[Senate Hearing 109-50]
[From the U.S. Government Publishing Office]



                                                  S. Hrg. 109-50, Pt. 2
 
                                 GAMING

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON INDIAN AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON

          OVERSIGHT HEARING ON THE REGULATION OF INDIAN GAMING

                               __________

                             JUNE 28, 2005
                             WASHINGTON, DC

                               __________



                                 PART 2

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
22-315                      WASHINGTON : 2005
_____________________________________________________________________________
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                      COMMITTEE ON INDIAN AFFAIRS

                     JOHN McCAIN, Arizona, Chairman

              BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico         DANIEL K. INOUYE, Hawaii
CRAIG THOMAS, Wyoming                KENT CONRAD, North Dakota
GORDON SMITH, Oregon                 DANIEL K. AKAKA, Hawaii
LISA MURKOWSKI, Alaska               TIM JOHNSON, South Dakota
MICHAEL D. CRAPO, Idaho              MARIA CANTWELL, Washington
RICHARD BURR, North Carolina
TOM COBURN, M.D., Oklahoma

                 Jeanne Bumpus, Majority Staff Director

                Sara G. Garland, Minority Staff Director

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page
Statements:
    Crawford, James, chairman, Sisseton-Wahpeton Oyate of the 
      Lake Traverse Reservation..................................    22
    Dorgan, Byron L., U.S. Senator from North Dakota, vice 
      chairman, Committee on Indian Affairs......................     1
    Hagen, Doreen, president, Prairie Island Indian Community....    25
    Juan-Saunders, Vivian, chairwoman, Tohono O'odham Nation.....     5
    Marquez, Deron, chairman, San Manuel Band of Mission Indians.     9
    Massey, Sr., Dallas, chairman, White Mountain Apache Tribal 
      Council....................................................     8
    McCain, Hon. John, U.S. Senator from Arizona, chairman, 
      Committee on Indian Affairs................................     3
    Pakootas, Joseph A., chairman, Colville Confederated Tribe...    12
    Ransom, Jim, chief, St. Regis Band of Mohawk Indians.........    24

                                Appendix

Prepared statements:
    Hagen, Doreen................................................    33
    Inouye, Hon. Daniel K., U.S. Senator from Hawaii.............    35
    Juan-Saunders, Vivian........................................    35
    Marquez, Deron (with attachment).............................    42
    Massey, Sr., Dallas..........................................    39
    Pakootas, Joseph A...........................................    67
    Ransom, Jim (with attachment)................................    71


                                 GAMING

                              ----------                              


                         TUESDAY, JUNE 28, 2005


                                       U.S. Senate,
                               Committee on Indian Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:16 a.m. in 
room 106 Senate Dirksen Building, Hon. John McCain (chairman of 
the committee) presiding.
    Present: Senators McCain, Burr, Coburn, and Dorgan.

  STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH 
       DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    Senator Dorgan. I am going to call the hearing to order. I 
am Senator Dorgan, the vice chairman of the committee. Senator 
McCain, the chairman of the Committee on Indian Affairs will be 
with us momentarily. We just started a vote on the energy bill 
on the floor of the Senate moments ago, and as soon as the 
chairman votes, he will be here.
    I am managing the Interior bill on the floor of the Senate, 
which is coming to the floor immediately following the energy 
vote, so I will have to depart for the floor. Senator McCain 
suggested that I begin as soon as I arrived at the hearing 
room. So I will do that and make an opening statement, and as I 
said, my colleague Senator McCain will be along shortly. I then 
will have to leave to go manage the Interior bill on the floor 
for the remainder of the day.
    We have a hearing today in the Committee on Indian Affairs 
on the regulation of Indian gaming. We have previously 
discussed this issue in this committee, and we wanted to invite 
specifically today a number of representatives of Indian tribes 
to discuss with us the general subject of Indian gaming; what 
it means to tribes; what the opportunities are that it offers 
to tribes; what some of the challenges that they have 
experienced are; how they see and view the regulatory 
mechanisms that exist.
    We felt it would be a useful opportunity and I believe the 
tribes feel the same say, to have this kind of an open 
discussion from the viewpoint of those elected governments of 
the tribes who are involved in gaming to discuss with us their 
view of it.
    I want to make a couple of brief comments about the subject 
generally of Indian gaming. I come from a State that has four 
Indian reservations. Not unlike in many other areas of the 
country, the locations for the Indian reservations are areas of 
the State that are in remote areas, in many cases, without 
substantial industry or job opportunities, or in some cases 
without substantial natural resources.
    The tribes that have been located there over these many 
years have found it very, very difficult to exist. In many 
cases, they face full-blown crises in health care, education, 
and housing. I have spoken at great length about those 
challenges in many other hearings. We have all struggled to 
find ways to bring new industry, new jobs, new opportunities to 
the reservations, to provide new educational opportunities and 
to improve the educational facilities that exist on the 
reservations.
    We have all worked in all of these areas to try to see if 
we can change things, and yet not very much has changed over a 
long period of time. Some years ago, there was a decision, the 
Cabazon decision, that determined that the sovereignty of 
Indian tribes allowed them to engage in gaming operations. That 
brought about an industry that has now grown to become a rather 
significant industry, somewhere we believe between $16 billion 
and $19 billion a year in Indian gaming.
    Indian tribes as a result of that court decision have 
decided in many circumstances, I believe over nearly 250 of 
them, have decided to engage in gaming activities. Those 
activities have in some circles been controversial and in other 
circles have been a Godsend and a real boon to tribes that have 
been struggling for the kind of revenue stream that would give 
them an opportunity to make an investment in the people of 
their tribes. So we have stories, for example, cover stories or 
feature stories in Time magazine that describe certain elements 
of gaming in one way, and then we have others that describe it 
in another way.
    From my point, Indian gaming has brought significant 
opportunities to certain tribes that found that they have a way 
to generate revenue that they previously had not had the 
opportunity to take advantage of. That revenue then goes into 
an income stream that allows the tribes to invest in the 
general welfare of the citizens of that tribe and to make 
investments to improve health care, to improve education, to 
improve housing on the reservations.
    There are some other circumstances where the tribes through 
the recognition process are very small tribes with just a few 
members. I believe in one case there is a tribe with one 
recognized member, with a gaming facility; another with four, 
five, or six members, where a substantial amount of resources 
are developed.
    Still, again there are the issues of the compacts with 
State Governments because in order to engage in gaming, the 
tribes must negotiate with the States, the Governors and the 
State authorities, for a compact. The question then has become 
what portion of that revenue shall the States be involved in, 
what kinds of compacts shall exist.
    So all of these things have been worked through and worked 
out over now well over a decade. This gaming activity has grown 
and grown very substantially. As I indicated, it certainly 
includes with it challenges. Some of the challenges were 
discussed at a previous hearing we held. It brings with it also 
enormous opportunity for resources to be made available to 
people who previously did not have those resources.
    So our committee recognizes both sides of this issue. We 
believe it is a very important issue. We believe decisions 
about this need to be made with the full consultation and a 
full discussion with the members of the Indian tribes. They are 
a sovereignty. No one gave them that sovereignty. That 
sovereignty is theirs. I know from time to time people say 
Indians were given sovereignty. That was not the case. The 
sovereignty is theirs.
    We believe it is helpful and fruitful for us to have this 
kind of discussion today in order to hear from the members of 
the tribes with respect to their view of gaming. How has it 
worked? What benefit does it provide? What challenges has it 
posed? How do they view the regulatory mechanisms? That is the 
purpose of the hearing.
    You have noticed that two of my colleagues have just joined 
us. Senator McCain, at your instruction I did proceed with an 
opening statement, and that is the point we are at now. I also 
indicated that I am managing our side of the Interior 
appropriations bill on the floor of the Senate as soon as this 
vote is over and will have to leave.
    The Chairman. Thank you very much, Senator Dorgan. I am 
pleased to note you always carry out my instructions. I thank 
you for that. [Laughter.]
    Senator Dorgan. There will come a time. [Laughter.]
    The Chairman. Thank you very much, Senator Dorgan. I 
appreciate your involvement in this issue, your continued 
involvement, and I understand the requirement of your presence 
on the floor as we take up the Interior appropriations bill. I 
thank you for your continued involvement in this very important 
issue.

   STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA, 
             CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

    The Chairman. This morning the committee is holding the 
third in a series of hearings on the Indian Gaming Regulatory 
Act. This hearing is devoted to those most impacted by the 
successes and challenges of Indian gaming: Indian tribes. That 
success has not been achieved, however, without Indian tribes 
facing a number of challenges, some of which still confront 
them.
    It is important to remember that when Congress enacted IGRA 
in 1988, it was not creating another Federal program for 
Indians. Rather, IGRA was an acknowledgment of the ingenuity of 
the Indian tribes in finding a legal economic activity that 
could provide jobs on the reservations and supplement the 
meager Federal support for necessary tribal government 
services; 17 years later, that ingenuity has proven to be a 
greater success than anyone could have imagined.
    I also want to emphasize that IGRA was a direct result of 
the Cabazon decision. If it had not been for the Cabazon 
decision, there would not have been IGRA. Once that decision 
was made, then we had to do our best to find a workable 
relationship between States and tribes.
    This success has not been shared solely by Indian tribes. 
According to a recent economic study, States received over $900 
million in ``revenue sharing'' funds last year, in addition to 
$200 million for reimbursement of regulatory costs, despite the 
fact that IGRA specifically preserved Indian tribes' immunity 
from taxation by States. As this committee continues its 
oversight of IGRA, we will review those payments to ensure that 
Indian tribes are obtaining value in return for sharing gaming 
revenues with State Governments.
    IGRA reflects careful balancing of tribal, State, and 
Federal interests. In keeping with our trust responsibility, 
this committee is committed to reviewing the implementation of 
the act over 17 years and ensuring that Indian tribes remain 
the primary beneficiaries of the gaming activities under IGRA 
and that there is transparency and that there is integrity and 
that there is sufficient oversight. This enterprise has gone 
from a $500-million a year business to a $18.5-billion to $19 
billion a year business.
    Anyone who does not believe that it does not need to be 
reviewed after 17 years, then we have an honest difference of 
opinion. I have been a member of this committee for 19 years. I 
believe we have an obligation to review any enterprise that is 
a $19-billion a year business. If any of the witnesses today 
believe that we do not have that responsibility, then we have a 
respectful disagreement.
    So I look forward to this hearing and others as we review 
this very important aspect, and now has become a very important 
aspect of America's economy.
    Senator Coburn.
    Senator Coburn. Mr. Chairman, I have no opening statement.
    The Chairman. Thank you very much.
    Senator Dorgan. Mr. Chairman.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Before I leave to go to the floor, I wanted 
to mention that Chairman JC Crawford from the Sisseton-Wahpeton 
Tribe, is here. I had visited that tribe some months ago, and 
wanted to just mention to you I went to the gaming facility. 
Senator Conrad and I were actually down near the southern end 
of our State.
    It was dinner time and we stopped into the gaming facility 
owned by the Sisseton-Wahpeton Tribe. It was the first time I 
had been there. We went to the buffet, which is always a well-
advertised portion of any gaming facility. As we stood in the 
buffet line, when we got to the cashier, she looked at Senator 
Conrad and myself and said, ``Would you want the senior citizen 
discount?'' [Laughter.]
    I confess to you that did your tribe no good. [Laughter.]
    To be asking the two of us that question. We actually 
demurred. We deferred, I guess, for another trip, our senior 
citizen discount.
    The Chairman. I could have taken it.
    Senator Dorgan. I was not too happy. She took a close look 
at us and then asked the question.
    But I did want to say to Chairman Crawford, we are very 
pleased you are here, and I am sorry I am not able to stay for 
your testimony, but I have read it.
    Thank you.
    The Chairman. Welcome. Our first panel is Vivian Juan-
Saunders, chairwoman of the Tohono O'odham Nation in Sells, AZ; 
Dallas Massey, Sr., chairman of the White Mountain Apache 
Tribal Council; Deron Marquez, chairman of the San Manuel Band 
of Mission Indians; and Joseph A. Pakootas, chairperson of the 
Colville Confederated Tribe.
    Please come forward.
    Welcome, Chairwoman Saunders. It is good to see you again. 
Please begin. All four of you, your written statements will be 
made part of the record. Please proceed.

