Just my thought. Even though it is spelled wrong It could of been deliberately done that way. Adding that extra letter A would of probably taken more space and made the wording look cluttered. Everything is evenly spaced with the spelling given.
https://coins.ha.com/itm/civil-war-...1235-98317.s?ic4=GalleryView-Thumbnail-071515 Heritage says "The town name is misspelled on the token". The name supposedly comes either from the Niagagarega people or the name of a nearby Iroquois town called Onguiaahra, so I was wondering if there were alternate spellings in 1863, but I couldn't find any evidence of that.
I looked over this site and couldn't find an example of this coin. https://www.cwtoken.com/Civil_War_Token_Type_Set/Patriotics/Pages/NY_-_New_York.html @johnmilton what does your book say? is there a variety of this token. Well even better, what is the rarity and who was the die sinker?
The Niagara Falls token is an example of a single merchant town. In other words, there was only one merchant who issued a CWT from there. The code is NY 640-A-1a for the piece in the OP. It is rated as an R-6 (21 to 75), which takes some digging to find one. There are other very rare ones in off-metals and other reverses that were made for collectors.