New York state agreed on Monday to give a swathe of land to a Wisconsin Native American tribe, which has plans for a major casino and resort complex near New York City.

The Stockbridge-Munsee tribe will give up their decades-long claim to 23,000-acres of land in New York and receive 330-acres of land 90 miles northwest of New York City.

But the deal now needs approval from the federal Department of Interior and faces opposition from environmental groups.

“This compact is a significant step toward revitalizing the economy of Sullivan County by building on its legacy as a tourist destination,” New York Governor David Paterson said in a statement.

If approved, the 584,000-square-foot casino in the area known as the Catskills would compete with New Jersey’s Atlantic City, two American Indian casinos in Connecticut and other, smaller gaming facilities in New York state.

Paterson said the project will generate $1.3 billion in economic activity during the construction phase. Once built, the casino would pump an additional $900 million into the state per year, Paterson said.

According to the National Indian Gaming Association, there are 558 federally recognized tribes in the United States of which 237 run 442 gaming operations in 28 states. Tribes have sovereignty and are subject to limited gaming regulations.

Gaming is an attractive source of revenue as many U.S. states struggle with high unemployment, diminished consumer and property sales taxes and other recession woes.

But revenue from all forms of legal gambling in the United States declined by 2.9 percent in fiscal 2009 from fiscal 2008, according to the Rockefeller Institute in Albany, New York.

“The days of, ‘We’ll just build something and we’ll double the interest (in) gaming and twice as many people will gamble’ — I think those days are over,” said Keith Foley, a senior vice president at Moody’s Investors Services.

“Anything that cuts traffic and offers a good product will probably take away from somebody else,” he said.

By Edith Honan