 STATEMENT OF VIVIAN JUAN-SAUNDERS, CHAIRWOMAN, TOHONO O'ODHAM 
                             NATION

    Ms. Juan-Saunders. Thank you.
    Good morning, Chairman McCain and Vice Chairman Dorgan and 
members of the committee. I am Vivian Juan-Saunders, chairwoman 
of the Tohono O'odham Nation. I am also here on behalf of the 
Arizona Indian Gaming Association. In Arizona, we have 22 
federally recognized tribes; 18 are members of our association.
    Thank you for the opportunity to discuss Indian gaming 
regulation in the State of Arizona. I would also like to extend 
a special appreciation and greetings to our honorable Senator 
from our great State of Arizona. It is always a pleasure to be 
in the same room with you. I appreciate your interest and your 
concern for our industry.
    Arizona's regulatory system meets the intent and directives 
of the Indian Gaming Regulatory Act. My written comments 
provide in detail the success of Indian gaming on the Tohono 
O'odham Nation. Indeed, sound regulation and prudent management 
of our gaming operations has generated revenues that fund more 
than one-half of our budget. Without casino revenue, the nation 
clearly could not provide the amount of available governmental 
services.
    For the Tohono O'odham Nation, we have used gaming revenue 
to build our own Tohono O'odham Community College, a tribal 
college which this past year was accredited by the higher 
learning institution, the same accrediting agency that 
accredits other 2-year colleges. We built three Head Start 
centers, a nursing home, five recreation centers for our youth, 
offered business grants for tribal members, and a westside 
health clinic. If we waited for the Federal Government to build 
our health clinic, we would be in line for 20 years. In the 
meantime, our people are dying and are in need of health care.
    My remarks this morning will address the successful Indian 
gaming regulatory system in our State. Under Arizona's gaming 
compacts, tribes are the primary regulators, but the State also 
has an important role. The State regulatory agency has 
concurrent licensing authority and significant oversight 
functions. The tribes and the State cooperatively work together 
to ensure that Indian gaming is well regulated and achieves 
what Congress intended in passing IGRA.
    Today, Arizona has 567 people employed in Indian gaming 
regulation, including 105 State employees and 462 tribal 
employees. Collectively, the tribal and State regulatory 
agencies spent more than $35 million per year funded with 
Arizona Indian gaming revenues. State regulators share a 
variety of concurrent licensing, inspection and compliance 
functions, which are detailed in my written remarks.
    The State's role has been evaluated as highly effective. In 
1999, Arizona's Auditor General determined that the State's 
extensive oversight activities are well designed for ensuring 
the integrity of class III gaming operations. The report noted 
the following key State regulatory functions. Pre-operation 
inspections are conducted at every casino. Random inspections 
of at least 50 devices at each casino are conducted every 4 
weeks. Compact compliance reviews are conducted at each casino 
every 18 months. State regulatory agencies maintain an ongoing 
presence through weekly visits to casinos to inspect operations 
and investigate possible compact violations.
    The report concluded that Arizona's regulatory system was 
among the most extensive nationally, with more staff monitoring 
Indian gaming than any other State with comparable gaming 
demographics. In addition, the report noted that our regulatory 
budget is larger than States with comparable numbers of casinos 
and that gaming inspections and reviews are more frequently 
conducted in our facilities than in most other States.
    In Arizona, Indian gaming is both limited and well 
regulated. Our compact limits the number of facilities, as well 
as the type of devices and games, including table games. The 
scope of gaming is based on the size of the tribe, with those 
having more enrolled members eligible for devices and so on.
    While the State has an active regulatory role, these 
activities are secondary to those of the tribes who are the 
primary gaming regulators in the State. The tribal regulatory 
offices have primary responsibilities for licensing all casino 
employees, licensing all gaming vendors, licensing all large 
non-gaming vendors, inspecting gaming devices, approving the 
rules for poker and blackjack games, setting detailed internal 
control standards governing casino operations, monitoring 
compliance with IGRA and the compact and meeting internal 
control standards.
    Arizona's gaming compacts also require that a tribal gaming 
inspector be physically present in each gaming facility at all 
times during operating hours. Moreover, the tribes and State 
have been working on other initiatives to further strengthen 
our system, including the creation of a special U.S. attorney 
position to exclusively address crimes committed in tribal 
gaming facilities, and we have an ongoing effort to update and 
improve gaming regulatory requirements in the areas of new 
security and surveillance. We anticipate continued cooperative 
work in the areas I mentioned.
    We believe there is a misperception that serious crime 
exists at Indian casinos that go unpunished. Typically, most 
offenses occurring at tribal facilities are in fact minor 
property crimes. Nevertheless, we are diligently working in 
Arizona to protect the integrity of our facilities and to 
ensure that appropriate measures are taken to prevent and 
prosecute any criminal or other wrongful action committed in 
our facilities.
    Arizona's gaming tribes take our role as regulators 
seriously, and so does the State. Our system is both stringent 
and demanding, and requires a significant amount of 
communication and cooperation. Because our system is both 
comprehensive and highly effective, we believe that additional 
regulation at the Federal level will only duplicate current 
tribal and State efforts. Instead, it makes sense for the 
National Indian Gaming Commission to continue providing 
technical assistance to help strengthen our existing system. It 
is not necessary or functional, however, to add a third 
regulatory layer.
    Finally in light of the significant resources we spend on 
regulation, as well as the NIGC's current role in our system, 
we do not believe that Arizona tribes should be required to 
shoulder the cost of any additional NIGC regulatory functions 
in our State.
    Let me just conclude by sharing with you that in Arizona, 
we have what we refer to as metro tribes and urban tribes. The 
Tohono O'odham Nation is not only metro and rural, we are also 
international in that we have 75 miles of the international 
border that is adjacent to the United States, Mexico, and 
Tohono O'odham Nation.
    We continue to catch up for the last 200 years. Today, we 
spend $3 million annually addressing homeland security. We have 
spent $10 million of our own tribal resources on border issues, 
when these funds ought to be spent on housing, economic 
development, infrastructure, roads and so forth.
    Another major unique difference with our tribes in Arizona 
is some are small in population and land-based, and other like 
Tohono O'odham Nation are large in land-base and population. We 
have 2.8 million acres of land and 28,000 enrolled members, 
one-half of which live on the reservation. Much of our land is 
still virgin territory, with lack of infrastructure, which is 
very costly. So you can see that an increased revenue to 
oversee the regulation of gaming will seriously impact our 
efforts and the efforts of tribes in Arizona to catch up to the 
21st century.
    I also want to express that for tribes in Arizona, the 
metro tribes continue to deal with encroachment; continue to 
deal with encroachment not only on land, but also with the 
water sources surrounding the reservation lands. Revenue-
sharing in the State of Arizona, we also negotiated with the 
State of Arizona to provide significant revenue-sharing, 
although there were internal discussion with tribes in our 
State, including Tohono O'odham Nation, and the political 
realities sank in. In 2004, $37 million went to the Arizona 
Benefits Fund to fund problem gambling, instructional 
improvement. Also, $8 million went to the Arizona Department of 
Gaming to regulate gaming in our State, Arizona wildlife and 
tourism. In addition, 12 percent of revenue-sharing goes to 
local municipalities to help support their government services.
    So each time we agree to take from gaming revenue, we 
continue to take from the intent of Indian gaming, which was to 
develop sound and stable economies for Indian country. I want 
to conclude my remarks and thank you for the opportunity to 
provide testimony this morning.
    [Prepared statement of Ms. Juan-Saunders appears in 
appendix.]
    The Chairman. Thank you very much.
    I note Senator Burr is here. Would you care to make any 
opening comments, Senator Burr?
    Senator Burr. Senator McCain, thank you. I would much 
prefer to hear the testimony. Thank you.
    The Chairman. Thank you.
    Chairman Massey, it is good to see you again, sir.

   STATEMENT OF DALLAS MASSEY, Sr., CHAIRMAN, WHITE MOUNTAIN 
                     APACHE TRIBAL COUNCIL

    Mr. Massey. Good morning, John, chairman of the committee 
and committee members. Thank you for inviting me to be part of 
these proceedings. I will make brief comments and ask to submit 
my written testimony entered into the record.
    The Chairman. Without objection.
    Mr. Massey. I am Dallas Massey, tribal chairman of the 
White Mountain Apache Tribe. The White Mountain Apache Tribe is 
located in East-Central Arizona on the Fort Apache Indian 
Reservation. We are a rural tribe, a small market. Our land 
covers more than 1.6 million acres. We have about 12,000 
members within our land-base. Our members experience serious 
poverty and unemployment. Our median family income is just over 
$9,200 a year. Our casino provides not only an important source 
of revenue for us, but it also provides a major source of 
employment for our people.
    We have many natural resources on our land, including 
timber. In the summer of the year 2002, the White Mountain 
Apache Tribe suffered a horrible loss when the Rodeo-Chedeski 
fire swept through our timber stand on the west side of the 
reservation. Because of the fire, the land cannot he logged for 
100 to 150 years. Even when the mill was operating, 
unemployment on our reservation was over 60 percent. Our casino 
is critical for jobs and governmental revenues.
    Yet despite our daily struggle with severe revenue 
shortfalls, our tribe, like other Arizona tribes, is sharing a 
portion of our gaming revenues with the people of Arizona. In 
the year 2004, Arizona gaming tribes contributed nearly $38 
million in revenue-sharing payments to the State to support 
education, emergency health care, wildlife conservation and 
tourism throughout Arizona. We also provide support for helping 
problem gamblers.
    Arizona regulations, I want to point this out, in the year 
2004, 21 tribes have compacts and 15 have gaming facilities. 
Arizona has 11,831 slot machines, 424 table games. To regulate 
the industry, Arizona tribes and the State of Arizona spent 
more than $35 million in oversight. In total, the State has 567 
regulatory employees, a number that is exclusive of NIGC staff. 
This equates to one regulatory employee for every 21 games.
    In comparison, Atlantic City, which has 34,225 machines in 
play, one regulatory employee for every 95 games. In Nevada, 
which has 211,760 games in play, has one regulatory employee 
for every 492 games. Arizona spends roughly $3,000 per year 
program per game for regulations, while Atlantic City, with an 
industry three times the size, spends $672 per game per year. 
In Nevada, nearly 20 times the games, spent $118 per game per 
year.
    How did Arizona develop such a system? Although we have 
different backgrounds, cultures, and competing interests, we 
unite to agree upon common policy for Indian gaming in Arizona. 
Tribal governments are dedicated to building and maintaining 
strong regulatory systems because our sovereign immunity 
authority and government operation resources are at stake.
    Proposition 202 passed by Arizona voters in the year 2002 
provided additional regulation for Indian gaming by the Arizona 
Department of Gaming. Indian gaming is a highly regulated 
industry. In Arizona, nothing is left to chance. In the year 
2004, Arizona gaming tribes contributed $8 million to the 
Arizona Department of Gaming. This nearly fully funds the 
agency, since ADOG's total budget is almost $10 million. This 
increase in funding has enabled the agency to grow from 75 
full-time employees in the year 2003 to 105 full-time employees 
in 2004.
    In 2004, Arizona tribes spent more than $25 million for 
tribal regulation. In addition to being licensed by tribes, 
gaming vendors and gaming employees must be certified by ADOG. 
This process includes background checks on and licensing and 
certification of management, officials and key tribal 
employees. ADOG also inspects Indian gaming facilities to 
review cash and credit transactions, the integrity of games and 
vendor payments.
    Arizona tribes believe revenue-sharing should be capped to 
ensure that more money is generated for tribal needs and 
regulations, rather than using revenues from tribal government 
gaming to offset State deficits. Senator McCain, when you 
drafted IGRA, you said no authority could tax Indian gaming 
agreements. Tribal government gaming was instituted to help 
tribes supply essential government services to its members, not 
to provide State Government with ways to meet budget 
shortfalls.
    Arizona tribes have already fully funded adequate State 
tribal regulatory systems. Tribes should not be forced to pay 
for increases in NIGC fees. Furthermore, increases in NIGC 
funding should be based on specific budget justifications 
submitted to appropriation committees and not based on 
automatic funding increases.
    Our system is limited, regulated. It works. From our 
experience, our model interprets the letter and intent of IGRA. 
It generates revenues for tribes to encourage self-sufficiency 
and recognizes that tribal land presents tribes with different 
opportunities. Therefore, we would like to be on the record to 
remind the committee that there are financial impacts and 
hardships to tribes when fees are increased.
    Thank you for giving me an opportunity today to represent 
the White Mountain Apache Tribe and the State of Arizona. On 
behalf of Arizona tribes, we invite this committee to come to 
Arizona and see our system working.
    Thank you.
    [Prepared statement of Mr. Massey appears in appendix.]
    The Chairman. Thank you very much.
    Chairman Marquez.

   STATEMENT OF DERON MARQUEZ, CHAIRMAN, SAN MANUEL BAND OF 
                        MISSION INDIANS

    Mr. Marquez. Good morning, Chairman McCain, Vice Chairman 
Dorgan and members of the committee.
    I am Deron Marquez, chairman of the San Manuel Band of 
Mission Indians. I would like to begin by thanking you for this 
opportunity to testify before this committee.
    First, I would like to provide some background on our 
tribe. Our reservation was established in 1891. It is located 
roughly 70 miles east of Los Angeles. We occupy roughly 800 
acres in the mountainous region of San Bernardino County. Our 
reservation was like many before gaming: No infrastructure, 
poor housing, poor health, conditions still found on many 
reservations today.
    Tribal government gaming has empowered our tribe to 
dramatically improve these conditions for our people and to 
assist other tribes. My understanding is Congress intended this 
empowerment to occur when enacting IGRA. IGRA's purpose is to 
provide tribes with economic activity, self-sufficiency and 
strong tribal governments. It was also intended to provide a 
framework for gaming regulation to ensure that gaming was fair 
and honest; and finally, to ensure that tribes are the primary 
recipients of gaming revenues.
    Today, I would like to discuss two of our concerns: First, 
reservation shopping or off-reservation land acquisitions; and 
second, revenue-sharing.
    Before we talk about specific concerns, let me tell you 
about our tribal gaming regulation. Last year, we spent $47 
million on regulation.
    The Chairman. Based on what revenues?
    Mr. Marquez. Based off of our tribal gaming operations.
    The Chairman. And what were the revenues? You spent $47 
million on regulation. How much were your gaming revenues?
    Mr. Marquez. Last year?
    The Chairman. Yes.
    Mr. Marquez. Those are numbers we really do not disclose. I 
would probably get in a lot of trouble if I disclosed.
    The Chairman. I see. But you want to disclose how much you 
spent on regulation, but you do not want to disclose your 
revenues. It is not helpful. Go ahead.
    Mr. Marquez. On average, we allocate $20 million on 
regulation per year. Our independent gaming commission has 
around-the-clock oversight responsibility. As a result, we 
experienced zero embezzlements or other systemic criminal 
activity. All of this pursuant to our tribal gaming ordinance, 
and working in concert with Federal and State regulatory 
bodies.
    As Chairman Hogan recently stated, ``Indian gaming is a 
healthy and transparent industry due to solid tribal 
regulation.'' We believe this to be true and San Manuel is one 
example of upholding the strictest and most comprehensive 
regulation.
    Another strong example of our commitment is a $17 million 
investment in a state-of-the-art security and surveillance 
system we installed last year. Our system is an all-digital 
platform. It provides quick turnaround for prosecutors and has 
over 2,500 cameras. For these reasons, we encourage cooperation 
among all agencies that oversee tribal gaming and that these 
agencies acknowledge and work with tribal gaming commissions 
since they are the primary regulatory body.
    For San Manuel, we have remained steadfast in our 
commitment to the strictest regulation. No other form of gaming 
is as highly regulated as tribal gaming. We hold a deep belief 
in separation between the elected body of the tribe and the 
gaming commission.
    While we believe IGRA is working for the most part, we do 
have two concerns where we believe IGRA's intent is not being 
followed. First is reservation shopping. We support tribes 
acquiring land to rebuild their homelands. However, we strongly 
oppose encroachment on our ancestral lands by tribes or 
developers. As the Interior Inspector General stated, 
``Expansion of gaming off-reservation is being pushed by 
wealthy developers who want a piece of the action.'' This 
conflicts with the stated purpose of IGRA and places tribal 
nations against each other.
    What needs to be understood is that tribal government 
gaming is a tool. Sovereignty should be exercised responsibly. 
Accessing of land far from existing reservations will lead to 
the end of gaming as we know it today. If this activity occurs, 
tribal governments will lose rights and critical revenue, 
taking us backwards. Clearly, that was not the intent of IGRA.
    Let me tell you about our second concern, which is current 
revenue-sharing practices. IGRA restricts revenue-sharing and 
prohibits taxation. But today, States are using tribal 
government funds to pay down State deficits, and neither tribal 
governments or tribal gaming caused these debts. Governor 
Schwarzenegger has literally demonized tribes in his campaign 
slogan, ``Fair Share,'' convincing the public that tribes are 
responsible for paying taxes to the State with large sums of 
money.
    Yet our gaming operation provides millions of dollars and 
thousands of jobs outside of the tribal community. In 
California, tribal governments are the second-largest employer 
in the State, only second to the State itself in job creation. 
Gaming is not a Federal or a State program. Tribes are 
responsible for paying for services received and improper 
revenue-sharing only bleeds tribes. This is why we believe 
protecting our sovereignty and our rights is paramount.
    In closing, San Manuel supports the intent of IGRA. The 
spirit and soul of IGRA always contemplated a tribal primacy 
regulatory role; that gaming is to be conducted on lands not 
many miles away from existing reservations; and that tribes are 
the primary recipients of revenues generated on tribal lands. 
These concepts are nothing new to this committee, for it was 
this committee that crafted this critical piece of legislation 
that has lifted many tribes from utter poverty and despair. We 
simply ask that Congress enforce the true intent of this act.
    Finally, tribal gaming works. It works because of strong 
regulation, a strong tribal government, fair revenue-sharing 
practices, and strong relationships with the local communities. 
Housing, health care, education and infrastructure are now 
possible. That is why IGRA must be upheld to what this 
committee created.
    Mr. Chairman, I would invite you or anybody from the 
committee to visit our reservation to see our operation for 
yourselves. Thank you for asking me to testify today. I am 
pleased to answer any questions when it allows.
    [Prepared statement of Mr. Marquez appears in appendix.]
    The Chairman. Thank you very much.
    Can you help me with the pronunciation of your name?
    Mr. Pakootas. Certainly. Joe Pakootas.
    The Chairman. Pakootas.
    Mr. Pakootas. Pakootas, yes.
    The Chairman. Thank you very much. Welcome.

