The stakes are high, and the clock is ticking.

Lawyers for the Seneca Nation and other Indian tribes have one more day to convince a judge that the state's efforts to tax millions of dollars in Native American cigarette sales to non-Indians are illegal.

Lawyers for New York State won the latest round in the legal fight Monday. State Supreme Court Justice Donna M. Siwek lifted two injunctions previously issued by another judge, which had prevented the state from taxing any Native American cigarette sales.

With tax collections scheduled to begin Wednesday, the Seneca Nation and other Indian tribes will get another chance to fight the law in federal court tuethis afternoon.

They will ask U.S. District Judge Richard J. Arcara to issue an injunction delaying the implementation of the new law, which could ignite some violent demonstrations by angry Senecas.

"For us, these are grave circumstances," said Robert Odawi Porter, a Seneca Nation lawyer and tribal presidential candidate who attended Monday's proceedings. "For the first time in decades, the state is making a real effort to put an embargo on our tobacco economy."

Meanwhile, Seneca tribal leaders voted Monday night to withhold future casino slot machine revenue payments to New York State, contending that the state has violated terms of its 2001 Gaming Compact with the nation.

"We have run out of patience. We are tired of the ongoing process of the state violating more of our treaty rights, our sovereign rights and the Gaming Compact," Tribal Council Co-Chairman J.C. Seneca said.

In a ruling issued late Monday afternoon on the cigarette issue, Siwek said she agreed with state lawyers who argued that the state acted legally in enacting a new tax-collection law earlier this year.

"I find that the state has met its burden," Siwek said, reading her order from the bench of her downtown Buffalo courtroom.

Lawyers for the Seneca Nation and two businessmen had argued against implementation of the law. Today they hope to have better success in Arcara's court.

The legal fight is held against a backdrop of deep concern over the possibility of violence by Senecas who feel that their livelihoods are being unfairly threatened by the state.

Some Seneca officials, as well as a number of state and federal law enforcement officials, have expressed concern about the possibility of violent and destructive protests if the law goes into effect as planned.

Seneca President Barry E. Snyder Sr. issued a statement saying tribal leaders met with federal, state and local law enforcement officials last week in hopes of maintaining the peace.

"Everyone's top goal is the public safety of our community and the surrounding communities," Snyder said. "There have been many statements made about the potential for violence tied to the tobacco tax situation, even by New York State's governor. As I have said several times, the Seneca Nation is committed to working through this in an orderly, peaceful process."

Porter said his worry is that some Senecas may disregard the advice of their leaders and engage in destructive protests.

"Our president is doing everything he can to prevent any kind of conflict and disruption, but he doesn't control every Seneca," Porter said. "The shocking thing is that Gov. [David A.] Paterson made a statement last week where he seemed to accept violence and death as a consequence of enforcing this state tax law."

Police told The Buffalo News they are concerned about the possibility of train derailments and forced closings of the Thruway on Seneca land if enforcement of the tax law is not delayed in state or federal court.

"I'm concerned about the violence. There could be people dying on both sides. That's how upset people are," said Sue Lindgren, a Seneca who attended Monday's legal arguments in Siwek's courtroom.

The FBI and the State Police already are investigating the attempted derailment July 5 of a passenger train carrying 354 people on Seneca land in the Town of Irving. The train was moving at 70 mph and took a mile to stop after crashing into railroad ties that were placed on the tracks.

Big money and high emotions are in play. Monday, Andrew D. Bing of the State Attorney General's Office estimated that the state could collect $110 million in cigarette taxes from Native American businesses in the first six months after the law takes effect.

Paterson has vowed to collect $4.35 in state taxes for each pack of cigarettes sold by Indian businesses to non-Native Americans. Traditionally, such sales have not been taxed.

Seneca leaders insist that the taxation would violate Indian treaties dating from 1794, but state lawyers dispute this.

Lawyers for the Senecas and other tribes tried to make their case before Arcara last week. The federal judge reserved judgment Friday but said he would reconsider the matter this week.

During Monday's arguments, a former federal magistrate judge, Carol E. Heckman, represented the Seneca Nation, and a former city judge, Margaret A. Murphy, represented two tobacco businesses that would be affected by the law. Bing argued the state's case.

In addition to the proceedings before Arcara, Murphy said she plans to appeal Siwek's ruling to the state appellate court.

U.S. Attorney William J. Hochul Jr. confirmed that he and other law enforcement officials -- including representatives of the FBI and the State Police Ñ met with Snyder and other Seneca leaders last week.

"The Senecas told us that their goal is to keep the peace," Hochul said, "and that is our goal, too."

Meanwhile, what the state gains with one hand it might lose in another.

The Seneca vote to withhold future exclusivity payments -- a percentage of slot machine revenue from the Buffalo Creek, Seneca Allegany and Seneca Niagara casinos -- is a reaction to the cigarette tax plan and to continuing state efforts to move into the slot machine game, said Seneca, the Tribal Council co-chairman.

Seneca referred to the Hamburg Casino at the Fairgrounds, Batavia Downs Casino and Finger Lakes Gaming and Racetrack as examples of state breaches of the compact.

Seneca Gaming Corp. has paid the state $707.2 million in "slot fees" on its casinos, including $58.2 million in 2009 and $32 million this year through June.

"Timing is everything," Seneca said. "In regards to the gaming issue, we've been pretty outraged for a while now, as far as the way the state has expanded its gaming operations into casinos. The games being played there are mirroring what we do in our casino operations. We've been concerned and outraged about this for a long time and with the recent events, I think everything is coming to a head."

News Staff Reporter Charlie Specht contributed to this report.

dherbeck@buffnews.comnull