative and judicial. The Nation holds an election every two years for its three Executive Branch officers: the President, the Treasurer and the Clerk. These officers alternate between the two principal Territories, Cattaraugus and Allegany, every two years. The next election of the Executive Branch Officers will be held in November 2008. The Legislative Branch, or the Council, has sixteen members, of which eight members are elected from each of the two principal Territories. Each Councillor is elected to a four-year term, which is staggered.  An election of eight Council members was recently held in November 2006.  The next election of eight Council members will be in November 2008.

Nation Governmental Operations.  The Nation currently has administrative departments located on both the Allegany and Cattaraugus Territories. The Nation’s programs include tribal administration functions as well as a wide array of community services, including health, environmental, education, recreation and community planning. In order to provide efficient services to the communities, many departments have offices located on both Territories. The tribal administrative executive offices are housed in the two central administration buildings located on the Allegany and Cattaraugus Territories: the G.R. Plummer and the William Seneca Buildings. The other Nation organizational departments are located in buildings adjacent to the main tribal administration building or surrounding area.

Nation Businesses.  The Nation enterprises, subdivisions of the Nation’s government, are responsible for the various economic development initiatives undertaken by the Nation other than SGC and its subsidiaries. The Nation enterprises are currently comprised of the following: Seneca Management Development Corporation, Seneca Construction Management Corporation, Seneca Gaming & Entertainment, Seneca One Stop, Seneca-Iroquois National Museum, and Highbanks Campground. None of these enterprises is a part of SGC or its subsidiaries or otherwise contributes to its revenue. Individual Seneca entrepreneurs also operate their own businesses on Nation lands. The businesses include, but are not limited to, restaurants, retail shops, hotels, gas stations, and Internet-based businesses.

Tribal Employment Rights Ordinance.  Our operations are subject to the Nation’s Tribal Employment Rights Ordinance (TERO) which requires the granting of a preference to enrolled Nation members and other Native Americans in the hiring of employees and in the engagement of certain vendors and contractors.  TERO is implemented by a five member commission, appointed by the Nation’s Council.  With respect to employees, TERO requires that we give preference to qualified Indians in

14

all hiring, promotion, training and all other aspects of employment.  With respect to vendors, TERO requires that, in awarding contracts or subcontracts for supplies, services, labor and materials in an amount in excess of $250 where the majority of the work will occur on Nation lands, we give preference to Indian-owned firms when contracts are subject to a competitive bidding process and the bids of the Indian-owned firms fall within a defined percentage or amount of the lowest responsive bid (ranging from 1% when the lowest responsive bid is $7 million or more, to $9,000 when the lowest responsive bid is $100,000 or less), in each case as specified in the ordinance.  The Nation, through its TERO Commission, has the sole power to determine and certify whether and to what extent a firm is “Indian-owned”.

Regulation of the Nation, Seneca Gaming Corporation and its Subsidiaries

The conduct of our Class III gaming activities on Nation lands is subject to multiple levels of regulation, including regulation by the Nation through its Gaming Ordinance (and the SGA, which has regulatory jurisdiction over the Nation’s gaming activities) and regulation by the State of New York, through the New York State Racing and Wagering Board and the New York State Police, each in accordance with the Compact between the Nation and New York State. See “Material Agreements—Nation-State Gaming Compact” for further discussion of the regulatory authority of the SGA and New York State gaming officials.  The federal government also oversees Indian gaming generally pursuant to IGRA and exercises regulatory oversight through the NIGC. The Department of Justice also possesses authority to enforce IGRA and the Gambling Devices Act, 15 U.S.C. § 1171-78, more commonly known as the Johnson Act. The following description of the regulatory environment in which gaming takes place and in which SGC and its subsidiaries operate is intended as a summary and is not a complete recitation of all relevant laws. Moreover, because the regulatory environment is dynamic and evolving, it is impossible to predict how certain provisions will ultimately be interpreted or applied or how they may affect SGC and its subsidiaries. Changes in such laws or regulations could, under certain circumstances, have a material adverse effect on the operations of SGC and its subsidiaries.

Seneca Nation Law and Legal Systems

Applicability of State and Federal Law.    The Nation is an Indian tribal government with certain sovereign powers. The Nation’s ability to enact its own laws and regulations to regulate gaming activities derives from the exercise of the Nation’s inherent sovereign powers, recognized by the United States in the 1794 Treaty of Canandaigua and in subsequent federal court opinions. It is the position of the United States, and federal courts have uniformly held, that Indian nations are subject to certain federal laws and certain state laws where federal law so prescribes. It is therefore possible that a federal agency with whose regulations the Nation may not be currently complying could object to such noncompliance. If an agency sought to enforce compliance, such agency action and any resultant federal court ruling could result in the disruption of construction and related activities of SGC which events would have a material adverse effect on our operations and financial results.

Waiver of Sovereign Immunity; Court Jurisdiction; Exhaustion of Tribal Remedies.    Indian nations enjoy sovereign immunity from unconsented suit similar to that of the states and the United States. An Indian nation and its wholly owned tribal entities, such as SGC and its subsidiaries, share in the Indian nation’s sovereign immunity, but may formally waive their sovereign immunity with respect to suits against them. The Nation and SGC, respectively, granted a limited waiver of sovereign immunity and consent to suit in connection with the senior notes issued by SGC in 2004 and 2005, including suits against SGC to enforce its obligation to repay the senior notes.  Courts have held waivers of sovereign immunity to be effective, if given explicitly with proper authorization.

The remedies available against an Indian nation also depend, at least in part, upon the jurisdiction of courts and the rules of comity and doctrines requiring initial exhaustion of remedies in tribal tribunals and, as to some judicial remedies, the particular nation’s consent to jurisdictional provisions contained in the disputed agreements. The U.S. Supreme Court has ruled that state courts do not have jurisdiction over actions involving Indians or Indian tribes and arising within Indian country unless Congress specifically grants jurisdiction to those courts. Congress has allowed the courts of New York State to hear certain matters involving Indians and occurring on Indian lands in New York, although each situation must be analyzed on a case-by-case basis.

The Nation’s judiciary branch is comprised of separate Peacemaker, Appellate, and Surrogate Courts. The Nation court system has its own clerks and facilities and has heard numerous civil cases.

The U.S. Supreme Court has held that, under certain circumstances, where a tribal court exists, the remedies and jurisdictional questions in that forum must first be exhausted before the claim can properly be heard by federal courts that would otherwise have jurisdiction. We sometimes waive our right to require exhaustion of tribal court remedies.  For example, the Nation and SGC, respectively, consented to the jurisdiction of the federal and New York State courts in connection with any action by the trustee to enforce the senior notes and operative documents related thereto and agreed to waive the requirement of exhaustion of tribal court remedies. However, it is not clear that such a waiver would be effective. Generally, where a dispute as to the

15

existence of jurisdiction in the tribal forum exists, the tribal court must first rule as to the limits of its own jurisdiction. In the event that a waiver of tribal court jurisdiction is held to be ineffective, the recipient of the waiver (e.g., the trustee and holders of the senior notes) may be required to enforce their rights and remedies against the Nation or SGC in Nation court. In addition, unless the decisions of the Nation court violate some applicable state or federal law, if any, there may be no effective right to appeal such decisions in state or federal court.

The Federal Court of Appeals for the Second Circuit (which has appellate jurisdiction over federal district courts located in New York State) has ruled that if a non-member of a tribe asserts a claim against a tribe based on state or federal law, and not on tribal law, and no prior tribal court proceedings are pending, a federal court generally may adjudicate the claim without requiring the plaintiff to exhaust tribal court remedies. A similar ruling by a New York State appellate court concluded that the state trial court properly proceeded with adjudicating a dispute rather than requiring the plaintiff to exhaust tribal court remedies where the dispute was among tribal members involving issues not concerning internal tribal affairs, the state court had jurisdiction concurrent with tribal courts over the issues and no case was currently pending before the tribal court. Courts in other states and federal judicial circuits have reached different conclusions, and it cannot be certain whether a court in New York State will defer exercising jurisdiction over a case until after the appropriate tribal court has had an opportunity to adjudicate the matter, even where there is a waiver of exhaustion of tribal court remedies.

The Indian Gaming Regulatory Act of 1988

IGRA.    All gaming activities on Indian lands are subject to IGRA. Congress enacted IGRA in order to establish a system for regulating gaming activities on Indian lands. IGRA’s purpose is to provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self sufficiency, and strong tribal governments. Congress simultaneously sought to shield Indian gaming from organized crime and other corrupting influences, to ensure that the Indian tribe is the primary beneficiary of the gaming operation and that gaming is conducted fairly and honestly by both the operator and players.

Classes of Gaming.    IGRA divides gaming into three classes, each of which is regulated differently. Class I gaming encompasses social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as a part of, or in connection with, tribal ceremonies or celebrations. Such gaming is subject to the exclusive jurisdiction of the tribes and is not subject to regulation under IGRA. Class II gaming includes bingo and similar games, and is subject to tribal regulation and federal oversight by the NIGC. Class III gaming, the most heavily regulated of the three classes, encompasses all other forms of gaming, and includes slot machines, casino games, banking card games, dog racing, and lotteries. Class III gaming is lawful only if it is (1) authorized by a tribal ordinance, (2) located in a State that permits such gaming for any purpose by any person, organization, or entity, and (3) conducted in conformance with a Tribal-State compact.

National Indian Gaming Commission.    The NIGC, an independent executive agency located in the Department of the Interior, is vested with regulatory authority over gaming activities on Indian lands pursuant to IGRA and its implementing regulations. The NIGC is charged with the administration and enforcement of IGRA. The NIGC regulates gaming by Indian tribes, in order to shield tribes from organized crime and other corrupting influences, to ensure that the Indian tribe is the primary beneficiary of the gaming operation and that gaming is conducted fairly and honestly by both the operator and players. Congress aimed to make gaming a means of promoting tribal economic development, self-sufficiency, and strong tribal governments. To carry out these goals, Congress gave the NIGC substantial power, including the authority to initiate enforcement actions, close tribal gaming operations and levy civil fines. Moreover, the NIGC has authority to issue regulations governing gaming activities of Indian lands, review and approve Class II and Class III gaming ordinances, review and approve management agreements for tribal gaming operations, conduct investigations and generally monitor Indian gaming activities. IGRA also provides for federal criminal penalties for illegal gaming on Indian land and for theft from Indian gaming facilities. The Secretary of the Interior retains certain responsibilities under IGRA, such as the approval of tribal-state compacts and approval of per capita distribution plans.

NIGC Regulations Implement Certain Provisions of IGRA. These regulations govern, among other things, the submission and approval of tribal gaming ordinances or resolutions, and require an Indian tribe to have the sole proprietary interest in and responsibility for the conduct of gaming activities. Pursuant to NIGC regulations, tribes are required to issue gaming licenses only under certain articulated standards, to conduct or commission financial audits of their gaming enterprises, to perform or commission background investigations of primary management officials and key employees and to maintain facilities in a manner that adequately protects the environment and the public health and safety. NIGC regulations also set forth a review procedure for tribal licensing of all gaming operation employees and require tribes to report certain specified information, including information derived from background investigations, to the NIGC.  On August 24, 2005, the United States District Court For The District of Columbia in Colorado River Indian Tribes vs. National Indian Gaming Commission, ruled “that the [IGRA] does not confer upon the NIGC the authority to issue or enforce [minimum internal control standards] for Class III gaming.”  Accordingly, the Court declared unlawful the minimum internal control standards as applied to Class III gaming. 

16

On October 26, 2006, the D.C. Circuit Court of Appeals unanimously upheld this decision finding that the Indian Gaming Regulatory Act does not grant the NIGC power to impose operational standards on Class III gaming.

On November 18, 2005, Senate Indian Affairs Committee Chairman McCain (R-AZ) introduced S. 2078, the Indian Gaming Regulatory Act Amendments of 2005.  S. 2078 makes a number of amendments to IGRA, including authorizing the NIGC to promulgate “regulations addressing minimum internal control standards for class II gaming and class III gaming activities.”  The import of this particular amendment is to essentially overrule the Colorado River Indian Tribes vs. National Indian Gaming Commission decision.

Tribal-State Compacts.    Under IGRA, Class III gaming activities are lawful on Indian lands only if such activities are conducted in conformance with a Tribal-State gaming compact. A Tribal-State gaming compact is the product of negotiation by a tribe and a state which sets the terms by which the tribe may conduct Class III gaming. IGRA contemplates that states and tribes will utilize the compacting process to address public policy issues of mutual concern. IGRA provides a representative list of the types of provisions that may be included in a Tribal-State gaming compact. Among other things, Congress sought through the compact process to accommodate significant governmental interests of the states. At the same time, IGRA’s compacting process affords reciprocal protection for the significant governmental interests of tribes by requiring a state to negotiate over a form of Class III gaming as long as the state permits it for any purpose by any person. The mechanism for entering into a Tribal-State gaming compact is set forth in IGRA.

The Nation’s Compact was executed on August 18, 2002, and deemed approved by the Secretary of the Interior on October 25, 2002 pursuant to IGRA. After taking effect on December 9, 2002, when notice was published in the Federal Register, the Compact authorized the Nation to own and operate three Class III gaming facilities, two then off-Territory in the City of Niagara Falls and in Erie County, and one on then already existing Nation Territory.

Tribal-state gaming compacts have been the subject of litigation in thirteen states, including New York State. In 1996, the U.S. Supreme Court ruled in the case of Seminole Tribe of Florida v. Florida that the provision of IGRA that permits Indian tribes to sue in federal court to force states to negotiate tribal-state gaming compacts in good faith is unconstitutional, as applied to an unconsenting state, by virtue of the Eleventh Amendment to the U.S. Constitution.

In 1999, certain legislators, organizations and individuals opposed to casino gambling brought a lawsuit: (1) challenging the validity of the 1993 gaming compact between New York State and the St. Regis Mohawk Tribe under the separation of powers provisions in the New York State Constitution; and (2) seeking a declaration that New York State Constitution’s general prohibition on gambling covers Las Vegas-style gaming at casinos operated pursuant to IGRA by Indian tribes on their Territory lands in New York. The plaintiffs also requested an injunction prohibiting New York State from expending any money in furtherance of the gaming compact.

In October 2001, the New York Legislature passed Chapter 383 of the Laws of 2001, or Chapter 383, which allowed Governor Pataki to enter into a gaming compact with the Seneca Nation of Indians and to enter into gaming compacts with other Indian tribes for the establishment of three additional casinos in the Catskills. Chapter 383 also approved the installation of VGMs at certain racetracks.

In January 2002, two actions were filed in the Supreme Court of the State of New York, County of Albany, challenging legislation that, among other things, authorized the Governor of New York to execute tribal-state gaming compacts, approved the use of slot machines as games of chance, approved the use of VGMs at racetracks and authorized the participation of New York State in a multi-state lottery. The actions are captioned Dalton v. Pataki, et al., and Karr v. Pataki, et al. Plaintiffs sought a judgment declaring the legislation unconstitutional and enjoining its implementation. These two cases were consolidated and we refer to both cases below as Dalton v. Pataki.

On July 17, 2003, the New York Supreme Court dismissed the plaintiffs’ complaints in Dalton v. Pataki and held that the legislation is constitutional. The plaintiffs appealed the Court’s decision to the Third Department of the New York Supreme Court’s Appellate Division and oral argument was held on December 16, 2003. On July 7, 2004, a five judge panel issued its Opinion and Order declaring the legislation at issue, Chapter 383 of the Laws of 2001, constitutional as challenged. Notwithstanding the constitutionality of VGMs, the court declared the licensing of VGMs to racetracks to be unconstitutional due to the impermissible revenue distribution scheme set forth therein. Lastly, the court declared the provision of Chapter 383 of the Laws of 2001 authorizing the Division of the Lottery to participate in the multi-state lottery constitutional.

On May 3, 2005, the New York Court of Appeals held the legislation (including the licensing of VGMs to racetracks) to be constitutional. In July 2005, the New York Court of Appeals, the State’s highest court, denied a motion to rehear the case.  Appellants filed a writ of certiorari seeking review by the United States Supreme Court.  On November 28, 2005, the United States Supreme Court denied the writ.

17

Although we can provide no assurance, we believe that any change in New York law will not retroactively invalidate what the State has agreed to in the Compact. If New York State were to make various forms of gaming illegal or against public policy (or the courts were to similarly rule), or otherwise to take a legal position adverse to SGC, such actions could have a material adverse effect on our ability to conduct our gaming operations as currently conducted.

While no assurance can be given as to litigation in New York State, any invalidation of the Nation’s Compact would not affect the Nation’s ability to engage in Class II Gaming.

Indian Lands.    In order for the Nation to conduct gaming pursuant to the Compact, it must do so on Indian lands within its jurisdiction. Indian lands include, but are not limited to, lands located within the boundaries of an Indian Territory. For non-Territory lands to qualify as Indian lands under IGRA, the land must be either held in trust by the United States for the benefit of any Indian tribe or individual, or held by any Indian tribe or individual subject to restriction by the United States against alienation, and the tribe must exercise governmental power over those lands.

As it relates to lands that have been acquired in trust or restricted fee status for gaming purposes after October 17, 1988, IGRA generally prohibits gaming on such lands unless certain conditions are met. As relevant to date, lands that are acquired as part of a settlement of a land claim are exempt from the prohibition against gaming on lands acquired after the enactment of IGRA.

Pursuant to the Compact, the Nation may acquire property and establish gaming facilities in the City of Niagara Falls within the boundaries of the approximate 50 acre area of land described in Appendix I of the Compact and designated as land to be developed by the Nation in connection with its gaming facilities. The Compact also authorizes the Nation to establish a gaming facility in Erie County and one on then already existing Nation Territory. Moreover, the Compact authorizes the Nation to use funds appropriated under the SNLCSA to acquire parcels of land in Niagara Falls and Erie County for gaming purposes.  See “Material Agreements—Nation-State Gaming Compact”, below.

In 1990, Congress enacted the SNLCSA which provides the Nation with fair compensation for use of its land and for the impact on the Nation from prior lease arrangements in the City of Salamanca, New York. The funds appropriated under the SNLCSA are available for the Nation to acquire additional land which could be placed into restricted fee status. The SNLCSA provides that unless the Secretary of the Interior determines that lands acquired pursuant to the SNLCSA should not be subject to restrictions against alienation, such lands shall be held in restricted fee status by the Nation.

As determined by the Secretary of the Interior in connection with the approval of the Compact, the Nation will have jurisdiction over lands placed into restricted fee status pursuant to the SNLCSA. Indeed, lands placed in restricted status pursuant to the SNLCSA are held in the same legal manner as existing Nation lands are held and thus, subject to the Nation’s jurisdiction. In addition, the Secretary determined that lands placed into restricted fee status pursuant to the SNLCSA are Indian lands as defined by IGRA, and the Nation is authorized to use such land for gaming purposes pursuant to IGRA, because such lands will be acquired as part of a settlement of a land claim.

In the future, if and when all funds appropriated under the SNLCSA have been used by the Nation, the Nation may acquire lands in fee status and then request such lands to be held in trust on its behalf through the land-into-trust process.  To the extent the Nation acquires lands in trust in the future, it is noted that the land-into-trust process, as compared to the restricted fee process under the SNLCSA, will be much more cumbersome and lengthy.

As of December 15, 2006, the Nation (as opposed to SGC or its subsidiaries) had acquired approximately 24 acres in Niagara Falls (of the approximate 50 acre area of land described in Appendix I of the Compact) with funds appropriated under the SNLCSA.  On October 3, 2005, the Nation acquired approximately nine acres of land in Erie County with SNLCSA funds.  On November 9, 2006, SEGC purchased the two-block section of Fulton Street which bisects the nine-acre site purchased by the Nation, creating a contiguous site for development of the land.  The Nation’s Council has approved the purchase from SEGC (with SNLCSA funds) of the two block section of Fulton Street.  See discussion of “Seneca Buffalo Creek Casino”, above.  By operation of federal law, these lands and other parcels that may be acquired in the future pursuant to the SNLCSA (in Niagara Falls or Erie County), are subject to restrictions against alienation, constitute Indian country subject to the jurisdiction of the Nation, and qualify as gaming eligible Indian lands pursuant to IGRA. The Nation’s existing casino and hotel on the Niagara Falls Territory is, and the planned casino on the Buffalo Creek Territory will be, situated on these lands.

In addition to the two then off-Territory sites in Niagara Falls and Erie County, the Compact also authorizes the Nation to establish a gaming facility on then already existing Nation Territory. The lands upon which the Nation owns, operates and manages its Territory-based Seneca Allegany Casino, are located within the Nation’s Allegany Territory boundaries, thus constituting Indian lands eligible for gaming pursuant to IGRA.

18

Possible Changes in Federal and State Law.    Several bills have been proposed during the current and recent sessions of Congress that could affect Indian gaming.  Most notably Senator McCain’s S. 2078, the Indian Gaming Regulatory Act Amendments of 2006 and Congressman Pombo’s (R-CA) H. 4893, Restricting Indian Gaming to Homelands of Tribes Act of 2006, propose additional regulations for tribes and more restrictions on “off-reservation” gaming.  Also, the administration has published proposed regulations relative to off-reservation gaming.  Certain of such bills and regulations, if enacted, could impair the ability of the Nation and SGC to expand its gaming operations and adversely impact the future growth of the Nation’s revenue base. In addition, from time to time, various government officials have proposed taxing Indian casino gaming or otherwise limiting or restricting the conduct of gaming operations by Indian tribes. No assurance can be given that such legislation, if and when enacted by Congress, would not have a material adverse effect on the operations of SGC. If Congress were to enact comprehensive amendments to the IGRA, such legislation could have a material adverse effect on the operations of SGC. In addition, under federal law, gaming on the Nation’s lands may be dependent upon the permissibility under New York law of certain forms of gaming or similar activities. If New York State were to make various forms of gaming illegal or against public policy (or the courts were to similarly rule), or otherwise to take a legal position adverse to SGC, such actions could have a material adverse effect on our ability to conduct our gaming operations as currently conducted.

Material Agreements

The following summaries of certain material agreements in effect as of December 15, 2006 related to our operations, to which the Nation or SGC (or its subsidiaries) is a party do not purport to be complete and are qualified in their entirety by reference to the agreements summarized herein. Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the agreement being summarized (unless otherwise indicated).

Nation-State Gaming Compact

The Nation engages in Class III gaming activities in accordance with the Compact, approved on October 25, 2002. The Compact was negotiated between the Nation and New York State in accordance with the provisions of IGRA applicable to the conduct of Class III gaming operations by Indian tribes. See “Regulation of the Nation and Seneca Gaming Corporation and its Subsidiaries—The Indian Gaming Regulatory Act of 1988—Tribal-State Compacts.”

The Compact provides, among other things, that:

(1)  The Nation may conduct the following games of chance on its lands: baccarat, bang, beat the dealer, best poker hand, blackjack, Caribbean stud poker, chuck-a-luck, craps, gaming devices, hazard, joker seven, keno, let it ride poker, minibaccarat, pai gow poker, pai gow tiles, red dog, roulette, sic bo, super pan, under and over seven, wheel games, casino war, Spanish blackjack, multiple action blackjack, and three card poker. The legality of slot machines pursuant to State law, however, is the subject of ongoing State court litigation. See “Regulation of the Nation and Seneca Gaming Corporation and its Subsidiaries—The Indian Gaming Regulatory Act of 1988—Tribal-State Compacts.” The Compact sets forth specifications describing and governing the operation of each of these types of games by the Nation.

(2)  The Compact provides for the establishment of the Seneca Gaming Authority, or SGA, which exercises jurisdiction over and responsibility for the conduct of gaming operations by the Nation. The SGA was established pursuant to the Gaming Ordinance. The New York State Racing and Wagering Board and the New York State Police, collectively, the SGO, act in a concurrent regulatory and oversight role with regard to the Nation’s Class III gaming operations. The SGA is entitled to unfettered access to all areas of the Nation’s gaming facilities including the surveillance room(s), copies of daily inspection reports as well as access to the business and accounting records relating to the Nation’s gaming operations during the course of an investigation. Each Nation Class III gaming operation must provide reasonable office and reserved parking space adjacent to the Class III gaming facilities for the SGO. New York State is empowered to sue to enforce applicable Compact terms and to remedy violations through arbitration or in federal court.

(3)  Law enforcement responsibilities relating to the Nation’s Class III gaming operations are concurrent between the Nation Law Enforcement Agency and the New York State Police as a matter of federal law. Nothing in the Compact alters the jurisdiction of New York State, if any, over Indian land as provided by applicable law. Members of the New York State Police in the course of official duties have unfettered access to all areas of the Class III gaming and auxiliary facilities, subject only to State and federal constitutional limitations. As stated, the Nation Law Enforcement Agency may exercise concurrent authority with that of the New York State Police to maintain public order and safety, to the extent authorized by federal law.

(4)  All gaming employees are required to apply for, and obtain, a valid gaming employee license issued by the SGA, following a fingerprint check by the New York State Division of Criminal Justice Services, a background investigation by the New York State Police, and a suitability determination by the SGO. Applicants must submit a license application to the SGA concerning

19

personal and family history, personal and business references, criminal conviction record, business activities, financial affairs, gaming industry experience, gaming school education and general educational background. The SGA may in specified circumstances suspend, revoke or deny a renewal of any gaming license.

(5)  Any enterprise providing gaming services, gaming supplies or gaming equipment to a Nation Class III gaming operation must hold a current valid gaming service registration issued by the SGA.

(6)  Any enterprise that provides goods, supplies or services to a Nation Class III gaming operation (other than gaming services, gaming supplies or gaming equipment) in a total amount exceeding $75,000 in a single twelve-month period must be identified to the board by the Commission. The SGA cooperates with the SGO in any reasonable investigations deemed necessary by the SGO relating to the fitness of any such enterprise to engage in any business with a Nation Class III gaming operation. The SGO may bar such an enterprise from providing such goods, supplies or services upon a determination of a threat to the effective regulation of Class III gaming or danger of unfair or illegal practices, methods and activities in the conduct of Class III gaming.

(7)  The Nation’s Class III gaming operations must conform with a detailed set of operational and management standards relating to a variety of matters, including accounting, internal controls, operational procedures, surveillance personnel and the handling of cash and credit.

(8)  The Nation must maintain complete and accurate records of all transactions relating to the revenues and costs of its gaming operations. The forms of such accounts must be consistent with generally accepted accounting principles. An annual audit of the financial statements of its gaming operations must be conducted by an independent certified public accountant in a manner consistent with generally accepted auditing standards.

(9)  The Nation reimburses New York State for its costs of oversight under the Compact. Costs include staffing, fringe benefits, overhead costs and non-personal services.

(10)  The Nation prohibits the possession of firearms in its Class III gaming facilities except by persons authorized by law and does not permit persons under the age of 18 to be admitted to any Class III gaming facility or to place any wager, directly or indirectly. The SGA maintains and shares with SGC a list of persons barred from the Class III gaming facilities because of criminal histories or associations posing a threat to gaming integrity or safety.

(11)  As required by IGRA and the Nation’s Class III Gaming Ordinance, SGC has constructed, maintained, and operated its gaming facilities in a manner that adequately protects the environment and the public health and safety.

(12)  SGC (or its subsidiaries) or the Nation on its behalf maintains liability insurance to compensate injured patrons of Class III gaming facilities. The Nation has established procedures for the adjudication of compensation for tort claims by patrons of Class III gaming facilities.

(13)  Except for disputes concerning the games and activities permitted under the Compact, the Nation and New York State have established binding arbitration as a method of resolution of all other disputes concerning compliance with and interpretation of Compact provisions.

(14)  The terms and conditions of the Compact may be modified or amended by written agreement of both parties. If the State agrees to permit any other Nation or Indian tribe to conduct a Class III game or activity which has not been authorized under the Compact, the State shall notify the Nation, which may then conduct such game or activity upon adoption of the State’s specifications regarding such game or activity.

(15)  The Compact is in effect until December 9, 2016, to be renewed for an additional period of seven years unless either party objects in writing, or terminated as a result of any of the following: (1) repeal of IGRA; (2) the Nation adopts a referendum revoking the Nation’s authority to conduct Class III gaming; or (3) either the Nation or the State commits a Material Breach as defined by the Compact.

(16)  The Compact in no way waives the right of the Nation to request negotiations for amendment or modification to the Compact with respect to a Class III game or activity which is to be conducted on Nation lands but which is not permitted under the provisions of the Compact.

(17)  Except as specifically provided in the Compact, neither New York State nor the Nation waived its sovereign immunity by entering into the Compact.

20

The President of the Nation and the Governor of New York signed the Compact on August 18, 2002, and, on October 25, 2002, by operation of law, the Compact was deemed approved in accordance with IGRA. The Compact took effect on December 9, 2002, when notice was published in the Federal Register.

Assignment and Plan of Distribution Agreement

On May 5, 2004, SGC entered into an Assignment and Plan of Distribution Agreement, or the Assignment Agreement, with the Nation. Pursuant to this agreement, the Nation has pursuant to the charters of each of SNFGC, STGC and SEGC, adopted a plan of distribution providing that in the event of the dissolution or final liquidation of any of these entities, the net liquidation or dissolution proceeds shall be distributed to SGC. The Nation further assigned to SGC all of its right, title and interest in and to these proceeds. The Nation entered into the Assignment Agreement because even though SNFGC, STGC, and SEGC are owned by SGC, according to the charters of these subsidiaries, in the event of a liquidation or dissolution of a subsidiary, the Nation, and not SGC, would be entitled to receive the net proceeds of the liquidation or dissolution after all liabilities and obligations of the subsidiary have been paid, satisfied and discharged. Each of the Nation and SGC also waived their respective sovereign immunity from unconsented suit and consent to suit in accordance with the Assignment Agreement. Remedies against the Nation are generally limited to specific performance. However, in the event a subsidiary has distributed net liquidation or dissolution proceeds to the Nation and the Nation has not transferred those proceeds to SGC, the Nation may be required to transfer an amount equal to the liquidation proceeds to SGC, or if such remedy is not available, SGC may file a claim for money damages in an amount no greater than the amount of net liquidation or dissolution proceeds not assigned. Any such money damages for which the Nation is liable are only payable from assets held by the Nation, SGC, SNFGC, STGC, or SEGC related to the gaming business, other than real property held in trust for the Nation by the United States.

Construction Agreements

On July 14, 2005, STGC entered into a construction management agreement with Seneca Construction Management Corporation, or SCMC, a wholly owned corporation of the Nation, to manage the construction of the new 212-room hotel and casino at Seneca Allegany Casino.  SCMC replaced Klewin, the prior construction manager for this project.  SCMC is responsible for contract procurement and daily oversight of the construction project. The construction agreement, as amended, with SCMC provides that the cost of all of the contract work to be completed under the agreement will not exceed a guaranteed maximum amount of $132.5 million.  If STGC further changes the scope of the project or finishing materials, the guaranteed maximum amount under the contract may be further increased.  Also during 2005, SNFGC entered into a construction management agreement with SCMC for the completion of the luxury hotel project at Seneca Niagara Casino and Hotel.  Effective December 1, 2005, SEGC entered into an agreement with SCMC for the demolition and land preparation work in connection with the site for the Seneca Buffalo Creek Casino.  This work was completed at a cost of $2.8 million.  For the fiscal years ended September 30, 2006 and 2005, SNFGC, STGC and SEGC have collectively made payments to SCMC for construction management fees and other costs of $6.2 million and $0.6 million, respectively.

Buffalo Creek Agreement with City of Buffalo

On November 9, 2006, we entered into an agreement with the City of Buffalo for the purchase of a two-block section of Fulton Street in the City of Buffalo, which street bi-sected the nine acre parcel previously acquired by the Nation.  The agreement provides for, among other things, the purchase of the two-block section of Fulton Street for $631,600; and commitments by us to expend $5 million - $7 million in total for infrastructure improvements relating to our proposed permanent Seneca Buffalo Creek Casino and $1.7 million annually to market Seneca Buffalo Creek Casino outside of the Western New York region.

Item 1A.  Risk Factors

In addition to the other information in this Annual Report, the following risk factors should be carefully considered in evaluating Seneca Gaming Corporation and our business because such risk factors may have a significant impact on our business, operating results and financial condition.  As a result of the risk factors set forth below and elsewhere in this Annual Report, actual results could differ materially from those projected in any forward-looking statements.

We have substantial indebtedness which could adversely affect our financial condition and prevent us from fulfilling our obligations, including our senior notes.

We have substantial indebtedness and have significant fixed debt service obligations in addition to our operating expenses. As of September 30, 2006, we had $500.0 million of 7-¼ % senior notes outstanding. The Indenture governing the senior notes permits us and our subsidiaries to incur additional debt in certain, limited circumstances. If we incur additional debt in the future, the related risks could intensify.

21

Our high level of indebtedness could have important consequences to you and significant adverse effects on our business. For example, it could:

·increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

·limit our ability to obtain additional debt financing for working capital, capital expenditures or other purposes;

·require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, development projects and other general business purposes;

·limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

·place us at a competitive disadvantage compared to our competitors that have less debt and/or more financial resources.

If our indebtedness affects our operations in these ways, our business, financial condition and results of operations could suffer, making it more difficult for us to satisfy our obligations.

Our failure to generate sufficient cash flow from our operations could adversely affect our ability to make payments on the senior notes and our other obligations.

Our ability to make payments on the senior notes and our other obligations will depend on our ability to generate cash flow from our current and future operations. Our ability to generate sufficient cash flow to satisfy our obligations will depend on our future operating performance, which is subject to many economic, competitive, regulatory and business factors that are beyond our control. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets or reduce or delay capital investments, or seek to raise additional capital. For the following reasons, among others, these measures may not be available to us on reasonable terms or at all, or, if available, they may not be adequate to enable us to satisfy our obligations under the senior notes:

·our ability to incur additional debt will be limited by the covenants of the Indenture governing the senior notes;

·the Indenture governing the senior notes includes covenants which limit our ability to create additional liens on or sell our assets; and

·unlike non-governmental businesses, we are prohibited by law from generating cash through an offering of equity securities.