    STATEMENT OF JOSEPH A. PAKOOTAS, CHAIRPERSON, COLVILLE 
                       CONFEDERATED TRIBE

    Mr. Pakootas. Thank you very much.
    Good morning, Mr. Chairman and members of the committee. As 
I said, my name is Joe Pakootas and I am chairman of the 
Colville Business Council. I represent the Confederated Tribes 
of the Colville Indian Reservation and over 9,000 enrolled 
members of the tribe.
    Today, I would like to present the views of the Colville 
Tribe on the Indian gaming regulations, specifically regulation 
of the after-acquired trust lands for gaming purposes under the 
IGRA.
    I would like to give a little brief history of the Colville 
tribes. We are located in North-Central Washington. Our 
reservation comprises about 1.4 million acres of trust and 
allotted lands. Our tribe, like many other tribes in the United 
States, has been the victim of the Allotment Act, Dawes Act, 
and many different acts of the Federal Government in the past. 
Indian gaming has helped us to reacquire many of those lands 
that we lost through the years, and also helped us to improve 
the health and welfare of our tribal members, tribal people on 
the reservation, and those who live off the reservation also 
that are going to college for higher education.
    The Colville Tribes is a confederation of 12 different 
tribes in North-Central and Eastern Washington. These tribes 
were located on the reservation after it was established by 
Executive order in 1872 by President Grant. Some of the tribes 
were moved to our reservation at gunpoint in the late 1800's. 
Also, a majority of our enrolled members live on the 
reservation. Our reservation is divided up into four different 
districts, and those districts are metropolitan, or where the 
smaller cities are located within our reservation.
    Also, our reservation is quite remote. We are a little ways 
off the beaten path, so to speak. The nearest Interstate to our 
reservation is about 100 miles from our headquarters which is 
in Nespelem. Our reservation encompasses lands within Okanogan 
and Ferry County in the State of Washington. These are two of 
the poorest counties in the State of Washington. These counties 
were primarily dependent upon agriculture, mineral, and timber 
industries.
    Since some Federal regulations have come into place also, 
these two counties are struggling economically. The Colville 
Tribe is the major contributor to these local economies at this 
point in time. Our tribe, along with our Colville Tribal 
Enterprise Corporation, employs over 2,500 people in this area. 
That makes the Colville Tribes the largest employer in North-
Central Washington.
    Many of these employees are non-members that live on the 
reservation or off the reservation. Many of our employees, 
tribal members that do work in our enterprises and within our 
tribal government spend all of their dollars off the 
reservation. We do not have any real economy on the reservation 
so these two counties where we are located receive quite a bit 
of those dollars, and the State of Washington also ultimately 
receives all of our dollars.
    As one of the largest employers in North-Central 
Washington, we are quite concerned with what is going on within 
our reservation. As I said, we have no economy. Our dollars 
leave the reservation immediately. Yet, we are so off the 
beaten path that not too many people come to our facilities, 
our gaming facilities in particular.
    Our gaming revenues, we have three casinos. One casino is 
located off the reservation on trust land. The other two 
casinos are located within the boundaries of the reservation. 
Our gaming revenues are about $25 million annually. So we are 
quite different than many tribes that are close to the huge 
metropolitan areas, the huge areas over on the west side of the 
mountains on the west coast, Seattle area. So we are not one of 
those rich tribes, so to speak, yet we do consider ourselves 
wealthy because of our land-base and because of our people.
    Eighty percent of our casinos' net revenues fund essential 
tribal governmental functions. These functions include our 
elders, many of our youth, fire safety, police protection, 
gaming regulation, land-use planning, social and health 
services, housing and also education. We do not utilize our 
gaming revenues for per capitas as some tribes do.
    Our tribe, as I said, we are located quite a ways from the 
metropolitan areas. Because of that, we are looking to off-
reservation lands. These lands that we are looking to are 
aboriginal territories of one of the 12 different bands, tribes 
that make up our confederation. One of the areas that we are 
looking at is the Moses Lake area. That is why I want to speak 
to the after-acquired lands after 1988. It is because of our 
economy on the reservation and the remoteness.
    We are looking at the Moses Lake area right now. That is 
aboriginal territory of the Moses-Columbia Band-Tribe of our 
Confederation. We still own trust land down in that area. We 
have trust land allotments still located outside the exterior 
boundaries of the reservation that is considered Indian land. 
So we looked at Moses Lake area. Some of the concerns that we 
have is putting that fee property into trust status. Many 
tribes that are in this situation have to put up millions of 
their own dollars, tribal dollars that are required to provide 
services to our tribal membership, and in this case for the 
Colville Tribe to improve the economy not only for the Colville 
Tribe, but also for the Moses Lake area.
    We are required to put up the millions of dollars up front 
to either purchase the land, and we want it to be a casino and 
destination resort area. We are required to put these millions 
of dollars to purchase the property, not knowing if it can ever 
be put into trust status.
    To a lot of people, this is bad business.
    The Chairman. You are going to have to summarize here 
pretty quick.
    Mr. Pakootas. Okay. For a lot of people, this is bad 
business, but for Indian tribes, we are required to do this to 
improve our economies. So that is a concern that we have, is 
the many hurdles that we have to jump through in section 20 of 
IGRA.
    So Mr. Chairman, that short part that I said, I do 
appreciate the opportunity to testify today. Our written 
testimony is submitted. We will answer any questions that you 
may have of the Colville Tribes.
    Thank you very much.
    [Prepared statement of Mr. Pakootas appears in appendix.]
    The Chairman. Thank you very much, Mr. Chairman.
    Chairwoman Saunders, the Arizona compact in some ways is 
unique in that remotely located tribes are able to share 
revenues in that urban tribes can lease the rights to slot 
machines. Right? And since you mentioned that you are both, 
since your tribe is both, how do you feel about that, and how 
is it working?
    Ms. Juan-Saunders. In our State, we have five tribes who 
currently are engaged in agreements for machine transfers. 
These are tribes who for many reasons have decided not to build 
facilities on their reservations so they enter into agreements.
    The Chairman. Like the Wallapais?.
    Ms. Juan-Saunders. Wallapai, Havasupais, San Juan, Southern 
Paiute, Zuni, and Kaibab Paiute, for example.
    The Chairman. Has that worked out well?
    Ms. Juan-Saunders. Yes; it has. It allows the protection of 
their sovereignty and the sovereignty of the tribe. They are 
entering into agreements to be protected. It also provides a 
revenue source for those very remotely located tribes to also 
share in the economics of Indian gaming.
    The Chairman. I understand the new Arizona compacts provide 
for some revenue-sharing with the State on a sliding scale. As 
a large urban tribe, do you find these revenue-sharing 
provisions to be acceptable?
    Ms. Juan-Saunders. In our State, we take pride in the fact 
that tribes are united on these issues. It was very difficult 
negotiations even among ourselves. But in the spirit of unity, 
we agreed to compromise and the scale ranges from 1 percent to 
8 percent, with everyone starting at 1 percent and it goes up 
to 8 percent as their year-to-date revenues reaches the change 
points. So for Tohono O'odham Nation, despite our ever-pressing 
needs, and in that spirit of cooperation and unity with the 
tribes in our State, we have agreed to the sliding scale.
    The Chairman. Off-reservation casino proposals do not seem 
to have the same popularity in Arizona as in other areas. Why 
do you think that is?
    Ms. Juan-Saunders. Again, the tribes in our State, we have 
come together to discuss these very important issues. Through 
our monthly meetings and respect for our basic needs and 
respect for our sovereignty, we compromise with each other. We 
have 18 of the 22 tribes in our State who are members of our 
association, the Arizona Indian Gaming Association. We have 
very frank discussions among ourselves. Next month, we will be 
having that very discussion on off-reservation shopping.
    The Chairman. Chairman Massey, do you have a view on that, 
on the issue of off-reservation casinos?
    Mr. Massey. Every tribe is different. Ours, what White 
Mountain Apache Tribe, I, like the leaders sitting here, we do 
not agree with that also, off-reservation gaming.
    The Chairman. You mentioned very eloquently, Chairman 
Massey, that this was an issue of tribal sovereignty, and I 
agree. I think that some of my fellow citizens would also point 
out that about 99 percent of the patrons of Indian gaming 
operations are non-Indian. So we have an obligation to protect 
the interests of those who engage in these gaming operations 
who are the source of the revenue. That aspect of this has to 
be injected in any discussion that we make. I happen to very 
proud that we engage in it. I happen to very proud of the 
compact that was agreed to by the majority of citizens of our 
State. I think that it is working well. But implicit in that 
agreement and the fact that the majority of off-reservation 
citizens of Arizona approve that compact, implicit in that is 
that we have to respect and safeguard their ability to engage 
in a gaming operation that is honest, straightforward and not 
one that lacks transparency. I hope that you appreciate that 
aspect of my representation of the people of the State of 
Arizona.
    Which brings me to my next question. Do you have concerns 
regarding the level and effectiveness of State regulatory 
involvement?
    Mr. Massey. State regulatory involvement?
    The Chairman. Yes.
    Mr. Massey. Yes; I think like I mentioned here that we are 
one of the most regulated gaming industries. The dollars that I 
have mentioned between different States and the State of 
Arizona, I think we have one of the strongest regulatory gaming 
in Arizona. I think that that says enough with the numbers that 
I gave out a while ago.
    The Chairman. Has your tribe had difficulties in making 
referrals to Federal law enforcement and prosecution agencies?
    Mr. Massey. Not on Fort Apache Indian Reservation.
    The Chairman. Chairman Marquez, you make a very important 
point in your statement about developers exploiting Native 
Americans for the purposes of developing casinos. One of the 
more outrageous practices that we have seen is specifically in 
IGRA we prohibited, we put a ceiling on the percentage that 
they could get in a management contract, so they changed the 
name to consulting. A number of ``consultants'' have exacted 
exorbitant amounts of money from tribes who are desperate to 
begin gaming operations.
    First of all, do you agree with that? I draw the conclusion 
from your testimony that you do. Second of all, if that is the 
case, what do you think we ought to do about it?
    Mr. Marquez. I do agree with the fact that there are 
unscrupulous developers masquerading themselves as consultants. 
They are what they are. I think that one of the elements, I do 
not know how you would get there, but there are obviously very 
fair and honest developers out there who do want to do good 
things out there and help tribal nations move forward, and how 
we could basically shift them around so we understand who is 
good and who is bad.
    I think the NIGC, along with our own gaming commissions, as 
well as the State's gaming operations, especially back in 
California, if they all have to go through a background check 
before they are engaged in this process. I can only speak to 
the fact that I know in California, at least for our gaming 
operations, it works. In California at the State level, it 
works. I do believe, some of the findings I have read from the 
NIGC about some of these corrupted people involved in 
developing or trying to develop, it works.
    I just think that there has to be a step up in the area by 
which if it is more funding to the NIGC, then it is more 
funding to the NIGC. If it is more funding to the State 
regulators, then it is more funding there, as well as the 
tribal level. But I think at each level, the tribal gaming 
commission having the primacy on this to find out first if this 
group is what they say they are.
    The Chairman. Let me talk to you about, very briefly since 
you raised it in your opening statement. We had a situation 
here. We had a hearing on the Lytton situation. As you know, a 
provision was inserted in another bill, an omnibus bill, that 
allowed this tribe to establish a casino, as I understand it, 
down in downtown Oakland. There was a significant backlash 
against that. As you know, Senator Feinstein from the State 
introduced legislation repealing that provision. I understand 
it has been rendered a little bit moot because the legislature 
is apparently not going to approve.
    Another example, there is a tribe that wants to give up 
their claim to one-half the State of Colorado in return for one 
acre in downtown Denver. We see example after example of this. 
There is another one lately that I do not recall the details 
of.
    First of all, it seems to me that that harms the whole 
ideal of Indian gaming, and that was allow Indian tribes to 
conduct gaming operations on their own sovereign territory. 
Now, we are seeking casinos in downtown Oakland and downtown 
Denver, which they may have a legitimate claim to, but that is 
a separate process.
    What is your view on that situation?
    Mr. Marquez. Mr. Chairman, let me speak to you about the 
particular situation in my own backyard, where I have three 
tribes seeking land into trust for the same exact purpose, to 
do gaming on our ancestral lands. These tribes have no 
historical ties to this area whatsoever. Big Lagoon is located 
on the California-Oregon border. Los Coyotes is located in San 
Diego. The Timbi-Sha Shoshone through an act of Congress 
already in place, are trying to seek lands in that area as 
well.
    If these are allowed to go through, as I said in my 
testimony, this will be the end of which we know tribal 
government gaming today. It will only do things that we cannot 
even fathom. If we think the compacts are bad today, when these 
types of deals are struck, they are going to be worse, thus 
setting the bar higher than any other compact across this 
country for submitting tribal sovereignty under State law.
    The Chairman. And there will be a predictable reaction in 
the Congress and among the people of California who do not 
think that that is the appropriate way. For example, polls in 
my State show the majority of the citizens agree and support 
gaming on Indian reservations, I think obviously because of 
concern we have about conditions on Indian reservations.
    The majority of my citizens do not support non-Indian 
gaming. So if you start blurring those distinctions, then I 
think you have a rather serious challenge here to Indian gaming 
as it exists today.
    Mr. Marquez. If I may, Mr. Chairman, especially in 
California, when we moved the process to get our compacts put 
in place, we took a stance by saying this would not happen. In 
fact, we created the revenue-sharing trust fund by which all 
the tribes who are in gaming pay into to provide funds to those 
tribes who cannot participate in gaming, just to make sure that 
