Robert Rodriguez, 44, admitted torching the main building of the Hitching Post Inn, which had been a favorite lodge and watering hole for Wyoming lawmakers for decades.
Rodriguez pleaded guilty before U.S. District Judge Nancy Freudenthal in Cheyenne. She set sentencing for June 6.
Rodriguez told Freudenthal that co-defendant Ajay Jariwala had hired him to set the fire and left the back door open with gasoline cans inside.
Jariwala is a New Mexico hotelier and principal in CJM Hospitality LLC, the company that owned the hotel, according to court papers.
Rodriguez said he had been working on renovating rooms at the Hitching Post when Jariwala approached him about burning it down.
"He didn't have the money to complete the renovation," Rodriguez said.
A federal grand jury indictment released in January charges Jariwala, 51, of Albuquerque, with arson and conspiracy in the fire. Jariwala has pleaded not guilty and faces trial before Freudenthal next month.
Jariwala's lawyer didn't immediately return a call Monday seeking comment on Rodriguez's statements.
The indictment against Jariwala states he took out a $13.6 million insurance policy on the Hitching Post Inn in 2010 on behalf of CJM, a Delaware company. It states CJM had bought the hotel in May 2010 for $1,050,000.
Rodriguez said Jariwala had agreed to pay him out of the insurance proceeds for setting the fire but didn't specify how much he was to be paid.
Federal prosecutor Jim Anderson and Rodriguez's defense lawyer, Daniel G. Blythe, both declined after Monday's hearing to discuss the amount Rodriguez maintains Jariwala agreed to pay him.
Anderson told Freudenthal that his office had worked out an agreement with Rodriguez in which other criminal charges against him were dropped in exchange for his guilty pleas to the arson and conspiracy charges and for his agreement to testify against Jariwala at trial.
Freudenthal advised Rodriguez that he faces a possible sentence of from five to 40 years in prison and a fine of up to $500,000. She said it's possible that prosecutors could move to reduce his mandatory five-year sentence if they determine that he's been cooperative.
National Surety Corp., the company that had insured the Hitching Post, has refused to pay CJM's $13.6 million claim on the grounds that the fire was arson. Freudenthal has suspended action in an ongoing civil lawsuit between the insurance company and CJM while the criminal charges are pending.