If our cash flow is insufficient and we are unable to raise additional capital, we may not be able to service our debt obligations, including making payments on our senior notes.

Our obligations under the Indenture governing the senior notes are not secured, and the senior note holders’ rights to receive payments on the senior notes are effectively subordinated to SGC’s and the Guarantors’ secured indebtedness.

Holders of SGC’s and the Guarantors’ secured indebtedness will have claims that are prior to the claims of holders of senior notes to the extent of the value of the assets securing the other indebtedness. The Indenture governing the senior notes permits certain secured indebtedness.  The senior notes are effectively subordinated to all of that secured indebtedness. In the event of any distribution or payment in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, holders of SGC’s and the Guarantors’ secured indebtedness will have prior claim to those assets that constitute their collateral. Holders of the senior notes will participate ratably with all holders of SGC’s and the Guarantors’ unsecured indebtedness that is deemed to be of the same class as the senior notes, and potentially with all of SGC’s and the Guarantors’ other general creditors, based upon the respective amounts owed to each holder or creditor, in the remaining assets. In any of the foregoing events, we cannot assure senior note holders that there will be sufficient assets to pay amounts due on the senior notes. As a result, holders of senior notes may receive less, ratably, than holders of secured indebtedness.

22

As of September 30, 2006, the amount of the consolidated indebtedness of SGC was approximately $494.3 million, of which none is secured indebtedness. We are permitted to incur substantial additional indebtedness in the future under the terms of the Indenture governing the senior notes.

SGC conducts substantially all of its operations through its subsidiaries and may be limited in its ability to access funds from its subsidiaries to service its debt, including the notes.

SGC conducts substantially all of its operations through its subsidiaries. Accordingly, SGC relies on dividends from its subsidiaries to provide funds necessary to meet its obligations, including the payment of principal and interest on the senior notes. The ability of any subsidiary to pay dividends or make cash distributions to SGC may be contractually restricted. If SGC is unable to access the cash flows from its subsidiaries, SGC may have difficulty meeting its debt obligations, including the senior notes.  Although the Indenture governing the senior notes restricts our ability to incur additional indebtedness, those restrictions are subject to exceptions.

The senior notes are not the obligation of the Nation and the senior note holders’ rights as creditors are limited to the assets of SGC and the Guarantors.

SGC and the Guarantors are liable exclusively for the payment of the senior notes.  The Nation is not obligated for the payment of the senior notes. The assets of the Nation and its affiliates other than SGC and the Guarantors will not be available to pay the senior notes. Therefore, the senior note holders’ rights as creditors in a bankruptcy, liquidation or reorganization or similar proceeding would be limited to the assets of SGC and the Guarantors and the senior note holders would have no right to the assets of the Nation or its other affiliates.

The senior note holders’ ability to enforce their rights or have an adequate remedy against the Nation and us may be limited by the sovereign immunity of the Nation and us. If senior note holders are unable to enforce their rights, they may lose their entire investment in the senior notes.

We issued the senior notes pursuant to the Indenture. In addition, in connection with our issuance of the senior notes, the Nation entered into the Nation Agreement with the Trustee pursuant to which the Nation agreed not to take certain actions with respect to us while the senior notes were outstanding.  References to the “Nation Agreement” are to the Nation Agreement as amended on May 23, 2005.  On May 5, 2004, the Nation entered into an assignment and plan of distribution agreement, or the Assignment Agreement, with SGC pursuant to which the Nation assigned to SGC the Nation’s rights to the net proceeds in the event of a liquidation or dissolution of SNFGC, STGC or SEGC and pursuant to the plan of distribution, the net liquidation or dissolution proceeds of such entities shall be distributed by such entities directly to SGC. See “Item 1. - Business - ---Material Agreements—Assignment and Plan of Distribution Agreement.” Under federal law, we and the Nation have sovereign immunity and may not be sued without our and its consent, respectively. In the Indenture governing the senior notes, we do, and, in the Nation Agreement and the Assignment Agreement, the Nation does, grant a limited waiver of sovereign immunity and consent to suits to interpret or enforce the Indenture governing the senior notes, and the other agreements entered into in connection with the respective offerings involving the senior notes.  This waiver does not extend to all possible claims or remedies that a holder of the senior notes might allege or seek against us or the Nation. Specifically, the waiver limits available remedies to specific performance in most cases and limited money damages equal to the amount of a payment made in prohibition of the Indenture governing the senior notes or to the amount of the net liquidation or dissolution proceeds not assigned to SGC; provided, that, such money damages are only payable from assets held by the Nation, SGC, SNFGC, STGC or SEGC related to the gaming business, other than real property held in trust for the Nation by the United States. In the event that a New York court would find that specific performance is not an available remedy, the trustee and the holders of the senior notes may not have an adequate remedy against the Nation under the Nation Agreement and the Assignment Agreement. Furthermore, in the event that the Nation’s or our limited waiver of sovereign immunity is unenforceable, the trustee and the holders of the senior notes could be precluded from judicially enforcing their rights and remedies under the senior notes, the Indenture governing the senior notes, the Nation Agreement, and the Assignment Agreement.

Although we are subject to federal securities laws and could be liable with respect to any civil or criminal enforcement action brought by the United States government, we and the Nation have not waived our sovereign immunity from private civil suits, including for violations of the federal securities laws. Accordingly, the holders of the senior notes may not have any remedy against us or the Nation for violations of the federal or state securities laws if we raise sovereign immunity as an affirmative defense and it is accepted by the applicable court of law.

Uncertainty exists as to whether a federal or state court would have jurisdiction in an action related to the senior notes.

Obtaining jurisdiction over an Indian tribe and tribal instrumentalities, such as the Nation and us, can be difficult. Often, a commercial dispute with an Indian tribe or instrumentality cannot be heard in federal court because the typical requirements for federal jurisdiction are absent. The failure to satisfy the requirements for federal jurisdiction occurs because there is generally

23

no federal law question involved and there is no diversity of citizenship as an Indian tribe is not considered to be a citizen of a state for purposes of obtaining federal diversity jurisdiction.

The extent to which state courts will assume jurisdiction over disputes involving Indian tribes varies from state to state. The senior notes, the Indenture governing the senior notes and the related agreements are governed by the laws of New York State. There is conflicting case law on the issue of whether disputes with Indian tribes or instrumentalities should be heard in federal, state or tribal court. As a result of these conflicting cases, it is possible that neither a federal nor a state court would accept jurisdiction to resolve a matter involving the senior notes and the holders of the senior notes may have no legal recourse to a state or federal court.

In addition, under certain legal doctrines, a federal court or state court otherwise having jurisdiction may decline to hear a matter involving an Indian tribe and instead defer the matter for disposition in a tribal court or other tribal proceedings. For matters subject to the waiver of sovereign immunity by the Nation and us, the Nation and we have waived our rights to have these matters resolved in any tribal court or other proceeding of the Nation. There is case law, however, suggesting these rights may not be waived. The Nation presently has a tribal court, and a federal or state court may defer to that tribal court if, contrary to the waiver of sovereign immunity by us and the Nation, we or the Nation seek or allege our right to seek tribal proceedings for resolution of a dispute related to the senior notes. The tribal court system is different from federal and state civil courts. For example, there is no requirement that a judge be a lawyer. The tribal court may reach a different conclusion than the federal or state courts would and this may have a material adverse effect on the rights of the senior note holders. Accordingly, holders of senior notes or the trustee under the Indenture governing the senior notes may have difficulty bringing suits against the Nation and us in federal or state court.

Senior note holders may be required to dispose of their senior notes, or their senior notes may be redeemed, if their ownership of the senior notes jeopardizes our gaming operations or violates the Compact.

We may have the right to cause senior note holders to dispose of their senior notes, or to redeem their senior notes, if regulations are promulgated pursuant to which their ownership of the senior notes is determined to be unsuitable by the Seneca Gaming Authority or the New York State Racing and Wagering Board. In such event, the redemption price will be the lowest of the amount paid for the senior notes, the principal amount of the senior notes and the then current fair market value of the senior notes.

It is uncertain whether we or the Nation may be subject to the U.S. Bankruptcy Code, which could impair the senior note holders’ ability to realize on our assets.

It is uncertain whether we or the Nation may be a debtor in a case under the U.S. Bankruptcy Code. Without bankruptcy court protection, other creditors might receive preferential payments or otherwise obtain more than they would have under a bankruptcy court proceeding. If either we or the Nation commence a case under the Bankruptcy Code and the bankruptcy court does not dismiss the case, payments from the debtor would cease. It is uncertain how long payments under the senior notes could be delayed following commencement of a bankruptcy case.

If the guarantees of the senior notes are deemed fraudulent conveyances or preferential transfers, a court may subordinate or void them.

The Guarantors have incurred substantial debt under the guarantees of the senior notes. The incurrence by the Guarantors of debt under their guarantees may be subject to review under federal and state fraudulent conveyance laws if a bankruptcy, reorganization or rehabilitation case or a lawsuit, including circumstances in which bankruptcy is not involved, were commenced by, or on behalf of, unpaid creditors of our guarantors at some future date. Federal and state statutes allow courts, under specific circumstances, to void guarantees and related liens and require note holders to return payments received from the issuer or the guarantors.

An unpaid creditor or representative of creditors could file a lawsuit claiming that the issuance of guarantees constituted a “fraudulent conveyance.” To make such a determination, a court would have to find that a Guarantor did not receive fair consideration or reasonably equivalent value for the guarantee, and that, at the time the guarantee was issued, such Guarantor:

·was insolvent;

·was rendered insolvent by the issuance of the senior notes;

·was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or

·intended to incur, or believed that it would incur, debts beyond its ability to repay as those debts matured.

24

If a court were to make such a finding in respect to a Guarantor’s guarantee, it could void all or a portion of such Guarantor’s obligations under its guarantee of the senior notes, subordinate the claim in respect of its guarantee to its other existing and future indebtedness or take other actions detrimental to holders of the senior notes, including, in certain circumstances, invalidating the guarantees of the senior notes.

The measure of insolvency for these purposes will vary depending upon the law of the jurisdiction being applied. Generally, however, a company will be considered insolvent for these purposes if the sum of that company’s debts is greater than the fair value of all of that company’s property, or if the present fair salable value of that company’s assets is less than the amount that will be required to pay its probable liability on its existing debts as they mature. Moreover, regardless of insolvency, a court could void an incurrence of indebtedness, including the senior notes, if it determined that the transaction was made with intent to hinder, delay or defraud creditors, or a court could subordinate the indebtedness, including the senior notes or the guarantees, to the claims of all existing and future creditors on similar grounds. We cannot determine in advance what standard a court would apply to determine whether we were “insolvent” in connection with the sale of the senior notes.

There is a risk of a preferential transfer if:

·a Guarantor declares bankruptcy or its creditors force it to declare bankruptcy within 90 days (or in certain cases, one year) after a payment on the guarantee; or

·a guarantee was made in contemplation of insolvency.

A guarantee could be voided by a court as a preferential transfer. In addition, a court could require holders of senior notes to return any payments made on the senior notes during the 90-day (or one-year) period.

Each guarantee contains a provision intended to limit the Guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent conveyance. This provision may not be effective to protect the guarantees from being voided under a fraudulent conveyance law.

SGC and the Guarantors may not be able to repurchase senior notes upon a change of control.

The Indenture governing the senior notes requires SGC and the Guarantors to repurchase all outstanding notes at 101% of the principal amount thereof plus accrued and unpaid interest, if any, upon the occurrence of specific kinds of change of control events. SGC and the Guarantors may not have sufficient funds to purchase the senior notes after a change of control. SGC’s and the Guarantors’ failure to purchase the senior notes would be a default under the Indenture governing the senior notes.

We are controlled by the Nation and the interests of the Nation may conflict with the interests of senior note holders.

The Guarantors are wholly owned and controlled by SGC, which is wholly owned and controlled by the Nation. Circumstances may occur in which the interests of the Nation, the Council or the members of the Nation could be in conflict with the interests of a holder of the senior notes. In particular, the Nation, the Council or the members of the Nation could make business or other decisions that may affect a senior note holder. For example, the Nation, subject to the restrictions in the Indenture, could decide to expand our facilities, incur more debt, increase distributions or other payments to the Nation, dispose of assets or enter into other transactions that, in their judgment, are in their interest, even though these transactions might involve risks to holders of the senior notes, including making it more difficult for us to make payments on the senior notes and for the Guarantors to guarantee these payments.   Additionally, the Nation’s sovereign interests may result in policies or decisions that may conflict with the interests’ of the senior note holders.  For example, the Nation may determine not to approve a limited waiver of sovereign immunity in connection with a potential commercially favorable transaction between us and a third party, based principally on sovereignty considerations rather than customary commercial considerations, resulting in the loss of that commercially favorable business opportunity.  The loss of this opportunity could adversely affect us and, as a result, the senior note holders.

25

The Nation has a limited body of laws and has not adopted a corporate code. As a result, legal terms used in this Annual Report, the prospectuses related to the senior notes, the Indenture governing the senior notes and related transaction documents may have a different meaning under the laws of the Nation than under laws with which you are familiar.

The Nation has a limited number of laws, which primarily consist of the Nation’s constitution, a limited number of ordinances and codes, Council resolutions and judicial interpretations of Nation law. Because the body and scope of the Nation’s laws are not as fully developed as federal and state law, in many instances under Nation law it is difficult to predict how and which law will be applied. In particular, the Nation has not adopted a corporate code. Therefore, terms used in this Annual Report, the prospectuses related to the senior notes, the Indenture governing the senior notes and other related transaction documents, including, but not limited to, terms such as “liquidation” and “dissolution” that may require application and interpretation of the Nation’s laws may have no defined meanings under those laws or may have meanings different from what one is accustomed to finding under laws with which one is familiar.

We are subject to greater risks than a geographically diverse company.

We currently rely exclusively on cash flow from Seneca Niagara Casino and Hotel and Seneca Allegany Casino to service our obligations, including the senior notes. While we expect to expand the geographic scope of our patron base as a result of our expansion projects, our Seneca Niagara Casino and Hotel  relies primarily on patrons from within a 100-mile radius for its cash flow and Seneca Allegany Casino relies primarily on patrons from within an 80-mile radius for its cash flow. Further, our future expansion plans for additional casino operations as permitted by the Compact are limited to Western New York. As a result, in addition to our susceptibility to adverse global and domestic economic, political and business conditions, any economic downturn in the region could have a material adverse effect on our operations. An economic downturn would likely cause a decline in the disposable income of consumers in the region, which could result in a decrease in the number of patrons at Seneca Niagara Casino and Hotel and Seneca Allegany Casino, the frequency of their visits and the average amount that they would each be willing to spend at the casinos. We are subject to greater risks than more geographically diversified gaming or resort operations and may continue to be subject to these risks upon completion of our expansion project, including:

·a downturn in national, regional or local economic conditions;

·an increase in competition in New York State or the Northeastern United States and Canada, particularly for day-trip patrons residing in New York State, including as a result of recent legislation permitting new Indian casinos and video gaming machines at certain racetracks;

·impeded access due to road construction or closures of primary access routes; and

·adverse weather, and natural and other disasters in the Northeastern United States and Canada.

Although we maintain insurance customary in our industry (including property, casualty, terrorism and business interruption insurance), we cannot assure you that such insurance will be adequate or available to cover all the risks to which our business and assets may be subject. The occurrence of any one of the events described above could cause a material disruption in our business and make us unable to generate sufficient cash flow to make payments on the senior notes.

We compete with casinos, other forms of gaming and other resort properties. If we are unable to compete successfully, we may not be able to generate sufficient cash flow to fund our operations or service our debt.

Our casino operations compete with casinos, other forms of gaming and other resort properties located within and outside New York State. We face intense competition in our primary and secondary market areas, in addition to competition from casinos and gaming operations in our broader regional market.  New market entrants in New York State and elsewhere in the northeastern United States could also adversely affect our operations and our ability to meet our financial obligations. For a more extensive discussion of the competitive landscape affecting our operations, see “Item 1. - Business—Market and Competition.”

We depend on our key personnel to manage our business effectively and if we are unable to retain our key personnel, our ability to execute our business strategy could be impaired.

Our future success depends upon the continued services of certain of our key operating and executive personnel. The loss of the services of such key operating and executive personnel could have an adverse impact on us. There can be no assurance that the services of such personnel will continue to be made available to us. We do not maintain key person life insurance policies on any of our executives.

26

We could face difficulties in attracting and retaining qualified employees.

The operation of the expanded facilities of Seneca Niagara Casino and Hotel and Seneca Allegany Casino and the expected opening of Seneca Buffalo Creek Casino will require us to hire qualified executives, managers and a significant number of skilled employees with gaming and hospitality industry experience and qualifications. Currently, there is a shortage of skilled labor in the gaming industry in general. We cannot assure you that we will be able to recruit, train and retain a sufficient number of qualified employees, particularly due to the very small number of workers skilled in the gaming industry that reside in the immediate vicinity of either casino.

The Indenture governing the senior notes contains various covenants and provisions that limit our management’s discretion in the operation of our business.

The Indenture governing the senior notes includes covenants and provisions that, among other things, restrict our ability to:

·incur additional debt;

·make investments;

·create liens;

·enter into transactions with affiliates;

·sell assets;

·merge, consolidate or sell substantially all of our assets; and

·make capital expenditures.

All of these restrictive covenants may limit our ability to expand our operations or to pursue our business strategies. Changes in business conditions or results of operations, adverse regulatory developments or other events beyond our control may affect our ability to comply with these and other provisions of the Indenture governing the senior notes. The breach of any of these covenants could result in a default under our indebtedness, which could cause those obligations to become due and payable. If our indebtedness were to be accelerated, there can be no assurance that we would be able to pay it.

Our operations could be adversely affected during our expansion.

Although construction activities related to Seneca Allegany Casino are planned to minimize disruptions, construction noise and debris may disrupt Seneca Allegany Casino’s current operations. Unexpected construction delays could exacerbate or magnify these disruptions. We cannot assure you that construction activities will not have a material adverse effect on our results of operations.

Failure to complete our expansion projects and other future development projects on budget and on time could adversely affect our financial condition.

Our current expansion projects are, and any future expansion projects will be, subject to significant development and construction risks, any of which could cause unanticipated cost increases and delays. These include, among others, the following:

·shortages of material and skilled labor;

·failure to generate sufficient operating cash flow to meet our expansion needs;

·labor disputes and work stoppages;

·weather interference or delays;

·engineering problems;

·environmental problems;

27

·regulatory problems;

·increased distributions or head lease payments to the Nation delaying construction timetables due to availability of cash;

·changes to the plans or specifications;

·fire, earthquake, flood and other natural disasters; and

·geological, construction, excavation and equipment problems.

We cannot provide assurance that total costs for constructing and equipping the Seneca Allegany Casino and hotel,  will not exceed $167.0 million  Failure to complete our expansion projects on time and within our budgets may cause us to devote additional resources to the projects, which could divert our time and attention away from our operation of Seneca Niagara Casino and Hotel and Seneca Allegany Casino and could cause our business to suffer.

In addition, we may not be able to complete our other expansion plans, including the temporary and permanent Seneca Buffalo Creek Casinos, in a timely manner or at all.

We may not be able to generate enough cash flow to complete our current and future expansion projects.

We intend to fund a portion of our current and future expansion projects with cash flows from operations. We cannot provide assurance that we will be able to generate the required amount of cash from our operations to complete any or all of these projects. In addition, distributions or increased head lease payments to the Nation beyond what is currently anticipated will result in our cash flow being diverted from the construction of our hotels. If we are not able to generate enough cash to pay for our expansion projects, our projects may be delayed and we may need to find additional sources of funds, which may not be available on terms acceptable to us, if at all. Further, if we incur additional debt to cover the cost of our expansion projects, risks related to our indebtedness could intensify. If we cannot generate enough cash or find alternative sources of funding to expand our operations, our business, financial condition and results of operations could be materially adversely affected and we may not be able to make payments on the senior notes.

We have limited experience operating casinos and hotels in Western New York.

While our current senior management has over 100 years of combined experience managing significant gaming facilities with hotels, our casinos have been in operation since December 31, 2002 and May 1, 2004, respectively, we have limited experience operating our hotel in Niagara Falls, and no experience operating hotels in Salamanca, New York. Our expansion plans include opening an additional casino in Buffalo, New York and the completion of our resort hotel for Seneca Allegany Casino. We may experience difficulties in operating multiple casinos and hotels in a limited geographic region. Further, the addition of our hotels and other new and untested amenities to our existing casinos have many of the same risks inherent in the establishment of a new business enterprise since we have limited or no operating history in those activities. We may not be able to timely identify or anticipate all of the material risks associated with operating that business or additional casinos. Our lack of operating history in these new ventures may adversely affect our future operating results, ability to generate adequate cash flow and ability to make payments on the senior notes.

Our business could be affected by weather-related factors and seasonality.

Our results of operations may be adversely affected by weather-related and seasonal factors. Since opening, Seneca Niagara Casino and Hotel’s and Seneca Allegany Casino’s gaming revenue have not been materially impacted by severe weather conditions, but severe winter weather conditions may deter or prevent patrons from reaching our gaming facilities or undertaking day trips. In addition, some recreational activities, such as tourism, are curtailed during the winter months. Although our cash flow management system assumes seasonal fluctuations in gaming revenue for both of our casinos to ensure adequate cash flow during expected periods of lower revenue, we cannot provide assurance that weather-related and seasonal factors will not have a material adverse effect on our operations. Our limited operating history makes it difficult to predict the future effects of seasonality on our business, if any.

28

Although litigation challenging the validity of our Compact and our right to conduct Class III gaming in New York State has been unsuccessful to date, the validity of our Compact and our right to conduct Class III gaming in New York State could still be challenged in court or otherwise adversely affected by legislation, regulation, or judicial action relating to gaming generally, or our right to conduct Class III gaming, in particular.

In October 2001, the New York Legislature passed Chapter 383 of the Laws of 2001, or Chapter 383, which allowed Governor Pataki to enter into a gaming compact with the Seneca Nation of Indians and to enter into gaming compacts with other Indian tribes for the establishment of three additional casinos in the Catskills. Chapter 383 also approved the installation of VGMs at certain racetracks.

In January 2002, two actions were filed in the Supreme Court of the State of New York, County of Albany, challenging legislation that, among other things, authorized the Governor of New York to execute tribal-state gaming compacts, approved the use of slot machines as games of chance, approved the use of video lottery terminals at racetracks and authorized the participation of New York State in a multi-state lottery. The actions are captioned Dalton v. Pataki, et al., and Karr v. Pataki, et al. Plaintiffs sought a judgment declaring the legislation unconstitutional and enjoining its implementation. These two cases were consolidated and we refer to both cases below as Dalton v. Pataki.

On July 17, 2003, the New York Supreme Court dismissed the plaintiffs’ complaints in Dalton v. Pataki and held that the legislation is constitutional. The plaintiffs appealed the Court’s decision to the Third Department of the New York Supreme Court’s Appellate Division and oral argument was held on December 16, 2003. On July 7, 2004, a five judge panel issued its Opinion and Order declaring the legislation at issue, Chapter 383 of the Laws of 2001, constitutional as challenged. Notwithstanding the constitutionality of VGMs, the court declared the licensing of VGMs to racetracks to be unconstitutional due to the impermissible revenue distribution scheme set forth therein. Lastly, the court declared the provision of Chapter 383 of the Laws of 2001 authorizing the Division of the Lottery to participate in the multi-state lottery constitutional.

On May 3, 2005, the New York Court of Appeals held the legislation (including the licensing of VGMs to racetracks) to be constitutional. In July 2005, the New York Court of Appeals, the State’s highest court, denied a motion to rehear the case.  Appellants filed a writ of certiorari seeking review by the United States Supreme Court.  On November 28, 2005, the United States Supreme Court denied the writ.

If New York State were to make various forms of gaming illegal or against public policy (or the courts were to similarly rule), or otherwise to take a legal position adverse to SGC, such actions could have a material adverse effect on our ability to conduct our gaming operations as currently conducted.

If our ability to operate Class III gaming facilities on land held in restricted fee were successfully challenged, it would have a material adverse effect on our ability to conduct gaming operations in Niagara Falls and Erie County pursuant to the Compact.

The Compact authorizes the Nation to use funds appropriated under the Seneca Nation Land Claims Settlement Act, or SNLCSA, to acquire parcels of land in Niagara Falls and Erie County for gaming purposes. In 1990, Congress enacted SNLCSA, which provides the Nation with fair compensation for use of its land and for the impact on the Nation from prior lease arrangements in the City of Salamanca, New York. The funds appropriated under the SNLCSA are available for the Nation to acquire land, which could be placed into restricted fee status. As previously determined by the U.S. Secretary of the Interior, the Nation possesses jurisdiction over lands placed into restricted fee status pursuant to SNLCSA, and such lands constitute gaming eligible Indian lands as defined by the Indian Gaming Regulatory Act, or IGRA. While we believe that there is substantial support for the Secretary’s determination that lands placed into restricted fee pursuant to SNLCSA qualify as gaming eligible Indian lands as defined by IGRA, including the lands upon which Seneca Niagara Casino is located, it is possible that some person or group could successfully challenge the Secretary’s conclusion that the Nation is authorized to use such land for gaming purposes pursuant to IGRA.

If the Secretary’s determination that the Nation is authorized to use such land for gaming purposes pursuant to IGRA were successfully challenged, the Nation would be unable to conduct any gaming under IGRA at its current gaming facility in Niagara Falls or proposed gaming facility in Erie County. However, such an adverse determination would not affect the ability of the Nation to operate its Seneca Allegany Casino, which is located on existing Nation reservation territory.

In January 2006, an action was filed in the United State District Court, Western District of New York by various plaintiffs against the United States Department of Interior, the National Indian Gaming Commission and three individuals in their official capacities as Secretary of the Interior, Acting Assistant Secretary of the Interior for Indian Affairs and Chairman of the National Indian Gaming Commission.  The action seeks declaratory and injunctive relief under the Administrative Procedure Act, the Declaratory Judgments Act, the National Historic Preservation Act (NHPA), the National Environmental Policy Act (NEPA) and the Indian Regulatory Gaming Act and is principally directed at the decisions and actions of the defendants that permit the construction and operation of our Seneca Buffalo Creek Casino.  The plaintiffs claim that the defendants have failed to comply with NEPA, NHPA, and IGRA and have requested that the Court take numerous actions including declaring that the

29

lands acquired by the Nation pursuant to SNLCSA are not gaming eligible Indian lands within the meaning of IGRA and declaring that the Nation’s Compact violates IGRA.  If the plaintiffs are successful, the Nation would be unable to conduct any gaming upon lands acquired pursuant to SNLCSA.  On November 1, 2006 oral argument was heard on the defendant’s motion to dismiss for lack of jurisdiction, on the Nation’s amicus motion to dismiss based upon failure to join the Nation as a necessary party and sovereign immunity, and on the plaintiff’s motion for summary judgment.  As of December 15, 2006, the judge had not ruled on such motions.

On or about February 1, 2006, an action was filed in the New York Supreme Court, County of Erie, by various plaintiffs against George E. Pataki, in his official capacity as Governor of the State of New York; State Gaming Officials of the New York State Wagering Board; City of Buffalo; Common Council of the City of Buffalo; Anthony Masiello in his previous capacity as Mayor of Buffalo; Byron Brown in his capacity as Mayor of Buffalo; City of Buffalo Department of Public Works; Buffalo Sewer Authority; and Niagara Frontier Transportation Authority.  The action initially sought directive and injunctive relief under the State Environmental Quality Review Act (SEQRA); the First Parks, Recreation, Historic Preservation Law (PRHPL); First City Environmental Review Ordination (CERO); and Freedom of Information Law (FOIL) and is principally directed at the decisions and actions of the defendants in connection with our Seneca Buffalo Creek Casino.  The plaintiffs initially claimed that the defendants had failed to comply with SEQRA, PRHPL, CERO and FOIL and requested that the Court take numerous actions including directing compliance with SEQRA, PRHPL, CERO and FOIL and restraining further action relating to the development of our Seneca Buffalo Creek Casino.  In June 2006, the plaintiffs amended their complaint to drop their claims against Governor Pataki, the State Gaming Officials and the Niagara Frontier Transportation Authority, and added the Buffalo Department of Economic Development, Permits and Inspections as a party. The amended complaint also dropped all claims except for the SEQRA and CERO claims. In October 2006, the plaintiffs also moved for an injunction to prevent the Buffalo Creek Agreement with the City of Buffalo from being executed and performed, which motion was denied and is now under appeal. If the plaintiffs are successful, the Nation may be delayed in the completion of the Seneca Buffalo Creek Casino at this site or may be unable to complete the Seneca Buffalo Creek at this site.  Certain of these plaintiffs are also plaintiffs in the federal lawsuit filed in January 2006 and referenced above.

On or about April 6, 2006, an action was filed in the United State District Court, Western District of New York, by Daniel T. Warren, a pro se plaintiff, against the United States of America, the United State Department of the Interior, the National Indian Gaming Commission, and five individuals in their official capacities as Acting Secretary of the Interior, Acting Assistant Secretary of the Interior for Indian Affairs and Chairman of the National Indian Gaming Commission, as well as Governor George E. Pataki, as Governor of the State of New York, and Cheryl Ritchko-Buley, as Chairwoman of the New York State Racing and Wagering Board.  The action initially sought  declaratory and injunctive relief as to numerous matters including declaring that IGRA is unconstitutional, that the Compact violates IGRA, that the New York Constitution is not preempted by IGRA, that New York does not have the authority under state law to enter into a tribal state compact under IGRA, that certain actions of the defendants were not in accordance with law, and that certain lands purchased by the Nation were not subject to being taken into trust or restricted fee status under the SNLCSA or were not pursuant to settlement of a land claim within the meaning of IGRA; and enjoining the defendants from taking actions which would further casino gambling in the State of New York under IGRA or on any lands acquired by the Nation pursuant to SNLCSA. On August 16, 2006, the plaintiff amended his complaint bringing:  a Tenth Amendment challenge to IGRA;  a claim that the Compact violates IGRA by providing for gaming which is not otherwise lawful in New York; a claim that both the Compact and the statute authorizing the Governor of New York to enter into the Compact violate various provisions of the New York State Constitution; and a claim that the United States has failed to promulgate regulations for gaming on off-reservation territory, in violation of its statutory duties.  The effect of such amendment was to limit the claims remaining in the case, by dropping many of the federal law claims in the original complaint.  On December 1, 2006, the court heard argument on the plaintiff’s motion to join additional parties in which he seeks to add as defendants (1) Barry E. Snyder, Sr., as President of the Seneca Nation of Indians; (2) John Pasqualoni, as President and CEO of the Seneca Gaming Corporation; (3) the Seneca Nation of Indians; and (4) the Seneca Gaming Corporation.  As of December 15, 2006, the court had not ruled upon this motion.  Dispositive motions (to dismiss) on behalf of both the plaintiff and the defendants have not yet been heard by the court.  If the plaintiff is successful in this lawsuit, the Nation could be unable to conduct any gaming upon lands acquired pursuant to SNLCSA.

We may not be able to acquire the remaining approximate 4 acres of the approximate 50 acres in the City of Niagara Falls, New York, designated by New York State under the Compact for ownership by the Nation.

Consistent with the terms of the Compact, we intend to acquire the remaining approximate 4 acres of the approximate 50 acres in the City of Niagara Falls, New York, designated by New York State under the Compact for ownership by the Nation.  Also consistent with the terms of the Compact, the New York State Urban Development Corporation d/b/a Empire State Development Corporation, or ESDC, is assisting the Nation in acquiring this land from property owners, including through the exercise of the power of eminent domain.  There can be no assurance that ESDC will be successful in acquiring the land through condemnation proceedings.   Failure to acquire the additional land could adversely impact our future operations.

30

We may be subject to material liabilities arising out of the condemnation process through which we are acquiring lands in the City of Niagara Falls, NY.

In Niagara Falls, NY, the appraised value of the land and fixtures that have been acquired by us through the condemnation process is subject to challenge under New York state law.  If a court determines that the value for the land and fixtures is higher than the appraised value we paid to a condemnee, then we may be liable to the condemnee for the difference and potentially also responsible for certain additional costs and payments to the condemnee.

Terrorism and war may directly or indirectly harm our business.

The strength and profitability of our business will depend on consumer demand for casino resorts in general and for the type of luxury amenities Seneca Niagara Casino offers. Changes in consumer preferences or discretionary consumer spending could harm our business. The terrorist attacks of September 11, 2001 and ongoing terrorist and war activities in the United States and elsewhere, have had a negative impact on travel and leisure expenditures, including lodging, gaming and tourism. We cannot predict the extent to which terrorist activities may continue to affect us, directly or indirectly, in the future. An extended period of reduced discretionary spending and/or disruptions or declines in travel, conferences and conventions could significantly harm our operations.

We may be subject to material environmental liability as a result of unknown environmental hazards.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or chemical releases on or relating to its property and may be held liable to a governmental entity or to third parties for property damage, personal injury and for investigation and cleanup costs incurred by such parties in connection with the contamination. Such laws typically impose cleanup responsibility and liability without regard to whether the owner knew of or caused the presence of contaminants. The costs of investigation, remediation or removal of such substances may be substantial. Although the Nation has not waived its sovereign immunity with regard to such federal, state and local environmental legislation, the existence or discovery of an environmental hazard on any of its lands could result in an assertion of liability under federal environmental laws and have a significant adverse effect on the Nation’s relations with the state and the local community.

We rely in part on federal and in part on common law trade name protection to protect certain of our trademarks.

We rely in part on federal and in part on common law trade name protection to protect certain of our trademarks. We may face claims by third parties for alleged trade name infringement. Any resulting claims, if successful, could require us to cease using one or more of the names used in our business or require us to pay to use these names.

The entity that managed construction at our luxury hotel project in Niagara Falls, NY and is now managing the construction of our resort hotel and casino expansion projects is an entity with limited operating experience and limited experience in construction management.