this activity did not transpire. Unfortunately, we are a the 
stage today and we have been very vocal about saying how wrong 
this is and how it needs to be addressed.
    The Chairman. Do you think that requires congressional 
action?
    Mr. Marquez. Yes, sir.
    The Chairman. Would you provide this committee with 
specific recommendations?
    Mr. Marquez. Yes, sir.
    The Chairman. Thank you.
    Chairman Pakootas, do you have any views on this particular 
aspect of the issue, particularly since you have a casino far 
removed from your actual tribal lands, as I understand it?
    Mr. Pakootas. We do have a casino. It is located outside 
the exterior boundaries of our reservation, but it is 
considered Indian lands, trust property. This is trust property 
that has been held in trust for the tribe and members of our 
tribe since the Allotment Act has been in place.
    So especially for our reservation, we do look outside the 
reservation to develop our different businesses, gaming, 
whatever it is going to be, to go toward to those larger 
populations to generate more revenues because we are a ways out 
in the country and people are not going to come to sometimes 
visit our reservation.
    We do have a couple of huge, one of them is Grand Coulee 
Dam, which is located one-half on our reservation and 1.5 
million people come and visit that annually, but they are more 
tourist-type people. They stop at Coulee Dam for one night and 
visit the huge concrete thing there that is stopping the water, 
then go on someplace else, so there are no real draws to come 
to our reservation. In a lot of cases, we have to go outside to 
our aboriginal territories of one of those 12 different tribes. 
We do still own trust property outside, even down in the Moses 
Lake area, that is considered Indian land. That is outside.
    So for us, we do have to go outside the reservation 
boundaries to generate more revenues.
    The Chairman. Senator Coburn.
    Senator Coburn. Thank you, Mr. Chairman.
    I would like for each of you to describe for me the 
economic diversification that you have put in place from the 
revenues that you have received from gaming.
    Ms. Juan-Saunders. Mr. Coburn, right now the Tohono O'odham 
Nation is moving forward to address the diversification of our 
economy. As I stated earlier, our land-based is 2.8 million 
acres and enrolled population of 28,000. We do have an economic 
development plan in place. We are moving toward looking at a 
hotel, looking at economic development on the reservation.
    However, one of our key barriers is the lack of 
infrastructure. In order to bring business to the reservation, 
we need water, power lines, roads in place. As you know, those 
are very costly. We also need sound business codes in place. We 
also need stable government. We are working very hard right now 
to put those in place. Infrastructure on the main reservation 
is a concern.
    In the surrounding Tucson area where we do have land, we 
look at those potential market areas as our source. We have 
convenience stores, gas stations on the reservation.
    The Chairman. May I interrupt, Chairwoman Saunders? It 
might help Senator Coburn if you told him how much the tribe is 
spending fighting the issue of illegal immigration, including 
how many abandoned cars a week that you have to remove and the 
enormous burden you have on law enforcement.
    Senator Coburn. I heard her testimony, Mr. Chairman. I 
understand the $10 million that they spent on illegal 
immigration. But the key I want to get through is the funds 
generated in gaming to create a further future for your tribe. 
How many dollars are going into economic development? Is there 
an example of where you have put in a business or invested in 
an industry or invested in things that will generate other 
revenues outside of gaming that will give you a long term?
    My fear is, in Oklahoma we have 39 recognized tribes and 83 
gaming operations. In another couple of years, it will be 
saturated in Oklahoma. There is only so much money that is 
going to go into gaming. So the time to make the investments 
for economic development, for sustainable economic development 
I believe is now. I was just wondering what are the specifics.
    Ms. Juan-Saunders. We agree with you. The whole intent of 
IGRA was to develop sound economies so that we do not rely on 
Indian gaming. I believe that firmly. However, we still have 
these barriers that we deal with every day, and so we are 
working right now to look at other sources of revenue to assist 
us with infrastructure development and move in that direction.
    Senator Coburn. Chairman Massey.
    Mr. Massey. Yes; like I have mentioned, White Mountain 
Apache Tribe is isolated from cities. We are in a rural area. 
So right now, our revenues are basically governmental and 
trying to get some money into the Education Department and also 
probably going into some other businesses that will be off set 
in our sawmill and ski area also. Right now, we are just re-
strengthening our enterprises on the reservation with the 
revenues that we have from gaming.
    Senator Coburn. So is there an economic development 
program? Have you built a business? Have you invested in an 
economic model other than gaming, with the gaming revenues?
    Mr. Massey. Not right now.
    Senator Coburn. Chairman Marquez?
    Mr. Marquez. First let me explain to you a brief synopsis 
of our philosophy as we move forward for economic development. 
One of the things we look at is it has to stand on its own. We 
do not believe in coupling businesses with each other to make 
it sound good. In other words, we do not believe a casino and a 
golf course. A golf course is not diversification, or a hotel 
with a casino.
    Second, the project must make economic sense. Third, it has 
to fit within our parameters set forth for our plan. And then 
also it has to fit within our moral and ethical standards that 
the tribe has set forward.
    We have a complete department called Economic Development/
Project Development that reviews thousands of these things a 
year. We get countless proposals to get involved in various 
programs. To date, we have gotten ourselves involved in some 
pretty interesting programs. Obviously, the casino that you 
heard about which is on the reservation.
    We are partners in the Four Fires development and residents 
here in Washington, DC. We are building another hotel in 
Sacramento under the same paradigm by which the Four Fires was 
created, now called Three Fires. On the reservation, we have 
the San Manuel water bottling plant by which we buy our own 
water and sell it to the valley down below. We own a restaurant 
in Pasadena called Twin Palms. We own an office building here 
in town, the Congressional Building. We are in the middle of 
developing what was Norton Air Force Base. We are looking to do 
warehousing and light manufacturing in that area. We have 90 
acres down there.
    We have a site for a warehouse building in the city of San 
Bernardino on Sterling and Fifth. We have a Colton warehouse 
building by which we moved some of our water bottling plant 
facility into there and lease out the other one-half. We have 
built in the city of Irvine what is called the Big Orchard 
property project, by which we built three buildings and bought 
back two, so we own two buildings down there and leased those 
out to some of the most qualified companies across this 
country.
    Back on the reservation, we have a wireless tower that 
provides Internet services to the reservation, as well as to 
the tribal offices down below in the valley, soon to open that 
to other businesses to tie in and use that service as well.
    Currently, we are in the process with the city of Highland 
to do what is called the San Manuel Village, where we will have 
our third hotel, which is two miles east of the reservation. 
There will be a hotel, two restaurants, retail shopping center-
type of a mixed-use facility. Last, we have what we call simple 
property management. We have a building now called the San 
Manuel Warehouse that we use for our own purposes, as well as 
office buildings located in the city of San Bernardino.
    So we have a pretty aggressive economic program. Our 
philosophy, from my tribe, and I came into office back in 1999, 
was in the year 2020, I want this Council to have a sound 
decision to make, to stay in gaming or get out of gaming, and 
that is where I want to put my people.
    Senator Coburn. And Chairman Pakootas?
    Mr. Pakootas. Yes; there is 80 percent of our gaming 
revenues goes towards our tribal government. We have our tribal 
government. Also, we have an enterprise corporation that is 
incorporated under the Governmental Incorporations Act of 
Colville Tribes. They manage 14 different businesses on behalf 
of the Colville tribal government. That 20 percent remains with 
the corporation and they take a look at economic development 
and diversifying our economy. We are mainly a timber tribe. We 
have been in the past.
    Since gaming has come about, we have purchased a new mill, 
or an old mill that was closed down and going into bankruptcy. 
The tribe purchased that and taken some of our gaming dollars 
and remodeled that facility. We are now employing almost double 
what it was in the past, nearly 300 people right now. It was 
employing about 160 when it was owned by non-Indians.
    So there is some diversification there, and taking a look 
at our dollars. We are also looking at industrial parks to 
improve the economy in the local areas in our counties.
    Senator Coburn. Let me ask each of you again, for the 
record, the answer is obvious, but I would like for you to 
state for the record why you do not publish your gaming 
revenues?
    Ms. Juan-Saunders. Because we are a sovereign entity and we 
have the right to. The law right now does not authorize us or 
mandates that we do, and that is our position.
    Senator Coburn. What is the reason behind the position?
    Ms. Juan-Saunders. The law does not require us to.
    Senator Coburn. But you could just as well say we will 
publish it, because sunshine is good for people to know how 
much revenue we are making; how much we are doing. Why would 
you not want to do that? What is wrong with publishing your 
revenue?
    Mr. Massey. I think for information for Arizona tribes, we 
submit together as tribes submitted to the State of Arizona.
    Senator Coburn. I understand that, but again, what is the 
reason for not publishing your revenue? I want you to state 
that for the record. Why would you not want the people in 
Arizona to know and the people in this country to know your 
revenue from gaming?
    Mr. Massey. I believe ADOG has that record. I believe they 
publish that.
    Senator Coburn. Again, specifically, why would you not want 
to publish your specific tribal organization's revenue from 
gaming? Not in combination, but individually? What is wrong 
with people knowing what your revenue is?
    Ms. Juan-Saunders. I guess my concern is why are we singled 
out as tribes?
    Senator Coburn. Every other organization in this country, 
whether it is a 501(c)(3), whether it is a corporation, whether 
it is a business, whether it is an individual income taxpayer, 
recognizes and publishes through either individually through 
the IRS so that the government knows that. That is not public 
knowledge, but every business that is public and publicly 
traded or publicly interacting with the Congress or with the 
Nation as a whole, publishes their record. You can go to every 
501(c)(3), you can go and get their 990's.
    I am just asking, I know you do not have to. I am asking 
why you won't.
    Ms. Juan-Saunders. We as sovereign governments, we want to 
abide by the law and the compact and the National Indian Gaming 
Commission prohibits it.
    Senator Coburn. It prohibits you from publishing it, or 
does not allow you to publish it, or you can publish the 
revenue if you want to?
    Ms. Juan-Saunders. It is prohibited.
    Senator Coburn. Chairman Marquez?
    Mr. Marquez. This topic is one that has been debated many 
times in our council by why we do not move forward in such a 
display of financial information. One of the things, I believe 
within our own council, there is a trend that is going to be 
shifting, I believe, to being more, wanting to disclose various 
elements.
    As it stands now, for our council, the main reason is 
simply trust. History shows that ever time we did share 
information with the outside world, if you will, it has always 
come back to hurt us. It has always been something that has 
been detrimental to us, so there is a large reluctance.
    Senator Coburn. Let me take a little exception with that. 
The number of people who are getting Indian Health Service in 
Oklahoma is in excess of 60,000 or 70,000. That is published 
information from the tribes which allows us to get more dollars 
for health care. As a matter of fact, I am going to be offering 
an amendment on the Interior bill to move money to Indian 
Health Service.
    I cannot take that statement as a blind fact. It is not a 
blind fact. The information gives us knowledge. In fact, one of 
the ways we protect your sovereignty is with open and clear 
sunshine and transparency. So either you have the right to have 
sovereign gaming or you do not. If you have that right, then 
what is wrong with publishing the numbers?
    Mr. Marquez. As I was saying, I think that that tide is 
turning. I can only speak for San Manuel. I cannot speak for 
Oklahoma or any other tribe. I only know what is going on in my 
council. And that is, one of the chief reasons why, mostly 
flowing from the elder side, is that we just simply are 
reluctant to release that information.
    I think one of the things, if you know or do not know this, 
that our council, our general membership has full access to all 
this information, so they are getting the information. I do not 
want anybody to think that we are hoarding that information 
from our own people. It is simply not the case. We simply at 
this juncture in time are not comfortable releasing information 
to the outside. Like I said, it has always come back to hurt 
us.
    Senator Coburn. Thank you. I think Chairman Pakootas has 
already given us their revenue.
    Mr. Pakootas. Yes; that is just on our gaming side of it.
    Senator Coburn. That is all I asked about.
    Mr. Pakootas. We do not publish all the numbers, but we are 
audited every year by the Federal Government. There are audits 
performed annually. We audit ourselves. We have State compacts. 
The State requires a lot of reporting. As Chairman Marquez 
said, there is a lot of history behind a lot of our secrecy in 
some cases, so to speak. It is not necessarily secrecy, but we 
are not public companies. We are actually like different 
countries, so to speak. We are a country within the United 
States. That is the stance that we look at.
    We publish a lot of our numbers in our economies in our 
local areas. We have no secrets. Our secrets are cultural areas 
and those types of places.
    Senator Coburn. I would just say, every other form of 
government in this country, county, State, municipal, and 
Federal Government publishes their numbers. Transparency and 
sunshine is great for you in the long run. It may not be great 
for you in the short run, but in the long run will build trust 
and build support for the Native Americans in this country.
    Mr. Chairman, thank you.
    The Chairman. Thank you very much.
    I thank the witnesses. Thank you.
    Our next panel is James ``JC'' Crawford, chairman of the 
Sisseton-Wahpeton Oyate of the Lake Traverse Reservation, 
Agency Village, SD; Jim Ransom, chief of the St. Regis Band of 
Mohawk Indians; Doreen Hagen, president of the Prairie Island 
Indian Community.
    Chairman Crawford, we will begin with you. Next time, you 
should offer Senator Conrad and Senator Dorgan the children's 
discount. [Laughter.]
    Mr. Crawford. I do not think that is something we are going 
to live down very easily.
    The Chairman. Thank you. Please proceed. You are welcome 
here.