SCMC is an entity formed by, and wholly owned by the Seneca Nation and organized for the purpose of managing construction projects.  We entered into construction management agreements with SCMC in connection with each of the Seneca Allegany Casino hotel and casino project and the Seneca Niagara Casino luxury hotel expansion project (which is now complete).  Although SCMC has hired key personnel who are knowledgeable and experienced in managing large construction projects, SCMC has very limited experience in overseeing and managing construction projects.  SCMC may not be able to identify or anticipate all material risks related to managing our construction projects, which could adversely affect our ability to timely and successfully develop and construct these projects as well as our business and results of operations.

A change in our current tax-exempt status could have a material adverse effect on our ability to repay our obligations under the senior notes.

A change in our current tax-exempt status could have a material adverse effect on our ability to repay our obligations under the senior notes. Based on our current interpretations of federal tax law, we will continue to treat our income as not being subject to federal income tax. However, we have not sought a private letter ruling from the Internal Revenue Service, or the IRS, confirming that interpretation.

SGC and each of its subsidiaries are instrumentalities of the Nation’s government and chartered under the laws of the Nation. Under current law, the Nation is not subject to federal income tax and we do not believe that SGC or the Guarantors, as instrumentalities of the Nation’s government, are so subject. The IRS, prior to 1996, took the position that tribal corporations wholly owned by a tribe were treated the same as the tribe and not subject to federal income tax. However, in 1996, the IRS publicly announced that it was taking the issue under submission and intended to study it further, and did not state whether any such future guidance would be prospective only or be retroactive. When the IRS changed its position on the federal tax status of state chartered corporations wholly owned by a tribe (stating that such entities were taxable), it made such change prospective and provided a transition period with retroactive relief if the form of the corporation was modified. Following the

31

IRS public announcement in 1996, some tribal corporations have obtained private letter rulings from the IRS to the effect that their operations would not be subject to federal income tax. Private letter rulings cannot be relied upon by other taxpayers. As of the date of this Annual Report, the IRS had not issued definitive guidance upon which we could rely as to whether it agreed or disagreed that tribal corporations are subject to federal income tax, or, if subject to federal income tax in some circumstances and not others, the circumstances in which a tribal corporation would be subject to federal income tax. Consequently, there is no controlling legal authority that supports or is contrary to our position that we are not subject to federal income tax. If our interpretations are incorrect, or if the applicable tax law changes in this regard, our cash flow and ability to service our obligations under the senior notes may be adversely affected.

Efforts have been made in Congress over the past several years to tax the income of tribal business enterprises. These have included a House of Representatives bill that would have taxed gaming income earned by Indian tribes as business income subject to corporate tax rates. Although that legislation has not been enacted, similar legislation could be enacted in the future. Any future legislation permitting the taxation of the Nation or our business could have a material adverse effect on our business, financial condition, results of operations or ability to pay our obligations under the senior notes.

Any adverse changes in the laws regulating our gaming operations or failure to maintain licenses required under gaming laws and regulations and other permits and approvals required under applicable laws and regulations could have a material adverse effect on our ability to conduct gaming operations and on our ability to fulfill our obligations under the senior notes.

Gaming on the Nation’s land is regulated by Nation laws, the Compact and federal statutes, most notably the IGRA. Several bills have been proposed during the current and recent sessions of Congress that could affect Indian gaming. Notably, though its proposed legislation has yet to be presented to Congress, the Policies and Procedures Subproject of the Bureau of Indian Affairs has proposed sweeping changes to the federal laws concerning Indians. Certain of such bills, if enacted, could impair the ability of the Nation and SGC to expand its gaming operations and adversely impact the future growth of the Nation’s revenue base. In addition, from time to time, various government officials have proposed taxing Indian casino gaming or otherwise limiting or restricting the conduct of gaming operations by Indian tribes. No assurance can be given that such legislation, if and when enacted by Congress, would not have a material adverse effect on the operations of SGC. In addition, under federal law, gaming on the Nation’s lands may be dependent upon the permissibility under New York law of certain forms of gaming or similar activities. If New York State were to make various forms of gaming illegal or against public policy (or the courts were to similarly rule), or otherwise to take a legal position adverse to the Compact or any of its provisions, such actions could have a material adverse effect on our ability to conduct our gaming operations as currently conducted. Moreover, a 1996 U.S. Supreme Court decision may permit a state to avoid or refuse to negotiate amendments to existing compacts such as the Compact.

Currently, the operation of all gaming on Indian lands is subject to IGRA. For the past several years, legislation has been introduced in Congress designed to address numerous perceived problems with this Act. Most of the proposals that have been seriously considered would be prospective in effect and have contained clauses that would grandfather existing Indian gaming operations such as Seneca Niagara Casino and Hotel. However, certain legislative acts have also proposed repealing many of the provisions of IGRA. While none of the substantive proposed amendments to IGRA has proceeded out of committee hearings to a vote by either house of Congress, we cannot predict the success of future legislative acts. Changes in applicable laws and regulations or an increase in the cost of compliance with applicable laws and regulations could limit or materially affect the types of gaming that we may offer and the revenue our operations generate. Furthermore, if Congress enacted legislation that was applied retroactively, our ability to meet our outstanding debt obligations could be adversely affected.

Under the Compact and federal, state and Nation law we are required to maintain certain licenses, permits and approvals in order to conduct gaming operations. Failure to maintain such licenses, permits and approvals could have a material adverse affect on our ability to conduct gaming operations and on our ability to make payment on our obligations under the senior notes.

Changes in the membership of the Council, its policies or the Nation’s constitution could adversely affect our operations.

The Nation is governed by a Council, consisting of sixteen members, of which eight members are elected from each of the two principal Territories. Councilors are elected to four-year terms, which are staggered. The Nation holds an election every two years for its three executive branch officers: the President, the Treasurer and the Clerk. These officers alternate between the two principal Territories. The most recent election of the executive branch officers and eight Council members took place on November 7, 2006. We cannot assure that  this new Council, or any subsequently elected Council, will pursue the same agenda or goals as the prior government, in particular with respect to us, our expansion projects or compliance with the Compact and our other obligations including the covenants contained in the Indenture (including, but not limited to, timely payment of the

32

exclusivity fee and our public filings). In addition, the Council acts by majority vote and with respect to any issue or policy, a change in views by one or more members could result in a change in the policy adopted by the Council. Changes in the Council or its policies could result in significant changes in our structure or operations or in our planned expansions. In addition, the Council appoints the members of SGC’s board of directors. The Council may also remove a member of SGC’s board of directors for cause either upon the recommendation of a majority of SGC’s board of directors, or upon its own initiative with a vote of at least ten Councilors. The term cause has not been defined in SGC’s charter or in Nation law, and therefore, we do not know how this term will be interpreted. As a result, a change in the membership or views of existing members of Council adverse to the existing board or management could result in a change in SGC’s board of directors and potentially in SGC’s management. Any such changes could adversely affect our business plan or otherwise result in a material adverse effect in our business, financial condition, results of operations or ability to make payments on the senior notes. See “Directors and Executive Officers of the Registrant” for a discussion regarding the more active role the new Seneca government has taken in managing our affairs.

Further, while we believe that under the Nation’s constitution, adopted in 1848 and last amended in 1993, a referendum may only be called by the Council, our interpretation of the Nation’s constitution could be incorrect or the constitution may be amended in the future to provide that the Seneca people may call a referendum without the approval of the Council. If the constitution were amended to allow the Seneca people to call for a referendum directly, the Nation may adopt laws adversely affecting our business and results of operations.

Item 1B.  Unresolved Staff Comments

Not applicable

Item 2.   Properties

Seneca Niagara Casino and Hotel.    Seneca Niagara Casino and Hotel is located on Nation Territory in Niagara Falls, New York, in the former Niagara Falls Convention and Civic Center, which we lease from the Nation. Seneca Niagara Casino and Hotel is located approximately 20 miles north of Buffalo, New York and approximately 90 miles west of Rochester, New York.

Pursuant to the Compact, the Nation may acquire property and establish gaming facilities in the City of Niagara Falls within the boundaries of the approximately 50 acre area of land described in Appendix I of the Compact and designated as land to be developed by the Nation in connection with the Nation’s gaming facilities. The Compact also authorizes the Nation to establish a gaming facility in Erie County and one on the Nation’s Allegany Territory. The Compact authorizes the Nation to use funds appropriated under the SNLCSA to acquire parcels of land in Niagara Falls and Erie County for gaming purposes.

As of December 15, 2006, SNFGC has acquired, at a cost of $46.1 million, which cost may increase based on existing and future potential valuation challenges, approximately 44 acres of the remaining land in the City of Niagara Falls, New York, designated by New York State under the Compact for ownership by the Nation, thus reducing the remaining acreage to be acquired to four acres.  SNFGC has waived its right to acquire approximately two acres of land designated in the Compact for ownership by the Nation, in return for a right of first refusal to purchase such property if this two-acre parcel is offered for sale in the future by its owners, a religious organization.

As of December 15, 2006, the Nation had acquired approximately 24 acres (of the approximate 50 acres described in Appendix I of the Compact) with funds appropriated under the SNLCSA in Niagara Falls. By operation of federal law, these lands and other parcels that may be acquired in the future pursuant to the SNLCSA (whether in Niagara Falls or Erie County) are subject to restrictions against alienation, constitute Indian country subject to the jurisdiction of the Nation, and qualify as gaming eligible Indian lands pursuant to IGRA. Seneca Niagara Casino and Hotel and its 2,300 space parking garage are situated on the Nation’s restricted fee lands.

In March 2006 we acquired 257 acres of land with the intent to design and build a championship level golf course in Lewiston, New York, approximately 8 miles from Seneca Niagara Casino and Hotel.  We have selected the Robert Trent Jones II firm to design the golf course.  This land and the development project are intended to be sold to Seneca Management Development Corporation. The purchase of the land and development rights is expected to be financed by SMDC through a loan provided by SGC.

For further information relating to the real estate acquisitions of the Nation, SGC and its subsidiaries, see “Item 1. — Business --- Seneca Niagara Casino and Hotel --- Niagara Falls Real Estate Acquisitions”, above.

Seneca Allegany Casino.    Seneca Allegany Casino is located on the Nation’s Allegany Territory in the City of Salamanca, New York. STGC leases the gaming facility in which Seneca Allegany Casino is located from the Nation. Seneca Allegany Casino is located immediately off Interstate 86, approximately 70 miles south of Niagara Falls, New York and is within 75

33

miles of Erie, Pennsylvania, and 165 miles of Cleveland and Akron, Ohio and Pittsburgh, Pennsylvania. The land upon which the Nation owns and operates Seneca Allegany Casino is within the Nation’s territorial boundaries, and is therefore eligible for gaming pursuant to IGRA.

Seneca Buffalo Creek Casino.    On October 3, 2005, the Nation acquired approximately nine acres of land located within two city blocks in the inner-harbor district of downtown Buffalo, designating these nine acres as the Erie County gaming site for purposes of the Compact.  We commenced construction of our Erie County gaming facility on these nine acres in downtown Buffalo on December 8, 2005.  The approximate nine acres acquired in Erie County were acquired with funds appropriated under the SNLCSA.   In November 2006, SEGC also acquired from the City of Buffalo, New York, a two-block area of Fulton Street which bisects the previous nine-acre site, thus allowing SEGC to build the permanent Seneca Buffalo Creek Casino using our preferred grand design.

Irving, New York.  SGC owns approximately 113 acres in Irving, New York.  This acreage is not currently being used in our gaming operations.

Item 3.  Legal Proceedings

Seneca Niagara Falls Gaming Corporation v. Klewin Building Company, Inc. (American Arbitration No. 15 110 00691 05; Arbitration before the Arbitration Panel of James W. Gresens, Robert A. Dean, and S. Thomas Aiston (Arbitration))

On October 15, 2003, SNFGC and Klewin entered into an Owner-Design/Builder Agreement whereby Klewin agreed to design and build a hotel, casino and spa for SNFGC for a guaranteed maximum price of $153,048,497.  On August 10, 2005, SNFGC provided Klewin with a notice of default because of Klewin’s failure to pay the architect and Klewin’s acknowledgement that it would not deliver the project within the guaranteed maximum price.  A second notice of default was issued based on Klewin’s failure to pay its subcontractors. These matters are the subject of an arbitration proceeding pursuant to the arbitration clause in the contract.  The arbitration hearing is scheduled to begin on May 7, 2007.  The parties are currently engaged in discovery.

SNFGC v. Klewin Building Company, Inc., C.R. Klewin Gaming & Hospitality, Inc., and T.D. Banknorth, N.A.; T.D. Banknorth, N.A. v. JCJ Architecture, Inc. f/k/a Jeter, Cook & Jepson-Architects, Inc. (Supreme Court, Complex Litigation Docket, Hartford, Connecticut; Docket No. X03-CV-05-4009818-S)

On August 24, 2005, SNFGC filed a complaint against Klewin and BankNorth, as joint defendants, in the Superior Court for the Judicial District of New London, Connecticut. The suit was filed to obtain immediate injunctive relief in conjunction with the pending demand for arbitration by SNFGC related to Klewin ‘s failure to make required payments to the subcontractors for the construction of Seneca Niagara Casino’s new luxury hotel. SNFGC filed the complaint in order to enjoin the defendants from utilizing approximately $14.6 million paid by SNFGC into an account with BankNorth in the name of Klewin, which was set up by SNFGC principally for the purpose of paying Klewin’s subcontractors (including the architect) on the construction project. SNFGC was subsequently informed by Klewin that approximately $14.6 million paid by SNFGC into the account was “swept” by BankNorth and, as a result, several subcontractors (including the architect) were not paid by Klewin. Among other things, the complaint seeks temporary and permanent injunctive relief requiring that the defendants return to the account the approximate $14.6 million that has been removed from that account and temporary and permanent injunctive relief enjoining defendants from utilizing the approximate $14.6 million that has been removed from the account, other than for payment of Klewin’s subcontractors on the construction projects.  We subsequently advanced funds directly to the architect and to SCMC for payment to the remaining subcontractors.

On August 25, 2005, the parties appeared before the court and agreed to a stipulated immediate order freezing the remaining balance of approximately $5.5 million in the account pending a hearing on SNFGC’s application for temporary and permanent injunctive relief, subject to limited draw rights of not more than $350,000 per week permitted to Klewin for its operating expenses pursuant to a budget to be submitted by Klewin weekly. We intend to seek recovery of all amounts already withdrawn from the account, except to the extent disbursed for appropriate purposes. On September 14, 2005, Klewin filed an Application for Immediate Temporary Injunction seeking a temporary injunction prohibiting us from using design and construction documents and appropriating Klewin employees.  Klewin has also asserted counterclaims alleging, among other matters, tortuous interference with their business.  A hearing related to these counterclaims and the temporary injunction was held on November 22, 2005 and on November 30, 2005, the Court granted our motion to dismiss Klewin’s counterclaims and Application for Immediate Temporary Injunction.  Klewin has filed an appeal.  On November 23, 2005, BankNorth filed an answer asserting, among other matters, certain counterclaims including the request for a declaratory judgment to the effect that they would be permitted to retain approximately $9.1 million of the $14.6 million swept from the Klewin account.  On January 17, 2006, we filed a motion for attachment against other Klewin assets (other than the bank account at issue), which motion was heard on September 20 and 21, 2006.  On December 1, 2006, the court granted SNFGC’s order for an attachment pendente

34

lite to the value of $11.2 million, which order applied to all real property, bank accounts, and other assets owned by Klewin (other than the bank account at issue).  Klewin filed a notice of appeal on December 7, 2006.  As of December 15, 2006, the temporary injunction on the bank account at issue remains in place.

SNFGC and STGC, as assignees v. T.D. BankNorth, N.A. (Niagara County Supreme Court; Index No. 124716

On December 23, 2005, SNFGC and STGC filed a complaint in Niagara County Supreme Court seeking to recover monies taken by BankNorth that were originally directed to the Klewin subcontractors and to the architect, along with an award of attorneys’ fees, under  Section 77 of the New York Lien Law and under the theory of common law conversion.   SNFGC and STGC commenced the action as assignees of the claims of the subcontractors and the architect.  On February 27, 2006, BankNorth filed a motion to dismiss the action, claiming that the trust fund provisions of the New York Lien Law do not apply and the Connecticut action was filed first, before the New York action.  An order denying BankNorth’s motion to dismiss was filed on May 24, 2006.  BankNorth served its answer to SNFGC’s complaint on June 28, 2006, and also filed a motion to reargue and renew its prior motion to dismiss. On December 8, 2006, the court granted the defendant’s motion to reargue and granted the defendant’s previously denied motion for summary judgment.

We can provide no assurance that we will be able to recover all or any portion of the approximate $14.6 million at issue in the foregoing matters involving Klewin and BankNorth.

Citizens Against Casino Gambling v. Norton (1:06-cv-00001-WMS (WDNY))

In January 2006, an action was filed in the United State District Court, Western District of New York by various plaintiffs against the United States Department of Interior, the National Indian Gaming Commission and three individuals in their official capacities as Secretary of the Interior, Acting Assistant Secretary of the Interior for Indian Affairs and Chairman of the National Indian Gaming Commission.  The action seeks declaratory and injunctive relief under the Administrative Procedure Act, the Declaratory Judgments Act, the National Historic Preservation Act (NHPA), the National Environmental Policy Act (NEPA) and the Indian Regulatory Gaming Act and is principally directed at the decisions and actions of the defendants that permit the construction and operation of our Seneca Buffalo Creek Casino.  The plaintiffs claim that the defendants have failed to comply with NEPA, NHPA, and IGRA and have requested that the Court take numerous actions including declaring that the lands acquired by the Nation pursuant to SNLCSA are not gaming eligible Indian lands within the meaning of IGRA and declaring that the Nation’s Compact violates IGRA.  If the plaintiffs are successful, the Nation would be unable to conduct any gaming upon lands acquired pursuant to SNLCSA.  On November 1, 2006 oral argument was heard on the defendant’s motion to dismiss for lack of jurisdiction, on the Nation’s amicus motion to dismiss based upon failure to join the Nation as a necessary party and sovereign immunity, and on the plaintiff’s motion for summary judgment.  As of December 15, 2006, the judge had not ruled on such motions.

Scott v. Pataki (NYS Supreme Court, Erie County, Index No. 001189/06)

On or about February 1, 2006, an action was filed in the New York Supreme Court, County of Erie, by various plaintiffs against George E. Pataki, in his official capacity as Governor of the State of New York; State Gaming Officials of the New York State Wagering Board; City of Buffalo; Common Council of the City of Buffalo; Anthony Masiello in his previous capacity as Mayor of Buffalo; Byron Brown in his capacity as Mayor of Buffalo; City of Buffalo Department of Public Works; Buffalo Sewer Authority; and Niagara Frontier Transportation Authority.  The action initially sought directive and injunctive relief under the State Environmental Quality Review Act (SEQRA); the First Parks, Recreation, Historic Preservation Law (PRHPL); First City Environmental Review Ordination (CERO); and Freedom of Information Law (FOIL) and is principally directed at the decisions and actions of the defendants in connection with our Seneca Buffalo Creek Casino.  The plaintiffs initially claimed that the defendants had failed to comply with SEQRA, PRHPL, CERO and FOIL and had requested that the Court take numerous actions including directing compliance with SEQRA, PRHPL, CERO and FOIL and restraining further action relating to the development of our Seneca Buffalo Creek Casino.  In June 2006, the plaintiffs amended their complaint to drop their claims against Governor Pataki, the State Gaming Officials and the Niagara Frontier Transportation Authority, and added the Buffalo City Department of Economic Development, Permits and Inspections as a party.  The amended complaint also dropped all claims except for the SEQRA and CERO claims.  In October 2006, the plaintiffs moved for an injunction to prevent the Buffalo Creek Agreement with the City of Buffalo from being executed and performed, but the motion was denied based upon the judge’s determination that the plaintiffs failed to show a likelihood of success on the merits.  The plaintiffs have appealed the denial of the injunction to the New York Supreme Court Appellate Division.  A hearing on the appeal is anticipated to occur in late 2007.

If the plaintiffs are successful, the Nation may be delayed in the completion of the Seneca Buffalo Creek Casino at this site or may be unable to complete the Seneca Buffalo Creek Casino at this site.  Certain of these plaintiffs are also plaintiffs in the federal lawsuit filed in January 2006 and referenced above.

35

Warren v. United States (1:06-cy-00226-JTE (WDNY))

On or about April 6, 2006, an action was filed in the United State District Court, Western District of New York, by Daniel T. Warren, a pro se plaintiff, against the United States of America, the United State Department of the Interior, the National Indian Gaming Commission, and five individuals in their official capacities as Acting Secretary of the Interior, Acting Assistant Secretary of the Interior for Indian Affairs and Chairman of the National Indian Gaming Commission, as well as Governor George E. Pataki, as Governor of the State of New York, and Cheryl Ritchko-Buley, as Chairwoman of the New York State Racing and Wagering Board.  The action initially sought  declaratory and injunctive relief as to numerous matters including declaring that IGRA is unconstitutional, that the Compact violates IGRA, that the New York Constitution is not preempted by IGRA, that New York does not have the authority under state law to enter into a tribal state compact under IGRA, that certain actions of the defendants were not in accordance with law, and that certain lands purchased by the Nation were not subject to being taken into trust or restricted fee status under the SNLCSA or were not pursuant to settlement of a land claim within the meaning of IGRA; and enjoining the defendants from taking actions which would further casino gambling in the state of New York under IGRA or on any lands acquired by the Nation pursuant to SNLCSA. On August 16, 2006, the plaintiff amended his complaint bringing:  a Tenth Amendment challenge to IGRA;  a claim that the Compact violates IGRA by providing for gaming which is not otherwise lawful in New York; a claim that both the Compact and the statute authorizing the Governor of New York to enter into the Compact violate various provisions of the New York Constitution; and a claim that the United States has failed to promulgate regulations for gaming on off-reservation territory, in violation of its statutory duties.  The effect of such amendment was to limit the claims remaining in the case, by dropping many of the federal law claims in the original complaint.  On December 1, 2006, the court heard argument on the plaintiff’s motion to join additional parties in which he seeks to add as defendants (1) Barry E. Snyder, Sr., as President of the Seneca Nation of Indians; (2) John Pasqualoni, as President and CEO of SGC; (3) the Seneca Nation of Indians; and (4) SGC.  As of December 15, 2006, the court had not ruled upon this motion.  Dispositive motions (to dismiss) on behalf of both the plaintiff and the defendants have not yet been heard by the court.  If the plaintiff is successful in this lawsuit, the Nation could be unable to conduct any gaming upon lands acquired pursuant to SNLCSA.

County of Erie v. City of Buffalo (NYS Supreme Court, Index No. 2006-10440).

On November 6, 2006, a suit was brought in New York Supreme Court, County of Erie, by the County of Erie, New York, Joel Giambra (as County Executive), and Andrew Eszak (as Commissioner of the County of Erie Department of Environment and Planning), against the City of Buffalo, Mayor Byron Brown and the Buffalo Common Council seeking to invalidate the Buffalo Creek Agreement on the basis that the City failed to refer the agreement to the County under Section 239-m of the New York State General Municipal Law.  The defendants filed a motion to dismiss on December 1, 2006, which is pending before the court.  If the plaintiffs are successful, the Nation may be delayed in the completion of the Seneca Buffalo Creek Casino or may be unable to complete the Seneca Buffalo Creek Casino as planned.

Item 4.  Submission of Matters to a Vote of Security Holders

Not Applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Not Applicable.

Item 6. Selected Financial Data

The Nation established SGC as a wholly owned entity to operate all of the Nation’s Class III gaming and resort-related activities. The selected consolidated financial data set forth below as of and for Fiscal 2006, Fiscal 2005, Fiscal 2004, Fiscal 2003 and as of and for the period ended September 30, 2002 have been derived from our audited financial statements included in this Annual Report.  This information should be read with our financial statements and the related notes included in this Annual Report beginning on page F-1. You should also read the following information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

36

	Fiscal Year Ended September 30,								Period  from  Inception to Sept. 30,
	2006		2005		2004		2003		2002
	(Dollars in Thousands)
Statement of Operations Data:
Revenues:
Gaming	$ 519,620		$ 440,156		$ 337,536		$ 184,332		$         —
Food and beverage	50,141		41,689		31,358		16,158		—
Lodging	10,654		—		—		—		—
Retail and other	19,940		16,955		11,797		4,823		—
Gross revenues	600,355		498,800		380,691		205,313		—
Less: Promotional allowances	(77,861	)	(49,647	)	(24,295	)	(9,557	)	—
Net revenues	522,494		449,153		356,396		195,756		—
Expenses:
Gaming	129,396		114,746		92,531		53,686		—
Food and beverage	43,485		34,877		26,387		15,856		—
Lodging	6,131		—		—		—		—
Retail, entertainment and other	11,668		10,418		7,184		2,732		—
Advertising, general and administrative	131,997		117,188		91,552		42,176		—
Pre-opening costs	9,478		1,509		4,228		7,155		2,961
Depreciation and amortization	38,992		26,295		17,638		8,723		—
Total operating expenses	371,147		305,033		239,520		130,328		2,961
Operating income	151,347		144,120		116,876		65,428		(2,961	)
Other income and (expense):
Other non-operating expenses	(558	)	(13,301	)	—		—		—
Interest income	5,814		5,116		1,535		44		—
Interest expense	(33,198	)	(90,366	)	(33,702	)	(15,515	)	—
Net other expense	(27,942	)	(98,551	)	(32,167	)	(15,471	)	—
Net income	$ 123,405		$   45,569		$   84,709		$   49,957		$   (2,961	)
Other Financial Data:
EBITDA(1)	$ 189,781		$ 157,114		$ 134,514		$   74,151		$   (2,961	)
Cash provided by (used in) operating activities	181,838		47,652		143,803		97,720		(69	)
Cash used in investing activities	(233,582	)	(192,147	)	(238,703	)	(118,963	)	(39	)
Cash (used in) provided by financing activities	(12,528	)	75,367		246,867		80,739		240
Capital expenditures and payments for land acquisitions and other assets	241,741		172,684		180,740		118,963		39
Ratio of earnings to fixed charges(2)	4.0x		1.4x		3.4x		3.9x		—

	As of September 30,
	2006	2005	2004	2003	2002
	(Dollars in Thousands)
Balance Sheet Data:
Cash and cash equivalents	$   78,195	$ 142,467	$ 211,595	$  59,628	$       132
Total assets	840,376	698,848	584,056	181,749	2,883
Total liabilities	650,745	589,423	497,369	134,753	5,844
Total capital	$ 189,631	$ 109,425	$   86,687	$  46,996	$   (2,961	)

37

(1)EBITDA represents earnings before interest, depreciation and amortization. We are not subject to U.S. federal income taxation under current interpretations of the U.S. federal tax code. EBITDA is presented to provide additional information that our management uses to assess our business and because we believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. However, other companies in our industry may calculate EBITDA differently than we do. EBITDA is not a measurement of financial condition or profitability under generally accepted accounting principles and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with generally accepted accounting principles.

EBITDA includes pre-opening costs of approximately $9.5 million, $1.5 million, $4.2 million, $7.2 million and $3.0 million for Fiscal 2006, Fiscal 2005, Fiscal 2004, Fiscal 2003 and the period from inception through September 30, 2002, respectively.

38

The following table sets forth a reconciliation of net income to EBITDA, which management believes is the most nearly equivalent measure under U.S. generally accepted accounting principles. The adjustments set forth below are those relevant to the periods presented.

	Fiscal Year Ended September 30,				Period  from  Inception  to Sept. 30,
	2006	2005	2004	2003	2002
	(Dollars in Thousands)
Net income (loss)	$ 123,405	$   45,569	$   84,709	$  49,957	$   (2,961	)
Depreciation and amortization	38,992	26,295	17,638	8,723	—
Net interest expense	27,384	85,250	32,167	15,471	—
EBITDA	$ 189,781	$ 157,114	$ 134,514	$  74,151	$   (2,961	)

(2)The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For purposes of determining the ratio of earnings to fixed charges, the term “earnings” is the amount resulting from adding (i) net income, (ii) fixed charges and (iii) amortization of capitalized interest, less the amount of interest capitalized. The term “fixed charges” is the amount resulting from adding (i) interest expense whether expensed or capitalized, and (ii) the amortization of debt financing costs.  Note that for the fiscal year ended September 30, 2005, this ratio includes the effect of a $49.2 million charge to earnings, recorded as interest expense, relating to the early extinguishment of the Term Loan, and a non-recurring charge to earnings relating to the Klewin matter, as discussed below.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with the section titled “Selected Consolidated Financial and Other Data” and the financial statements and related notes included elsewhere in this Annual Report. References herein to years are to fiscal years of Seneca Gaming Corporation unless otherwise noted. Our fiscal year is from October 1 through September 30.

Overview

Seneca Gaming Corporation is wholly owned by the Seneca Nation of Indians of New York and chartered to develop, manage and direct all of the Nation’s Class III gaming operations. The Nation entered into a Compact with New York State on August 18, 2002 that provides the Nation with the right to establish and operate three Class III gaming facilities in Western New York. We opened our first Class III gaming facility on Nation Territory in the City of Niagara Falls, New York on December 31, 2002, featuring principally Class III slot machines and table games. This facility is operated by our wholly owned subsidiary SNFGC. On May 1, 2004, we opened our second Class III gaming facility, Seneca Allegany Casino, on the Nation’s Territory in the City of Salamanca, New York. This facility features Class III slot machines and table games. We formed STGC on September 20, 2003 as a wholly owned subsidiary to operate this facility.

Also, since our Seneca Allegany Casino was open for only five months during Fiscal 2004, comparisons between Fiscal 2005 and Fiscal 2004 are less meaningful in some respects.

Under the Compact, the Nation has the right to establish and operate a third Class III gaming facility in Erie County, New York.  If the Nation had failed to commence construction of a Class III gaming facility in Erie County by December 9, 2005, the Nation’s exclusive right under the Compact to own and operate a Class III gaming facility in Erie County could have terminated, and if the Nation fails to commence Class III gaming operations in Erie County by December 9, 2007, the Nation’s exclusive right under the Compact to own and operate a Class III gaming facility in Erie County may terminate. On October 3, 2005 the Nation acquired approximately nine acres of land in the inner-harbor district of downtown Buffalo.  We commenced construction of our Erie County gaming facility on these nine acres on December 8, 2005.  We plan to open a temporary Class III gaming facility on this site in May 2007, and the permanent Class III gaming facility on this site in 2009.

Executive Summary

Our Current Operations.    We currently operate two Class III gaming facilities, Seneca Niagara Casino and Hotel, in the City of Niagara Falls, New York, and Seneca Allegany Casino, in the City of Salamanca, New York. Our casino operations include gaming, lodging, dining, entertainment and retail. For Fiscal 2006 and Fiscal 2005, approximately 94% and 94%, respectively, of our net revenue was derived from our Class III gaming activities.

39

Key Performance Indicators.    Our operating results are dependent on the volume of patrons at our casinos and our ability to attract them for repeat visits.

Seneca Niagara Casino and Hotel.    Prior to the opening of our luxury hotel, Seneca Niagara Casino primarily relied on drive-in and bus patrons from the Buffalo, Niagara Falls, and Rochester areas in New York and secondarily from Erie, Pennsylvania, Ohio and other parts of New York.  Since the opening of the new luxury hotel and expanded gaming and related amenities during fiscal 2006, Seneca Niagara Casino and Hotel has experienced steady growth in its patron base. We believe that the expansion of Seneca Niagara Casino and Hotel, including the addition of our luxury hotel and other amenities, has enabled us to increase higher-end patron volume, gaming activity and length of stay and extended our geographic penetration and appeal to a more diverse demographic base.  Since the full opening of the luxury hotel on March 31, 2006, our average occupancy rate has been approximately 78%.  During the same period approximately 69% of our occupied rooms were complimentary rooms for our gaming patrons.

As of September 30, 2006, we had paid for substantially all of our completed expansion projects out of cash flow from operations along with the proceeds of our senior notes. Our completed expansion projects since the opening of the casino on December 31, 2002 include the addition of Turtle Island, a non-smoking casino room, a 2,300-space parking garage, the Western Door, an upscale steakhouse, our “Pennies From Heaven” slot room located on the mezzanine level overlooking our main casino, adding approximately 6,600 square feet of gaming space and 242 additional ticketed slot machines and our luxury hotel with expanded gaming floor and related amenities.  We opened substantially all public areas and the first 10 floors of rooms on December 15, 2005, and completely opened the remaining hotel rooms and all amenities on March 31, 2006.  The total cost of the luxury hotel expansion project was $234.0 million.

Seneca Allegany Casino.    Since its opening on May 1, 2004, Seneca Allegany Casino has experienced steady growth in its patron base, net revenue, and profitability. Seneca Allegany Casino has attracted patrons from the southern portion of Western New York, Erie and Pittsburgh, Pennsylvania and Ohio. From opening through September 30, 2006, approximately 65% of its patrons have come from outside New York State.

In July 2005, we opened our 1,850-space parking garage, which cost $32.2 million, and we are constructing a 212-room hotel and permanent casino at Seneca Allegany Casino. We believe this expansion is necessary to provide a first-class gaming experience for our patrons, to increase their length of stay and to maintain the competitive position of the facility in light of expected future competition in Pennsylvania.  We currently expect the total cost to complete the resort hotel project, including the cost of furniture, fixtures and equipment, will be from $156.0 million to $167.0 million.  We plan to continue to fund this expansion with cash flows from operations and cash on hand.  We expect to open the new gaming floor by the end of December 2006, and completely open the hotel and other amenities by March 31, 2007.

Class II Gaming Operations.  As of January 1, 2005, we transferred all Class II operations to the Nation. We opened the Seneca Allegany Class II Facility on May 1, 2004. During the five months ended September 30, 2004 and all of Fiscal 2005, we invested approximately $2.0 million and $0.4 million, respectively, in renovating and upgrading the Seneca Allegany Class II Facility and received approximately $2.5 million and $1.4 million, respectively, of net revenue from this facility during these periods.