STATEMENT OF JAMES CRAWFORD, CHAIRMAN, SISSETON-WAHPETON OYATE 
                OF THE LAKE TRAVERSE RESERVATION

    Mr. Crawford. Good morning, chairman and members of the 
committee. I am very honored to present to you some testimony 
in oral form, but I also have to apologize today that my 
written summary is driving around in a taxicab someplace, so I 
have to wing it from my vision and from the heart.
    Today, Mr. Chairman, I want to bring to you some of the 
issues that we have at Sisseton-Wahpeton Oyate at the Lake 
Traverse Reservation. We reside in the northeast corner of 
South Dakota. Our tribe overlaps in two State's jurisdictions, 
that of North Dakota and South Dakota. We are composed of 
11,600 tribal members. We do enjoy the benefit of Indian gaming 
by having three facilities, one in North Dakota and two in 
South Dakota.
    Mr. Chairman, we also want to express the gratitude toward 
your hearing today of going in to the benefits of Indian 
gaming. Indian gaming is not something that was invested into 
by private stockholders for shares and profits. It is really a 
benefit for us to go forward and to invest in our number one 
resource, in our tribe.
    Mr. Chairman and members of the committee, our number one 
resource at Sisseton-Wahpeton is our people itself, as we 
understand that the people is the government and the government 
is for the people. So the things that we have done for the 
future for our tribe is that we have been able to start 
communicating and talk about the issues of tribal master plans. 
We started to look at the issues of integrated resource 
management plans, and how do we build a future for our tribe, 
and how do we build a future and give a statement to lasting 
generations for our young people that have yet to be heard or 
seen.
    Those are the things that we need to concentrate on to the 
benefit of our people. It is not so much that JC is going to 
get something at the end of the day. It is what are my children 
and grandchildren are going to receive at the end of their 
time, when it comes to there's, to rely upon a resource to get 
a quality of life in Northeast South Dakota.
    We are very honored to be able to enjoy the benefits of 
Indian gaming. It has started all the things that previous 
witnesses and previous tribes are doing out there, doing for 
education, health and benefits and economic diversification 
plans. Those are all things that are on our plate and our 
agenda for the Sisseton-Wahpeton Oyate.
    I want to come to you today, Mr. Chairman, and acknowledge 
that Indian gaming has been a springboard, not just from the 
gaming industry itself and for its people that work there. We 
have 55 percent of our tribal members are employed through our 
three facilities. They have attained a quality of life that 
they could help and give direction not only for themselves, but 
for their children that they leave behind.
    I am just a small portion as a tribal leader on the 
reservation. I believe that as a vision, we need to contribute 
our resources together for a common goal to a total vision of 
our global total vision for our people at Sisseton-Wahpeton 
Oyate.
    We also want to become good neighbors. We also want to 
participate in the benefits of those in the communities around 
us that surround us, that we understand that we dip into their 
socioeconomic dollars by coming to be entertained and to play 
the gaming devices that we offer at our casinos. We also 
understand that those are detrimental to them in a social 
means. So there is a concern that we monitor and evaluate 
through economic plans and assessments to see the social 
disparities that it has, not only on the tribal reservation 
members, but members in the communities around it as well.
    As we look forward for Indian gaming, we understand that 
there is no certainty when the end of gaming is going to come, 
or it is going to continue to prosper. But we do know that as 
we take this very at this point stable industry and resource, 
and to plan for the future for our grandchildren, we need to 
know that we are taking those steps. We need to know that we 
are asking for partnerships with our local communities and 
brothers and sisters to work together. We are going to be 
successful because we all believe that this resource is 
beneficial for all of us.
    In the benefits of Indian gaming, we are able to diversify 
on issues such as with doing the plastic bag manufacturing that 
employs 45-plus employees, to have something diversified other 
than gaming. We looked into the retail management opportunities 
that the tribe could have. We looked at our own internal 
resources that we have to do that, where we buy retail issues 
in daily activities, things that we need such as heating 
resources or petroleum to put in our cars to move forward to 
work and to our recreations.
    Those are things that we are asking, that are taking our 
gaming dollars, to go in and expand those and provide those 
services to us. Our main goal, as I started out, is we need to 
have our number one resource be able to have those 
opportunities, and that is our people.
    We look at those business opportunities as being 
profitable, but we also look them, or in one of our major 
objectives is to maintain that the people have jobs in whatever 
it may be. If we can manipulate somewhat the bottom line of 
profitability that we can share that, that it is more 
affordable for those members that live on fixed incomes, that 
they enjoy all those things, that means such as propane or 
gasoline, fuel oil. Those things may be the bare necessities, 
but they would make that contribution to them so that they have 
enjoyable lifestyles.
    In closing, Mr. Chairman, I guess I would like to apologize 
for not being more professionally prepared today because my 
notes are in the taxicab. But I speak to you from my vision 
that I see as a tribal member and as a tribal leader, and I 
speak to you in this committee in this testimony from the 
heart, knowing that I am a part of the gaming process, that I 
work through the system and now somehow, some way they decided 
I should be a tribal leader and be their tribal chairman.
    I come with those things and with a good way. I present 
this to you in our oral testimony knowing that as we go with 
our challenges in life, we will use every resource available to 
us to sustain the stability of our government to our tribal 
people.
    In closing, not to enlighten you, not to be detrimental to 
anything, but I, don't give me a check; give me a resource, and 
let me make that resource work for me and determine the amount 
of the check that I will receive from those benefits.
    Thank you.
    The Chairman. Thank you very much.
    Chief Ransom.

   STATEMENT OF JIM RANSOM, CHIEF, ST. REGIS BAND OF MOHAWK 
                            INDIANS

    Mr. Ransom. Good morning. I extend my appreciation to 
Chairman McCain and the committee for the opportunity to speak 
today.
    The St. Regis Mohawk Tribe has been diligently observing 
the discussion that has occurred surrounding the issue of off-
reservation gaming and out-of-State tribes, as we have a vested 
interest in its outcome. Clearly, Indian gaming is under 
increased scrutiny. There is a national debate going on 
primarily over off-reservation gaming and out-of-State tribes. 
In Indian country, NCAI and NIGA have taken leadership roles in 
responding to concerns raised over these issues. I would like 
to commend them for the good work they have been doing.
    What has emerged from the discussion are two important 
trends. First, Indian gaming is a success story and much of the 
success can be attributed to IGRA. It works. Second, Congress 
should not reopen IGRA. There are other regulatory solutions 
that will work.
    I think it is timely that you are holding this hearing. It 
is good to hear from other tribes, especially the Arizona 
tribes. What has been missing from this national discussion has 
been the success stories. What if it is to a tribe's and 
State's mutual interest to pursue off-reservation gaming? What 
if the off-reservation gaming can help local governments in an 
economically depressed part of a State? And what if off-
reservation gaming is pursued in a transparent and open manner?
    In New York, the experience is unique. We believe that what 
is happening in New York can serve as a model for conducting 
off-reservation gaming. It addresses many of the issues that 
have been identified in the various meetings that have taken 
place. One of the issues has been whether the State and/or 
Governor supports off-reservation gaming. What has happened in 
New York is that in 2001, the New York State legislature 
authorized three off-reservation casinos in the Catskills. In 
March of this year, the BIA issued an expanded checklist to 
give clearer guidance for off-reservation gaming.
    Recently, New York Governor George Pataki introduced 
legislation providing additional criteria for off-reservation 
casinos. These enhanced regulations will ensure that off-
reservation gaming in New York is conducted in a responsible 
manner.
    Another issue is the issue of local support. Local impact 
agreements are now one of the criteria BIA looks for in 
reviewing off-reservation gaming projects. In New York, 
Governor Pataki's recent legislation requires that before a 
gaming compact is ratified there must be a local service and 
impact agreement. These additional steps ensure local interests 
are protected.
    On the issue of full environmental reviews, the BIA's 
checklist now calls for a full environmental review of off-
reservation gaming. Again in New York, Governor Pataki's 
legislation requires that each gaming compact for an off-
reservation casino provide prior to construction a full 
environmental review. These increased requirements create a 
positive atmosphere for off-reservation gaming to occur.
    In regards to the issue of out-of-State tribes, current 
regulations and the atmosphere within both States and Congress 
are addressing this issue. New York illustrates this point. 
Recently, just last week, two out-of-State tribes interfered in 
our Mohawk land claims settlement. They were attempting to 
piggyback their effort to get an off-reservation casino on our 
effort to settle our land claim.
    Last Thursday, Governor Pataki sent them an e-mail:

    Please be advised that if your clients or their 
representatives succeed in their current efforts to prevent 
passage of the Mohawk settlement legislation, the State will 
engage in no further settlement negotiations with out-of-State 
tribes.

    We commend Governor Pataki for recognizing the desperate 
attempt by out-of-State tribes and for his strong response to 
their actions. We believe that in the future, it will continue 
to become more difficult, not less, for out-of-State tribes.
    In conclusion, the St. Regis Mohawk Tribe is the lead tribe 
in siting an off-reservation casino in the Catskills. Our 
project has the support of the Governor and the State. We have 
a local impact and service agreement. We have undertaken a 
comprehensive environmental review at both the State and 
Federal level. We are the only tribe with site-plan approval, 
and the lands are within our ancestral lands. All of this is 
being done within the context of IGRA.
    Mr. Chairman and members of the committee, thank you for 
listening to me. I would be pleased to answer any questions you 
may have.
    [Prepared statement of Mr. Ransom appears in appendix.]
    The Chairman. Thank you very much.
    President Hagen.

  STATEMENT OF DOREEN HAGEN, PRESIDENT, PRAIRIE ISLAND INDIAN 
                           COMMUNITY

    Ms. Hagen. Good morning, Chairman McCain and honorable 
committee members. Thank you for the opportunity to testify 
today on the regulation of Indian gaming.
    My name is Doreen Hagen. I am a member of the Prairie 
Island Community, a veteran of the U.S. Army, and president of 
the Prairie Island Indian Community Tribal Council.
    Prior to being elected to tribal council, I worked for the 
Prairie Island Indian Community Gaming Commission. During my 
tenure, I served as a commissioner of vendor licensing and 
later I became the assistant executive director.
    For centuries, my tribe has been a careful steward of 
resources. In the past, the tribe cared for the bounty of the 
land because it provided for our sustenance. Today, the tribe 
carefully attends to its economic enterprise, Treasure Island. 
That stewardship is implemented by aggressive and thorough 
regulation. Our tribe works closely with the Minnesota 
Department of Public Safety and its alcohol, gambling 
enforcement division. We have a good relationship with the 
division's Deputy Director Frank Ball, Special Agent Norm Pint, 
and the agent assigned to our property, Jill Ahart, and the 
late Ralph Shingledecker. The State officials have and will 
always have an open door at Treasure Island. In addition, we 
work with the NIGC to ensure we meet all standards as described 
by the Federal MICS.
    First and foremost, however, our tribe takes full 
responsibility for the regulation of our tribal government 
gaming operations through the Prairie Island Indian Community 
Gaming Commission. We are very proud of their work and their 
regulatory reputation. That commission is an autonomous 
regulatory arm of tribal government. It is the principal 
regulator of gaming at Prairie Island. The commission is 
responsible for the day-to-day oversight of gaming activities 
and ensures the business adheres to all guidelines set forth in 
IGRA, the Federal MICS, our compact with the State of 
Minnesota, and the Prairie Island Gaming Ordinance.
    The commission provides a weekly regulatory report to the 
tribal council, but it does not take requests or receive 
regulatory direction from the tribal council. The commission is 
comprised of five members, an executive director and the 
commissioners of employee licensing, vendor licensing, 
compliance and surveillance. Commissioners are appointed 
officials and have no fixed terms. Each commissioner oversees 
his or her respective department and reports any concerns to 
the full commission for action.
    The commission has a staff of 12 employees. Prior to 
employment, all gaming commissioners and gaming commission 
employees are subject to a full background check. In addition, 
employees receive vigorous training and testing before assuming 
the responsibility of their job. Moreover, employees attend 
continuing education courses, conferences and seminars as 
appropriate.
    The commission's obligation to protect the gaming facility 
and its integrity is realized in two principal ways: First, by 
controlling access to the facility by third parties through its 
employee and vendor licensing departments; and second, by 
internal policing through the compliance and surveillance 
departments.
    The commission's employee licensing department has a staff 
of five employees. These employees conduct full background 
checks on all applicants for employment at Treasure Island, 
which includes at a minimum a full FBI background check, State 
and local criminal checks, driver's license and credit checks, 
and checks on past residences and employment. Once a full 
background check is completed, it is forwarded along with a 
recommendation regarding the applicant's licensing to the 
Commissioner of Employee Licensing. If an applicant or license 
is determined by the commission to pose a potential threat to 
the integrity of gaming at Treasure Island, his or her license 
is denied or suspended.
    Recently, the employee licensing department converted to 
electronic fingerprinting, which has reduced the time for 
receiving background check results from days or months to 
minutes. The commission also conducts full background 
investigations and licenses casino vendors via its vendor 
license department. Although not required by IGRA or its 
implementing regulations, the commission has fulfilled this 
function for many years. Vendor licensing applications are 
available and can be completed online on the casino's website. 
Only licensed and approved vendors can do business with the 
casino.
    Internal monitoring of gaming activities at Treasure Island 
is accomplished by the Commissioner of Surveillance, who works 
closely with the casino's Surveillance Department. In 2002, the 
department installed a state-of-the-art all-digital 
surveillance system valued at over $5 million, the first such 
system in the entire gaming industry. The system provides 
clarity of images that far exceeds any analog technology and 
allows the operators to instantly review recorded images, while 
simultaneously viewing ongoing activity. The new system has 
proved to be an invaluable tool in monitoring the integrity of 
the business, tracking potentially illegal activity, and 
assisting in prosecution and conviction of individuals engaged 
in such activity. This technology is so advanced that the NIGC 
is reviewing its MICS for surveillance requirements which are 
still based on outdated analog technology.
    The commission's internal oversight is also fulfilled by 
the compliance department whose purpose is to ensure the 
business follows all Federal, State, and tribal regulatory 
guidelines. The department includes compliance inspectors who 
are on-property 24 hours a day. These inspectors observe day-
to-day activities for complete regulatory compliance. If the 
inspectors discover any deviation, the incident is documented 
and forwarded to the Commissioner of Compliance. In turn, the 
commissioners meet with the department responsible to resolve 
the deviation. If necessary, a citation is issued to the 
responsible department. Failure to comply with recommendations 
from the compliance department results in disciplinary action 
up to and including fines, gaming license revocation, and even 
employment termination.
    The Prairie Island Indian Community Gaming Commission 
provides a complete regulatory structure for the tribe's 
government and gaming operation. The commission prevents 
potential threats to the business's integrity from third 
parties, and it internally monitors the business for compliance 
with all Federal, State, and tribal regulations.
    In closing, the Prairie Island Indian Community takes its 
stewardship responsibilities very seriously. Our tribal 
government gaming operation is the lifeblood of our community. 
We now have sanitary water, sewers, good housing, paved roads, 
excellent health care, a tribal court system, our own police 
department, and education opportunities that never existed 
before tribal gaming. Moreover, we have the resources and time 
to revitalize our culture and tradition.
    I want to echo Chairman Massey's remark that tribal 
government gaming is intended to provide essential services to 
our members, not to provide State government with a way to meet 
budget deficits. The regulation and the integrity of our 
business are vital to our very survival. On every occasion, we 
have met and in many instances exceeded all Federal and State 
regulatory guidelines because of their importance to our 
business, as well as their importance to the Prairie Island 
Indian Community.
    We do not believe that the Indian Gaming Regulatory Act 
needs to be amended. As a proud leader of Indian country, 
tribes are self-governing in the manner intended by the 
committee and the U.S. Government. I assure you that the 
privilege and responsibility of governing and providing for 
one's people is something no tribe would place in jeopardy.
    Thank you. I will answer any questions you may have.
    [Prepared statement of Ms. Hagen appears in appendix.]
    The Chairman. Thank you very much.
    Chairman Crawford, do the tribe and State share the 
regulation of the tribe's casino?
    Mr. Crawford. Under the compact under the State of North 
Dakota and South Dakota, there is some dual reporting 
requirements that we need to submit to the State's regulatory 
body, as well as audit reports.
    The Chairman. It works out okay?
    Mr. Crawford. It works out okay, yes. There needs to be 
some little tuning up to be done, but nothing is always 
perfect. You have to work it out.
    The Chairman. Does the NIGC come around regularly?
    Mr. Crawford. Yes; they do.
    The Chairman. Has gaming affected your tribe's 
relationships with local communities?
    Mr. Crawford. Greatly. In reading the testimony, about 10 
years ago, I could not sit in a coffee shop in Watertown, SD 
and talk shop. Today, seeing our resources, they kind of 
recognize who I am now today, and they try to say, hey, how are 
you guys doing out there; how is the tribe doing; how are you 
guys moving to Dakota Western Corporation; what are your plans; 
how do we work with housing development and those things. Those 
are all things that are kind of positive now that it sets you 
into that opportunity to make that small talk.
    The Chairman. And they want you to pick up the check? 
[Laughter.]
    Mr. Crawford. Sometimes they do. [Laughter.]
    The Chairman. Chief Ransom, the way I understand your 
testimony, you think off-reservation gaming is okay as long as 
it is within the State that the tribe resides. Is that your 
position?
    Mr. Ransom. I think that it is okay in certain 
circumstances when some of the criteria I identified are in 
place when you have the local support.
    The Chairman. But not out of State?
    Mr. Ransom. I think that the current regulations and the 
current atmosphere prevents out-of-State tribes from crossing 
the border.
    The Chairman. Yes; but what is your position?
    Mr. Ransom. Officially as a tribe, we have not taken a 
position.
    The Chairman. What I find interesting is that you are very 
involved with Governor Pataki and the Assembly and approvals 
and disapprovals and site locations and all that with the 
State. And yet I have spent my 19 years on this committee 
trying to protect tribal sovereignty and excluding the States 
from exercising any influence over the tribes because of their 
sovereignty. And yet you seem to be hand-in-glove with the 
Governor of the State and with the legislature and agreements 
with the State. Aren't you worried about an erosion of tribal 
sovereignty here?
    Mr. Ransom. We think it is probably just the opposite. It 
is an example of tribal sovereignty at work.
    The Chairman. That the Governor should have the right to 
decide whether you should have an off-reservation casino or 
not?
    Mr. Ransom. That the tribe should have the ability to 
negotiate with the State an off-reservation casino, and that it 
be done on terms that we find acceptable and that do not 
compromise our sovereignty. I think that where there are 
problems is when out-of-State tribes in particular attempt to 
accept less when they cross borders.
    The Chairman. Well, I think that, it is just my opinion, if 
we have enough off-reservation casinos set up in America, you 
are going to see a backlash against Indian gaming, because that 
was not the intent of the law; that was not the intent of IGRA; 
none of us ever anticipated that there would be casinos in the 
Catskills as associated with your ability to conduct Indian 
gaming within your tribal reservation boundaries. You are 
already beginning to see that backlash. So we will be examining 
this issue very carefully.
    It seems to me now you are in a position where the State of 
New York has basically the ability to decide whether you can 
locate a casino or not anywhere in the State of New York. I am 
not sure that that is in keeping with the tribal sovereignty 
issue, which I think is paramount and should remain paramount.
    President Hagen, how are your relations with the State as 
far as the regulatory role is concerned?
    Ms. Hagen. As I testified, we have a very good relationship 
with the Department of Public Safety. They come down quite 
often and we meet with them, and are in constant communication 
with them.
    The Chairman. What about with the NIGC?
    Ms. Hagen. We also have the same type of relationship. 
However, our surveillance department has not been approved 
because of the new digital, what I testified in here. But we 
have been meeting with them and we are working with them and we 
also have our doors open to them at all times.
    The Chairman. How do you handle criminal jurisdiction 
matters with State law enforcement agencies?
    Ms. Hagen. We have an agreement with the county of Goodhue, 
and we send whatever prosecutions or arrests that we have to 
the county of Goodhue.
    The Chairman. What is your tribe's position on off-
reservation casinos?
    Ms. Hagen. Do you have plenty of time? Because right now, 
we are in a disagreement with the Governor of Minnesota on off-
reservation gaming.
    The Chairman. Here is my point. We have reservations that 
are located near metropolitan areas and some not near 
metropolitan areas. Okay? Now, they are engaged in gaming 
operations after compacts that are concluded. Suppose that 
tribes were allowed to locate off-reservation casinos in 
downtown metropolitan areas. What would that do to the gaming 
operations that are being conducted on reservations which 
happen to be geographically further away from the areas, like 
downtown Denver, downtown Oakland, et cetera. Haven't we 
thought that through? I would like your opinion, too, Chief 
Crawford.
    Go ahead.
    Ms. Hagen. I understand what you are talking about because 
we are going through that right now. In Minnesota, we have 11 
tribes. Right now, there are tribes that operate away from the 
metro area and we have tribes that are in remote areas that are 
doing good for the rural economy where they are located. We 
have actually three tribes that are close to the metro area.
    However, any type of off-reservation casinos will affect 
even those, because we have as far as Treasure Island, Prairie 
Island is concerned, we are a destination resort. We are off 
the beaten track. We do not have a major highway or a major 
roadway. You have to literally drive a long way to get to our 
casino. We have to market the metro area. We have buses.
    The Chairman. What would happen to you if there was a 
casino located in downtown Minneapolis?
    Ms. Hagen. We just had a new study done that 30 percent of 
our income would be affected, and 300 jobs would be affected. 
We employ 1,500 employees, and 300 would lose their jobs. That 
means a tax-paying job, excellent health benefits, and 401(k) 
benefits. Those would be affected by the rural community. We 
have resolutions from the city of Red Wing and the commission 
of Goodhue County backing us on this, that we do not want a 
casino to be opened in the metro area.
    The Chairman. Chairman Crawford.
    Mr. Crawford. Yes; South Dakota is a very rural area, 
obviously, and we have a struggle. Governor Rounds of South 
Dakota has come out with a 2010-initiative on how to increase 
the State gross product. He gave a hand in friendship to the 
tribes as they come to speak with him on how do we improve the 
quality of life, the Midwest lifestyle in South Dakota.
    We are hampered by our resources, our people leaving the 
State of South Dakota and our reservation to find the quality 
jobs that they need to sustain a quality of life. But putting 
these resources like that into a metropolitan area only 
handicaps us further, to be able to be bringing in people to 
our region for economic benefits. We cannot get 3M; we cannot 
get the big corporations to come out to rural South Dakota.
    So if we can tie this benefit of Indian gaming to tourism, 
to integrate our resources together to make a plan that we can 
help each other, not only the tribes, but the State as well, I 
think those are some of the things that we need to offer.
    I think, to be honest with you, Mr. Chairman, I think that 
the IGRA Act does not completely maximize its responsibility to 
rural development. I think that was an intent.
    The Chairman. Chief Ransom, I would like to give you an 
opportunity to respond.
    Mr. Ransom. I think that, again, New York is unique in that 
there are only seven federally recognized tribes. There are 
only three out of the seven that are doing gaming. The Senecas 
are in the Buffalo-Niagara Falls corridor. The Oneidas are in 
the Central New York corridor. The Mohawks, we are in the 
northernmost remote part of the State. We do not have a large 
urban population near us.
    So in terms of the Catskills, we see it as a project that 
would benefit not only the Catskills, but our current 
reservation as well, so it benefits two parts of the State. I 
think that that is why we see it as a win-win for the State and 
us.
    The Chairman. Well, I would agree there are different 
situations throughout the country.
    I thank the witnesses. You have been very helpful being 
here today.
    This hearing is adjourned.
    [Whereupon, at 12:04 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]


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                            A P P E N D I X

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              Additional Material Submitted for the Record

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 Prepared Statement of Doreen Hagen, President, Prairie Island Indian 
                        Community Tribal Council

    Good morning Chairman McCain, Vice Chairman Dorgan and honorable 
members of the committee. Thank you for the opportunity to testify 
today on the regulation of Indian gaming. My name is Doreen Hagen. I am 
a member of the Prairie Island Indian Community, a U.S. veteran, and 
president of the Prairie Island Indian Community Tribal Council. Prior 
to being elected to tribal council, I was one of the first 
commissioners on the Prairie Island Indian Community Gaming Commission.
    During my tenure, I served as the Commissioner of Vendor Licensing 
and later I became the Assistant Executive Director.
    The Prairie Island Indian Community is a federally recognized, 
sovereign, self-governing Indian tribe located in the State of 
Minnesota along the banks of the Mississippi River north of the city of 
Red Wing. My tribe is a Mdewakanton Dakota Community; the literal 
translation of Mdewakanton is ``dwellers of Spirit Lake'' and Dakota 
means ``ally.'' Tinta Wita or Prairie Island has provided for the needs 
of my people for centuries; it is a spiritual place. Over the years, 
this land has provided food, medicine and housing for my tribe, 
especially following the Dakota Conflict when times were especially 
challenging.
    More recently, Prairie Island has provided my tribe with economic 
opportunities, namely casino gambling. In 1984, we opened a bingo 
parlor known as Island Bingo. Tribal members worked hard to make 
certain that the enterprise was ran well and provided for good jobs for 
the membership. Many tribal members can tell you stories of late nights 
and hard work, lean times but happy times, making the bingo enterprise 
a success.
    Following the Cabazon decision, and subsequent passage of the 
Indian Gaming Regulatory Act [IGRA] in 1988, my tribe successfully 
negotiated compacts with the State of Minnesota and our modest bingo 
operation was transformed into a casino, known as Treasure Island. 
Resort & Casino. Throughout our business' existence, we have been proud 
of our record of regulatory compliance and our positive and productive 
relationships with state and Federal regulatory and legislative bodies.
    As a result of hard work, responsible management, and aggressive 
regulation, Treasure Island has become a great economic success, both 
for my tribe and the State of Minnesota. Our casino employs over 1,500 
people, 95 percent of whom.are non-Indians, residing near our 
reservation. As such, the Prairie Island Indian Community is the 
largest employer in Goodhue County, providing good paying jobs with 
great benefits in rural Minnesota without any assistance from the State 
of Minnesota. Prairie Island, and other Indian Gaming Operations in 
Minnesota are great examples of successful rural economic development 
in Minnesota. We are economic enterprise zones that cost the residents 
of Minnesota nothing.
    For centuries, my tribe has been a careful steward of its 
resources. In the past, the tribe cared for the bounty of Prairie 
Island, which provided for our sustenance. Similarly today, the tribe 
carefully attends to its economic enterprise, Treasure Island, and that 
stewardship is implemented by aggressive and thorough regulation.
    Our tribe works closely with the Minnesota Department of Public 
Safety and its Alcohol Gambling Enforcement Division. We have a good 
relationship with the division's Deputy Director, Frank Ball; the late 
Ralph Shingledecker; Special Agent, Norm Pint and the agent assigned to 
our property, Jill Ahart. The State officials have and will always have 
an open door at Treasure Island. In addition, we work with the National 
Indian Gaming Commission [NIGC] to ensure we meet all standards as 
described by the Minimum Internal Control Standards [MICS].
    First and foremost, however, our tribe takes full responsibility 
for the regulation of our tribal government gaming operation through 
the Prairie Island Indian Community Gaming Commission. We are very 
proud of their work and their regulatory reputation.
    The Prairie Island Indian Community Gaming Commission is an 
autonomous regulatory arm of our tribal government. It is the principal 
regulator of all gaming activities at Prairie Island. The commission is 
responsible for the day-to-day oversight of gaming activities and 
ensures the business adheres to all regulatory requirements set forth 
in IGRA, the Federal MICS, our compact with the State of Minnesota and 
the Prairie Island Gaming Ordinance.
    The commission is comprised of 5 members, an executive director and 
commissioners of employee licensing, vendor licensing, compliance and 
surveillance. Commissioners are appointed officials and have no term 
limits. Commissioners are rigorously trained in every aspect of the 
gaming operation before assuming their role as commissioner and each 
commissioner is, therefore, cross-trained in the department of the 
other commissioners. Each commissioner oversees his or her respective 
department and reports concerns to the full commission for action. The 
commission has a staff of 12 employees. All Gaming Commission employees 
receive weeks of training and testing before assuming the 
responsibility of their job. Moreover, employees attend continuing 
education courses, conference and seminars as appropriate.
    The commission's obligation to protect the Gaming facility and its 
integrity is realized in two principal ways: first by controlling 
access to the facility by third parties through its employee and vendor 
licensing departments; and second by internal policing through its 
compliance and surveillance departments.
    The Commission's Employee Licensing Department has a staff of 5 
employees. These employees conduct full background checks on all 
applicants for employment at Treasure Island, which includes at a 
minimum, a full FBI background check, State and local criminal checks, 
driver's license and credit checks, and checks on past residences and 
employment. Once a full background check is completed, it is forwarded 
along with a recommendation regarding the applicant's licensing to the 
Commissioner of Employee Licensing. If an applicant or licensee is 
determined by the Commission to pose a potential threat to the 
integrity of gaining at Treasure Island, his or her license is denied 
or suspended. Applicants are entitled to a full post-deprivation due 
process hearing, including the opportunity to request reconsideration 
by the Commission en banc.
    Recently, the Employee Licensing Department converted to electronic 
fingerprinting, which has reduced the time for background checks from 
days or months to minutes. As is true with all other Departments of the 
Commission, the Employee Licensing Department is always looking to 
improve its efficiency and performance through improved technology.
    The Commission also conducts full background investigations and 
licenses casino vendors via its Vendor Licensing Department. Although 
not required. by the IGRA or its implementing regulations, the 
Commission has fulfilled this function for many years. Background 
checks for vendors are tiered based on the level of economic activity 
the vendor has with the casino. Only licensed and approved vendors can 
do business with the casino, regardless of whether a contract has been 
executed or agreed to, and a list of approved vendors is available on-
line for casino management.
    The Commission's regulation and oversight of vendors extends from 
enormous gaming vendors down to charter bus providers, who must 
demonstrate their licensure and good standing with the Minnesota 
Department of Transportation and the United States Department of 
Transportation. Vendor licensing applications are available and can be 
completed on-line on the casino's website.
    Internal monitoring of gaming activities at Treasure Island is 
accomplished by the Commissioner of Surveillance who works closely with 
the casino's Surveillance Department. In 2002, the department installed 
a state-of-the-art, all digital surveillance system valued at over $5 
million dollars, the first such system in the entire gaining industry. 
The system provides clarity of images that far exceeds any analog 
technology and allows the operators to instantly review recorded images 
while simultaneously watching on-going activity. The new system has 
proven to be an invaluable tool in monitoring the integrity of the 
business, tracking potentially illegal activity and in assisting in the 
prosecution and conviction of individuals engaged in such activity. The 
technology is so advanced that the NIGC is reviewing its MICS for 
surveillance requirements, which are still based on out-dated analog 
technology.
    The Commission's internal oversight is also fulfilled by the 
Compliance Department whose purpose is ensure that the business follows 
all Federal, state and tribal regulatory guidelines. The Department 
includes Compliance Inspectors who, are on property 24 hours a day. The 
inspectors observe day-to-day activities for complete regulatory 
compliance. If the inspectors discover any deviation, the incident is 
documented and forwarded to the Commissioner of Compliance. In turn, 
the Commissioner meets with the Department responsible to resolve the 
deviation and if necessary a citation is issued to the responsible 
department. Failure to comply with the recommendations from the 
Compliance Department will result in disciplinary action up to and 
including fines, gaming license suspension, gaming license revocation 
and even employment termination.
    The Prairie island Indian Community Gaming Commission provides a 
complete regulatory structure for the tribe's government gaming 
operation. The Commission prevents potential threats to the business' 
integrity from third parties and it internally monitors the business 
for compliance with all Federal, State, and tribal regulations.
    As has been the case for centuries before Europeans arrive here, 
the Prairie Island Indian Community takes its stewardship 
responsibilities very seriously and its current gaming regulatory 
responsibility is no exception. Our tribal government gaming operation 
is the lifeblood of our Tribal Community and helps support the 
economies of our neighbors and friends. Prairie Island's members now 
have sanitary water and sewer, good housing, paved roads, good health 
care and educational opportunities that never existed before tribal 
gaming. Moreover, we have the resources and time to revitalize our 
culture and traditions.
    The regulation and the integrity of our business are vital to our 
very survival. On every occasion we have met, and in many instances 
exceeded, all Federal and State regulatory guidelines because of their 
importance to our business as well as their importance to the Prairie 
Island Indian Community.
    We do not believe that the Indian Gaming Regulatory Act needs to be 
amended. The regulatory guidelines it includes allow tribes to self-
govern in the manner intended by this committee and the U.S. 
Government. As a proud leader in Indian country, I can assure you that 
the privilege and responsibility of governing and providing for one's 
people is something no tribe would place in jeopardy.
    Pidamaya. Thank you. I will answer any questions you may have.
                                 ______
                                 