As of January 1, 2005, separate management selected by the Nation runs the poker operations at the Seneca Niagara Casino and Hotel and Seneca Allegany Casino.  The related leases cover the costs, among other things, of rental and services provided by us, including accounting, and food and beverage. We opened the poker rooms at the Seneca Niagara Casino and Seneca Allegany Class II Facility on May 14, 2004 and May 1, 2004, respectively. We did not open a poker room at the Seneca Allegany Casino until October 1, 2004. From the opening of the poker rooms at Seneca Niagara Casino and Seneca Allegany Class II Facility through September 30, 2004, and for Fiscal 2005, we received approximately $2.7 million and $2.0 million, respectively, of net poker revenue.

The transfer of the Class II operations as of January 1, 2005 is consistent with our understanding of the Council’s intent that we manage and operate the Nation’s Class III operations and that the Council, through Seneca Gaming and Entertainment, directly manages and operates the Nation’s Class II operations as it has historically done.

We recorded in January 2005 the value of the improvements, video lottery terminals, and other costs we incurred to improve the Seneca Allegany Class II Facility of $2.4 million as an equity distribution to the Nation.

We funded all the construction, equipment and pre-opening costs of Seneca Allegany Casino entirely from Seneca Niagara Casino’s free cash flow, in the form of intercompany loans from SGC.

40

Current, Continued and Future Reliance on Cash Flow. We have purchased the site of our expected future casino in Erie County and intend to fund the maintenance of our facilities and our planned future expansion projects from our cash flow and cash on hand. We currently rely and will continue to rely on our ability to generate cash flow from operations to service our debt financing.

Seasonality.  Due to the continued construction and expansion activity during our initial years of operation, we have not yet been able to clearly determine the effect of seasonality on our operations.

Overall Outlook.  Since the opening on December 31, 2002 of the Seneca Niagara Casino, we have invested significantly in the development, expansion and maintenance of our gaming properties. In 2007, we will continue this investment with the opening of our permanent casino and our 212-room resort hotel and amenities on the Nation’s Allegany Territory, the opening of our temporary casino on the Seneca Buffalo Creek Territory, and the start of construction of our permanent gaming facility on the Seneca Buffalo Creek Territory.

We believe the Western New York hotel, entertainment and gaming markets are significantly underserved, and our exclusivity, as provided in the Nation’s Compact with the State of New York, gives us the opportunity to serve these markets by providing our patrons with unique entertainment and gaming options at our properties. In addition, the March 2006 opening of our hotel on the Nation’s Niagara Territory has enabled us to penetrate a wider geographic area and attract higher-end gaming patrons, providing us with a competitive advantage.

It is, and will continue to be, our intent to be the premier entertainment and gaming operator in the Western New York region, including areas in northern Pennsylvania and Ohio within our primary and secondary markets. To further that objective, and to provide for expanded opportunities in the convention and tourism markets, we have started a master planning process for Niagara Falls that will include our Allegany and Buffalo facilities. As we continue to develop and expand our facilities, we intend to have them complement each other, offer a diverse hotel, entertainment and gaming environment for our guests, and provide financial operating results in excess of industry averages.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition, results of operations and liquidity and capital resources are based on our consolidated financial statements. To prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, we must make estimates and assumptions that affect the amounts reported in the consolidated financial statements. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where changes in the estimates and assumptions could have a material impact on our results of operations, financial position and, to a lesser extent, cash flows. There can be no assurance that actual results will not differ from our estimates. To provide an understanding of the methodology we apply, our significant accounting policies and basis of presentation are summarized in Note 2 to our audited consolidated financial statements included in this Annual Report for the year ended September 30, 2006. We believe the following accounting policies involve a higher degree of management judgment.

Liability for Unredeemed Seneca Link Player’s Card Points.    Patrons who are members of our Seneca Link Player’s Card rewards program earn promotional points based on the volume and type of their gaming activity. The Seneca Link Player’s Card accumulates points that are redeemable for food and beverages at our restaurants, hotel stays and products offered at our retail stores. Points are accrued and reflected as current liabilities on our balance sheets based upon expected redemption rates and the estimated cost of the service or merchandise to be provided. Management reviews the adequacy of the accrual for unredeemed points by periodically evaluating the historical redemption and projected trends. Actual results could differ from our estimates.

Self-Insurance Reserves.    We have financial exposure for portions of our employee benefits programs and general liability reserves. We accrue for liabilities based on filed claims and estimates of claims incurred but not reported. In our opinion our accruals to cover these costs are adequate, but actual results may vary from the amount accrued.

Property and Equipment.    We have a significant amount of capital invested in our property and equipment, which is stated at cost less accumulated depreciation and amortization. We use judgment in determining if or when assets have been impaired and the estimated useful lives of assets. The accuracy of these estimates affects whether or not impairment exists, and the depreciation and amortization expense recognized in our results of operations. Leasehold improvements represent a significant portion of our property and equipment balance. These assets are amortized over the lesser of the related lease term or the estimated life of the assets. The useful lives assigned to our other property and equipment assets are based on our standard policy, which we believe represents the useful life of each category of asset. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying values of our long-lived assets are reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are grouped at the

41

property level when estimating future cash flows for determining whether an asset has been impaired. Management assesses the possibility of asset impairment by using the estimates of future cash flows, which are affected by current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition and other economic factors.

Regulatory Costs.    We have financial exposure for unbilled regulatory costs related to oversight provided by the New York State Police (State Police).  There is an on-going dispute between the Nation and the State Police as to the appropriate amount of costs that are due to the State Police for their regulatory oversight.  As of September 30, 2006, we have accrued approximately $12.1 million to cover such costs.  In our opinion, this accrual is adequate, but actual results may vary from the amount accrued.

Our analysis of cash flows represents our best estimates at the time of the review. However, changes in these assumptions due to actual market conditions that cause less favorable results than our estimates may result in impairment in the future.

Operating Results

Operating Results

	Fiscal Year Ended September 30,
	2006	2005	2004
	(Dollars in Thousands)
Net revenue	$ 522,494	$ 449,153	$ 356,396
Operating expenses:
Gaming	129,396	114,746	92,531
Food and beverage	43,485	34,877	26,387
Lodging	6,131	—	—
Retail, entertainment and other	11,668	10,418	7,184
Advertising, general and administrative	131,997	117,188	91,552
Pre-opening costs	9,478	1,509	4,228
Depreciation and amortization	38,992	26,295	17,638
Operating income.	$ 151,347	$ 144,120	$ 116,876

The most important factors and trends contributing to our operating performance during Fiscal 2006, 2005 and 2004 were:

·Our ability to successfully market Seneca Niagara Casino and Hotel and, since its May 1, 2004 opening, Seneca Allegany Casino, to our primary and secondary target markets.

·Our opening of the luxury hotel at Seneca Niagara Casino and Hotel, enabling us to better attract higher-end gaming guests, extend the stay of our guests and expand our geographic marketing reach.

·Our opening of the Seneca Events Center at Seneca Niagara Casino and Hotel, resulting in increased entertainment offerings for our guests.

·Our ability to enroll approximately 1.2 million patrons in our cross-property Seneca Link Player’s Card program, which has increased our ability to use effective direct mail and targeted marketing programs to establish patron loyalty to the Seneca brand at a profitable level.

·Our mix of slot machines, which we believe is superior to our competition and includes the latest product introductions by leading United States and international slot manufacturers.

·Our use of current information technology, including “ticket-in/ticket-out” slot machines, automated jackpot payment machines, ticket redemption units, electronic slot bonusing and database programs to increase operating efficiencies.

·Our ability to operate at a high margin, which we achieve through the careful monitoring and control of labor costs and the effective use of our marketing and advertising expenditures.

·Our continued expansion at and reinvestment in both of our properties.

42

Detailed Revenue Information

	Fiscal Year Ended September 30,
	2006			2005			2004
	(Dollars in Thousands)
Gaming revenue:
Slots	$	452,473		$	372,116		275,129
Table games	66,694			64,030			57,045
Other	453			4,010			5,362
Gaming revenue	519,620			440,156			337,536
Non-gaming revenue:
Food and beverage	50,141			41,689			31,358
Lodging	10,654			—			—
Retail, entertainment and other	19,940			16,955			11,797
Non-gaming revenue	80,735			58,644			43,155
Less promotional allowance	(77,861		)	(49,647		)	(24,295	)
Net revenues	$	522,494		$	449,153		356,396

Our gaming revenue for Fiscal 2006 increased relative to Fiscal 2005 primarily due to the December 15, 2005 opening of our expanded gaming area at Seneca Niagara Casino and Hotel, which added approximately 950 slot machines and 20 additional table games, and the complete opening of our 604-room luxury hotel on March 31, 2006.  Our gaming revenue for the fiscal year ended September 30, 2005 increased relative to 2004 due primarily to the opening of Seneca Allegany Casino on May 1, 2004, which added approximately 1,886 slot machines and 24 table games to our operations, the addition of 315 slot machines at Seneca Niagara Casino and continued growth in our patron database. In addition, in July 2004 at Seneca Niagara Casino and in August 2004 at Seneca Allegany Casino, we implemented electronic slot bonusing which are included in slot revenues and promotional allowances.  This program allows us to reward our slot patrons, based on their propensity to game, by providing free slot play directly at the slot machine through the use of their Seneca Link Player’s Card. The free slot play must be played at a slot machine, and cannot be redeemed for cash.  The amount totaled $19.6 million, $9.6 million and $1.4 million at Seneca Niagara Casino during fiscal 2006, 2005 and 2004, respectively, and $10.0 million, $5.7 million and $0.1 million at Seneca Allegany Casino during Fiscal 2006, 2005 and 2004, respectively.  The large increase in free slot play during Fiscal 2006 was partially due to selected promotions during the year that allowed patrons to exchange Seneca Link Player’s Card points for free slot play.  As of September 30, 2006, our casinos had an aggregate of 123 table games and 6,292 slot machines available to our patrons, representing a net increase of 20 table games and a net increase of 1,126 slot machines from September 30, 2005.  During these periods the number of patrons enrolled in our Seneca Link Player’s Card program has steadily increased. As of September 30, 2006, we had approximately 1.2 million patrons enrolled, an increase of approximately 252,000 patrons over the number enrolled at September 30, 2005.

Our net gaming revenue, net of promotional credits of $29.6 million and $15.2 million in 2006 and 2005, respectively, increased $65.1 million, or 15%, for Fiscal 2006 relative to Fiscal 2005.  During Fiscal 2006, Seneca Niagara Casino and Hotel’s net gaming revenue increased $51.3 million, or 18%, while Seneca Allegany Casino’s net gaming revenue increased $13.8 million, or 10% over the same period.

Our net gaming revenue, net of promotional credits of $15.2 million and $1.5 million, respectively, increased $88.9 million, or 26%, for the Fiscal 2005 relative to Fiscal 2004.  During Fiscal 2005, Seneca Niagara Casino net gaming revenue increased $0.3 million, while Seneca Allegany Casino accounted for $88.6 million of our increased net gaming revenue for Fiscal 2005, mainly due to an additional seven months of operations in that year.

Our food and beverage revenue and retail revenue have increased in direct relation to our increase in gaming revenue. There is a direct relation of our food and beverage revenue and retail revenue to our gaming revenue because a significant portion of this revenue is from players’ point redemptions.  For Fiscal 2006 and 2005, 57% and 56%, respectively, of our food and beverage and 87% and 86%, respectively, of our retail revenue represented players’ point redemptions.  For Fiscal 2006, food and beverage revenue increased $8.5 million, or 20% to $50.1 million.  Seneca Niagara Casino and Hotel contributed

43

$7.3 million of the increase due to the addition of three full service restaurants, a deli and two additional bars, all opened by January 31, 2006.  Seneca Allegany Casino accounted for $1.2 million of the increase, as increased gaming play generated higher player point redemptions for food and beverage.

For Fiscal 2005, food and beverage revenue increased $10.3 million, or 33% over Fiscal 2004.  Seneca Niagara Casino contributed $2.3 million of the increase due to higher gaming revenue and seven additional months of operation of our steakhouse.  Seneca Allegany Casino contributed $8.0 million of the increase, due mainly to an additional seven months of operations during Fiscal 2005.

On December 30, 2005, we officially opened the first ten floors of our 604-room luxury hotel at Seneca Niagara Casino and Hotel, with the full opening occurring on March 31, 2006.  Lodging revenue for Fiscal 2006 represents sales of occupied rooms during the period.  Incidental income from other amenities within the hotel are classified with retail, entertainment and other revenue.

For Fiscal 2006, our retail, entertainment and other revenue increased by $3.0 million, or 18% compared to Fiscal 2005.  The increase for Fiscal 2006 was primarily due to a $1.3 million increase in entertainment revenue at Seneca Niagara Casino and Hotel, due to the opening of our Seneca Events Center in December 2005.  In addition, retail revenue at both of our properties increased a combined $1.3 million for Fiscal 2006, in relation to the prior year, due to increased player point redemptions for retail merchandise, generated from higher gaming revenue.

For Fiscal 2005, our retail, entertainment and other revenue increased by $5.2 million, or 44% compared to Fiscal 2004.  The increase was primarily attributable to higher revenue at our Seneca Allegany Casino of $3.4 million due to an additional seven months of operations in 2005, and a $1.8 million increase at Seneca Niagara Casino, due to higher gaming revenue.

Detailed Operating Expenses Information

	Fiscal Year Ended September 30,
	2006		2005		2004
	(Dollars in Thousands)
Operating expenses:
Gaming	$	129,396	$	114,746	$	92,531
Food and beverage	43,485		34,877		26,387
Lodging	6,131		—		—
Retail, entertainment and other	11,668		10,418		7,184
Advertising, general and administrative	131,997		117,188		91,552
Pre-opening costs	9,478		1,509		4,228
Depreciation and amortization	38,992		26,295		17,638
Operating expenses	$	371,147	$	305,033	$	239,520

The most important factors making up our operating expenses during Fiscal 2006, 2005 and 2004 are the following:

Gaming expenses principally consist of costs incurred from operating our table games and slot machines, of which the primary components are related payroll and employee benefit costs, and the slot exclusivity fee due to New York State pursuant to the Compact. For Fiscal 2006, 2005 and 2004, the slot exclusivity fee expense was $79.0 million, $67.3 million and $51.6 million, respectively.  For Fiscal 2006, 2005 and 2004, Seneca Niagara Casino and Hotel incurred a slot exclusivity fee of $53.8 million, $45.0 million and $44.0 million, respectively.  Seneca Allegany Casino’s share of this expense for Fiscal 2006, 2005 and 2004 was $25.2 million, $22.3 million and $7.6 million, respectively.  The increase in the slot exclusivity fee was attributed to higher slot revenue.  Currently, the exclusivity fee is 18% of the slot machine net drop (money dropped into the machines after payout but before our expenses). This fee will increase to 22% on January 1, 2007 and to 25% on January 1, 2010.   The remainder of the variance in gaming expenses is principally due to higher costs of labor and benefits during 2006, reflecting increased headcount as well as higher medical insurance costs.

Food and beverage expenses are costs we incur for the operation of our restaurants, snack bars and beverage outlets. The primary components of these expenses are the cost of food and beverages, and related payroll and employee benefit expenses.  For Fiscal 2006, our food and beverage costs increased $8.6 million, or 25%, from the comparable 2005 period. This increase was primarily due to a $7.8 million increase in food and beverage expenses at Seneca Niagara Casino and Hotel, particularly

44

labor cost increases from the addition of three full-service restaurants, a deli and two new bars in conjunction with the opening of the luxury hotel in December 2005.  The remaining increase in expenses was due to higher cost of sales relating to higher redemptions of players club points for food and beverages at both our casinos, resulting from higher gaming play in Fiscal 2006 in relation to 2005.  For Fiscal 2005 our food and beverage costs increased $8.5 million, or 32% respectively, from the comparable 2004 period.  This increase was due to the higher food and beverage revenue at both casinos of $10.3 million, along with payroll and other expenses relating to the additional seven months of operation of the steakhouse at Seneca Niagara Casino during Fiscal 2005.

Lodging expenses are costs we incur for the operation of our luxury hotel in Niagara Falls, New York, which partially opened in December 2005, and completely opened on March 31, 2006.  The major components of lodging expenses during Fiscal 2006 were payroll and benefits costs, laundry expense and operating supplies.

Retail, entertainment and other expenses represent our costs to operate our retail shops and entertainment offerings. The components of these expenses include related payroll and employee benefit costs, the purchase of products offered for sale in our retail outlets, and contract costs for entertainers.  For Fiscal 2006, these costs increased approximately $1.3 million, or 12%.  This change was principally attributable to a $0.8 million increase in contract entertainment costs due to a greater number and quality of shows at Seneca Niagara Casino and Hotel’s Seneca Events Center, along with a $0.3 million increase in retail cost of sales at Seneca Allegany Casino, due to higher player’s club point redemptions during the 2006 fiscal year.  For Fiscal 2005 these costs increased approximately $3.2 million, or 44%.  The increase was principally attributable to higher point redemptions by our patrons at Seneca Niagara Casino and Hotel and Seneca Allegany Casino for retail merchandise, and also to higher revenues at Seneca Allegany Casino due to the additional seven months of operations in fiscal 2005 as compared to 2004.

Advertising, general and administrative expenses are incurred to support our operations.  These expenses consist primarily of related payroll and employee benefits costs, regulatory, advertising, rent, marketing, insurance, legal and energy costs.  For Fiscal 2006, these expenses were $132.0 million compared with $117.2 million during the same period in 2005, an increase of $14.8 million, or 13%.  The increase was due to several factors, including a $4.2 million increase in lease expense payable to the Nation for rental of the land upon which we operate our casinos, a $2.4 million increase in regulatory costs (particularly for New York State Police expenses), a $2.3 million increase in energy costs (particularly for natural gas to support the new luxury hotel and expanded facilities at Seneca Niagara Casino and Hotel) and a $1.5 million increase in advertising costs (related to the new luxury hotel and related amenities and significant entertainment events).  The remaining increase was primarily due to higher labor and benefits costs relating to an increased number of employees hired to support the expanded facilities at Seneca Niagara Casino and Hotel.  For Fiscal 2005, advertising, general and administrative expenses were $117.2 million compared to $91.6 million during the same period in 2004, or an increase of $25.6 million, or 28%.  The increase was mainly due to a $27.2 million increase at Seneca Allegany Casino attributable to an additional seven months of operations during 2005.  For Fiscal 2005, regulatory costs increased $5.0 million or 44.6%.  In addition, we made lease payments to the Nation for the land upon which we operate Seneca Niagara Casino and Seneca Allegany Casino totaling $26.8 million and $15.8 million during Fiscal 2005 and 2004, respectively.  Seneca Niagara Casino advertising, general and administrative expenses decreased $2.5 million for Fiscal 2005 relative to the same period in 2004, mainly due to a $1.4 million decrease in promotional expenses.

Pre-opening expenses are costs we incurred principally in connection with the May 1, 2004 opening of Seneca Allegany Casino, the expansion at Seneca Niagara Casino and Hotel including the opening of the luxury hotel, and the anticipated opening of our Seneca Buffalo Creek Casino.  These expenses include employee costs, legal, marketing and advertising expenses and other direct expenses related to the opening of our casinos.  Pre-opening expenses associated with the opening of Seneca Allegany Casino were approximately $3.8 million during Fiscal 2004.  In addition, we incurred pre-opening expenses at Seneca Niagara Casino and Hotel during fiscal 2006 and 2005 of approximately $5.1 million and $0.6 million, respectively in connection with the partial and complete opening of our new luxury hotel in December 2005 and March 2006, respectively.  During Fiscal 2006 and 2005, we also incurred approximately $3.9 million and $0.9 million for development expenses related to our future Seneca Buffalo Creek Casino, including $3.1 million in 2006 lease expense paid to the Nation.

For Fiscal 2006, depreciation and amortization expense was $39.0 million, an increase of $12.7 million, or 48% over Fiscal 2005.  This increase was principally due to the addition of the luxury hotel at Seneca Niagara Casino and Hotel in December 2005, along with the increased depreciation in Fiscal 2006 relating to the parking garage at Seneca Allegany Casino, which opened July 1, 2005.

45

Non-Operating Expenses

The following table summarizes information related to interest on our long term debt:

	Fiscal Year Ended September 30,
	2006		2005		2004
	(Dollars in Thousands)
Interest expense	$	33,198	$	90,366	$	33,702

Interest expense for Fiscal 2006 represents interest on our $500 million aggregate principal amount of 7¼% senior notes, partially offset by capitalized interest during the construction phase of our luxury hotel in Niagara Falls and on our construction activities for our Seneca Allegany Casino.  Our interest cost for Fiscal 2005 increased $56.7 million, which is inclusive of $49.2 million relating to the prepayment of SNFGC’s Term Loan, a $12.7 million increase in interest expense relating to the seven additional months of interest on the $300 million aggregate principal amount of the 2004 senior notes, issued in May 2004 by SGC, and $4.8 million increased interest expense relating to the $200 million aggregate principal amount of the 2005 senior notes, issued in May 2005.  These amounts were partially offset by lower interest on SNFGC’s Term Loan, due to the 2005 prepayment.  Prior to its extinguishment in May 2005, the Term Loan required us to make monthly interest payments on the outstanding balance at one-month LIBOR plus 29%.

Net Income

Net income for Fiscal 2006 was $123.4 million compared to $45.6 million for the comparable 2005 period, an increase of $77.8 million, or 171%.  This increase was mainly attributable to the charge to earnings in Fiscal 2005 of approximately $49.2 million incurred pursuant to the early extinguishment of the Term Loan, the $13.3 million non-recurring construction charge in Fiscal 2005 and the favorable financial impact of the December 15, 2005 opening of our expanded casino gaming area and the opening of our 604-room luxury hotel at Seneca Niagara Casino and Hotel during Fiscal 2006.

Net income for Fiscal 2005 was $45.6 million compared to $84.7 million in the comparable 2004 period, a decrease of $39.1 million, or 46%.  This decrease was mainly attributable to the $49.2 million charge noted above, along with the $13.3 million non-recurring construction charge above, partially offset by the increase in net income from the operations of the Seneca Allegany Casino, which opened May 1, 2004.

Liquidity and Capital Resources

Cash Flows

	Fiscal Year Ended September 30,
	2006			2005			2004
	(Dollars in Thousands)
Net cash provided by operations	$	181,838		$	47,652		$	143,803
Investing cash flows
Capital expenditures	(203,729		)	(171,011		)	(168,704		)
Payments for land acquisitions and other assets	(38,012		)	(1,673		)	(12,036		)
Refund of deposits	168			700			—
Payment to collateralize letter of credit, net	(25,800		)	—			—
Sales (purchases) of investments, net	33,791			(20,163		)	(57,963		)
Net cash used in investing activities	(233,582		)	(192,147		)	(238,703		)
Financing cash flows
Proceeds from long-term debt	—			193,000			341,966
Repayments of long-term debt	—			(80,325		)	(46,916		)
Payments to sinking fund, net	—			(11,917		)	(6,048		)
Purchase of interest rate caps	—			—			(2,188		)
Proceeds from sale of interest rate caps	—			683			—
Payment of deferred financing costs	(682		)	(4,982		)	(11,937		)
Cash distributions paid to the Nation	(11,846		)	(21,092		)	(28,010		)
Net cash (used in) provided by financing activities	(12,528		)	75,367			246,867
Net (decrease) increase in cash and cash equivalents	(64,272		)	(69,128		)	151,967

46

Cash Flows—Operating Activities.  The increase in cash flows from operations during Fiscal 2006 compared to the same period in 2005 was primarily due to a $77.8 million increase in net income which is principally due to the absence of a $49.2 million interest expense charge during 2005 relating to the early extinguishment of the Term Loan, and the absence of a $13.3 million non-recurring construction charge, along with the favorable financial results relating to the opening of the 604-room luxury hotel, including 35,000 square feet of additional gaming space at Seneca Niagara Casino and Hotel during fiscal 2006. The decrease in cash flows from operations during Fiscal 2005 compared to the same period in 2004 was primarily due to a $39.1 million decrease in net income which resulted from the two non-recurring charges in 2005 noted above, partially offset by higher net income at Seneca Allegany Casino of $26.1 million due to an additional seven months of operations in 2005.  In addition to the net income decrease, working capital outflows resulted from the payment during 2005 of 12 months of accrued exclusivity fees incurred in 2004.  During 2005, exclusivity fees started to be paid by the Company monthly to the Nation as incurred.

Cash Flows—Investing Activities.    Our capital expenditures of $203.7 million during Fiscal 2006 were comprised of $143.5 million of costs associated with the construction and equipping of the Seneca Niagara Casino and Hotel, and $59.2 million related to the construction and equipping of our Seneca Allegany Casino.  We also incurred costs toward land acquisition in 2006 and 2005 of $38.0 million and $1.7 million, respectively.

During Fiscal 2004, we invested $48.0 million in collateralized market auction preferred stock (MAPS) and $9.9 million in a U.S. Government entity short-term note. These investments do not meet the definition of a cash equivalent.  MAPS has a dividend rate determined periodically (typically less than 90 days) based on an auction mechanism.  MAPS are typically secured by the issuing funds’ underlying investment portfolio, which must maintain a 2-to-1 minimum net asset coverage ratio.  Notwithstanding the liquidity which may be provided by the auction process, market auction preferred stock generally does not have a scheduled maturity.  During Fiscal 2005, we invested an additional $20.1 million in similar instruments.  During Fiscal 2006, we sold $33.8 million of these investments.

Cash Flows—Financing Activities.   We borrowed the remaining $22.7 million that was available under the Term Loan on April 15, 2004. On May 23, 2005, we paid the Term Loan in full.  The negotiated payment in full of the Term Loan resulted in a charge to earnings on the early extinguishment of the Term Loan of approximately $49.2 million, including the write-off of $2.5 million of deferred financing costs. Prior to its payment, we were obligated to pay interest on the outstanding balance at LIBOR plus 29%. In addition, SNFGC was obligated to maintain a minimum cash balance of $10.0 million and a pro rata share of the sinking fund obligation. In addition, in Fiscal 2003, we borrowed an aggregate $37.3 million from vendors to finance the initial equipment for Seneca Niagara Casino at interest rates ranging from 6.0% to 6.42% for 36 months. The outstanding balances of these loans were paid in full in May 2004, and we recognized a gain, net of the write-off of deferred finance fees related to these financings of $415,000. This gain is included in Other Income in our Statement of Operations for the fiscal year ended September 30, 2004.

In May 2004, SGC sold $300.0 million of 2004 senior notes, with net proceeds to SGC of $288.7 million after financing costs. These net proceeds were, or will be, used principally to fund in whole or in part: (1) SNFGC’s construction and equipping of the luxury hotel, which was completed and opened on March 31, 2006; (2) the acquisition of the remaining approximate 24 acres of the approximate 48 acres in the City of Niagara Falls, New York; (3) the payment of the Empire State Development Corporation bonds to New York State, which were paid off on August 16, 2004 for $22.0 million; (4) the repayment of the vendor equipment financing referenced above, which occurred in May 2004; and (5) a $25.0 million distribution to the Nation, which was made in fiscal 2004.

In May 2005, SGC sold $200.0 million of 2005 senior notes as an add-on to the 2004 senior notes receiving gross proceeds of $193.0 million (as the issue price was 96.5% since the 2005 notes were issued with original issue discount).  Of the $193.0 million gross proceeds, as of September 30, 2006, approximately $126.7 million had been used to pay in full the Term Loan and approximately $4.7 million had been used to pay fees and expenses associated with the offering of the 2005 senior notes.  The remaining $61.6 million in gross proceeds will be used to fund certain costs associated with the expansion of our operations, for general corporate purposes and to pay additional fees and expenses associated with the offering of the 2005 senior notes, including the related exchange offer.

In addition, we purchased two interest rate caps in May 2004 for $2.2 million that effectively capped the Term Loan interest at 29% plus 4% on the one month LIBOR.  In June 2005, we sold the two interest rate caps for $0.7 million in connection with the termination of the Term Loan.

47

Principal Debt Arrangements.   As of September 30, 2006, our long-term debt consisted of the senior notes on which we pay a fixed interest rate of 7¼%. Following is a summary of certain material terms of the senior notes and the Term Loan.

The Senior Notes.    On May 5, 2004 and May 23, 2005, SGC issued $300.0 million and $200.0 million, respectively, in senior notes with fixed interest payable at a rate of 7¼% per annum due 2012, which we refer to collectively as the senior notes, under the Indenture. The notes are currently guaranteed by STGC, SEGC and SNFGC. SNFGC became a guarantor of the senior notes upon payment in full of the Term Loan on May 23, 2005. Interest on the senior notes is payable semi-annually on November 1 and May 1. The senior notes mature on May 1, 2012. The senior notes are unsecured general obligations. As of September 30, 2006, accrued interest on the senior notes was $15.1 million.

The Indenture contains certain covenants, including limitations on restricted payments and the incurrence of indebtedness and reporting obligations. As of the date of this Annual Report, SGC is in compliance with all of its covenant requirements in the Indenture.

Term Loan.    On November 22, 2002, SNFGC entered into a five-year Term Loan with Freemantle, which required Freemantle to provide $80.0 million in financing for the initial construction of the SNFGC casino facility and other related costs. Immediately prior to payment in full on May 23, 2005 and as of September 30, 2004, $80.0 million was outstanding under the Term Loan.  SNFGC paid interest on a monthly basis in arrears at one-month LIBOR plus 29%.  In addition, SNFGC incurred an availability fee of 0.5% per month on any unborrowed balance.

Prior to the payment in full of the Term Loan, SNFGC was obligated to make payments into a sinking fund account to be held for the benefit of and as additional collateral for Freemantle. Payments of $6.0 million and $12.0 million were made in December 2003 and 2004, respectively, into the sinking fund. Commencing January 1, 2005 and through December 31, 2006, equal quarterly payments of $5.5 million each were due on or before the last day of each calendar quarter.  Prior to the payment in full of the Term Loan, the sinking fund consisted of $23.5 million.  After payment in full of the Term Loan, all funds in the sinking fund were released and $5.5 million and $18.0 million were reclassified as cash and cash equivalents and short-term investments, respectively.

On May 9, 2005, SNFGC, the Nation and Freemantle entered into a Termination Agreement to terminate the Term Loan and to allow SNFGC to pay in full the Term Loan at a negotiated amount, which occurred on May 23, 2005. Pursuant to the terms of the Termination Agreement and in full payment of the Term Loan, we paid an amount equal to approximately $126.7 million, representing (i) the outstanding principal of $80.0 million under the Term Loan plus (ii) the aggregate amount of interest on such principal at a prescribed interest rate that would have otherwise been payable if the Term Loan had not been paid on May 23, 2005, but was instead paid 8½ months prior to its November 22, 2007 stated maturity, which amount was approximately $46.7 million.  The payment in full of the Term Loan reduced the future interest payments that would have otherwise been payable under the Term Loan if it had not been paid in full by approximately $18.0 million. The payment in full of the Term Loan, however, resulted in a charge to earnings on the early extinguishment of the Term Loan of approximately $49.2 million, including the write off of $2.5 million of deferred financing costs. The prescribed interest rate was one-month LIBOR as of May 18, 2005 plus 29%. A significant portion of the proceeds from the offering of the 2005 senior notes were used to pay in full the Term Loan.  Upon payment in full of the Term Loan, SNFGC became a full and unconditional guarantor of the 2004 and 2005 senior notes.

The above descriptions of the senior notes, the Term Loan and the Termination Agreement are only a summary. You should review the Indenture, the Term Loan agreement and the Termination Agreement for an understanding of all of the terms and conditions of these financing arrangements.

We intend to acquire the remaining acreage in the City of Niagara Falls, New York, designated by New York State under the Compact for ownership by the Nation. Under the Compact, the Nation is required to fund the acquisition of this property, including all related costs and expenses. As initial security for the Nation’s obligations to pay site acquisition costs and in furtherance of the ongoing condemnation proceeding, the Nation was required to deliver, and has delivered, to ESDC a letter of credit in the amount of $33.5 million representing 150% of the then estimate of the total remaining site acquisition costs not yet paid by the Nation.  On July 13, 2006, we acquired, through the condemnation process, approximately 18 acres of land and trade fixtures appurtenant thereto from Fallsite, LLC (“Fallsite”) and Fallsville, LLC (“Fallsville”) for an aggregate initial advance payment of $18.0 million, which land is a portion of the land in the City of Niagara Falls, New York designated under the Compact for ownership by the Nation. Of this amount, $7.7 million was drawn on the letter of credit as part of the consideration for the purchase, leaving $25.8 million available under the letter of credit.  If the estimate of such site acquisition costs increases or if certain other events occur, the Nation may have to provide an additional letter of credit or replace the

48

existing one with one for a larger monetary amount or, if acceptable to the ESDC, provide a supplemental cash escrow amount.  This outstanding letter of credit is 100% cash collateralized (with cash and cash equivalents) by us.

Pursuant to agreements entered into in furtherance of the Compact, SNFGC was obligated to pay to ESDC the principal due on certain bonds (issued by ESDC in connection with the 1970s construction of the Niagara Falls Convention Center) upon the opening of a permanent gaming facility in the City of Niagara Falls, New York. The principal amount due was $23.9 million. ESDC accepted an early, discounted payment of approximately $22.0 million in full satisfaction of our $23.9 million obligation under the Compact. This payment was made on August 16, 2004.

We have constructed a 1,850 space-parking garage at a cost of $32.2 million, and are constructing a 212-room hotel and casino at our Seneca Allegany Casino.  The current expected total cost to complete the hotel and permanent casino project is from $156.0 million to $167.0 million.  The garage opened on July 1, 2005.  We had initially planned to complete the entire project, including the resort hotel and its amenities, before the end of December 2006.  Due to certain delays, primarily relating to the lack of availability of selected materials, we now expect to open the permanent gaming floor in December 2006, and to complete the entire project by the end of March 2007.

We expect cash generated from our operations, available cash and cash equivalents and short-term investments as of September 30, 2006 to be sufficient to fund our expansion plans described above, service our debt, and meet our working capital requirements for the near future. However, our ability to fund our operations, make planned capital expenditures and service our debt depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. Additionally, unlike traditional corporations, we are prohibited by law from generating cash through an offering of equity securities and our ability to incur additional indebtedness is limited under the terms of the Indenture governing the senior notes.

We are highly leveraged and have significant interest payment requirements under the senior notes. As such, limitations on our capital resources could force us to delay or abandon capital projects as well as the construction and development of new properties.

Contractual Obligations

The following table reflects our significant contractual obligations as of September 30, 2006.

	Payment due by period
Contractual Obligations	Total		1 Year		2-3 Years		4-5 Years		After 5 Years
(dollars in thousands)
Principal amount of the 2004 senior notes	$	300,000	$	—	$	—	$	—	$	300,000
Principal amount of the 2005 senior notes	200,000		—		—		—		200,000
Interest payments on 2004 senior notes(1)	130,500		21,750		43,500		43,500		21,750
Interest payments on 2005 senior notes(1)	87,000		14,500		29,000		29,000		14,500
Seneca Allegany Casino construction projects	65,000		65,000		—		—		—
Seneca Niagara Casino operating lease with the Nation(2)	346,306		15,914		33,274		35,300		261,818
Seneca Allegany Casino operating lease with the Nation(2)	346,306		15,914		33,274		35,300		261,818
Seneca Buffalo Creek Casino operating lease with the Nation (3)	326,425		15,000		31,364		33,274		246,787
Total	$	1,801,537	$	148,078	$	170,412	$	176,374	$	1,306,673

(1)      Interest on the 2004 and 2005 senior notes is 7.25%.

(2)      Amounts represent annual lease payments based upon $1.3 million per month, an increase of 3% on October 1, 2006 and an assumed 3% increase on each October 1 thereafter through the term of the Compact.  Annual increases must be authorized by the board of directors of SGC and, subject to compliance with the terms of the Indenture governing the senior notes, may exceed 3%.

(3)      Amounts represent annual lease payments based upon $1.25 million per month beginning October 1, 2006, and an assumed 3% increase on October 1, 2007 and each October 1st thereafter through the term of the Compact. Annual increases must be authorized by the board of directors and, subject to compliance with the terms of the Indenture governing the senior notes, may exceed 3%.

49

Regulation

Our operations are regulated by Nation laws, the Compact and federal statutes, most notably the Indian Gaming Regulatory Act, or IGRA. Several bills have been proposed during the current and recent sessions of Congress that could affect Indian gaming.  Most notably Senator McCain’s S. 2078, the Indian Gaming Regulatory Act Amendments of 2006 and Congressman Pombo’s (R-CA) H. 4893, Restricting Indian Gaming to Homelands of Tribes Act of 2006, propose additional regulations for tribes and more restrictions on “off-reservation” gaming.  Also, the administration has published proposed regulations relative to off-reservation gaming.  Certain of such bills and regulations, if enacted, could impair the ability of the Nation and SGC to expand its gaming operations and adversely impact the future growth of the Nation’s revenue base. In addition, from time to time, various government officials have proposed taxing Indian casino gaming or otherwise limiting or restricting the conduct of gaming operations by Indian tribes. No assurance can be given that such legislation, if and when enacted by Congress, would not have a material adverse effect on the operations of SGC. If Congress were to enact comprehensive amendments to the IGRA, such legislation could have a material adverse effect on the operations of SGC. In addition, under federal law, gaming on the Nation’s lands may be dependent upon the permissibility under New York law of certain forms of gaming or similar activities. If New York State were to make various forms of gaming illegal or against public policy (or the courts were to similarly rule), or otherwise to take a legal position adverse to SGC, such actions could have a material adverse effect on our ability to conduct our gaming operations as currently conducted. Moreover, a 1996 U.S. Supreme Court decision may permit a state to avoid or refuse to negotiate amendments to existing compacts such as the Compact.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”).  This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.  SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company does not believe that the adoption of SFAS 157 will have a material effect on its results of operations or consolidated financial position.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.  Since our senior notes are fixed-rate indebtedness, we believe that our exposure to market risk in the form of interest rate fluctuations is low.

Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements and notes thereto, referred to in Item 15(a)(1) of this Annual Report, are filed as part of this Annual Report and appear beginning on page F-1.

Item 9.  Changes and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15 and Rule 15d-15 under the Securities Exchange Act of 1934, as of September 30, 2006.  This evaluation has allowed us to make conclusions, as set forth below, regarding the effectiveness of our disclosure controls and procedures.  There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including cost limitations, the possibility of human error, judgments and assumptions regarding the likelihood of future events, and the circumvention or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving the desired control objective.  We believe our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. We also believe our disclosure controls and procedures are designed to ensure that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

50

Based on the evaluation of the effectiveness of our disclosure controls and procedures, as of September 30, 2006, completed by our management, with the participation of our President and Chief Executive Officer and Chief Financial Officer (as our principal executive officer and principal financial officer, respectively), our President and Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant

The following table sets forth information concerning our executive officers and directors as of December 15, 2006:

Name	Age	Position
John Pasqualoni	60	President and Chief Executive Officer
Joseph D’Amato (1)	58	Chief Operating Officer
Patrick M. Fox (2)	54	Chief Financial Officer
Barry W. Brandon	45	Senior Vice President and General Counsel
Rajat R. Shah	35	Senior Vice President of Corporate Development and Deputy General Counsel
Michael Speller (3)	51	Senior Vice President of Gaming Operations
Brian Hansberry	52	General Manager of Seneca Niagara Casino and Hotel
Barry E. Snyder, Sr.	67	Chairman of the Board of Directors
Bergal L. Mitchell III	33	Vice Chairman of the Board of Directors
Maurice A. John, Sr.	58	Treasurer and Director
Martin E. Seneca, Jr.	64	Secretary and Director
N. Cochise Redeye	50	Director
Maribel Printup	77	Director
Michael L. John	38	Director

(1)      Mr. D’Amato was appointed Chief Operating Officer on June 22, 2006, having previously served as Senior Vice President of Finance and Administration.

(2)      Mr. Fox was appointed Chief Financial Officer on June 22, 2006, having previously served as Vice President of Finance.

(3)      Mr. Speller was appointed Senior Vice President of Gaming Operations on June 22, 2006, having previously served as Senior Vice President of Table Games and Poker.

The Council alone has the power to appoint and remove directors from SGC and each of its subsidiaries. Since the Council election in November 2004, the Council has taken a more active role in managing our affairs. As previously discussed, all of our Class II gaming operations were transferred to the Nation as of January 1, 2005, as part of the initial actions taken by the  then-new Council at its first meeting on November 13, 2004. In addition, the then-President of the Nation subsequently issued two executive orders affecting the management of SGC and its subsidiaries. By executive orders in November 2004, the Nation’s President (1) established a Gaming Management Task Force to review the management and operation of the Nation’s Class III gaming facilities within 120 days of the executive order and (2) imposed certain temporary cost containment measures on the operations of the casinos requiring pre-approval from the Nation’s President or Treasurer before certain expenditures are made by us.

51

In addition, on December 20, 2004, the Council amended each of the charters of SGC and its subsidiaries requiring more oversight by the Council. These amendments include, but are not limited to, Council approval of:

(i)  SGC and/or its subsidiaries agreeing to (a) waive such corporation’s sovereign immunity and (b) submit to jurisdiction of non-Nation courts;

(ii)  any significant expenditure (in excess of $3 million) of corporate resources via approval of a comprehensive business plan regarding such activity requiring the expenditure;

(iii)  termination of the operation of any gaming facility;

(iv)  any amendments to any of the bylaws of SGC and its subsidiaries;

(v)   any agreements with any government or governmental agency or entity;

(vi)  incurrence of any significant guarantees or liabilities by SGC or its subsidiaries;

(vii)  any intercompany loans; purchase of real property and significant expenditures for personal property; and

(viii)  obtaining financing and issuance of obligations by SGC or its subsidiaries.

These amendments also (i) prohibit SGC and its subsidiaries from engaging in any activities to politically influence any Indian nation, federal, state, or local government or their officials, (ii) clarify that the requirement that board members shall not have been convicted of a “Felony” to involve only those offenses set forth under the Indian Major Crimes Act (18 U.S.C. §1153) and (iii) change the board membership requirement to require at least five members of each board to be enrolled members of the Nation and that no members of Council may serve on the boards of directors.

John Pasqualoni has been our President and Chief Executive Officer since June 21, 2005. Prior to his election to that position, Mr. Pasqualoni served briefly as our interim President and Chief Executive Officer and Chief Operating Officer of all our gaming operations. Prior to his appointment as Chief Operating Officer in February 2005, Mr. Pasqualoni was our Senior Vice President, Slot Operations/Marketing. Mr. Pasqualoni has been with SGC since October 2002. Previously, Mr. Pasqualoni was employed by Resorts International Hotel and Casino in Atlantic City from November 2001 to October 2002 and attained the position of Senior Vice President of Slot Operations/Promotions. From June 1999 to November 2001, Mr. Pasqualoni was a gaming industry consultant to Louisiana Downs and Resorts International Hotel and Casino. From March 1998 to June 1999, Mr. Pasqualoni was a partner at Top Gun Gaming, LLC, a slot machine development company. From 1993 to 1998, Mr. Pasqualoni was Vice President of Slot Operations and Casino Marketing at the Foxwoods Resort Casino. Additionally, he has worked in slot management positions at several casinos and hotel gaming complexes, including the Frontier Hotel in Las Vegas, Bally’s Park Place Casino, Tropicana Casino, the Hilton/Trump’s Castle and Trump Plaza Hotel Casino in Atlantic City and the Lucayan Beach Hotel Resort in the Bahamas.

Joseph D’Amato was appointed our Chief Operating Officer on June 22, 2006.  Mr. D’Amato formerly served as  Senior Vice President of Finance and Administration since July 2004 and has been with SGC since December 2002. From August 2000 to November 2002, he was Senior Vice President of Finance/ CFO of Resorts International Casino in Atlantic City. Prior to joining Resorts, he was employed for over three years by the Trump Organization, serving as the COO of Trump’s riverboat operation in Gary, Indiana and then as Vice President of Finance/CFO of Trump Marina. Prior to his employment at Trump, Mr. D’Amato held various financial management positions with Bally’s Casinos in Atlantic City, including Vice President of Finance and Administration, Vice President of Finance and Treasurer.  Mr. D’Amato is a Certified Public Accountant (inactive status) in New Jersey and Pennsylvania.

Patrick M. Fox was appointed our Chief Financial Officer on June 22, 2006.  Prior to his appointment, Mr. Fox served as Vice President of Finance since October 24, 2005.  For the four months prior to October 24, 2005, Mr. Fox served as Financial Controller of Majestic Star Casino.  From April 2004 through May 2005, Mr. Fox served as Chief Financial Officer of Prairie Meadows Racetrack & Casino and from November 2001 through April 2004 he served as Chief Financial Officer of Trump Indiana, Inc. (which corporation filed for bankruptcy shortly after April 2004).  Prior to such time, Mr. Fox served as Director of Finance of the Carlson Group, an engineering and architectural firm, from February 2001 through September 2001.  Prior to February 2001, and for approximately 25 years, he was with Arthur Andersen and Accenture (formerly Andersen Consulting) where he held several auditing and management positions.  Mr. Fox is a certified public accountant.

Barry W. Brandon has served as our Senior Vice President and General Counsel since August 2004. Prior to accepting his current position with SGC, he was a partner at the law firm of Akin Gump Strauss Hauer & Feld LLP where he practiced federal Indian law and policy. From April 1998 to December 2000, Mr. Brandon served first as the General Counsel and then

52

the Chief of Staff of the National Indian Gaming Commission in Washington, D.C. From June 1997 to April 1998, he was the Deputy Director of the Secretary’s Office on Indian Water Rights at the U.S. Department of the Interior. From September 1994 to June 1997, Mr. Brandon served as Senior Trial Attorney at the U.S. Department of Justice, Indian Resources Section.

Rajat R. Shah has served as our Senior Vice President of Corporate Development and Deputy General Counsel since May 2, 2005. Prior to joining SGC, Mr. Shah was a counsel at the law firm of Akin Gump Strauss Hauer & Feld LLP where he practiced corporate and securities law, with a concentration in the areas of finance, securities, mergers and acquisitions and joint ventures. From September 1996 until July 1998, Mr. Shah worked as an associate at the law firm of Pillsbury Winthrop Shaw Pittman LLP.  Mr. Shah is a member of the board of directors for the Buffalo Children’s Hospital Board Foundation.

Michael F. Speller was appointed Senior Vice President of Gaming Operations on June 22, 2006, having served as our Senior Vice President of Table Games and Poker since June 2004. From September 2002 to June 2004, Mr. Speller served as our Vice President of Table Games. From 1999 to September 2002, Mr. Speller worked as an independent gaming consultant. Mr. Speller has over 30 years of gaming experience in both domestic and international gaming jurisdictions. He has worked with major casino operators including the Tropicana in Atlantic City, Coral Casino Group in London, England, Resorts International in Paradise Island, Bahamas, and Foxwoods Resort and Casino in Connecticut. He has extensive senior management experience at the chief executive officer, chief operating officer and general manager levels.

Brian Hansberry has served as the General Manager of Seneca Niagara Casino and Hotel since August 28, 2006.  Prior to that time, Mr. Hansberry had served as STGC’s Vice President and Chief Operating Officer since December 2003. Mr. Hansberry joined us in October 2002 as a table games shift manager and subsequently as table games manager. Mr. Hansberry has over 25 years of experience in the gaming industry. He has worked for several gaming corporations including Resorts International Casino and The Sands Casino Hotel in Atlantic City, and Players Island Casino Isle of Capri in Louisiana. Mr. Hansberry has experience in operations, marketing and administration, and has held the positions of Director of Operations and Vice President of Operations and Administration.

Barry E. Snyder, Sr. has served as Chairman of the board of directors of SGC since December 2004. Mr. Snyder served as  the President of the Nation from November 2004 to November 2006, and previously served the Nation in this capacity on two other occasions. Mr. Snyder is the former owner of the Seneca Hawk Tobacco Shop.   Mr. Snyder also serves on the board of directors of the Seneca Management Development Corporation.

Bergal L. Mitchell, III has served as a member and Vice Chairman of the board of directors of SGC since August 2002 and December 2004, respectively. Mr. Mitchell was a member of Council from November 2000 to November 2004. Mr. Mitchell has been employed by Ross John Enterprise since 1996 where he has held various business development positions.  Mr. Mitchell also serves on the board of directors of the Seneca Management Development Corporation.

Maurice A. John, Sr. has served as Treasurer of the board of directors of SGC since December 2004. Mr. John was recently elected as the President of the Nation in November 2006.  From November 2004 to November 2006, Mr. John served as Treasurer of the Nation and previously served two terms in the Nation’s Council. Mr. John has also served the Nation as a judge in the Nation’s appellate court. Mr. John was the former President of the Coalition of Indian Controlled School Boards, a national Indian Education Organization. Mr. John has an existing tax lien imposed by the U.S. Government which is a result of his beliefs in the treaties between the United States of America and the Seneca Nation of Indians.  Mr. John also serves on the board of directors of the Seneca Management Development Corporation and Seneca Construction Management Corporation.

Martin E. Seneca, Jr. has served as Secretary of the board of directors of SGC since December 2004. Mr. Seneca currently engages in the private practice of law and serves as a special legal advisor to the President of the Nation. He received his J.D. from Harvard Law School. He is a former White House Fellow and a former Deputy Commissioner of the Bureau of Indian Affairs. Mr. Seneca also serves on the board of directors of the Seneca Management Development Corporation.

Norman Cochise Redeye has served as a member of the board of directors of SGC since February 2005. Mr. Redeye is a retired detective from the Erie County Sheriff’s Office, a position he held since 1981. In addition, Mr. Redeye has served as a Lay Advocate in the Seneca Nation of Indians Peacemakers’ Court for the past 20 years.  Prior to joining the Erie County Sheriff’s Office, Mr. Redeye served as a member of the U.S. Air Force from 1974 until 1980.   Mr. Redeye also serves on the board of directors of the Seneca Management Development Corporation.

Maribel Printup has served as a member of the board of directors of SGC since February 2005. Ms. Printup currently serves as a chairperson emeritus of the board of trustees of the Seneca Iroquois National Museum. Ms. Printup also served as Councilor of the Nation’s Council from 1998 to 2000 and was with the Bureau of Indian Affairs for 25 years. During the last 10 years in which Ms. Printup was with the Bureau of Indian Affairs, she served as National Program Coordinator for the Johnson O’Malley Program.

53

Ms. Printup also serves on the board of directors of the Seneca Management Development Corporation.

Michael L. John has served as a member of the board of directors of SGC since November 2006.  Mr. John also served as member of the Nation’s Council from November 1998 through November 2006, and as Chief of Staff for the Seneca Nation of Indians from November 2004 through November 2006.  Mr. John also served as TERO Chairman from 2000 through 2006, and as Chairman of the Nation’s Compact Negotiations Committee from 1998 through 2000.  Mr. John also serves on the board of directors of the Seneca Management Development Corporation.

Audit Committee of the Board of Directors

Our board of directors has established an audit committee to assist it with its responsibilities. The board handles all compensation and other matters directly. The principal duties of our audit committee are as follows:

·      to recommend board action related to the discharge of the board of directors’ responsibilities with respect to overseeing the integrity of our financial statements, our compliance with legal and regulatory requirements, our risk assessment and risk management policies and procedures, and the performance of our internal and external audit functions;

·      to hire, monitor the performance of and, if necessary, replace the independent auditors;

·      to approve any significant non-audit relationship with the independent auditors and assess the independent auditor’s qualifications and independence;

·      to perform an annual evaluation of the committee itself; and

·      to undertake any other action deemed appropriate or necessary by the board of directors or applicable rules or regulations.

The audit committee is comprised of members from the board of directors. The members of our audit committee are Martin E. Seneca, Jr., chairman of the committee, Bergal L. Mitchell III, Maurice A. John, Sr. and Michael L. John.

Audit Committee Financial Expert

The board of directors has determined that it does not have an audit committee financial expert, meaning that no person has past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background, which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.  While we are not required to have an audit committee financial expert, the board of directors has looked, and expects to continue to look, for an individual meeting the requisite criteria of an audit committee financial expert to serve on our board and audit committee.

Director Compensation

Our directors receive the following compensation: (i) the Chairman of the Board receives a $100,000 annual fee; (ii) each non-Nation employee director receives a $40,000 annual fee; and (iii) each Nation employee director receives $500 per meeting.  In addition, we reimburse directors for travel and other expenses incurred in connection with their duties as directors of SGC and each director has complimentary privileges of $1,000 per month at each of our casinos. Nation executives who also serve as directors have unlimited complimentary privileges at both of our casinos. These complimentary privileges are to be used by our directors solely for business purposes.  The directors are also entitled to all other non-compensatory benefits available to our employees, including, but not limited to, health, dental and disability benefits.  The amended charters of SGC and its subsidiaries prohibit any of our employees from serving as one of our directors.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics applicable to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer and all other senior financial executives, and to our directors when acting in their capacity as directors. Our Code of Business Conduct and Ethics is designed to set the standards of business conduct and ethics and to help directors and employees resolve ethical issues. The purpose of our Code of Business Conduct

54

and Ethics is to ensure to the greatest possible extent that our business is conducted in a consistently legal and ethical manner. Employees may submit concerns or complaints regarding audit, accounting, internal controls or other ethical issues on a confidential basis by means of a toll-free telephone call or an anonymous email. We investigate all concerns and complaints.  Our Code of Business Conduct and Ethics is available to investors on our website at www.senecagamingcorporation.com or free of charge upon written request. Any such request should be sent by mail to Seneca Gaming Corporation, 310 Fourth Street Niagara Falls, New York (Seneca Nation Territory) 14303, Attn: General Counsel or should be made by telephone by calling (716) 299-1100.

We intend to disclose on our website amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K.

Item 11. Executive Compensation

The following table sets forth the compensation earned during the last three fiscal years by our Chief Executive Officer and our four most highly compensated executive officers other than the Chief Executive Officer whose total compensation exceeded $100,000 for Fiscal 2006:

Summary Compensation Table

				Other compensation
		Annual compensation		401(k) Plan Matching
Name and Principal Position	Year	Salary($)	Bonus($)(1)	Contributions
John Pasqualoni	2006	$923,750	—	2,813
President and Chief Executive Officer	2005	390,000	$237,500	2,625
	2004	266,250	187,500	2,606
Joseph D’Amato	2006	$517,603	$221,000	4,106
Chief Operating Officer	2005	375,000	187,500	5,954
	2004	249,327	262,500	3,531
Michael F. Speller	2006	$393,863	134,500	2,598
Senior Vice President of Gaming Operations	2005	290,000	125,000	2,621
	2004	203,750	137,500	2,054
Barry Brandon	2006	$700,000	$75,000	4,106
Senior Vice President and General Counsel	2005	375,000	187,500	4,404
	2004	62,671	106,250	—
Rajat R. Shah	2006	$700,000	—	2,427
Senior Vice President of Corporate Development and	2005	295,005	155,000	—
Deputy General Counsel

(1)      Bonuses were earned on a fiscal year basis, and may be paid in the following fiscal year.

Employment Agreements

SGC has entered into employment agreements with several of its executive officers, the material terms of which are summarized below.

55

John Pasqualoni.  In connection with his election as interim President and Chief Executive Officer, Mr. Pasqualoni and SGC entered into a second amended and restated employment agreement on April 6, 2005.  As of January 30, 2006, SGC and Mr. Pasqualoni entered into an amendment to Mr. Pasqualoni’s second amended and restated employment to, among other matters, modify Mr. Pasqualoni’s compensation, with such amendment effective as of October 1, 2005.

Mr. Pasqualoni is entitled to an annual base salary of $390,000 for the period commencing June 1, 2004 and ending September 30, 2005, $923,750 for the fiscal year ending September 30, 2006, and $923,750 for the fiscal year ending September 30, 2007, with a salary review by the board of directors each fiscal year thereafter at which time the board of directors shall determine whether, in its sole discretion, Mr. Pasqualoni’s base salary shall be increased.

For the fiscal years ended prior to October 1, 2005, the effective date of the amendment to Mr. Pasqualoni’s second amended and restated employment agreement, Mr. Pasqualoni was also eligible for an annual performance bonus. For the fiscal year ending September 30, 2005, Mr. Pasqualoni was eligible for an annual performance bonus equal to $187,500 if SGC’s Consolidated EBITDA for the 2005 fiscal year is at least $140.0 million. This performance bonus was paid to Mr. Pasqualoni in November 2005.

If Mr. Pasqualoni’s employment is terminated for any reason other than for cause, his death or disability, the loss by the Nation of its ability to conduct gaming activities, or the loss by Mr. Pasqualoni of his license to work at the Nation’s gaming facilities, we are obligated to: (i) pay Mr. Pasqualoni his earned, but unpaid, base salary through the termination date, and (ii) continue to pay his base salary in effect as of the date of termination for a period following his termination equal to the lesser of (A) 18 months or (B) the remainder of the period ending on the termination date. Following the termination of his employment, Mr. Pasqualoni has a duty to mitigate damages by seeking employment with duties and salary comparable to those provided by us, and if he obtains such employment, he shall reimburse us the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation we have paid him for such period.

Joseph D’Amato.    Mr. D’Amato and SGC entered into an amended and restated employment agreement on July 13, 2004, pursuant to which Mr. D’Amato agreed to serve as Senior Vice President of Finance and Administration of each of SGC, SNFGC, STGC and SEGC through September 30, 2007, unless his employment is earlier terminated pursuant to the terms of the agreement or renewed by subsequent written agreement.  On September 14, 2006, Mr. D’Amato’s amended and restated employment agreement was further amended to, among other matters, reflect Mr. D’Amato appointment to Chief Operating Officer, extend the term of the agreement through September 30, 2009, and to reflect certain changes to Mr. D’Amato’s compensation effective as of June 22, 2006.  Mr. D’Amato is entitled to an annual base salary of $375,000 for the period commencing June 1, 2004 and ending September 30, 2005, an annual base salary of $400,000 prorated for the period between October 1, 2005 and June 21, 2006, an annual base salary of $825,000 for the fiscal year ending September 30, 2006  (prorated for the period from June 22, 2006 through September 30, 2006), an annual base salary of $825,000 for the fiscal year ending September 30, 2007, and a minimum annual base salary of $825,000 for the fiscal years ending September 30, 2008 and September 30, 2009, respectively, with such minimum amounts subject to increase based upon negotiations between SGC and Mr. D’Amato.  For the fiscal year ending September 30, 2005, Mr. D’Amato was eligible for an annual performance bonus equal to $187,500 if SGC’s Consolidated EBITDA for the 2005 fiscal year is at least $140.0 million. This performance bonus was paid to Mr. D’Amato in November 2005.  For the fiscal year ending September 30, 2006, Mr. D’Amato was eligible for a prorated performance bonus equal to $146,000 if SGC’s Consolidated EBITDA for the 2006 fiscal year is at least $145.0 million.  This performance bonus was paid to Mr. D’Amato in September 2006.   In addition, Mr. D’Amato received a signing bonus of $75,000 in connection with entering into his employment agreement.

If Mr. D’Amato’s employment is terminated for any reason other than for cause, his death or disability, the loss by the Nation of its ability to conduct gaming activities, or the loss by Mr. D’Amato of his license to work at the Nation’s gaming facilities, we are obligated to: (i) pay Mr. D’Amato his earned, but unpaid, base salary through the termination date, (ii) pay Mr. D’Amato a pro-rata performance bonus for the year of his termination, and (iii) continue to pay his base salary in effect as of the date of termination for a period following his termination equal to the lesser of (A) 18 months or (B) the remainder of the period ending on the termination date. Following the termination of his employment, Mr. D’Amato has a duty to mitigate damages by seeking employment with duties and salary comparable to those provided by us, and if he obtains such employment, he shall reimburse us the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation we have paid him for such period.

Michael F. Speller.    Mr. Speller and SGC entered into an amended and restated employment agreement on July 13, 2004, pursuant to which Mr. Speller agreed to serve as Senior Vice President of Table Games and Poker of each of SGC, SNFGC, STGC and SEGC through September 30, 2007, unless his employment is terminated earlier pursuant to the terms of the agreement or renewed by subsequent written agreement. On September 14, 2006, Mr. Speller’s amended and restated employment agreement was further amended to, among other matters, reflect Mr. Speller’s appointment to Senior Vice

56

President of Gaming Operations, extend the term of the agreement through September 30, 2009, and to reflect certain changes to Mr. Speller’s compensation effective as of June 22, 2006.   Mr. Speller is entitled to an annual base salary of $225,000 for the period commencing June 1, 2004 and ending September 30, 2004, $290,000 for the fiscal year ending September 30, 2005, $315,000 prorated for the period between October 1, 2005 and June 21, 2006, an annual base salary of $600,000 for the fiscal year-ended September 30, 2006 (prorated for the period from June 22, 2006 through September 30, 2006), an annual base salary of $600,000 for the fiscal year-ended September 30, 2007, and a minimum annual base salary of $600,000 for the fiscal years-ended September 30, 2008 and 2009, respectively, with such minimum amounts subject to increase based upon negotiations between SGC and Mr. Speller. For the fiscal year ending September 30, 2005, Mr. Speller was eligible for an annual performance bonus equal to $125,000 if SGC’s Consolidated EBITDA for the 2005 fiscal year is at least $140.0 million. This performance bonus was paid to Mr. Speller in November 2005.  For the fiscal year ending September 30, 2006, Mr. Speller was eligible for a prorated performance bonus equal to $109,500 if SGC’s Consolidated EBITDA for the 2006 fiscal year is at least $145.0 million. This bonus was paid to Mr. Speller in September 2006.  In addition, Mr. Speller received a signing bonus of $25,000 in connection with entering into his employment agreement.

If Mr. Speller’s employment is terminated for any reason other than for cause, his death or disability, the loss by the Nation of its ability to conduct gaming activities, or the loss by Mr. Speller of his license to work at the Nation’s gaming facilities, we are obligated to: (i) pay Mr. Speller his earned, but unpaid, base salary through the termination date, (ii) pay Mr. Speller a pro-rata performance bonus for the year of his termination, and (iii) continue to pay his base salary in effect as of the date of termination for a period following his termination equal to the lesser of (A) 18 months or (B) the remainder of the period ending on the termination date. Following the termination of his employment, Mr. Speller has a duty to mitigate damages by seeking employment with duties and salary comparable to those provided by us, and if he obtains such employment, he shall reimburse us the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation we have paid him for such period.

Barry W. Brandon.    Mr. Brandon and SGC entered into an employment agreement on July 13, 2004, and an amendment to such agreement effective October 1, 2005, pursuant to which Mr. Brandon agreed to serve as Senior Vice President and General Counsel of each of SGC, SNFGC, STGC and SEGC from August 1, 2004 through September 30, 2007, unless his employment is earlier terminated pursuant to the terms of the agreement or renewed by subsequent written agreement. Mr. Brandon’s employment agreement was amended as of September 14, 2006 to, among other matters, extend the term of the agreement through September 30, 2009, and to reflect certain changes to Mr. Brandon’s compensation.  Mr. Brandon is entitled to an annual base salary of $375,000 for the period commencing August 1, 2004 and ending September 30, 2005, $700,000 for the fiscal year ending September 30, 2006, and $700,000 for the fiscal year ending September 30, 2007, and a minimum annual base salary of $700,000 for each of the fiscal years ending September 30, 2008 and September 30, 2009, with such minimum amounts subject to increase based upon negotiations between SGC and Mr. Brandon.  For the fiscal year ending September 30, 2005, Mr. Brandon was eligible for an annual performance bonus equal to $187,500 if SGC’s Consolidated EBITDA for the 2005 fiscal year is at least $140.0 million.  This performance bonus was paid to Mr. Brandon in November 2005.   Mr. Brandon received a signing bonus of $75,000 in connection with entering into his employment agreement.

If Mr. Brandon’s employment is terminated for any reason other than for cause, his death or disability, the loss by the Nation of its ability to conduct gaming activities, or the loss by Mr. Brandon of his license to work at the Nation’s gaming facilities, we are obligated to: (i) pay Mr. Brandon his earned, but unpaid, base salary through the termination date and (ii) continue to pay his base salary in effect as of the date of termination for a period following his termination equal to the lesser of (A) 18 months or (B) the remainder of the period ending on the termination date. Following the termination of his employment, Mr. Brandon has a duty to mitigate damages by seeking employment with duties and salary comparable to those provided by us, and if he obtains such employment, he shall reimburse us the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation we have paid him for such period.

Rajat R. Shah.    Mr. Shah and SGC entered into an employment agreement on April 28, 2005, pursuant to which Mr. Shah agreed to serve as Senior Vice President of Corporate Development and Deputy General Counsel of each of SGC, SNFGC, STGC and SEGC through September 30, 2008, unless his employment is terminated earlier pursuant to the terms of the agreement or renewed by subsequent written agreement. Mr. Shah’s employment agreement was amended as of September 14, 2006 to, among other matters, extend the term of the agreement through September 30, 2009, and to reflect certain changes to Mr. Shah’s compensation.  Mr. Shah is entitled to receive an amount equal to $295,625 from the period commencing May 2, 2005 and ending September 30, 2005, an annual salary of $700,000 for the fiscal year ending September 30, 2006, an annual salary of $700,000 for the fiscal year ending September 30, 2007, and a minimum annual base salary of $700,000 for each of fiscal years ending September 30, 2008 and September 30, 2009, with such minimum amounts subject to increase based upon negotiations between SGC and Mr. Shah.

57

If Mr. Shah’s employment is terminated for any reason other than for cause, his death or disability, the loss by the Nation of its ability to conduct gaming activities, or the loss by Mr. Shah of his license to work at the Nation’s gaming facilities, we are obligated to: (i) pay Mr. Shah his earned, but unpaid, base salary through the termination date, and (ii) continue to pay his base salary in effect as of the date of termination for a period following his termination equal to the lesser of (A) 18 months or (B) the remainder of the period ending on the termination date. Following the termination of his employment, Mr. Shah has a duty to mitigate damages by seeking employment with duties and salary comparable to those provided by us, and if he obtains such employment, he shall reimburse us the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation we have paid him for such period.

Patrick M. Fox.    Mr. Fox and SGC entered into an employment agreement on October 24, 2005, pursuant to which Mr. Fox agreed to serve as Vice President of Finance of each of SGC, SNFGC, STGC and SEGC from October 24, 2005 through October 23, 2007, unless his employment is earlier terminated pursuant to the terms of the agreement or renewed by subsequent written agreement. Mr. Fox’s employment agreement was amended as of June 22, 2006 to, among other matters, reflect Mr. Fox’s appointment to Chief Financial Officer, extend the term of the agreement through June 21, 2008, and to reflect certain changes to Mr. Fox’s compensation.  Mr. Fox is entitled to an annual base salary of $170,000 for the period commencing October 24, 2005 and ending June 21, 2006.  As of June 22, 2006, Mr. Fox’s annual base salary is $325,000.  Mr. Fox’s salary is subject to review on an annual basis.

If Mr. Fox’s employment is terminated for any reason other than for cause, his death or disability, the loss by the Nation of its ability to conduct gaming activities, or the loss by Mr. Fox of his license to work at the Nation’s gaming facilities, we are obligated to: (i) pay Mr. Fox his earned, but unpaid, base salary through the termination date and (ii) continue to pay his base salary in effect as of the date of termination for a period following his termination equal to the lesser of (A) 6 months or (B) the remainder of the period ending on the termination date. Following the termination of his employment, Mr. Fox has a duty to mitigate damages by seeking employment with duties and salary comparable to those provided by us, and if he obtains such employment, he shall reimburse us the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation we have paid him for such period.

Medical Reimbursement Plan

We have in place an executive medical reimbursement plan pursuant to which members of our senior management are entitled to reimbursement for up to $100,000 in otherwise uncovered medical expenses. We pay all premiums for this plan on behalf of our senior executives. As of September 30, 2006, the annual cost was approximately $6,000 for each member of senior management covered by this plan.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We are wholly owned by the Seneca Nation of Indians.