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii

    Thank you, Mr. Chairman.
    I commend the committee for holding this hearing on the regulation 
of Indian gaming specifically to hear the views of tribes.
    Indian gaming has grown to a multi-billion dollar industry. there 
are over 200 Indian tribes that have taken advantage of this thriving 
economic opportunity.
    Unfortunately, when most people think of Indian gaming, they think 
of the wealthier tribes, which often have the benefit of an ideal 
location.
    So I welcome the opportunity today to hear from those tribes that 
rely on Indian gaming the most--those that are located in rural areas 
or face other challenges.
    Indian tribes, including the less wealthy tribes, have accepted the 
call for regulation and have developed state of the art surveillance 
systems and other mechanisms to ensure the integrity of Indian gaming.
    They have established systems to identify criminal activities 
undertaken by visitors who seek to take advantage of them and reported 
those activities to the proper authorities.
    This has resulted in much benefit to Indian tribes--both socially 
and economically.
    I look forward to listening to the testimonies of today's 
witnesses.
    Thank you Mr. Chairman for scheduling this hearing today.
                                 ______
                                 

Prepared Statement of Vivian Juan-Saunders, Chairwoman, Tohono O'odham 
                                 Nation

    Good morning Chairman McCain, Vice Chairman Dorgan and members of 
the committee and staff. My name is Vivian Juan-Saunders and I am 
chairwoman of the Tohono O'odham Nation. The Tohono O'odham Nation is a 
member of the Arizona Indian Gaming Association, an organization 
comprised of the gaming tribes in the State of Arizona. Thank you for 
the opportunity to address the committee. It is my great pleasure to 
provide you with an overview of tribal gaming regulation in the State 
of Arizona, and to share the gaming success on the Tohono O'odham. 
Nation.
    The Arizona gaming compacts work both for tribes and for the State. 
Tribes in Arizona have a long track record of working with each other, 
and with the State. Because of our new gaming compacts, our commitment 
and our process, Arizona has a system that is meeting the intent and 
directives of the Indian Gaming Regulatory Act [IGRA].
    To understand the Arizona regulatory climate, it is important to 
first understand the Arizona gaming environment. For most of the past 
century, Indians on reservations in Arizona lived in extreme poverty, 
welfare dependency, and economic despair. The situation began to 
improve after Federal legislation recognized and affirmed the right of 
Indian tribes to conduct gaming on our lands and established a 
regulatory framework for the purposes of, among other things, providing 
jobs and funding services for tribal members.
    Since 1992, Arizona law has authorized the Governor of the State to 
negotiate tribal-State compacts on the State's behalf. Since then, 21 
Indian tribes in Arizona have entered into compacts with the State. 
Sixteen have made major investments in gaming facilities on their 
tribal lands.
    The first compacts authorizing class III gaming by tribal 
governments were signed in Arizona in 1993. Since the first casino 
opened in Arizona, gaming revenues earned by Arizona tribes have been 
directed to providing for the health, welfare, education and well-being 
of tribal members. Just as the IGRA intended, Indian casinos on Arizona 
tribal lands generate vital revenues used to provide decent housing, 
clean water, better education, health care, public safety and other 
services to tens of thousands of Indians living on Arizona 
reservations. Indian casinos also provide jobs removing thousands of 
Indians off welfare and unemployment, and producing many economic 
benefits both for nearby communities and for the State as a whole.
    Regulation is a major component of this successful system. In 
Arizona, the gaming conducted by tribal governments is both limited and 
well-regulated. Arizona's gaming compacts limit the types of games that 
may be played on tribal lands, the number of gaming facilities, and the 
number of gaming devices and table games that can be installed in these 
facilities. The scope, of gaming permitted under Arizona's gaming 
compacts is based upon the size of the tribe. Tribes with more enrolled 
members are eligible to have more gaming devices. Conversely, smaller 
tribes are able to have fewer gaming devices. This regulatory structure 
enjoys the broad support of both Arizona's tribes and by Arizona's 
citizens.
    Revenues earned by Arizona Indian casinos also fund the 
comprehensive regulatory oversight system of Arizona Indian casinos. 
Not only do Arizona's tribes fund our tribal gaming regulatory offices, 
they also fund the Arizona Department of Gaming [ADOG]--the State 
agency that oversees gaming conducted by tribal governments on Indian 
lands.
    Today, 567 people are engaged statewide in regulating gaming, 
including 105 employees with the Arizona Department of Gaming employees 
and 462 employees in tribal, regulatory offices. Collectively, these 
regulatory offices spend more than $35 million per year regulating 
Indian gaming in Arizona.
    In November 2002, Arizona voters passed an initiative sponsored by 
17 of Arizona's Indian tribes--proposition 202. Proposition 202 allows 
tribes that are unable to profitably operate gaming on their lands or 
that have chosen not to game to secure benefits of gaming by 
transferring their rights to operate gaming devices to other tribes. 
Intra-tribal transfers are enabling tribes on remote reservations like 
the Hualapai, Havasupai, San Juan Southern Paiute, Zuni, and Kaibab-
Paiute for the first time to benefit from gaming.
    Proposition 202 also provides for a portion of gaming revenues to 
be shared with the State of Arizona and local governments calculated on 
a sliding scale of 1 percent to 8 percent. Eighty-eight percent of 
these shared revenues are deposited into the Arizona Benefits Fund to 
pay regulatory expenses incurred by the Arizona Department of Gaming, 
to combat problem gambling, reduce classroom sizes, increase teacher 
salaries, support dropout prevention programs and instructional 
improvement programs, reimburse hospitals for unrecovered costs for 
trauma and emergency services, and fund wildlife conservation and 
statewide tourism promotion. The remaining twelve percent of these 
revenues are directed to city, town, and county governments, either 
through direct grants by tribes or through the Local Communities Fund 
of the State's Commerce and Economic Development Commission.
    A statewide study of Indian Gaming in Arizona released by the Udall 
Center for Studies in Public Policy [Stephen Cornell: An Analysis of 
the Economic Impacts of Indian Gaming in the State of Arizona] 
estimated the economic impact of tribal governmental gaming in the 
State of Arizona. The report concluded that Indian gaming in Arizona 
indirectly generated $468 million in economic activity during 2000.
    The Udall report noted that many Indian employees formerly were 
welfare recipients. Although statistical data is not available on the 
actual number of former welfare workers now employed in Indian gaining, 
the study concluded that, in counties where casinos operate, the 
presence of casinos reduced welfare rolls.
    Tribal gaming operations in Arizona currently employ approximately 
10,000 people--a figure comparable in size to the number employed in 
Arizona's mining sector. Approximately 4,300 Indians are employed in 
tribal gaining operations, and several hundred more are employed as 
tribal gaming regulators. On remote reservations, Indian casinos are 
often the largest employer in the region, significantly reducing the 
economic burden for Indian and non-Indian residents by providing much 
needed jobs. There, where few other options for employment exist, the 
number of tribal employees working in Indian gaming can run as high as 
84 percent. In addition to the direct benefits from employment, it is 
important to remember that these employees pay Federal income and 
payroll taxes, most pay state income taxes, and all spend their 
earnings in the State, creating a positive economic impact for the 
State.
    The IGRA confirmed the right of tribal governments to game on their 
lands, but it also established a regulatory structure for class III 
gaming, one that is shared by the State and tribes with oversight by 
the National Indian Gaming Commission [NIGC]. Arizona's gaming compacts 
provide for tribes to be the primary regulators of Indian gaming in the 
State, but the compacts also provide for a State regulatory agency with 
concurrent licensing authority and substantial oversight rights. The 
system has worked because sovereign tribal governments and the State 
government worked together to ensure that Indian gaming is well-
regulated and achieves what Congress intended in passing the IGRA.
    The Arizona Legislature established the Arizona Department of 
Gaining in 1995 to monitor Indian gaming operations on behalf of the 
State of Arizona. Today, the Arizona Department of Gaming has more than 
105 full-time employees who perform a variety of functions to meet the 
State's responsibilities under the gaming compacts. These employees 
carryout regulatory activities such as licensing many casino employees 
and making licensing recommendations on others, licensing all gaming 
vendors and large non-gaming vendors, inspecting gaming devices, 
reviewing the rules for poker and blackjack games, and monitoring 
tribal compliance with compact requirements, including detailed 
internal control standards.
    In 1999, the State of Arizona's Auditor General evaluated the, 
State's effectiveness in overseeing gaming operations run by tribal 
governments in Arizona. The Auditor General's report concluded: ``the 
[Arizona] Department's [of Gaming] extensive oversight activities are 
well designed for ensuring the integrity of class III gaming 
operations.'' The Auditor General noted that the Department performs 
pre-operation inspections at every casino, randomly inspects 50 gaming 
devices at each casino every 4 weeks, conducts compact compliance 
reviews of each casino every 18 months, and maintains an ongoing 
presence through its investigators who visit casinos on a weekly basis 
to inspect operations and investigate possible compact violations. The 
Auditor General also concluded that the Department's ``extensive and 
intensive activities are generally well designed and are accepted 
practices among gaming regulators.'' The Auditor General concluded that 
Arizona's regulatory approach was ``among the most extensive 
nationally,'' noting that the Arizona Department of Gaming has more 
staff monitoring Indian gaming than any other State, maintains a larger 
budget than States with comparable numbers of casinos, and conducts its 
activities more frequently than most other States.
    The Tohono O'odham Nation in Southern Arizona encompasses more than 
2.8 million acres of vast desert land, and is home to more than 28,000 
enrolled members. Our lands also extend into Sonora, Mexico, and we 
have the unique distinction and challenges created by the 75 miles of 
international border shared with Mexico, the largest of any tribe. The 
Tohono O'odham Nation, is the second largest Indian Nation in land 
base, next to the Navajo Nation, and is roughly equal in size to the 
State of Connecticut.
    The Tohono O'odham Nation's gaming operations generate revenues 
that fund more than one-half of our budget, providing vital and 
essential services to all our members. Our tribal gaming revenues 
directly fund essential governmental services such as education, public 
safety, housing, health care, community, and economic development, as 
well as many basic operations of the Nation and our 11 political 
subdivisions [which are known as Districts].
    The Nation is the first line of defense for the United States, 
protecting 75 miles of International border between the United States 
and Mexico. Since October 2003, the Nation has seized more than 180,000 
pounds of illegal narcotics and, when combining Federal and tribal law 
enforcement efforts, more than 300,000 pounds of illegal narcotics were 
seized on the Nation's lands in 2004. In addition, 27,130 undocumented 
immigrants were detained and arrested crossing the border on the 
Nation's reservation last year. Every single one of our officers spends 
60 percent of his or her day on border-related law enforcement. This 
benefit for the United States came at a great cost to the Nation, as 
the Nation spends in excess of $3 million annually on border law 
enforcement alone. To date, the Nation has spent more than $10 million 
dollars in tribal resources on Homeland Security issues, which is 
clearly a Federal responsibility. Over $2 million of the Nation's 
Indian health care funding allocation is lost to emergency health care 
treatment of undocumented immigrants taken to our health clinic.
    Revenues from the Nation's gaming operations fund 66 percent of the 
Nation's budget for police protection, supporting over 70 officers, 30 
rangers, 109 support staff, 40 vehicles, and 4 substations. However, 
the police protection provided cannot address the vast border related 
issues faced by the Nation.
    Our gaming revenues have had a marked impact on improving higher 
education opportunities for our tribal members to obtain college 
educations. A college education formerly was beyond the reach of most 
of our students. Our gaming revenues have allowed the Nation to fund 
over $30 million in scholarships, enabling more than 2,000 Tohono 
O'odham students to attend college. Our gaming revenues also have made 
it possible for the Nation to start our own community college, the 
Tohono O'odham Community College, which now is accredited by the Higher 
Learning Commission of the North Central Association of Colleges and 
Schools. In addition to supporting higher education, our gaming 
revenues also have entirely funded the Nation's budget for Early 
Childhood and Head Start facilities, as well as the costs of starting a 
radio station, KOHN, which broadcasts in O'odham in an effort to 
preserve our native language.
    Our gaming revenues have also allowed the Nation to fund 
initiatives to improve the health of our people, who are plagued with 
diabetes and related medical conditions. Although portions of the 
Nation's lands are close to metropolitan areas with numerous health 
care options, the vast majority of our members live in remote, rural 
areas far from health care providers. Our gaming revenues fund the 
entire $11.2 million budget for a health care clinic on the rural West 
side of the Nation, and were used to construct a $2.5 million kidney 
dialysis center in a location far more convenient for those who suffer 
from kidney failure. Our gaming revenues also have funded the entire 
$14 million budget for the construction of the first nursing home on 
the Nation's lands, providing health care services to our elderly 
without them having to move to Tucson, far from their families. 
Additionally, our gaming revenues are funding 11 youth recreation 
centers to encourage our youth to engage in healthy lifestyles.
    In an effort to diversify our economy, the Nation also has used 
gaming revenues to foster economic development on the Nation. The 
Nation has established a substantial fund to provide grants to small 
business ventures. To date, more than 150 of our tribal members have 
received grants to help them establish and run private businesses.
    This is just what the Nation has accomplished so far. In the 
future, the Nation plans to expand our police, fire, and EMT services, 
build a solid waste disposal way station, and continue work on 
addressing the sizable problem of substandard housing and poor or 
inadequate infrastructure on the Nation's lands.
    With the State taking an active role in the oversight of Indian 
gaming, it is important to recognize that the State's activities are 
secondary to those of the primary gaming regulators in the State--the 
tribes. Arizona's gaming compacts allocate the primary responsibility 
for the regulation of gaming to the tribes. The tribal gaming 
regulatory offices in Arizona license all casino employees, license all 
gaming vendors and large non-gaming vendors, inspect gaming devices, 
approve the rules for poker and blackjack games, set the detailed 
internal control standards that govern casino operations, and monitor 
compliance with the IGRA, compact requirements, and internal control 
standards. In addition, Arizona's gaming compacts require that a tribal 
gaming inspector be physically present in each gaming facility at all 
times during operating hours.
    Arizona's Indian tribes also have embraced technology as a tool for 
regulating gaming. Since 1993, Arizona's gaming compacts have required 
all gaming devices to be hooked up to and monitored by a computerized 
accounting system, which provides much greater control than a manual 
system. Soon, Arizona's larger gaining facilities will provide limited 
access to those computerized accounting systems to tribal and State 
regulators, which will allow for easier access to information, which 
today is available only on paper.
    The Arizona Department of Gaming, in consultation with many of 
Arizona's gaming tribes, has recently completed negotiations over the 
terms of a memorandum of understanding that contemplates the Department 
of Gaming funding a position at the U.S. Attorney's office. The Special 
U.S. Attorney position funded under this agreement will solely address 
crimes committed in tribal gaming facilities. This agreement assures 
that the U.S. Attorneys' office has adequate resources to prosecute 
crimes committed in these facilities.
    There is a misperception that serious crime exists at Indian 
casinos that is going unpunished. What has been found is that typically 
most crimes occurring at tribal casinos are minor property crimes 
against casinos. Regardless of the nature of the crime, Arizona is 
working to find unique solutions to address all challenges and ensure 
appropriate action is taken for any criminal action found. Clearly, in 
Arizona, crimes in gaming country are not being ignored.
    The Arizona Department of Gaming and many of Arizona's gaming 
tribes also have been engaged for several years in an on-going effort 
to update and improve the regulatory requirements for Indian gaming in 
Arizona. We have just completed several years of negotiations that will 
result in new security and surveillance regulations for Arizona 
casinos. Similar discussions will continue in the future as we address 
new topics of concern for tribes and the State.
    A few short years of gaming revenues cannot reverse the effects of 
more than a century of poverty, despair, and inadequate education, but 
gaming conducted by tribal governments is contributing to significant 
improvements on many of Arizona's Indian reservations. If the 
challenges remain severe, the successes are sweet.
    As this committee considers potential changes to the IGRA, please 
remember that the regulatory framework in Arizona is working well. 
Arizona's gaming tribes take our role as gaming regulators seriously, 
as does the State in its oversight role. Stringent and often demanding, 
this system, which has required substantial on-going cooperation by 
tribal governments and the State of Arizona, has provided comprehensive 
and highly effective regulation of Indian gaming operations. Additional 
regulation at the Federal level will only duplicate current tribal and 
State efforts in Arizona. We invite the members of this committee to 
visit Arizona and see how Indian gaming is working.
    Considering that class III Indian gaming largely hinges on the 
agreements negotiated with the States, it makes the most sense that the 
majority of the regulation be left to the States and tribes. The 
appropriate role for the NIGC would be providing technical assistance 
to the States to strengthen the tribal State regulatory relations. It 
is not appropriate or functional to add a third layer of regulators if 
the basic tribal State regulation is soundly established and effective.
    Finally, in light of the significant tribal resources already 
devoted to the regulation of Indian gaming in Arizona, and the limited 
role the NIGC plays in the regulation of Indian gaining in Arizona, 
Arizona's Indian tribes do not believe that we should be forced to 
shoulder the cost of any additional funding that the National Indian 
Gaming Commission needs to carry out its regulatory responsibilities in 
other States.
    Mr. Chairman, members of the committee and staff, thank you for the 
opportunity to share my perspective on this very important issue. I 
would be happy to answer any questions you may have.
                                 ______
                                 