Item 13. Certain Relationships and Related Transactions

Transactions with the Nation

The Nation entered into an operating lease agreement with SNFGC on October 25, 2002 for use of the land and the building where the Seneca Niagara Casino currently operates. The Seneca Niagara Casino lease term expires in 2023. During Fiscal 2006, SNFGC made lease payments to the Nation of $15.5 million. Rent is payable only to the extent that sufficient funds are available from the net proceeds derived from the operation of the Seneca Niagara Casino and other commercial activities related to the operation of that casino.

STGC acquired and assumed the leasehold interests held by Sandra Abrams and Valent Farms, LLC under long term leases with the Nation on December 29, 2003 and February 19, 2003, respectively. Seneca Allegany Casino was built on land occupied pursuant to such leases. Pursuant to the terms of the Indenture governing the senior notes, the monthly payments to the Nation under the leases with SNFGC and STGC are limited to $1.25 million each with annual increases up to 3.0% beginning October 1, 2005.

STGC currently leases the land upon which the Seneca Allegany Casino operates from the Nation pursuant to an oral lease agreement. During Fiscal 2006, STGC made lease payments to the Nation of $15.5 million.

Effective April 1, 2006, SEGC leases the land upon which the planned Seneca Buffalo Creek Casino is expected to operate from the Nation pursuant to an oral agreement, as authorized by the SGC board of directors on April 18, 2006.  Beginning April 1, 2006, SEGC made monthly lease payments of $0.5 million to the Nation.  Effective October 1, 2006, the board of directors approved an increase to SEGC’s monthly lease payments to $1.25 million, which payments may be increased by 3% each October 1 beginning October 1, 2007.

We reimburse the Nation for all of the regulatory costs of the SGA, the New York State Racing and Wagering Board and the New York State Police, which are incurred by the Nation. For Fiscal 2006, we incurred approximately $18.6 million for regulatory costs.

58

During Fiscal 2006, SEGC distributed land with aggregate acquisition costs of approximately $7.4 million to the Nation.

We make distributions to the Nation pursuant to resolutions adopted by our board of directors for specific projects identified by the Nation and for general purposes. During Fiscal 2006, we distributed $11.8 million to the Nation, including a $2.0 million portion of a $26.0 million distribution which was approved by the SGC board of directors, declared in September 2006 and payable in $2.0 million increments over a thirteen month period.  On December 11, 2006, SGC declared an additional $20.0 million distribution to the Nation, payable in 10 equal monthly installments of $2.0 million beginning December 2006.  We intend to continue to make distributions to the Nation subject to the restrictions set forth in the Indenture governing the senior notes.

During Fiscal 2006, SGC distributed approximately $79.0 million to the Nation for the payment of the exclusivity fee to New York State for revenue generated through September 30, 2006

As of January 1, 2005, we transferred all Class II operations to the Nation, including our poker operations.  We lease space within both Seneca Niagara Casino & Hotel and Seneca Allegany Casino to the Nation for operation of the poker rooms.  During Fiscal 2006 and Fiscal 2005, we recorded $806,000 and $875,000 of rental income, respectively, and at September 30, 2006, we had recorded $401,000 as a receivable from the Nation relating to poker room rentals.

On July 14, 2005, STGC entered into a construction management agreement with SCMC to manage the construction of the 212-room hotel and casino at Seneca Allegany Casino.  SCMC is responsible for contract procurement and daily oversight of the construction project.  The construction agreement with SCMC, as amended, provides that the cost of all of the contract work to be completed under the agreement will not exceed a guaranteed maximum price (GMP) of $132.5 million.  If STGC further changes the scope of the project or finishing materials, the GMP under the contract may be further increased.

Effective September 1, 2005, SNFGC entered into an agreement with SCMC to manage the construction of the luxury hotel and gaming expansion project at Seneca Niagara Casino and Hotel.  This project was completely opened on March 31, 2006, and cost $234.0 million including the cost of equipment and furnishings.

SCMC was also contracted by SEGC for the demolition and site preparation work for our planned gaming facility on the Seneca Buffalo Creek Territory.  Such site preparation and demolition work was completed at a cost of $2.8 million.

Related Party Transactions

During Fiscal 2006, SGC purchased an aggregate of $90,000, of tobacco products from KW Seneca Tobacco, which is owned by Kevin Seneca, the newly-elected treasurer of the Nation and a former member of the Council.  We have not purchased from this vendor since April 2006.

During Fiscal 2006 STGC paid M&M Allegany Junction approximately $261,000 for leasing the building used by STGC for administrative purposes. M&M Allegany Junction is owned by Merle Watt, Sr., the brother of Maribel Printup, a member of our board of directors.

During Fiscal 2006, SNFGC paid RGBK, Inc. approximately $131,000 for kitchen design services. A principal of this firm is a brother-in-law of Michael Speller, SGC’s Senior Vice President of Gaming Operations.

During Fiscal 2006, SNFGC paid KMM Gaming, Inc. approximately $67,000 for gaming consulting services. KMM Gaming, Inc. is owned by the sister-in-law of SGC’s President and CEO.

Reference is made to “Directors and Executive Officers of the Registrant” for a discussion of certain matters relating to the compensation and employment of our officers and compensation of our directors.

59

Item 14.  Principal Accountant Fees and Services

The following table sets forth the aggregate fees incurred by SGC related to the services of SGC’s independent registered public accounting firm, Ernst & Young LLP for the years indicated:

	Fiscal Year September 30,
	2006		2005
Audit fees(1)	$	632,323	$	763,054
Audit-related fees(2)	31,568		17,923
All other fees(3)	18,940		—
Total	$	682,831	$	780,977

(1)   The audit fees relate to the audit of SGC’s annual financial statements and quarterly reviews. Audit fees also include services for agreed upon procedures reports in connection with the National Indian Gaming Commission requirements.  For 2005, this amount also includes fees related to the 2005 senior note offering of $179,150, including Ernst & Young LLP consent included in the Registration Statement on Form S-4 and comfort letter procedures.

(2)   Audit related fees relate to audit services for the Company’s employee benefit plan.

(3)   All other fees relate to Section 404 compliance procedures.

Preapproval of Services Required

Under the policies and procedures established by our audit committee, each engagement for audit and permissible non-audit services to be provided by our independent registered public accounting firm must be approved by the audit committee. The preapproval policy prohibits the independent registered public accounting firm from providing the following services: bookkeeping or other services related to our accounting records or financial statements; financial information systems design and implementation; appraisal or valuation services; fairness opinions or contribution-in-kind reports; actuarial services; internal audit outsourcing services; management function services; human resource services; broker-dealer, investment adviser or investment banking services; legal services; and expert services unrelated to the audit.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)1. and 2.		Financial statements required as a part of this Annual Report on Form 10-K are listed on the “Index to Consolidated Financial Statements” at page 66 herein. All financial statements schedules are omitted since the required information is included in the financial statements or the notes thereto, or is not applicable.
(a)3.		Exhibits
	1.1	Purchase Agreement, dated April 29, 2004, by and among SGC, the Guarantors defined therein and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 1.1 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
	1.2	Purchase Agreement, dated May 18, 2005, by and among SGC, the Guarantors as defined therein and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 1.1 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
	3.1	Fifth Amended and Restated Charter of SGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
	3.2	Second Amended and Restated By-Laws of SGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).

60

3.3	Third Amended and Restated Charter of SNFGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.4	Third Amended and Restated By-Laws of SNFGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.5	Second Amended and Restated Charter of STGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.6	Amended and Restated By-Laws of STGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.7	Second Amended and Restated Charter of SEGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.8	Amended and Restated By-Laws of SEGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
4.1	Indenture, dated as of May 5, 2004, among SGC, the Guarantors as defined therein and Wells Fargo Bank, National Association, as Trustee, relating to our $300,000,000 principal amount of 7¼% Senior Notes due 2012 (including form of note) (incorporated by reference to Exhibit 4.1 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
4.2	Supplemental Indenture, dated as of May 23, 2005, to the Indenture, dated as of May 5, 2004, among SGC, the Guarantors as defined therein and Wells Fargo Bank, National Association, as Trustee, relating to our $200,000,000 principal amount of 7¼% Senior Notes due 2012, Series B (including form of note) (incorporated by reference to Exhibit 4.1 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
4.3	Registration Rights Agreement, dated as of May 5, 2004, among SGC, the Guarantors party thereto and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 4.2 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
4.4	Registration Rights Agreement, dated as of May 23, 2005, among SGC, the Guarantors party thereto and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 4.2 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
4.5	Nation Agreement, dated May 5, 2004, between Seneca Nation of Indians, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America Securities LLC and Wells Fargo Securities, LLC, collectively as the Initial Purchasers, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
4.6	Amendment No. 1, dated May 23, 2005, to Nation Agreement, dated May 5, 2004, between Seneca Nation of Indians, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America Securities LLC and Wells Fargo Securities, LLC, collectively as the Initial Purchasers, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
4.7	Assignment and Plan of Distribution Agreement, entered into and effective as of May 5, 2004, by and between Seneca Nation of Indians and SGC (incorporated by reference to Exhibit 4.2 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.1	Nation-State Gaming Compact between the Seneca Nation of Indians and New York State, effective December 9, 2002 (incorporated by reference to Exhibit 10.1 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).

61

10.2		Term Loan Agreement, dated as of November 22, 2002, between Freemantle Limited, as Lender, and SNFGC, as Borrower, as amended by Amendment No. 1 on December 6, 2002 (incorporated by reference to Exhibit 10.2 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.3		Amendment No. 2 to Term Loan Agreement, dated April 22, 2004, between Freemantle Limited, as Lender, and SNFGC as Borrower (incorporated by reference to Exhibit 10.14 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.4		Nation Agreement, dated as of November 22, 2002, between Freemantle Limited, as Lender, and the Seneca Nation of Indians (incorporated by reference to Exhibit 10.3 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.5		Amendment No. 1 to Nation Agreement, dated April 22, 2004, between Freemantle Limited, as Lender, and the Seneca Nation of Indians (incorporated by reference to Exhibit 10.15 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.6		Term Loan Termination Agreement, dated as of May 9, 2005, between Freemantle Limited, as Lender, and SNFGC, as Borrower (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on May 10, 2005).
10.7		Agreement of Lease (“Head Lease Agreement”), dated as of October 25, 2002, between Seneca Nation of Indians, as Landlord, and SNFGC, as Tenant, as amended on December 23, 2002 (incorporated by reference to Exhibit 10.4 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.8		Agreement, dated as of October 15, 2003, between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Niagara Casino luxury hotel) (incorporated by reference to Exhibit 10.6 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.9		First Amendment to Design/Build Agreement, dated as of February 10, 2004, by and between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Niagara Casino Hotel) (incorporated by reference to Exhibit 10.7 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.10		Agreement, dated as of September 1, 2004, between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Allegany Casino Parking Garage) (incorporated by reference to Exhibit 10.10 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.11		Agreement, dated as of September 1, 2004, between STGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Allegany Casino hotel and casino) (incorporated by reference to Exhibit 10.11 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.12		Construction Management Agreement, dated as of July 14, 2005, between Seneca Construction Management Corporation, as Construction Manager, and STGC, as Owner (for Seneca Allegany Casino Phase II Hotel and Casino) (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on July 17, 2005).
10.13		Letter of Agreement, dated June 29, 2005, for Mutual Termination of the Agreement dated September 1, 2004 between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Allegany Casino Phase II Hotel and Casino) (incorporated by reference to Exhibit 10.2 to SGC’s Current Report on Form 8-K filed with the SEC on July 17, 2005).
10.14	+	Employment Agreement, dated July 13, 2004, between SGC and Barry W. Brandon (incorporated by reference to Exhibit 10.9 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.15	+	Amended and Restated Employment Agreement, dated April 13, 2004, between SGC and G. Michael Brown (incorporated by reference to Exhibit 10.8 to SGC’s Registration Statement No. 33-117633 filed with the SEC on July 23, 2004).
10.16	+	Amended and Restated Employment Agreement, dated July 13, 2004, between SGC and Annette Mohawk Smith (incorporated by reference to Exhibit 10.10 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).

62

10.17	+	Second Amended and Restated Employment Agreement, dated April 6, 2005, between SGC and John Pasqualoni (incorporated by reference to Exhibit 10.16 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.18	+	Amended and Restated Employment Agreement, dated July 13, 2004, between SGC and Joseph D’Amato (incorporated by reference to Exhibit 10.12 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.19	+	Amended and Restated Employment Agreement, dated July 13, 2004, between SGC and Michael F. Speller (incorporated by reference to Exhibit 10.13 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.20	+	Employment Agreement, dated April 28, 2005, between SGC and Rajat Shah (incorporated by reference to Exhibit 10.11 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.21	+	Separation and Consulting Agreement, dated April 6, 2005, between SGC and C. Michael Brown (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on April 6, 2005).
10.22	+	Amendment No. 1 to Employment Agreement, dated as of October 1, 2005, between SGC and Barry W. Brandon (incorporated by reference to Exhibit 10.20 to SGC’s Registration Statement No. 333-128443 filed with the SEC on November 30, 2005)
10.23	+	Amendment No. 1 to Second Amended and Restated Employment Agreement, dated as of January 30, 2006, between SGC and John Pasqualoni (incorporated by reference to Exhibit 10.23 to SGC’s Amendment No. 3 to Registration Statement on Form S-4 filed with the SEC on February 2, 2006).
10.24	+	Letter of Resignation and Mutual Release of all Claims, dated as of April 28, 2006, executed by Annette Smith and SGC (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on 8-K filed with the SEC on May 4, 2006).
10.25	+	Amendment No. 2 to Employment Agreement, effective as of September 14, 2006, between SGC and Barry W. Brandon (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.26	+	Amendment No. 1 to Employment Agreement, effective as of September 14, 2006, between SGC and Rajat Shah (incorporated by reference to Exhibit 10.2 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.27	+	Amendment No. 1 to Employment Agreement, entered into on September 14, 2006 and effective as of June 22, 2006, between SGC and Joseph D’Amato (incorporated by reference to Exhibit 10.3 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.28	+	Amendment No. 1 to Employment Agreement, entered into on September 14, 2006 and effective as of June 22, 2006, between SGC and Michael Speller (incorporated by reference to Exhibit 10.4 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.29	*+	Employment Agreement, dated December 15, 2006, and effective as of June 22, 2006, between Seneca Gaming Corporation and Patrick M. Fox.
10.30		Construction Management Agreement, entered into January 12, 2006 and effective as of September 1, 2005, between SNFGC, as Owner, and Seneca Construction Management Corporation, as Construction Manager (incorporated by reference to Exhibit 10.21 to SGC’s Amendment No. 2 to Registration Statement on Form S-4 filed with the SEC on January 17, 2006).

63

10.31		First Amendment to Construction Management Agreement, dated as of January 12, 2006, by and between Seneca Construction Management Corporation, as Construction Manager, and STGC, as Owner (incorporated by reference to Exhibit 10.22 to SGC’s Amendment No. 2 to Registration Statement on Form S-4 filed with the SEC on January 17, 2006).
10.32		Construction Management Agreement, dated and effective as of May 9, 2006, between SEGC, as Owner, and Seneca Construction Management Corporation, as Construction Manager (for demolition work on Seneca Buffalo Creek Territory) (incorporated by reference to Exhibit 10.1 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2006).
10.33		Agreement between the City of Buffalo, New York, Seneca Gaming Corporation, Seneca Erie Gaming Corporation and the Seneca Nation of Indians, effective November 9, 2006 (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on November 14, 2006).
21.1	*	List of Subsidiaries of SGC.
24.1	*	Power of Attorney (included on the signature page of this Annual Report).
31.1	*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1	*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

*      Filed herewith.

+      Management contract or compensatory plan or arrangement.

(b)           See item (a)3. above

(c)           See item (a)1. and 2. above.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized, in Niagara Falls, State of New York, on the 15th day of December, 2006.

SENECA GAMING CORPORATION
By:	/s/ John Pasqualoni
	John Pasqualoni
	President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints John Pasqualoni and Patrick M. Fox, and each or any of them, his or her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution, for him or her in his or her name, place and stead, in any and all capacities, to sign on his or her behalf individually and in each capacity stated below any or all amendments to this annual report on Form 10-K and any other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agent, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.  This Power of Attorney may be signed in several counterparts.

64

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature	Title	Date
/s/ John Pasqualoni	President and Chief Executive Officer (Principal Executive Officer)	December 15, 2006
John Pasqualoni
/s/ Patrick M. Fox	Chief Financial Officer (Principal Financial and Accounting Officer)	December 15, 2006
Patrick M. Fox
/s/ Barry E. Snyder, Sr.	Chairman of the Board of Directors	December 15, 2006
Barry E. Snyder, Sr.
/s/ Bergal L. Mitchell III	Vice Chairman of the Board of Directors	December 15, 2006
Bergal L. Mitchell III
/s/ Maurice A. John, Sr.	Treasurer and Director	December 15, 2006
Maurice A. John, Sr.
/s/ N. Cochise Redeye	Director	December 15, 2006
N. Cochise Redeye
/s/ Maribel Printup	Director	December 15, 2006
Maribel Printup
/s/ Martin E. Seneca, Jr.	Director	December 15, 2006
Martin E. Seneca, Jr.
Michael L. John	Director

65

SENECA GAMING CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets, as of September 30, 2006 and 2005	F-2
Consolidated Statements of Income and Changes in Capital, for the years ended September 30, 2006, 2005 and 2004	F-3
Consolidated Statements of Cash Flows, for the years ended September 30, 2006, 2005 and 2004	F-4
Notes to Consolidated Financial Statements	F-5

66

SENECA GAMING CORPORATION

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Seneca Gaming Corporation

We have audited the accompanying consolidated balance sheets of Seneca Gaming Corporation as of September 30, 2006 and 2005, and the related consolidated statements of income and changes in capital, and cash flows for each of the three years in the period ended September 30, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Seneca Gaming Corporation at September 30, 2006 and 2005, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 30, 2006, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Buffalo, New York
December 1, 2006, except for Note 14
as to which the date is December 11, 2006

F-1

SENECA GAMING CORPORATION

CONSOLIDATED BALANCE SHEETS

	September 30,
	2006		2005
Assets
Current assets:
Cash and cash equivalents	$	78,195	$	142,467
Short-term investments	62,300		96,091
Receivables from affiliates	410		875
Other receivables, net	2,139		1,979
Inventories	2,734		2,095
Other current assets	6,268		6,437
Total current assets	152,046		249,944
Property and equipment, net	615,207		430,418
Restricted cash	25,800		—
Other long-term assets	47,323		18,486
Total assets	$	840,376	$	698,848
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payable	$	4,939	$	3,898
Construction payables — SCMC	52,489		10,894
Other construction payables	—		23,341
Distributions payable to Nation	24,000		—
Exclusivity fees payable	7,263		5,717
Accrued interest	15,104		14,218
Customer point liability	11,632		10,682
Accrued regulatory costs	14,700		9,347
Other current liabilities	26,271		17,974
Total current liabilities	156,398		96,071
Long-term debt	494,347		493,352
Total liabilities	650,745		589,423
Capital:
Retained earnings	189,631		109,425
Total liabilities and capital	$	840,376	$	698,848

See accompanying notes

F-2

SENECA GAMING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND CHANGES IN CAPITAL

	Year Ended September 30,
	2006			2005			2004
Revenues:
Gaming	$	519,620		$	440,156		$	337,536
Food and beverage	50,141			41,689			31,358
Lodging	10,654			—			—
Retail, entertainment and other	19,940			16,955			11,797
Less: promotional allowances	(77,861		)	(49,647		)	(24,295		)
Net revenues	522,494			449,153			356,396
Expenses:
Gaming	129,396			114,746			92,531
Food and beverage	43,485			34,877			26,387
Lodging	6,131			—			—
Retail, entertainment and other	11,668			10,418			7,184
Advertising, general and administrative	131,997			117,188			91,552
Pre-opening costs	9,478			1,509			4,228
Depreciation and amortization	38,992			26,295			17,638
Total operating expenses	371,147			305,033			239,520
Operating income	151,347			144,120			116,876
Other non-operating expenses	(558		)	(13,301		)	—
Interest income	5,814			5,116			1,535
Interest expense	(33,198		)	(90,366		)	(33,702		)
Net income	$	123,405		$	45,569		$	84,709
Beginning capital balance	109,425			86,687			46,996
Cash distributions declared to the Nation	(35,846		)	(20,438		)	(28,665		)
Distribution of real property, equipment and leasehold rights to the Nation	(7,353		)	(2,393		)	(16,353		)
Ending capital balance	$	189,631		$	109,425		$	86,687

See accompanying notes.

F-3

SENECA GAMING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended September 30,
	2006			2005			2004
Cash flows relating to operating activities
Net income	$	123,405		$	45,569		$	84,709
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization	38,992			26,295			17,638
Amortization of deferred financing costs and debt discount	3,196			2,445			1,735
Provision for bad debts	349			171			96
Write-off of acquisition costs and deferred financing costs	135			2,468			—
Fair market value adjustment of interest rate cap	—			177			1,328
Other	40			1,315			(264		)
Change in operating assets and liabilities:
Current assets	(514		)	(4,947		)	(1,713		)
Long-term assets	—			(149		)	(1,287		)
Current liabilities	16,235			(25,692		)	41,561
Net cash provided by operating activities	181,838			47,652			143,803
Cash flows relating to investing activities:
Purchases of property and equipment	(203,729		)	(171,011		)	(168,704		)
Land acquisition costs	(38,012		)	(1,673		)	(12,036		)
Payment to collateralize letter of credit	(25,800		)	—			—
Refund of deposits	168			700			—
Sales (purchases) of investments, net	33,791			(20,163		)	(57,963		)
Net cash used in investing activities	(233,582		)	(192,147		)	(238,703		)
Cash flows relating to financing activities:
Proceeds from long-term debt	—			193,000			341,966
Repayment of long-term debt	—			(80,325		)	(46,916		)
Payments to sinking fund, net	—			(11,917		)	(6,048		)
Purchase of interest rate caps	—			—			(2,188		)
Proceeds from sale of interest rate caps	—			683			—
Payment of deferred financing costs	(682		)	(4,982		)	(11,937		)
Distributions paid to the Nation	(11,846		)	(21,092		)	(28,010		)
Net cash (used in) provided by financing activities	(12,528		)	75,367			246,867
Net (decrease) increase in cash	(64,272		)	(69,128		)	151,967
Cash balances:
Beginning of period	142,467			211,595			59,628
End of period	$	78,195		$	142,467		$	211,595
Supplemental disclosures of cash flow information
Cash paid for interest, net of amounts capitalized	$	35,364		$	81,748		$	21,213
Noncash investing activities:
Distribution of property and leasehold rights to the Nation	$	7,353		$	2,393		$	16,353
Noncash financing activities:
Cash distributions to the Nation declared but not paid	$	24,000		$	—		$	—
Discount received upon extinguishment of long-term debt	—			882			—

See accompanying notes.

F-4

SENECA GAMING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

The consolidated financial statements include the accounts of Seneca Gaming Corporation (SGC) and its wholly owned subsidiaries (collectively, the Company).  In consolidation, all intercompany balances and transactions have been eliminated.

SGC, which was formed on August 1, 2002, is wholly owned by the Seneca Nation of Indians, or the Nation. The Nation is a federally recognized Indian tribe with total territorial land comprising approximately 54,000 acres in the Western New York region. SGC was organized by the Nation to operate and manage its Class III Gaming activities pursuant to the Indian Gaming Regulatory Act of 1988, or IGRA. Under IGRA, federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a compact with the affected state. Pursuant to IGRA, the Nation entered into the Nation-State Gaming Compact with the State of New York dated April 12, 2002, or the Compact, which has been approved by the Federal Bureau of Indian Affairs, Department of the Interior. The Compact provides the Nation the exclusive right to conduct Class III gaming activities at three sites in the western region of the State of New York.

The Nation’s Constitution established the Nation’s Council, or the Council, to act as the Nation’s legislative authority. The Council acts on the Nation’s behalf with respect to SGC, and the Council established the Seneca Gaming Authority, or SGA, to regulate the gaming activities of SGC under the Compact.

The Council, at the request of the SGC Board of Directors, chartered three subsidiary corporations of SGC to operate the three sites authorized by the Compact. In addition, the SGC Board of Directors hired the executive management of SGC, including the President and Chief Executive Officer, to oversee, develop, and manage the three sites. The subsidiary corporations are as follows:

Seneca Niagara Falls Gaming Corporation, or SNFGC

Seneca Territory Gaming Corporation, or STGC

Seneca Erie Gaming Corporation, or SEGC

SNFGC was formed on August 1, 2002 to operate the Nation’s gaming activities in Niagara Falls, New York. Operations at SNFGC’s casino, or Seneca Niagara Casino, commenced December 31, 2002.  In connection with the approval of the Compact on October 25, 2002, the State of New York transferred to the Nation certain property upon which the former Niagara Falls, New York, Convention Center (the Facility) was located.  As provided for in the Compact, the Nation leased the property to SNFGC pursuant to a lease agreement dated October 25, 2002.  SNFGC then leased the property to the Empire State Development Corporation (ESDC) pursuant to a sublease agreement dated October 25, 2002.  The ESDC then subleased the property back to SNFGC under a sub-sublease agreement also dated as of October 25, 2002.  The SNFGC casino is located on this leased property site and operates in the renovated facility.  The sub-sublease agreement with ESDC required SNFGC to pay Supplemental Rent of approximately $24 million in the event SNFGC conducted Class III gaming in a structure within the City of Niagara Falls outside of the Facility.  The Supplemental Rent represents the remaining general obligation bonds outstanding issued by ESDC in connection with financing of the Facility in the 1970s.  The sublease and sub-sublease were entered into in order to provide ESDC a continuing contractual interest in the Facility.

Based on the Company’s expansion plans, which includes expanded Class III gaming, the liability for payment of the Supplemental Rent became probable.  As a result, the Company negotiated a discounted payment of $22.0 million, which was paid to ESDC in August 2004.  This payment fulfilled the Nation’s and SNFGC’s obligation under the Compact with respect to such Supplemental Rent and results in the termination of both the sublease and sub-sublease.  The Company has recorded the $22.0 million payment as leasehold improvements, since it represents an additional cost of the facility leased from the Nation.  This amount is being amortized over the remaining term of the Compact, through 2023.

STGC was formed on September 20, 2003 to operate the Nation’s gaming activities in Salamanca, New York on its territorial land. From its formation until the May 1, 2004 opening of the STGC’s casino in Salamanca, or the Seneca Allegany Casino, STGC dedicated its efforts to the construction and equipping of the Seneca Allegany Casino, hiring and training staff, and obtaining regulatory approvals.

F-5

SEGC was formed on August 9, 2003 to operate the Nation’s gaming activities in Erie County, New York.  On October 3, 2005, the Nation acquired approximately nine acres of land in the inner-harbor district of downtown Buffalo.  SEGC commenced construction of SEGC’s Seneca Buffalo Creek Casino on those nine acres on December 8, 2005.  The exclusive right, under the Compact, to establish and operate a third Class III gaming facility in Erie County may terminate if the Nation or SEGC fails to commence Class III gaming operations by December 9, 2007.

SGC’s fiscal year-end is September 30. References to 2006, 2005, and 2004 represent the years ended September 30, 2006, September 30, 2005, and September 30, 2004, respectively.  As described in Note 11, the Nation incurs certain costs for regulatory and other expenses that are passed through to the Company on a dollar-for-dollar basis.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents include investments with initial maturities of three months or less. Cash and cash equivalents are carried at cost, which approximates market value.

Short-Term Investments

Investments with an original maturity of greater than three months to one year, and collateralized market auction preferred stock, are stated at fair value.

Short-term investments at September 30, 2006 consist of market auction preferred stock instruments with a carrying value of $62,300,000.  The carrying value approximates fair value at September 30, 2006.

Market auction preferred stock has a dividend rate determined periodically (typically less than 90 days) based on an auction mechanism. Notwithstanding the liquidity which may be provided by the auction process, market auction preferred stock generally does not have a scheduled maturity.  Short-term investments are classified as available for sale as defined in SFAS No. 115.  Realized gains and/or losses from the sales of short-term investments were not material for all years presented.  Also, for all years presented there were no unrealized gains or losses recorded in accumulated other comprehensive income, nor were any amounts reclassified to accumulated other comprehensive income.

Receivables

Receivables consist primarily of gaming receivables and non-gaming receivables. Gaming receivables represent credit extended to approved casino customers. The Company maintains an allowance for doubtful accounts which is based on management’s estimate of the amount expected to be uncollectible considering experience and the information management obtains regarding the creditworthiness of the customer. The collectibility of these receivables could be affected by future business or economic trends.

Inventories

Inventories consist principally of food and beverage, retail, and operating supplies. Inventories are stated at the lower of cost or market. Cost is determined using the first-in first-out method for retail and warehouse inventories and using the average cost method for food and beverage inventories.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line basis. Amortization of leasehold improvements is over the lesser of the term of the lease or the estimated useful life. Useful life estimates of asset categories are as follows:

Buildings	40 years
Leasehold improvements — casino	10–21 years
Leasehold improvements — other	4–5 years
Furniture and equipment	3–7 years

F-6

The cost of significant improvements is capitalized. Costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the determination of income. Interest incurred for construction related projects are capitalized and amortized over the life of the related asset using the straight-line method. The interest rate used was 7¼% in all years presented. The amount of interest capitalized for 2006, 2005 and 2004 was approximately $6,250,000, $5,054,000 and $654,000, respectively.

In accordance with the Financial Accounting Standard Board’s Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), the carrying value of the Company’s assets are reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an impairment loss has occurred based on current and future levels of income and expected future cash flows as well as other factors, then an impairment loss is recognized as a deduction in determining operating income. SGC management concludes that no such impairment exists at September 30, 2006.

Deferred Financing Costs

Deferred financing costs include costs incurred in connection with issuance of long-term debt. These costs are amortized over the term of the related financing agreement. Amortization expense for 2006, 2005, and 2004, was $2,201,000, $2,445,000 and $1,735,000, respectively.

Customer Point Liability

Customer point liability represents the estimated future cost of unredeemed Seneca Link Player’s Club points.  Management reviews the adequacy of this accrual by periodically evaluating the redemption experience and projected trends.  Actual results could differ from those estimates.

Other Current Liabilities

Accruals for estimates of vested employee benefits, marketing, and certain other costs are classified in other current liabilities on the accompanying consolidated balance sheets.  Actual results could differ from those estimates.

Advertising

The Company expenses advertising costs as incurred. Total advertising expenses for 2006, 2005 and 2004 were $7,579,000, $6,123,000 and $5,665,000, respectively.

Pre-opening Costs

In accordance with the American Institute of Certified Public Accountants’ Statement of Position 98-5, Reporting on the Costs of Start-up Activities, pre-opening costs are expensed as incurred. Pre-opening costs in 2006, 2005 and 2004 consist of development costs in obtaining Class III gaming approval as well as employee costs, legal, marketing and advertising expenses, and other direct expenses related to the opening of SNFGC and STGC, and the development of SEGC. For the years ended September 30, 2006, 2005 and 2004, such costs totaled $9,478,000, $1,509,000 and 4,228,000, respectively.

Casino Revenues

SGC recognizes casino revenue as gaming wins less gaming losses. Revenues from food and beverage, retail, entertainment, and other services are recognized at the time the service is performed.

Promotional Allowances

SGC operates a complimentary program in which food and beverage, retail, entertainment, and other services are provided to guests based on points that are earned through the Company’s Seneca Link Player’s Card. The retail value of these complimentary items is included in gross revenues and then deducted as promotional allowances to arrive at net revenues.

F-7

The retail value of providing such promotional allowances was included in revenues as follows:

	Years Ended September 30,
	2006	2005	2004
	(In Thousands)
Food and beverage	$29,271	$23,769	$15,636
Lodging	6,712	—	—
Retail, entertainment, and other	12,262	10,631	7,182
Promotional slot credits	29,616	15,247	1,477
Promotional allowances	$77,861	$49,647	$24,295

The estimated cost of providing such promotional allowances was as follows:

	Years Ended September 30,
	2006	2005	2004
	(In Thousands)
Food and beverage	$25,416	$19,885	$13,299
Lodging	3,620	—	—
Retail, entertainment, and other	8,929	8,082	5,205
Promotional allowances	$37,965	$27,967	$18,504

Gaming Expenses

Gaming expenses include the slot exclusivity fee which the Company is required to pay to the State of New York based on its Compact (see Note 12), the cost of casino operations, and earned Seneca Link Player’s Card points. The Company accrues for Seneca Link Player’s Card points expected to be redeemed in the future based on the cost of items expected to be redeemed.

Retirement Savings Plan

The Company sponsors a defined contribution retirement savings plan for its employees.  The Company’s expense relating to this plan was $434,000, $306,000 and $136,000 in the fiscal years ended September 30, 2006, 2005 and 2004, respectively.

Income Taxes

The Nation is a sovereign Indian nation with independent legal jurisdiction over its people and its lands. As an enterprise owned by the Nation, SGC is not subject to federal or state income taxes.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, short-term investments, receivables, accounts payable, and accrued expenses, and the senior notes approximate fair value.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”).  This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.  SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company does not believe that the adoption of SFAS 157 will have a material effect on its results of operations or consolidated financial position.

Management’s Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates included in the accompanying financial statements relate to the liability associated with unredeemed Seneca Link Player’s Card points, vested employee benefits, and regulatory costs. Actual amounts could differ from these estimates.

F-8

Reclassification

Certain amounts from the prior year have been reclassified to conform to the current year presentation.

3. Cash and Cash Equivalents

For reporting purposes, cash and cash equivalents include all operating cash and in-house funds.

4. Concentration of Credit Risk

Financial instruments that potentially subject SGC to concentrations of credit risk consist principally of cash and cash equivalent accounts in financial institutions. SGC maintains its cash balances in several financial institutions. Accounts are insured by the Federal Deposit Insurance Corporation up to $100,000. Cash and cash equivalents exceeding federally insured limits totaled approximately $49.0 million and $117.0 million at September 30, 2006 and 2005, respectively.

5. Other Receivables, Net

Components of other receivables, net are as follows:

	September 30,
	2006		2005
	(In Thousands)
Gaming	$1,311		$1,127
Non-gaming	1,291		1,126
	2,602		2,253
Allowance for doubtful accounts	(463	)	(274	)
Receivables, net	$2,139		$1,979

6. Other Current Assets

Components of other current assets are as follows:

	September 30,
	2006	2005
	(In Thousands)
Prepaid expenses	$5,939	$6,192
Other	329	245
Other current assets	$6,268	$6,437

7. Property and Equipment, Net

Components of property and equipment are as follows:

	September 30,
	2006		2005
	(In Thousands)
Buildings	$ 344,530		$ 105,004
Leasehold improvements — casino	106,085		105,412
Leasehold improvements — other	345		345
Furniture and equipment	152,152		101,944
Construction-in-progress	103,485		170,275
	706,597		482,980
Less accumulated depreciation and amortization	(91,390	)	(52,562	)
Property and equipment, net	$ 615,207		$ 430,418

F-9

8. Other Long-Term Assets

Components of other long-term assets are as follows:

	September 30,
	2006	2005
	(In Thousands)
Deferred financing costs, net	$12,463	$13,981
Land to be distributed to Nation	31,982	3,901
Deposits and other	2,878	604
	$47,323	$18,486

In 2006 and 2005, the Company incurred costs toward the acquisition of land totaling $38.0 million and $1.7 million, respectively, which are included in other long-term assets (net of amounts transferred to the Nation) within the accompanying consolidated balance sheets.   At September 30, 2006, deposits and other includes $2.4 million in costs associated with the purchase of land to be used to develop a golf course.  Such amounts are intended to be sold to another wholly owned subsidiary of the Nation.

During 2005, the Company made deposits to a sinking fund required by the Freemantle Term Loan, in the amount of $17.5 million.  Upon termination of the Term Loan in May 2005, the $23.5 million of deposited funds plus accumulated earnings were transferred, $18.0 million to short-term investments and $5.5 million to cash and cash equivalents.

9. Restricted Cash

The restricted cash balance within the accompanying consolidated balance sheets represents cash in an interest-bearing bank account which is restricted for use as collateral for a $25.8 million available letter of credit with a bank, which will be drawn upon to fund the intended purchase of certain parcels of land contemplated in the Compact with New York State, earmarked for ownership by the Nation.

10. Other Current Liabilities

Components of other current liabilities are as follows:

	September 30,
	2006	2005
	(In Thousands)
Accrued salaries, wages, and benefits	$11,925	$  7,522
Gaming liabilities	3,713	2,010
Other accrued expenses	10,633	8,442
Other current liabilities	$26,271	$17,974

11. Long-Term Debt

Long-term debt, as described below, consists of the following:

	September 30,
	2006	2005
	(In Thousands)
2004 7¼% Senior Notes due 2012	$ 300,000	$ 300,000
2005 7¼% Senior Notes due 2012	194,347	193,352
	494,347	493,352
Less current maturities of long-term debt	—	—
Long-term debt	$ 494,347	$ 493,352

7¼% Senior Notes due 2012

On May 5, 2004, SGC issued $300.0 million in 7¼% senior notes due 2012, or the 2004 senior notes. The 2004 senior notes are guaranteed by STGC, SEGC and, as of May 23, 2005, SNFGC or collectively, the Guarantors.  All of the guarantors are wholly owned by SGC and their guarantees are full, unconditional, joint and several.  The net proceeds from the 2004 senior

F-10

notes were, or will be, used principally to fund in whole or in part (a) the repayment in May 2004 of vendor equipment financing (discussed below), (b) SNFGC’s construction and equipping of a 604-room hotel, (c) the acquisition of the remaining 26 acres in Niagara Falls, as provided for in the Compact, (d) the payment of $22.0 million in August 2004 to satisfy the obligation to the Empire State Development Corporation in connection with the transfer of certain property to the Nation for use as the Seneca Niagara Casino, and (e) a $25.0 million distribution to the Nation.  All assets of SGC come from the proceeds of the offerings of senior notes, along with any intercompany advances or loans to SGC’s subsidiaries.  SGC has no independent operating assets or operating activities.

On May 23, 2005, SGC issued an additional $200.0 million in 7¼% senior notes due 2012, Series B, or the 2005 senior notes. The 2005 senior notes are treated as a single class with the 2004 senior notes and are identical to the 2004 senior notes, except for certain tax attributes and prior to November 1, 2005 the amount of interest accrued thereon.  Gross proceeds on the 2005 senior notes were approximately $193.0 million.  Such proceeds were, or will be, used to (a) pay in full and terminate on May 23, 2005, the senior secured term loan, or the Term Loan, made by Freemantle Limited, or Freemantle, to SNFGC in November 2002, for a negotiated amount of approximately $126.7 million, representing $80.0 million in outstanding principal and approximately $46.7 million for interest on such principal, at a prescribed interest rate, that would have otherwise been payable if the Term Loan had not been paid on May 23, 2005, but was instead paid 8½ months prior to its November 22, 2007 stated maturity, (b) to fund certain costs associated with the expansion of our operations, (c) to pay the fees and expenses associated with the offering of the 2005 senior notes, and (d) for general corporate purposes.  Interest on the 2004 and 2005 senior notes is payable semi-annually on November 1 and May 1. The 2004 and 2005 senior notes are unsecured and rank equally. As of September 30, 2006, aggregate accrued interest on the 2004 and 2005 senior notes was $15.1 million.

The Indenture governing the 2004 and 2005 senior notes contains certain financial and non-financial covenants. The financial covenants include limitations on restricted payments and the incurrence of indebtedness, while the non-financial covenants include reporting obligations and compliance with laws and regulations. As of September 30, 2006, SGC was in compliance with all covenants in the Indenture applicable to it.

Term Loan

SNFGC entered into a five-year Term Loan with Freemantle Limited (Lender) dated November 22, 2002. The Term Loan required that the Lender provide $80.0 million in financing for the initial construction of the SNFGC casino facility and other related costs.  As discussed above, on May 23, 2005, the Term Loan was paid in full. The negotiated payment in full of the Term Loan resulted in a charge to earnings on the early extinguishment of the Term Loan of approximately $49.2 million, including the write-off of $2.5 million of deferred financing costs.  These amounts are included in interest expense in the accompanying consolidated statements of income.

Upon repayment of the Term Loan, SNFGC became a full and unconditional guarantor of the 2004 and 2005 notes.

Equipment Financing

During 2003, SNFGC entered into five financing arrangements with certain slot machine vendors providing approximately $37.0 million to finance SNFGC’s gaming equipment, including its slot machines. Interest rates on these loans ranged from 6.0% to 6.42%. These loans were retired in May 2004 using proceeds from the Company’s 2004 Senior Notes. A gain of $415,000 was recognized in 2004, net of a $467,000 write-off of deferred financing costs related to these loans.

During 2004, STGC entered into four financing arrangements with certain slot machine vendors providing approximately $18.1 million to finance STGC’s slot machine purchases. Interest rates on these loans ranged from 6.0% to 8.0%. These notes were retired in May 2004 from the proceeds of the Company’s 2004 Senior Notes.

Derivative Instruments

SGC is considered an “end user” of derivative instruments and engages in derivative transactions for risk management purposes only. Effective on May 25, 2004, SGC entered into two interest rate cap agreements for an aggregate notional amount of $80.0 million, equal to the then outstanding balance of the Term Loan. The instruments were purchased for approximately $1.1 million each, $2.2 million in total. Periodic changes in the fair market value of the instruments were recorded as adjustments to interest expense. Both instruments were sold in the third quarter of 2005 subsequent to the payment in full and termination of the Term Loan.  Gross proceeds from the sale of these instruments was $0.7 million.

F-11

Maturities of the Company’s long-term debt (in thousands of dollars) are as follows:

	Maturities
Fiscal year ended September 30:
2007	$         —
2008	—
2009	—
2010	—
2011	—
Thereafter	500,000
	$ 500,000

12. Related-Party Transactions

Land Leases from the Nation

The Nation has entered into an operating lease agreement (each a Head Lease) with each of SNFGC (dated October 25, 2002) and STGC (effective as of May 1, 2004), for use of the land and/or buildings which are currently used in operating the Seneca Niagara Casino and Hotel and the Seneca Allegany Casino, respectively.  The STGC Head Lease is currently an oral agreement.  STGC is in the process of formalizing a written agreement with the Nation.  These agreements expire at the end of the Compact, in 2016 (provided that the Compact may be renewed throught 2023).  Monthly payments for both SNFGC and STGC were initially $1.0 million.  On March 1, 2005 and June 1, 2005, respectively, the monthly payments for STGC and SNFGC were increased to $1.25 million.  On April 18, 2006, the SGC board of directors approved 3% increases to lease payments for both SNFGC and STGC, to $1.3 million, effective October 1, 2005.  The increased expense has been recorded during the 2006 fiscal year.  The lease payments may increase by 3% annually on each October 1 over the remaining lease life.  Annual increases must be authorized by the board of directors of SGC and, subject to compliance with the terms of the Indenture governing the senior notes, may exceed 3%.  Under the SNFGC Head Lease, rent is payable only to the extent that sufficient funds are available, measured on an annual basis, from the net proceeds derived from the operation of the casino facilities and other related operations, and if on an annual basis sufficient funds are not available, any shortfall in the rent amount does not accumulate.  Due to the related party nature of these leases, which can be effectively modified by the Nation, the Company records monthly lease expense equal to the required payment amount for the respective month.  These leases contain no renewal options or escalation clauses.

Effective April 1, 2006, SEGC leases the land upon which the planned Seneca Buffalo Creek Casino is expected to operate from the Nation pursuant to an oral agreement, as authorized by the SGC board of directors on April 18, 2006.  Beginning April 1, 2006, SEGC made monthly lease payments of $0.5 million to the Nation.  Effective October 1, 2006, the board of directors approved an increase to SEGC’s monthly lease payments to $1.25 million, which payments may be increased by 3% each October 1 beginning October 1, 2007.  SEGC is in the process of formalizing a written agreement with the Nation.  Expenses resulting from the above lease agreements were as follows for the fiscal years ended September 30, 2006, 2005 and 2004 (in millions of dollars):

	2006	2005	2004
SNFGC	$15.5	$13.0	$12.0
STGC	15.5	13.8	3.8
SEGC	3.1	—	—
	$34.1	$26.8	$15.8

SNFGC and STGC both record the lease costs as a component of advertising, general and administrative costs in the accompanying consolidated statements of income.  SEGC records the lease cost as a component of pre-opening costs in the accompanying consolidated statements of operations.

Other Related-Party Transactions

On July 14, 2005, STGC entered into a construction management agreement with Seneca Construction Management Corporation, or SCMC, a wholly owned corporation of the Nation, to manage the construction of the new 212-room hotel and casino at Seneca Allegany Casino.  SCMC is responsible for contract procurement and daily oversight of the construction project. The construction agreement with SCMC, as amended, provides that the cost of all of the contract work to be completed under the agreement will not exceed a guaranteed maximum amount of $132.5 million.  If STGC further changes the scope of the project or finishing materials, the guaranteed maximum amount under the contract may be further increased.  Effective September 1,

F-12

2005, SNFGC entered into a construction management agreement with SCMC for the completion of the luxury hotel project at Seneca Niagara Casino.  The hotel was partially opened on December 15, 2005, and completely opened on March 31, 2006.  Total cost of the project was $234.0 million.  Effective as of December 1, 2005, SEGC entered into an agreement with SCMC for the demolition and land preparation work in connection with the site for the Seneca Buffalo Creek Casino.  This work was completed at a cost of $2.8 million.  For the fiscal years ended September 30, 2006 and 2005, SNFGC, STGC and SEGC have collectively made payments to SCMC for construction management fees and other costs of $6.2 million and $0.6 million, respectively.

As of January 1, 2005, the Company transferred all Class II operations to the Nation, including its poker operations.  The Company leases space within both Seneca Niagara Casino & Hotel and Seneca Allegany Casino to the Nation for operation of the poker rooms.  During 2006 and 2005, the Company recorded $806,000 and $875,000 of rental income, respectively, and at September 30, 2006, the Company has recorded $401,000 as a receivable from the Nation relating to poker room rentals.

During 2006 and 2005, the Company declared cash distributions to the Nation of $35.8 million and $20.4 million, respectively.  Cash distributions of $11.8 million and $21.1 million were paid in 2006 and 2005, respectively.

During 2006 and 2005, the Company distributed real property and leasehold rights acquired, net of liabilities transferred, for use in its casino operations to the Nation.  The distribution amounts of $7.4 million and $2.4 million for 2006 and 2005, respectively, is based on the acquisition costs.

The Company is charged by the Nation for SGA costs, which are incurred by the Nation. SGA costs charged to the Company were approximately $9.8 million in 2006, $8.7 million in 2005 and $6.2 million in 2004. The Company also incurs costs which are passed through the Nation for New York State gaming regulatory services and New York State Police and Cattaraugus County Sheriff Department services. The Company has recorded expenses of approximately $8.8 million in 2006, $7.4 million in 2005 and $5.0 million in 2004 in connection with these services.  At September 30, 2006 and 2005, approximately $14.7 million and $9.3 million, respectively, of the SGA, other regulatory, and police costs are recorded as accrued regulatory costs in the accompanying consolidated balance sheets.

During 2006, 2005 and 2004, the Company purchased $90,000, $248,000 and $689,000, respectively, of tobacco products from an entity in which the owner is the newly-elected treasurer of the Nation and a former SGA Commissioner.  We have ceased purchasing from this vendor effective April 2006.

STGC leases office space in a building owned by the brother of a member of the Company’s board of directors.  During the fiscal years ended September 30, 2006 and 2005, such lease payments totaled approximately $261,000 and $258,000, respectively.

During the fiscal year ended September 30, 2006, SNFGC paid RGBK, Inc. approximately $131,000 for kitchen design services. A principal of this firm is a brother-in-law of Michael Speller, SGC’s Senior Vice President of Gaming Operations.

During Fiscal 2006, SNFGC paid KMM Gaming, Inc. approximately $67,000 for gaming consulting services. KMM Gaming, Inc. is owned by the sister-in-law of SGC’s President and CEO.

13. Commitments and Contingencies

Litigation

On August 24, 2005, SNFGC filed a complaint against Klewin and BankNorth, as joint defendants, in the Superior Court for the Judicial District of New London, Connecticut. The suit was filed to obtain immediate injunctive relief in conjunction with a pending demand for arbitration by SNFGC related to Klewin ‘s failure to make required payments to the subcontractors for the construction of Seneca Niagara Casino’s new luxury hotel. SNFGC filed the complaint in order to enjoin the defendants from utilizing approximately $14.6 million paid by SNFGC (approximately $11.25 million was for the benefit of subcontractors on the Seneca Niagara Casino project and the balance related to the Seneca Allegany Casino expansion projects) into an account with BankNorth in the name of Klewin, which was set up by SNFGC principally for the purpose of paying Klewin’s subcontractors (including the architect) on the construction project. SNFGC was subsequently informed by Klewin that approximately $14.6 million paid by SNFGC into the account was “swept” by BankNorth and, as a result, several subcontractors (including the architect) were not paid by Klewin. Among other things, the complaint seeks temporary and permanent injunctive relief requiring that the defendants return to the account the approximate $14.6 million that has been removed from that account and temporary and permanent injunctive relief enjoining defendants from utilizing the approximate $14.6 million that has been removed from the account, other than for payment of Klewin’s subcontractors on the construction projects.  SNFGC has advanced funds to the architect and SCMC for payment to the remaining subcontractors.

On August 25, 2005, the parties appeared before the court and agreed to a stipulated immediate order freezing the remaining balance of approximately $5.5 million in the account pending a hearing on SNFGC’s application for temporary and permanent injunctive relief, subject to limited draw rights of not more than $350,000 per week permitted to Klewin for its operating expenses pursuant to a budget to be submitted by Klewin weekly.  The Company intends to seek recovery of all amounts already withdrawn from the account, except to the extent disbursed for appropriate purposes. On September 14, 2005, Klewin

F-13

filed an Application for Immediate Temporary Injunction seeking a temporary injunction prohibiting the Company from using design and construction documents and appropriating Klewin employees.  Klewin has also asserted counterclaims alleging, among other matters, tortuous interference with their business.  A hearing related to these counterclaims and the temporary injunction was held on November 22, 2005 and on November 30, 2005, the Court granted the Company’s motion to dismiss Klewin’s counterclaims and Application for Immediate Temporary Injunction.  On November 23, 2005, BankNorth filed an answer asserting, among other matters, certain counterclaims including a request for a declaratory judgment to the effect that BankNorth would be permitted to retain approximately $9.1 million of the $14.6 million swept from the Klewin account.  On January 17, 2006, SNFGC filed a motion for attachment against other Klewin assets (other than the bank account at issue), which motion was heard on September 20 and 21, 2006.  On December 1, 2006, the court granted SNFGC’s order for an attachment pendente lite to the value of $11.2 million, which order applied to all real property, bank accounts, and other assets owned by Klewin (other than the bank account at issue).  As of December 1, 2006, the temporary injunction on the bank account at issue remains in place.

On December 23, 2005, SNFGC and STGC filed a complaint in Niagara County Supreme Court seeking to recover monies taken by BankNorth that were originally directed to the Klewin subcontractors and to the architect, along with an award of attorneys’ fees, under  Section 77 of the New York Lien Law and under the theory of common law conversion.   SNFGC and STGC commenced the action as assignees of the claims of the subcontractors and the architect.  On February 27, 2006, BankNorth filed a motion to dismiss the action, claiming that the trust fund provisions of the New York Lien Law do not apply and the Connecticut action was filed first, before the New York action.  An order denying BankNorth’s motion to dismiss was filed on May 24, 2006.  BankNorth served its answer to SNFGC’s complaint on June 28, 2006, and also filed a motion to reargue and renew its prior motion to dismiss.  As of December 1, 2006, the court had not rendered its decision on BankNorth’s renewed motion to dismiss.

The arbitration hearing on the Klewin matter is scheduled to begin on May 7, 2007.  The parties are currently engaged in discovery.

The Company can provide no assurance that it will be able to recover all or any portion of the approximate $14.6 million.  As such, the Company has recorded a $13.3 million charge to earnings, representing the unrecovered amounts above, net of $1.3 million of management fees and other amounts which were otherwise due Klewin.

In January 2006, an action was filed in the United State District Court, Western District of New York by various plaintiffs against the United States Department of Interior, the National Indian Gaming Commission and three individuals in their official capacities as Secretary of the Interior, Acting Assistant Secretary of the Interior for Indian Affairs and Chairman of the National Indian Gaming Commission.  The action seeks declaratory and injunctive relief under the Administrative Procedure Act, the Declaratory Judgments Act, the National Historic Preservation Act (NHPA), the National Environmental Policy Act (NEPA) and the Indian Regulatory Gaming Act and is principally directed at the decisions and actions of the defendants that permit the construction and operation of our Seneca Buffalo Creek Casino.  The plaintiffs claim that the defendants have failed to comply with NEPA, NHPA, and IGRA and have requested that the Court take numerous actions including declaring that the lands acquired by the Nation pursuant to SNLCSA are not gaming eligible Indian lands within the meaning of IGRA and declaring that the Nation’s Compact violates IGRA.  If the plaintiffs are successful, the Nation would be unable to conduct any gaming upon lands acquired pursuant to SNLCSA.  On November 1, 2006 oral argument was heard on the defendant’s motion to dismiss for lack of jurisdiction, on the Nation’s amicus motion to dismiss based upon failure to join the Nation as a necessary party and sovereign immunity, and on the plaintiff’s motion for summary judgment.  As of December 1, 2006, the judge had not ruled on such motions.

On or about February 1, 2006, an action was filed in the New York Supreme Court, County of Erie, by various plaintiffs against George E. Pataki, in his official capacity as Governor of the State of New York; State Gaming Officials of the New York State Wagering Board; City of Buffalo; Common Council of the City of Buffalo; Anthony Masiello in his previous capacity as Mayor of Buffalo; Byron Brown in his capacity as Mayor of Buffalo; City of Buffalo Department of Public Works; Buffalo Sewer Authority; and Niagara Frontier Transportation Authority.  The action seeks directive and injunctive relief under the State Environmental Quality Review Act (SEQRA); the First Parks, Recreation, Historic Preservation Law (PRHPL); First City Environmental Review Ordination (CERO); and Freedom of Information Law (FOIL) and is principally directed at the decisions and actions of the defendants in connection with our Seneca Buffalo Creek Casino.  The plaintiffs initially claimed that the defendants had failed to comply with SEQRA, PRHPL, CERO and FOIL and had requested that the Court take numerous actions including directing compliance with SEQRA, PRHPL, CERO and FOIL and restraining further action relating to the development of our Seneca Buffalo Creek Casino.  In June 2006, the plaintiffs amended their complaint to drop their claims against Governor Pataki, the State Gaming Officials and the Niagara Frontier Transportation Authority, and added the Buffalo City Department of Economic Development, Permits and Inspections as a party. The amended complaint also dropped all claims except for the SEQRA and CERO claims. In October 2006, the plaintiffs moved for an injunction to prevent the Buffalo Creek Agreement with the City of Buffalo from being executed and performed, but the motion was denied based upon the judge’s determination that the plaintiffs failed to show a likelihood of success on the merits. The plaintiffs have appealed the denial of the injunction to the New York Supreme Court Appellate Division. A hearing on the appeal is anticipated to occur in late 2007. If the plaintiffs are successful, the Nation may be delayed in the completion of the Seneca Buffalo Creek Casino at this site or may be unable to complete the Seneca Buffalo Creek at this site.  Certain of these plaintiffs are also plaintiffs in the federal lawsuit filed in January 2006 and referenced above.

On November 6, 2006, a suit was brought in the New York Supreme Court, County of Erie, by the County of Erie, New York, Joel Giambra (as County Executive), and Andrew Eszak (as Commissioner of the County of Erie Department of Environment and Planning), against the City of Buffalo, Mayor Byron Brown and the Buffalo Common Council seeking to invalidate the Buffalo Creek Agreement on the basis that the City failed to refer the agreement to the County under Section 239(m) of the New York State General Municipal Law. The defendants filed a motion to dismiss on December 1, 2006. If the plaintiffs are successful, the Nation may be delayed in the completion of the Seneca Buffalo Creek Casino or may be unable to complete the Seneca Buffalo Creek Casino as planned.

F-14

On or about April 6, 2006, an action was filed in the United State District Court, Western District of New York, by Daniel T. Warren, a pro se plaintiff, against the United States of America, the United State Department of the Interior, the National Indian Gaming Commission, and five individuals in their official capacities as Acting Secretary of the Interior, Acting Assistant Secretary of the Interior for Indian Affairs and Chairman of the National Indian Gaming Commission, as well as Governor George E. Pataki, as Governor of the State of New York, and Cheryl Ritchko-Buley, as Chairwoman of the New York State Racing and Wagering Board.  The action initially sought  declaratory and injunctive relief as to numerous matters including declaring that IGRA is unconstitutional, that the Compact violates IGRA, that the New York Constitution is not preempted by IGRA, that New York does not have the authority under state law to enter into a tribal state compact under IGRA, that certain actions of the defendants were not in accordance with law, and that certain lands purchased by the Nation were not subject to being taken into trust or restricted fee status under the SNLCSA or were not pursuant to settlement of a land claim within the meaning of IGRA; and enjoining the defendants from taking actions which would further casino gambling in the State of New York under IGRA or on any lands acquired by the Nation pursuant to SNLCSA. On August 16, 2006, the plaintiff amended his complaint bringing:  a Tenth Amendment challenge to IGRA;  a claim that the Compact violates IGRA by providing for gaming which is not otherwise lawful in New York; a claim that both the Compact and the statute authorizing the Governor of New York to enter into the Compact violate various provisions of the New York State Constitution; and a claim that the United States has failed to promulgate regulations for gaming on off-reservation territory, in violation of its statutory duties.  The effect of such amendment was to limit the claims remaining in the case, by dropping many of the federal law claims in the original complaint.  On December 1, 2006, the court heard argument on the plaintiff’s motion to join additional parties in which he seeks to add as defendants (1) Barry E. Snyder, Sr., as President of the Seneca Nation of Indians; (2) John Pasqualoni, as President and CEO of the Seneca Gaming Corporation; (3) the Seneca Nation of Indians; and (4) the Seneca Gaming Corporation.  Dispositive motions (to dismiss) on behalf of both the plaintiff and the defendants have not yet been heard by the court.  If the plaintiff is successful in this lawsuit, the Nation could be unable to conduct any gaming upon lands acquired pursuant to SNLCSA.

The Company is a defendant in certain other litigation in the normal course of business. In the opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Company’s financial condition or results of operations.

The Seneca Nation Compact

As part of its Compact, the Nation agrees to contribute to the State of New York a portion of the proceeds from the operation and conduct of each category of Gaming Device for which exclusivity exists, based on the win of such machines (cash dropped into machines, after payouts but before expenses) and totaled on a cumulative quarterly basis to be adjusted annually at the end of the relevant calendar year.  However, beginning in February 2005, the Company began advancing to the Nation on a monthly basis the exclusivity fee due for the prior month.  The exclusivity fee to the State of New York for years 1–4 (through December 31, 2006), is 18.0%, payable on an annual basis. Thereafter, the exclusivity fee is 22% for years 5–7 (through December 31, 2009), payable on a semi-annual basis and 25.0% for years 8–14 (through December 31, 2016), payable on a quarterly basis.

Amounts payable for exclusivity fees were $7.3 million and $5.7 million at September 30, 2006 and 2005, respectively, and are recorded as exclusivity fees payable on the accompanying consolidated balance sheets. The exclusivity fee expense was $79.0 million, $67.3 million and $51.6 million for the years ended September 30, 2006, 2005 and 2004, respectively.

Additional Casino Locations and Expansion

As described in Note 1, the Compact provides the Nation the exclusive right to conduct Class III gaming activities at three sites in the western region of the State of New York.  The construction of our third casino in Erie County, as well as expansion by STGC at Seneca Allegany Casino will require significant capital outlays. The amount and timing of these capital expenditures are dependent on various factors including financing availability, certain Nation and governmental approvals, construction timelines, and the performance of its two operating casinos.

Capital Projects

On December 30, 2005, SNFGC officially opened the first 10 of 26 floors of rooms of its 604-room luxury hotel, which includes 35,000 square feet of additional gaming space, three new restaurants, three new retail stores and a 25,200 square foot multi-purpose room and an additional 8,000 square feet of conference and banquet space.  On March 31, 2006, the remaining 16 floors, including a penthouse floor featuring luxurious one and two-bedroom suites with butler service, were officially opened, along with a full-service spa, salon, fitness center and pool.  The luxury hotel is adjacent and connected to the Seneca Niagara Casino.  The entire complex, including the luxury hotel and the Seneca Niagara Casino, is referred to as the Seneca Niagara Casino and Hotel.  The total cost to construct and equip the luxury hotel and amenities was $234.0 million.

F-15

During 2004, the Company began to construct a parking garage and perform site preparation work for a hotel connected to the existing Seneca Allegany Casino featuring 212 rooms.  The parking garage opened on July 1, 2005 and cost $32.2 million.  STGC estimates that the total cost to construct and equip the resort hotel and gaming expansion with all amenities will be between $156.0 million and $167.0 million.  The new gaming floor is expected to be opened by the end of December 2006, and the hotel and its other amenities is scheduled to open in March 2007.  The Company has capitalized $98.9 million as of September 30, 2006 for the resort hotel project.

On December 8, 2005, the Company commenced construction of our Erie County gaming facility, which is referred to as the Seneca Buffalo Creek Casino on nine acres of land within the inner-harbor district of downtown Buffalo, NY, constituting the Nation’s Buffalo Creek Territory.  The Company’s board of directors and the Nation’s Council on August 8 and August 12, 2006, respectively, authorized the immediate commencement of construction on a temporary Class III gaming facility at the Seneca Buffalo Creek Territory site.  The temporary gaming facility will be approximately 6,000 square feet with approximately 125 slot machines and a snack bar.  The Company expects to open the temporary gaming facility in Spring 2007.

The Company is also finalizing the design and construction bid packages for a permanent Class III gaming facility on the Seneca Buffalo Creek Territory.  The cost to construct and equip the Seneca Buffalo Creek Casino permanent facility is currently expected to be approximately $125.0 million.

Operating Leases

In addition to its Head Lease with the Nation (Note 11), the Company rents land and building space, an employee parking lot, and warehouse space; and administrative space for its STGC casino facility, under various operating leases. The lease terms vary from yearly to 21 years with renewal options. Total rent expense under all operating leases for 2006, 2005 and 2004 was approximately $37.5 million, $32.7 million and $21.0 million, respectively.  The terms of the 2004 and 2005 Senior Notes limit the monthly payments under the SNFGC Head Lease and STGC land lease to $1.25 million with annual increases up to 3.0% beginning no earlier than October 2005. Estimated minimum rents due under the operating leases (including the Head Lease and STGC land lease) are as follows:

	(In Thousands)
Fiscal year ended September 30:
2007	$         47,075
2008	48,488
2009	49,853
2010	51,169
2011	52,704
Thereafter	770,425
	$    1,019,714

14. Subsequent Event

On December 11, 2006, the Company’s board of directors approved a distribution to the Nation in the amount of $20.0 million, payable in ten equal monthly installments of $2.0 million beginning in December 2006.

F-16

Exhibits
1.1	Purchase Agreement, dated April 29, 2004, by and among SGC, the Guarantors defined therein and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 1.1 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
1.2	Purchase Agreement, dated May 18, 2005, by and among SGC, the Guarantors as defined therein and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 1.1 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
3.1	Fifth Amended and Restated Charter of SGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.2	Second Amended and Restated By-Laws of SGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.3	Third Amended and Restated Charter of SNFGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.4	Third Amended and Restated By-Laws of SNFGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.5	Second Amended and Restated Charter of STGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.6	Amended and Restated By-Laws of STGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.7	Second Amended and Restated Charter of SEGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
3.8	Amended and Restated By-Laws of SEGC (incorporated by reference to Exhibit 3.1 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
4.1	Indenture, dated as of May 5, 2004, among SGC, the Guarantors as defined therein and Wells Fargo Bank, National Association, as Trustee, relating to our $300,000,000 principal amount of 7¼% Senior Notes due 2012 (including form of note) (incorporated by reference to Exhibit 4.1 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
4.2	Supplemental Indenture, dated as of May 23, 2005, to the Indenture, dated as of May 5, 2004, among SGC, the Guarantors as defined therein and Wells Fargo Bank, National Association, as Trustee, relating to our $200,000,000 principal amount of 7¼% Senior Notes due 2012, Series B (including form of note) (incorporated by reference to Exhibit 4.1 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
4.3	Registration Rights Agreement, dated as of May 5, 2004, among SGC, the Guarantors party thereto and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 4.2 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
4.4	Registration Rights Agreement, dated as of May 23, 2005, among SGC, the Guarantors party thereto and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Wells Fargo Securities, LLC, as the Initial Purchasers (incorporated by reference to Exhibit 4.2 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).

4.5	Nation Agreement, dated May 5, 2004, between Seneca Nation of Indians, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America Securities LLC and Wells Fargo Securities, LLC, collectively as the Initial Purchasers, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
4.6	Amendment No. 1, dated May 23, 2005, to Nation Agreement, dated May 5, 2004, between Seneca Nation of Indians, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America Securities LLC and Wells Fargo Securities, LLC, collectively as the Initial Purchasers, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2005).
4.7	Assignment and Plan of Distribution Agreement, entered into and effective as of May 5, 2004, by and between Seneca Nation of Indians and SGC (incorporated by reference to Exhibit 4.2 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.1	Nation-State Gaming Compact between the Seneca Nation of Indians and New York State, effective December 9, 2002 (incorporated by reference to Exhibit 10.1 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.2	Term Loan Agreement, dated as of November 22, 2002, between Freemantle Limited, as Lender, and SNFGC, as Borrower, as amended by Amendment No. 1 on December 6, 2002 (incorporated by reference to Exhibit 10.2 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.3	Amendment No. 2 to Term Loan Agreement, dated April 22, 2004, between Freemantle Limited, as Lender, and SNFGC as Borrower (incorporated by reference to Exhibit 10.14 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.4	Nation Agreement, dated as of November 22, 2002, between Freemantle Limited, as Lender, and the Seneca Nation of Indians (incorporated by reference to Exhibit 10.3 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.5	Amendment No. 1 to Nation Agreement, dated April 22, 2004, between Freemantle Limited, as Lender, and the Seneca Nation of Indians (incorporated by reference to Exhibit 10.15 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.6	Term Loan Termination Agreement, dated as of May 9, 2005, between Freemantle Limited, as Lender, and SNFGC, as Borrower (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on May 10, 2005).
10.7	Agreement of Lease (“Head Lease Agreement”), dated as of October 25, 2002, between Seneca Nation of Indians, as Landlord, and SNFGC, as Tenant, as amended on December 23, 2002 (incorporated by reference to Exhibit 10.4 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.8	Agreement, dated as of October 15, 2003, between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Niagara Casino luxury hotel) (incorporated by reference to Exhibit 10.6 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.9	First Amendment to Design/Build Agreement, dated as of February 10, 2004, by and between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Niagara Casino Hotel) (incorporated by reference to Exhibit 10.7 to SGC’s Registration Statement No. 333-117633 filed with the SEC on August 18, 2004).
10.10	Agreement, dated as of September 1, 2004, between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Allegany Casino Parking Garage) (incorporated by reference to Exhibit 10.10 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.11	Agreement, dated as of September 1, 2004, between STGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Allegany Casino hotel and casino) (incorporated by reference to Exhibit 10.11 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.12	Construction Management Agreement, dated as of July 14, 2005, between Seneca Construction Management Corporation, as Construction Manager, and STGC, as Owner (for Seneca Allegany Casino Phase II Hotel and Casino) (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on July 17, 2005).