   Prepared Statement of Dallas Massey Sr., Chairman, White Mountain 
                              Apache Tribe

    Thank you for inviting me to be part of these proceedings. My name 
is Dallas Massey Sr., chairman, White Mountain Apache Tribe.
    I am pleased to be able to add my remarks to those of Chairwoman 
Juan-Sanders and help you learn more about our system in Arizona. As 
the chairwoman explained, gaming in Arizona is limited and regulated 
and is working for all of us.
    The White Mountain Apache Tribe is located in east central Arizona 
on the Fort Apache Indian Reservation. Our land covers more than 1.6 
million acres. The tribe has over 12,000 members located on nine major 
reservation communities. Within our land base, our members experience 
serious poverty and unemployment. Our median family income is just 
$9,200 a year. Our casino provides not only an important source of 
revenue, but it also is a major source of employment for our people.
    For years, before gaming, my tribe struggled to move forward 
without adequate schools or housing, health care, roads, telephone 
systems, water, and police and fire protection. While gaming revenues 
are helping us make strides, our needs are so overwhelming that my 
people often go without food, electricity, employment and shelter. Our 
average income is far below the Federal poverty level and our 
unemployment rate is 60 percent.
    We have many natural resources on our land--including timber. But 
we do not see our land as a resource to exploit. We manage our land 
with traditional techniques out of respect for the Creator and 
creation. At the same time, we understand the need to develop extensive 
infrastructure so we can attract ecologically compatible industry to 
selected areas of our reservation. These competing needs and 
commitments make it difficult for us to finance the most basic services 
for our people.
    In the summer of 2002, the White Mountain Apache Tribe suffered a 
horrible loss when the Rodeo-Chedeski fire swept through our 
reservation. This was not only a physical but also an emotional loss 
because we feel such strong cultural ties to our land. To fight the 
blaze, we mobilized nearly 400 men and women. Still, the fire charred 
276,000 acres of the Fort Apache Reservation. Our tribe has been 
working hard to salvage the forest and our economy, but because of the 
fire, the land scarred by the fire cannot be logged for 100 to 150 
years. For the next 30 years, we will be cutting one-half of what the 
tribe planned to harvest. Loss of income is exacerbated by job losses. 
Even with the mill fully operating, unemployment on our reservation 
hovered at 60 percent. Without the mill operating, the casino becomes 
an even more critical source for employment.
    With revenues from gaming, the White Mountain tribal government is 
funding necessities like a daycare facility. We are making improvements 
to our schools, health care and housing. But building projects are 
costly and the needs, like our land base, are enormous.
    Yet despite our daily struggle with severe revenue shortfalls, our 
tribe, like other Arizona tribes, is sharing a portion of our gaming 
revenues with the people of Arizona. In 2004, Arizona gaming tribes 
contributed nearly $38 million in revenues sharing payments to the 
State. Revenues supported education, emergency health care, wildlife 
conservation and tourism throughout Arizona. Shared revenues also 
provided treatment and support to help problem gamblers. In addition, 
and as described in more detail below, part of this $38 million funded 
the Arizona Department of Gaming's regulation of Indian gaming in the 
State. As Chairwoman Saunders explained, our revenue sharing system is 
unique. Because our compact ensures that tribes with casinos near urban 
locations pay the lion's share of revenue sharing, smaller, more rural 
tribes, like mine, are not unfairly burdened.
    In 2004, 21 tribes have compacts and 15 have gaming facilities, 
with 11,831 slot machines and 424 table games. To regulate the 
industry, Arizona tribes and the State of Arizona spend more than $35 
million annually in oversight. In total, the State has 567 regulatory 
employees, a number that is exclusive of NIGC staff. This equates to 
one regulatory employee for every 21 games. In comparison, Atlantic 
City, which has 34,225 games in play, has one regulatory employee for 
every 95 games; and Nevada, which has 211,760 games in play, has one 
regulatory employee for every 492 games. Arizona spends roughly $3,000 
per year per game for regulation, while Atlantic City, with an industry 
three times the size, spends $672 per game per year and Nevada, with 
nearly twenty .times the games, spends $118 per game per year.
    How did Arizona develop such a system?
    Although tribes in Arizona have different backgrounds, cultures and 
competing interests, they united to agree upon a common policy for 
Indian gaming in Arizona. They gave up their parochial interests, which 
was not an easy decision or an easy process. Today tribes continue to 
be committed and dedicate tremendous resources to the regulation of 
Indian gaming. Tribal governments are dedicated to building and 
maintaining strong regulatory systems because our sovereign authority, 
government operations and resources are at stake.
    When proposition 202 was passed by Arizona voters in 2002, it 
contained several innovations that, at the time, represented some of 
the best practices from around the country. For example, it details a 
progressive approach to revenue sharing. In the Arizona model, the more 
you make, the more you pay. Agreement on revenue-sharing was not an 
easy decision for tribal leaders to reach. Establishing a sliding scale 
from 1 percent to 8 percent made this easier to accept. Arizona tribes 
provide 12 percent of the State-shared revenue to local cities and 
towns, or through them, to qualified non-profits. In Arizona, more than 
90 percent of the revenue sharing is paid by the large urban tribes who 
make the most revenues.
    Another innovation is that the tribal-State gaming compacts only 
allow Arizona tribes to increase the number of slot machines they 
operate by leasing machine rights from other tribes that are not using 
their gaming rights. These arrangements are done on a tribal 
government-to-tribal government basis. For example, the Salt River 
Pima-Maricopa Indian Community contracted with the Havasupai Tribe 
which is located at the bottom of the Grand Canyon and the Hualapai 
Tribe in northeast Arizona in Peach Springs to lease their machine 
rights. For the Havasupai, these revenues more than doubled the tribe's 
annual budget.
    And the Arizona model protects our exclusivity. Two so-called 
``poison pills'' keep slot machine gaming and other potential gaming 
limited to the compacts.
    Proposition 202 provided for additional regulation over Indian 
gaming by the Arizona Department of Gaming. Arizona gaming tribes 
contributed $8 million to the Arizona Department of Gaming [ADOG] in 
2004. The tribal contribution nearly fully funds ADOG, since its total 
budget is almost $10 million, ADOG receives no State general funding. 
This increase in funding has enabled ADOG to grow from 75 full-time 
employees in 2003, to 105 full-time employees in 2004. ADOG receives 
additional funding from fees paid by gaming vendors and gaming 
employees for their State certification.
    In addition to being licensed by the tribes, gaming vendors and 
gaming employees must be licensed by ADOG. That process includes 
background checks for suitability. ADOG also inspects Indian gaming 
facilities to review gaming transactions, the integrity of games, and 
vendor payments. Clearly, Indian gaming in Arizona is a highly 
regulated industry. In our industry, nothing is left to chance.
    Our system is limited and regulated and it works. From our 
experience our model interprets the letter and the intent of IGRA. It 
generates revenues for tribes to encourage self-sufficiency and 
recognizes that tribal lands present tribes with different 
opportunities.
    Therefore, we would like to be on record to remind the committee 
that there are financial impacts and hardships to tribes when fees are 
raised. Arizona tribes are opposed to a fee system for NIGC that would 
create unfair burdens for those tribes least able, to pay.
    Arizona tribes also believe that revenue sharing should be capped 
to ensure that more money is generated for tribal needs and regulation 
rather than using revenues from tribal governmental gaming to offset 
State deficits. Senator McCain, when you drafted IGRA, you said no 
authority could tax Indian gaming revenues. Tribal governmental gaming 
was instituted to help tribes deliver essential government services to 
their members, not to provide--State governments with a way to meet 
budget shortfalls.
    Arizona tribes believe that tribal governments must retain the 
primary responsibility for regulating tribally owned and operated 
gaming operations. Fifteen years of Federal policy under the Indian 
Gaming Regulatory Act have created a highly developed, well funded, and 
extensive State-tribal regulatory system that should be supported by 
the U.S. Congress and not supplanted with wasteful or duplicative 
Federal regulations. The National Indian Gaming Commission's authority 
over class III gaming should be supplemental and deferential to class 
III regulation under negotiated tribal-State gaming compacts.
    Arizona tribes already fully fund an adequate State-tribal 
regulatory system and should not be forced to pay for increases in 
National Indian Gaming Commission fees. Furthermore, any increase in 
the National Indian Gaming Commission's funding should be based on 
specific budget justifications submitted to the Appropriations 
Committee and not based on automatic funding increases.
    Thank you for giving me the opportunity today to represent the 
White Mountain Apache Tribe. On behalf of Arizona tribes, we invite 
this committee to come to Arizona and see our system working.

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