10.13		Letter of Agreement, dated June 29, 2005, for Mutual Termination of the Agreement dated September 1, 2004 between SNFGC, as Owner, and Klewin Building Company, Inc., as Design/Builder (for Seneca Allegany Casino Phase II Hotel and Casino) (incorporated by reference to Exhibit 10.2 to SGC’s Current Report on Form 8-K filed with the SEC on July 17, 2005).
10.14	+	Employment Agreement, dated July 13, 2004, between SGC and Barry W. Brandon (incorporated by reference to Exhibit 10.9 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.15	+	Amended and Restated Employment Agreement, dated April 13, 2004, between SGC and G. Michael Brown (incorporated by reference to Exhibit 10.8 to SGC’s Registration Statement No. 33-117633 filed with the SEC on July 23, 2004).
10.16	+	Amended and Restated Employment Agreement, dated July 13, 2004, between SGC and Annette Mohawk Smith (incorporated by reference to Exhibit 10.10 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.17	+	Second Amended and Restated Employment Agreement, dated April 6, 2005, between SGC and John Pasqualoni (incorporated by reference to Exhibit 10.16 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.18	+	Amended and Restated Employment Agreement, dated July 13, 2004, between SGC and Joseph D’Amato (incorporated by reference to Exhibit 10.12 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.19	+	Amended and Restated Employment Agreement, dated July 13, 2004, between SGC and Michael F. Speller (incorporated by reference to Exhibit 10.13 to SGC’s Registration Statement No. 333-117633 filed with the SEC on July 23, 2004).
10.20	+	Employment Agreement, dated April 28, 2005, between SGC and Rajat Shah (incorporated by reference to Exhibit 10.11 to SGC’s Annual Report on Form 10-K filed with the SEC on May 9, 2005).
10.21	+	Separation and Consulting Agreement, dated April 6, 2005, between SGC and C. Michael Brown (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on April 6, 2005).
10.22	+	Amendment No. 1 to Employment Agreement, dated as of October 1, 2005, between SGC and Barry W. Brandon (incorporated by reference to Exhibit 10.20 to SGC’s Registration Statement No. 333-128443 filed with the SEC on November 30, 2005)
10.23	+	Amendment No. 1 to Second Amended and Restated Employment Agreement, dated as of January 30, 2006, between SGC and John Pasqualoni (incorporated by reference to Exhibit 10.23 to SGC’s Amendment No. 3 to Registration Statement on Form S-4 filed with the SEC on February 2, 2006).
10.24	+	Letter of Resignation and Mutual Release of all Claims, dated as of April 28, 2006, executed by Annette Smith and SGC (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on 8-K filed with the SEC on May 4, 2006).
10.25	+	Amendment No. 2 to Employment Agreement, effective as of September 14, 2006, between SGC and Barry W. Brandon (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.26	+	Amendment No. 1 to Employment Agreement, effective as of September 14, 2006, between SGC and Rajat Shah (incorporated by reference to Exhibit 10.2 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).

10.27	+	Amendment No. 1 to Employment Agreement, entered into on September 14, 2006 and effective as of June 22, 2006, between SGC and Joseph D’Amato (incorporated by reference to Exhibit 10.3 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.28	+	Amendment No. 1 to Employment Agreement, entered into on September 14, 2006 and effective as of June 22, 2006, between SGC and Michael Speller (incorporated by reference to Exhibit 10.4 to SGC’s Current Report on Form 8-K filed with the SEC on September 20, 2006).
10.29	*+	Employment Agreement, dated December 15, 2006, and effective as of June 22, 2006, between Seneca Gaming Corporation and Patrick M. Fox.
10.30		Construction Management Agreement, entered into January 12, 2006 and effective as of September 1, 2005, between SNFGC, as Owner, and Seneca Construction Management Corporation, as Construction Manager (incorporated by reference to Exhibit 10.21 to SGC’s Amendment No. 2 to Registration Statement on Form S-4 filed with the SEC on January 17, 2006).
10.31		First Amendment to Construction Management Agreement, dated as of January 12, 2006, by and between Seneca Construction Management Corporation, as Construction Manager, and STGC, as Owner (incorporated by reference to Exhibit 10.22 to SGC’s Amendment No. 2 to Registration Statement on Form S-4 filed with the SEC on January 17, 2006).
10.32		Construction Management Agreement, dated and effective as of May 9, 2006, between SEGC, as Owner, and Seneca Construction Management Corporation, as Construction Manager (for demolition work on Seneca Buffalo Creek Territory) (incorporated by reference to Exhibit 10.1 to SGC’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2006).
10.33		Agreement between the City of Buffalo, New York, Seneca Gaming Corporation, Seneca Erie Gaming Corporation and the Seneca Nation of Indians, effective November 9, 2006 (incorporated by reference to Exhibit 10.1 to SGC’s Current Report on Form 8-K filed with the SEC on November 14, 2006).
12.1	*	Statement regarding Computation of Ratios.
21.1	*	List of Subsidiaries of SGC.
24.1	*	Power of Attorney (included on the signature page of this Annual Report).
31.1	*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2	*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1	*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

*      Filed herewith.

+      Management contract or compensatory plan or arrangement.

(b)    See item (a)3. above

(c)    See item (a)1. and 2. above.

EX-10.29

Exhibit 10.29

EXECUTION COPY

EMPLOYMENT AGREEMENT

THIS AGREEMENT (this “Agreement”) is executed this 15th day of December, 2006, to be effective as of June 22, 2006 (the “Effective Date”) between the Seneca Gaming Corporation (the “Company”), a wholly-owned subsidiary of the Seneca Gaming Corporation and a governmental instrumentality of the Seneca Nation of Indians of New York (the “Nation”), and Pat Fox (“Employee”).

WHEREAS, it is in the best interest of the Company and the Employee that there be a written contract defining the rights and obligations of the parties under their employment arrangement.

IT IS HEREBY AGREED AS FOLLOWS:

1.Employment

The Company hereby employs Employee as Vice President and Chief Financial Officer and Employee hereby accepts such employment under the terms and conditions of this Agreement.  Employee shall work under the authority of the President and Chief Executive Officer or his designee.  Employee shall perform all of the duties generally associated with the position and such other duties as shall be assigned from time to time by the President and Chief Executive Officer or his designee, including those duties set forth on Exhibit A hereto.  Employee agrees to devote Employee’s full business time, attention and best efforts exclusively to rendering the services described herein and agrees that Employee will not engage in any other business activity during the Term.

2.Term

The term of this Agreement (the “Term”) shall commence upon the Effective Date, and terminate on June 21, 2008 (the “Termination Date”), unless renewed by a subsequent written agreement of the parties.  The Term may be sooner terminated by either party in accordance with section 4 of this Agreement.

3.Compensation; Benefits

A.The Company shall pay Employee an initial salary of Three Hundred Twenty-Five Thousand Dollars ($325,000) per year (“Base Compensation”).  The Company shall review said salary on an annual basis (prior to or in connection with the close of its fiscal year) at which time the Company shall determine in its sole discretion whether or not said salary shall be increased and the timing thereof.  Said salary shall be payable in periodic payments in accordance with the Company’s regular payroll practices.

B.Employee may also be eligible to participate in annual incentive compensation or other bonus programs as determined by the Company in its sole discretion.

C.During the Term, Employee shall be entitled to participate in such employee benefit plans and insurance programs offered by the Company, or which it may

adopt from time to time, for its employees, in accordance with the terms and conditions thereof.

4.Termination

A.Employee’s employment hereunder may be terminated by the Company prior to the Termination Date under the following circumstances:

(i)upon revocation or disapproval of the license required pursuant to the Nation-State Gaming Compact between the Seneca Nation of Indians and the State of New York (the “Compact”), or upon disapproval by the National Indian Gaming Commission of the issuance of any license by the Nation pursuant to its own gaming ordinances, if either such action renders it unlawful for Employee to perform in the capacity set forth in this Agreement, or if any event renders it unlawful for the Nation and/or the Company to continue to conduct casino gaming on Nation Territory.  For purposes of this Agreement, “Nation Territory” shall include current or future Nation territory where the Company conducts or will conduct its gaming operations as of the date Employee’s employment is terminated;

(ii)upon revocation or disapproval of such licenses for Employee as are required pursuant to the Compact and/or by the Nation’s or the Company’s gaming ordinances;

(iii)Employee shall commit an act constituting “Cause,” which is defined to mean:

(a)an act of dishonesty by Employee intended to result in gain or personal enrichment of Employee or others at the expense of the Company or any of its affiliates;

(b)the deliberate and intentional refusal by Employee (except by reason of disability) to perform Employee’s duties hereunder;

(c)acts or omissions of Employee constituting gross negligence in the performance of Employee’s duties hereunder; or

(d)failure to perform any material term or condition of this Agreement after written notice thereof from Company and a reasonable opportunity to cure such failure (as determined by Company and specified in the notice of breach).

(iv)Employee shall die or the Company shall for any reason within the Company’s or the Nation’s control permanently cease to conduct casino gaming on Nation Territory; or

(v)Employee shall become unable to perform the duties and responsibilities set forth in this Agreement for a period of 180 days in any 365 day period by reason of long-term physical or mental disability.

2

B.If Employee’s employment should be terminated under paragraph 4A above, then the Company shall as soon as administratively feasible following termination pay Employee (or Employee’s estate, if applicable) the Base Compensation earned through the date Employee is terminated, whereupon the Company shall have no further liability or obligation to Employee under this Agreement or otherwise.

C.If Employee’s employment should be terminated by the Company for any reason other than those specified in paragraph 4A above (it being understood that a purported termination for Cause which is contested by Employee and finally determined not to have been proper shall be treated as a termination under this paragraph 4C) or paragraph 4D below, then the Company shall: (i) as soon as administratively feasible, pay Employee his or her Base Compensation earned, but unpaid, through the date Employee is terminated, and (ii) as soon as administratively feasible following the applicable revocation period set forth in the general release of claims contemplated in paragraph 4E below and provided Employee does not revoke the general release or breach any provision in section 5 of this Agreement following Employee’s termination, in which case all payments under this clause (ii) shall cease, continue to pay Employee his or her Base Compensation in effect as of the date of termination for a period equal to the lesser of six (6) months or the remainder of the Term, whereupon the Company shall have no further liability or obligation to Employee under this Agreement; provided, however, that Employee shall have a duty to mitigate damages by seeking other employment.  If Employee shall obtain other employment, perform consulting services or become entitled to unemployment benefits, Employee shall immediately notify the Company in writing and the Company shall have the right to offset on a dollar for dollar basis any amounts payable to Employee under this clause (ii) by any amounts earned by Employee through other employment, consulting activities or unemployment benefits.  Employee agrees to keep the Company informed of whether Employee’s employment or consulting activities are on a full or part-time basis, and to provide the Company with such other details as the Company shall request.

D.Employee may terminate his or her employment for any reason upon sixty (60) days prior written notice to the Company.  If Employee terminates his or her employment pursuant to this section 4D, the Company shall as soon as administratively feasible following termination pay Employee the Base Compensation earned through the date of termination, whereupon the Company shall have no further liability or obligation to Employee under this Agreement or otherwise, including obligations to pay Employee post-termination severance compensation.

E.Employee acknowledges and agrees that the payments set forth in this section 4 constitute liquidated damages for termination of Employee’s employment during the Term and such liquidated damages shall be his only remedy with respect to any claim, including, without limitation, breach of contact, he may have under this Agreement and that prior to receiving any such payments under section 4 and as a material condition thereof, Employee shall sign and agree to be bound by a general release of claims in favor of the Company and its affiliates related to

3

Employee’s employment (and termination of employment) with the Company and, if applicable, any affiliates in substantially the form attached hereto as Exhibit B as may be modified by the Company in good faith to reflect changes in law or its employment practices.  Notwithstanding any other provision of this Agreement to the contrary, Employee acknowledges and agrees that other than any claim for the liquidated damages contemplated hereunder, Employee waives any rights to be awarded any other damages with respect to any claim Employee may have under this Agreement, including, without limitation, compensatory or punitive damages.

5.Restrictive Covenants

For purposes of this section 5, the term “Company” shall include, in addition to the Company, its affiliates and any of their respective predecessors, successors, and assigns.

A.Employee acknowledges that:  (i) as a result of Employee’s employment  with the Company, Employee will obtain secret, proprietary and confidential information concerning the business of the Company, including, without limitation, business and marketing plans, strategies, employee lists, patron lists, operating procedures, business relationships (including persons, corporations or other entities performing services on behalf of or otherwise engaged in business transactions with the Company), accounts, financial data, know-how, computer software and related documentation, trade secrets, processes, policies and/or personnel, and other information relating to the Company (“Confidential Information”); (ii) the Confidential Information has been developed and created by the Company at substantial expense and the Confidential Information constitutes valuable proprietary assets and the Company will suffer substantial damage and irreparable harm which will be difficult to compute if, during the term of the Agreement and thereafter, Employee should enter a Competitive Business (as defined herein) in violation of the provisions of this Agreement; (iii) the Company will suffer substantial damage which will be difficult to compute if, during the Term or thereafter, Employee should solicit or interfere with the Company’s employees or patrons or should divulge Confidential Information relating to the business of the Company; (iv) the provisions of this section 5 are reasonable and necessary for the protection of the business of the Company; (v) the Company would not have hired or employed Employee unless Employee signed this Agreement; and (vi) the provisions of this Agreement will not preclude Employee from other gainful employment.  “Competitive Business” shall mean any gaming establishment which provides to its patrons games of chance such as slot machines, card games, roulette, and similar games in the State of New York or within a 100 mile radius of Nation Territory, and any other business in which the Company is then engaged as of the date of termination of this Agreement.

B.Employee acknowledges and agrees that the unauthorized disclosure or misuse of Confidential Information will cause substantial damage to the Company.  Therefore, Employee agrees not to, at any time, either during the Term or thereafter, divulge, use, publish or in any other manner reveal, directly or indirectly, to any person, firm or corporation any Confidential Information obtained or learned by Employee during the course of Employee’s employment with the Company, with regard to the operational, financial, business or other

4

affairs and activities of the Company, their officers, directors or employees and the entities with which they have business relationships, except (i) as may be necessary to the performance of Employee’s duties with the Company, (ii) with the Company’s express written consent, (iii) to the extent that any such information is in the public domain other than as a result of Employee’s breach of any of obligations hereunder, or (iv) where required to be disclosed by court order, subpoena or other government process which is consistent with the terms and conditions of paragraphs 15(f) and 15(g) of the Compact and, in such event, Employee shall cooperate with the Company in attempting to keep such information confidential.

C.During Employee’s employment with the Company and for one (1) year after Employee’s termination of employment for any reason (the “Restricted Period”), Employee, without the prior written permission of the Company, shall not, directly or indirectly, (i) enter into the employ of or render any services to any  corporation, limited liability company, entity, trust, group, company, partnership or individual, engaged in a Competitive Business; or (ii) become associated with or interested in any Competitive Business as an individual, partner, shareholder, member, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or capacity.  This paragraph 5C shall not prevent Employee from owning common stock in a publicly traded corporation which owns or manages a casino provided Employee does not take an active role in the ownership or management of such corporation and Employee’s ownership interest represents less than 3% of the voting securities and/or economic value of such corporation.

D.By executing this Agreement, Employee acknowledges that Employee understands that the Company’s ability to operate its business depends upon its ability to attract and retain skilled people and that the Company has and will continue to invest substantial resources in training such individuals.  Therefore, during the Restricted Period, Employee shall not, without the prior written permission of the Company, directly or indirectly solicit, employ or retain, or have or cause any other person or entity to solicit, employ or retain, any person who is employed or is providing personal services to the Company.

E.By executing this Agreement, Employee acknowledges that Employee understands that the Company’s ability to operate its business depends upon its ability to attract and retain vendors and patrons.  Therefore, during the Restricted Period, Employee shall not, directly or indirectly, solicit, contact, interfere with, or endeavor to entice away from the Company any of its current or potential patrons or any such persons or entities that were patrons of the Company within the one year period immediately prior to Employee’s termination of employment.  Employee further agrees that, during the Restricted Period, Employee shall not, directly or indirectly, interfere with, or endeavor to entice away from the Company any of its current or potential vendors or any such persons or entities that were vendors of the Company within the one year period immediately prior to Employee’s termination of employment.

5

F.Employee acknowledges and agrees during Employee’s employment and for all time thereafter that Employee will not defame or publicly criticize the services, business, integrity, veracity or personal or professional reputation of the Company and its officers, directors, employees, affiliates, or agents thereof in either a professional or personal manner.  The Company acknowledges and agrees that during Employee’s employment and for all time thereafter, the Company will not defame or publicly criticize Employee either in a professional or personal manner, except as may be necessary to defend the Company from comments made by or on behalf of Employee.

G.If Employee commits a breach, or threatens to commit a breach, of any of the provisions of this section 5 of the Agreement, the Company shall have the right and remedy to have the provisions specifically enforced by any court or other body having jurisdiction, it being acknowledged and agreed by Employee that the services being rendered hereunder to the Company are of a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.  Such right and remedy shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity.  Accordingly, Employee consents to the issuance of an injunction, whether preliminary or permanent, consistent with the terms of this Agreement.

H.If, at any time, the provisions of this Agreement shall be determined to be invalid or unenforceable under any applicable law, by reason of being vague or unreasonable as to area, duration or scope of activity, this Agreement shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter and Employee and the Company agree that this Agreement as so amended shall be valid and binding as though any invalid or unenforceable provision had not been included herein.

6.Miscellaneous

A.Employee represents to Company that there are no restrictions or agreements to which Employee is a party which would be violated by Employee’s execution of this Agreement and Employee’s employment hereunder.

B.This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the Seneca Nation of Indians.

C.No amendment or waiver of any provision of this Agreement shall be effective unless in writing signed by both parties.

D.This Agreement contains the entire agreement between the parties and may not be amended or modified except by a writing signed by the party sought to be charged.

6

E.The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

F.Except as otherwise provided herein, this Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto in respect of such subject matter.  Except as otherwise provided herein, any prior agreement of the parties hereto in respect of the subject matter contained herein is hereby terminated and cancelled.

G.All payments hereunder shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation.

H.The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation.

I.This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall be deemed to constitute one and the same instrument.

7.Assignment

This Agreement may not be assigned by either party unless consented to by the other party in writing.

8.Compliance with Section 409A of the Code

This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be construed and interpreted in accordance with such intent.  Employee acknowledges and agrees that the Company may revise any provision in this Agreement (including, without limitation, provisions concerning the timing of any payments described hereunder) to the extent necessary to comply with Section 409A of the Code and any regulations and/or guidance promulgated thereunder.

[Signature Page Follows]

7

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

SENECA GAMING CORPORATION
By:	/s/ John Pasqualoni	Date:
	John Pasqualoni
	President & CEO
EMPLOYEE
	/s/ Patrick M. Fox	Date
	Patrick M. Fox

8

EXECUTION COPY

Exhibit A

Description of Duties

JOB SUMMARY:

The Vice President of Finance and CFO is directly responsible for the efficient and effective operations of the Finance, Purchasing and Warehouse departments and their employees. Responsible for timely issuance of all financial reports, including Securities and Exchange Commission (SEC) filings and compliance with Sarbanes Oxley requirements. The Vice President of Finance and CFO assumes direct responsibility for ensuring that these departments are operating within the guidelines of the Seneca Gaming Corporation’s policies and procedures, Internal Control Standards and objectives.  Oversees all financial and operational accounting functions through his/her direct reports.

ESSENTIAL FUNCTIONS AND RESPONSIBILITIES include the following. Other duties may be assigned:

1.Creates, develops and implements an effective strategy of departmental organization and following management objectives.

2.Develops departmental business plans to include performance and profit objectives for short and long-term goals.

3.Establishes, monitors, and reviews all departmental budgets on a regular basis.  Ensure departments are meeting or exceeding established financial and performance goals.  Provides recommendations to improve financial results.

4.Reviews activity reports and financial statements to determine progress and status in attaining objectives and proposes revisions to plans in accordance with current conditions.

5.Ensures effective recruitment, hiring, training, recognition, coaching, terminations, and other personnel related matters are being handled appropriately throughout all departments.

6.Responsible for the development of departmental procedures and compliance with internal controls to ensure proper financial operations, including compliance with Sarbanes Oxley requirements of the SEC.

7.Oversees and directs budgeting, income audit, financial analysis, financial reporting, general accounting, purchasing, and risk management areas.

8.Responsible for the timely issuance of internal financial reports, and all financial filings with the SEC, including, 10-K, 10-Qs and, when appropriate 8-Ks.

9.Coordinates obtaining all internal officer certification for SEC filings.

10.Ensures compliance with of the debt covenants of the Company’s debt.

11.In conjunction with the COO maintains relationships with the Company’s investors and analysts ensuring timely and accurate supply of financial data in compliance with all confidential guidelines of the Company and the SEC.

12.Informs appropriate management of the Company’s and its subsidiaries financial position, and issues financial and operating reports.

13.Coordinates the establishment of budget programs.

14.Oversees and directs the preparation and issuance of the Nation Gaming Operations regulatory and required reports, including SEC.

15.Through staff, provides analysis of marketing promotions and events.

16.Communicates regularly with subordinate managers regarding operational, business policy and staffing issues.

17.Evaluates management performance and provides feedback in order to further develop management team.

9

18.Implements and monitors controls designed to assure full compliance with state, Federal, and Nation regulatory requirements.

19.Provides exceptional customer service to all patrons and communicates in a pleasant, friendly, and professional manner at all times.  Maintains a professional work environment with supervisors and staff.

20.Attends all necessary training meetings.

21.Member of SARC, Credit and Complimentary Committees.

22.Duties, responsibilities, requirements and expectations pertaining to this job are subject to change as needed.  Hours are determined by 24-hour schedule.

23.

10

EXECUTION COPY

Exhibit B

Form of Release

See Attached.

11

MUTUAL RELEASE OF ALL CLAIMS

Release of Claims by Executive.

It is understood and agreed by the Seneca Gaming Corporation (the “Company”), a governmental instrumentality of the Seneca Nation of Indians of New York, and ___________________ (“Executive”), that in consideration of the mutual promises and covenants contained in this general release of all claims (the “Release Agreement”), Executive, on behalf of Executive and Executive’s agents, representatives, administrators, receivers, trustees, estates, heirs, devisees, assignees, legal representatives, and attorneys, past or present (as the case may be), hereby irrevocably and unconditionally releases, discharges, and acquits all the Released Parties (as defined below) from any and all claims, promises, demands, liabilities, contracts, debts, losses, damages, attorneys’ fees and causes of action of every kind and nature, known and unknown, up to and including the Effective Date (as defined below), provided, however, that any claims arising after the Effective Date from the then present effect of acts or conduct occurring on or before the Effective Date shall be deemed released under this agreement, including but not limited to causes of action, claims or rights arising out of, or which might be considered to arise out of or to be connected in any way with (i) Executive’s employment or service with the Company and, to the extent applicable, a Released Party, or the termination thereof; (ii) the Employment Agreement dated as of _______________ between the Company and Executive, or the termination thereof; (iii) any treatment of Executive by any of the Released Parties, which shall include, without limitation, any treatment or decisions with respect to hiring, placement, promotion, discipline, work hours, demotion, transfer, termination, compensation, performance review, or training; (iv) any statements or alleged statements by the Company or any of the Released Parties regarding Executive, whether oral or in writing; (v) any damages or injury that Executive may have suffered, including without limitation, emotional or physical injury, compensatory damages, or lost wages; (vi) employment discrimination, which shall include, without limitation, any individual or class claims of discrimination on the basis of age, disability, sex, race, religion, national origin, citizenship status, marital status, sexual preference, or any other basis whatsoever; or (vii) all such other claims that Executive could assert against any, some, or all of the Released Parties in any forum, whether such claims are known or unknown, accrued or unaccrued, liquidated or contingent, direct or indirect.

Said release shall be construed as broadly as possible and shall also extend to release the Released Parties, without limitation, from any and all claims that Executive has alleged or could have alleged, whether known or unknown, accrued or unaccrued, against any Released Party for violation(s) of any of the following, to the extent applicable:  the National Labor Relations Act, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act; the Civil Rights Act of 1991; Sections 1981-1988 of Title 42 of the United States Code; the Equal Pay Act; the Employee Retirement Income Security Act of 1974, as amended; the Immigration Reform Control Act, as amended; the Americans with Disabilities Act of 1990, as amended; the Fair Labor Standards Act, as amended; the Occupational Safety and Health Act, as amended; the New York Human Rights Law; the New York City Human Rights

12

Law; the New York Labor Law; the New York Whistleblower Protection Law; the New York Wage and Hour Laws; the New York City Administrative Code; any other tribal, federal, state, or local law or ordinance; any public policy, whistleblower, contract, tort, or common law; and any demand for costs or litigation expenses, including but not limited to attorneys’ fees.

The term “Released Parties” or “Released Party” as used herein shall mean and include: the Company and the Company’s parents, subsidiaries, affiliates, and all of their predecessors and successors (collectively, the “Released Entities”), and with respect to each such Released Entity, all of its former, current, and future officers, directors, agents, representatives, employees, servants, owners, shareholders, partners, joint venturers, attorneys, insurers, administrators, and fiduciaries, and any other persons acting by, through, under, or in concert with any of the persons or entities listed herein.

Pursuant to the Older Workers Benefit Protection Act of 1990, Executive understands and acknowledges that by executing this Release Agreement and releasing all claims against any of the Released Parties, Executive has waived any and all rights or claims that Executive has or could have against any Released Party under the Age Discrimination in Employment Act, which includes any claim that any Released Party discriminated against Executive on account of Executive’s age.  Executive also acknowledges the following:

(a)The Company, by this written Release Agreement, has advised Executive to consult with an attorney prior to executing this Release Agreement;

(b)This Release Agreement does not include claims arising after the Effective Date, provided, however, that any claims arising after the Effective Date from the then present effect of acts or conduct occurring on or before the Effective Date shall be deemed released under this Release Agreement;

(c)The Company has provided Executive the opportunity to review and consider this Release Agreement for twenty-one (21) days from the date Executive receives this Release Agreement.  At Executive’s option and sole discretion, Executive may waive the twenty-one (21) day review period and execute this Release Agreement before the expiration of twenty-one (21) days.  If Executive elects to waive the twenty-one (21) day review period, Executive acknowledges and admits that Executive was given a reasonable period of time within which to consider this Release Agreement and Executive’s waiver is made freely and voluntarily, without duress or any coercion by any other person; and

(d)Executive may revoke this Release Agreement within a period of seven (7) days after execution of the agreement.  Executive agrees that any such revocation is not effective unless it is made in writing and delivered to the Company, to the attention of the General Counsel of the Seneca Gaming Corporation, 310 Fourth Street, Niagara Falls, New York (Seneca Nation Territory) 14303, by the end of the seventh (7th) calendar day.  Under any such valid revocation, Executive shall not be entitled to any benefits under this Release Agreement and this Release Agreement shall become null and

13

void.  This Release Agreement becomes effective on the eighth (8th) calendar day after it is executed by both parties (the “Effective Date”).

Executive confirms that no claim, charge, or complaint against any of the Released Parties, brought by Executive, exists before any federal, state, or local court or administrative agency.  Executive hereby waives Executive’s right to accept any relief or recovery, including costs and attorney’s fees, from any charge or complaint before any federal, state, or local court or administrative agency against any of the Released Parties, except as such waiver is prohibited by law.

Executive agrees that Executive will not, unless otherwise prohibited by law, at any time hereafter, participate in as a party, or permit to be filed by any other person on  Executive’s behalf or as a member of any alleged class of persons, any action or proceeding of any kind, against the Released Parties or any past, present or future employee benefit and/or pension plans or funds of the Released Entities with respect to any act, omission, transaction or occurrence up to and including the date of the execution of this Release Agreement.  Executive further agrees that Executive will not seek or accept any award or settlement from any source or proceeding with respect to any claim or right covered by this paragraph or by the Release Agreement and that this Release Agreement shall act as a bar to recovery in any such proceedings.

Executive agrees that neither this Release Agreement nor the furnishing of the consideration for the general release set forth in this Release Agreement shall be deemed or construed at any time for any purpose as an admission by the Released Parties of any liability or unlawful conduct of any kind.  Executive further acknowledges and agrees that the consideration provided for herein is adequate consideration for Executive’s obligations under this Release Agreement.

Release of Claims by Company.

Subject to the provisions of this Release Agreement and subject to Executive not exercising Executive’s revocation rights hereunder, the Company hereby irrevocably and unconditionally releases, waives and fully and forever discharges Executive, from and against any and all claims, liabilities, obligations, covenants, rights, demands and damages of any nature whatsoever, whether known or unknown, anticipated or unanticipated, arising from, by reason of or in any way related to any transaction, event or circumstance which occurred or existed prior to and including the date of this Release Agreement arising out of or in any way related to Executive’s employment with the Company and, to the extent applicable, a Released Party, or the termination thereof.  Notwithstanding the provisions of this paragraph, nothing in this waiver or release shall be construed to constitute any release or waiver by the Company of its rights or claims against Executive arising out of any intentional or willful misconduct or fraudulent or criminal acts engaged in by Executive while in the course of Executive’s employment or service.

Miscellaneous.

This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws of the Seneca Nation of Indians.  If any provision of the Release Agreement other than the general release set

14

forth above, is declared legally or factually invalid or unenforceable by any court of competent jurisdiction and if such provision cannot be modified to be enforceable to any extent or in any application, then such provision immediately shall become null and void, leaving the remainder of this Release Agreement in full force and effect.  If any portion of the general release set forth in this Release Agreement is declared to be unenforceable by a court of competent jurisdiction in any action in which Executive participates or joins, Executive agrees that all consideration paid to Executive under this Release Agreement shall be offset against any monies that Executive may receive in connection with any such action.

This Release Agreement sets forth the entire agreement between Executive and the Released Parties and it supersedes any and all prior agreements or understandings with respect to the subject matter hereof, whether written or oral, between the parties, except as otherwise specified in this Release Agreement.  Executive acknowledges that Executive has not relied on any representations, promises, or agreements of any kind made to her in connection with Executive’s decision to sign this Release Agreement, except for those set forth in this Release Agreement.

This Release Agreement may not be amended except by a written agreement signed by both parties, which specifically refers to this Release Agreement.

EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE CAREFULLY HAS READ THIS RELEASE AGREEMENT; THAT EXECUTIVE HAS HAD THE OPPORTUNITY TO THOROUGHLY DISCUSS ITS TERMS WITH COUNSEL OF EXECUTIVE’S CHOOSING; THAT EXECUTIVE FULLY UNDERSTANDS ITS TERMS AND ITS FINAL AND BINDING EFFECT; THAT THE ONLY PROMISES MADE TO SIGN THIS RELEASE AGREEMENT ARE THOSE STATED AND CONTAINED IN THIS RELEASE AGREEMENT; AND THAT EXECUTIVE IS SIGNING THIS RELEASE AGREEMENT KNOWINGLY AND VOLUNTARILY.  EXECUTIVE STATES THAT EXECUTIVE IS IN GOOD HEALTH AND IS FULLY COMPETENT TO MANAGE EXECUTIVE’S BUSINESS AFFAIRS AND UNDERSTANDS THAT EXECUTIVE MAY BE WAIVING SIGNIFICANT LEGAL RIGHTS BY SIGNING THIS RELEASE AGREEMENT.

[Signature Page Follows]

15

IN WITNESS WHEREOF, Executive has executed this Release Agreement as of the date set forth below.

	EXECUTIVE
	By:
		Name:
		Date:
Sworn to and subscribed before me
this ___ day of _____________, 20___.
Notary Public
		ACCEPTED AND ACKNOWLEDGED BY
		SENECA GAMING CORPORATION
	By:
		Name:
		Title:
		Date:

16

EX-12.1

Exhibit 12.1

	Fiscal Year Ended September 30,												Period from Inception to Sept. 30,
	2006			2005			2004			2003			2002
	(Dollars in Thousands)
Earnings:
Net income (loss)	$	123,405		$	45,569		$	84,709		$	49,957		$	(2,961	)
Amortization of capitalized interest	190			68			68			51			—
(Less) Amount of interest capitalized	(6,250		)	(5,054		)	(654		)	(1,416		)	—
Fixed charges	39,448			95,420			34,356			16,932			—
Total earnings available for fixed charges	$	156,793		$	136,003		$	118,479		$	65,524		$	(2,961	)
Fixed Charges:
Interest expense	33,198			90,366			33,702			15,515			—
Interest capitalized	6,250			5,054			654			1,416			—
Total Fixed Charges	39,448			95,420			34,356			16,932			—
Ratio of Earnings to Fixed Charges	4.0x			1.4x			3.4x			3.9x			—

EX-21.1

Exhibit 21.1

List of Subsidiaries

Seneca Niagara Falls Gaming Corporation
Seneca Territory Gaming Corporation
Seneca Erie Gaming Corporation

Seneca Niagara Falls Gaming Corporation, Seneca Territory Gaming Corporation, and Seneca Erie Gaming Corporation are wholly owned subsidiaries of Seneca Gaming Corporation.

EX-31.1

Exhibit 31.1

Section 302 Certification

I, John Pasqualoni, certify that:

1.             I have reviewed this annual report on Form 10-K of Seneca Gaming Corporation;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)           Discussed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 15, 2006
	/s/ John Pasqualoni
	John Pasqualoni
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Section 302 Certification

I, Patrick M. Fox, certify that:

1.             I have reviewed this annual report on Form 10-K of Seneca Gaming Corporation;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)           Discussed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 15, 2006
	/s/ Patrick M. Fox
	Patrick M. Fox
	Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

SENECA GAMING CORPORATION

CERTIFICATION OF CORPORATE OFFICERS

(Furnished Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report of Seneca Gaming Corporation (the “Company”) on Form 10-K for the fiscal year ended September 30, 2006, as filed with the Securities and Exchange Commission, we, John Pasqualoni, President and Chief Executive Officer, and Patrick M. Fox, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.             The Annual Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

2.             The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company as of, and for, the periods presented in the Form 10-K.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its Staff upon request.

December 15, 2006

/s/ John Pasqualoni

John Pasqualoni

President and Chief Executive Officer (Principal Executive and Accounting Officer)

/s/ Patrick M. Fox

Patrick M. Fox

Chief Financial Officer (Principal Financial and Accounting Officer)

The forgoing certification is being furnished as an exhibit to the Form 10-K pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-K for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.