[Senate Hearing 112-237]
[From the U.S. Government Publishing Office]
S. Hrg. 112-237
ENFORCING THE INDIAN GAMING REGULATORY ACT: THE ROLE OF THE NATIONAL
INDIAN GAMING COMMISSION AND TRIBES AS
REGULATORS
=======================================================================
HEARING
before the
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
JULY 28, 2011
__________
Printed for the use of the Committee on Indian Affairs
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COMMITTEE ON INDIAN AFFAIRS
DANIEL K. AKAKA, Hawaii, Chairman
JOHN BARRASSO, Wyoming, Vice Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
KENT CONRAD, North Dakota LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN HOEVEN, North Dakota
MARIA CANTWELL, Washington MIKE CRAPO, Idaho
JON TESTER, Montana MIKE JOHANNS, Nebraska
TOM UDALL, New Mexico
AL FRANKEN, Minnesota
Loretta A. Tuell, Majority Staff Director and Chief Counsel
David A. Mullon Jr., Minority Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on July 28, 2011.................................... 1
Statement of Senator Akaka....................................... 1
Statement of Senator Barrasso.................................... 2
Statement of Senator Hoeven...................................... 45
Statement of Senator McCain...................................... 12
Statement of Senator Udall....................................... 2
Prepared statement........................................... 2
Witnesses
Hummingbird, Jamie, Chairman, National Tribal Gaming
Commissioners/Regulators....................................... 22
Prepared statement........................................... 24
Luger, J. Kurt, Executive Director, Great Plains Indian Gaming
Association.................................................... 32
Prepared statement........................................... 35
Morago, Sheila, Executive Director, Oklahoma Indian Gaming
Association.................................................... 36
Prepared statement........................................... 38
Meskill, John, Director, Mohegan Tribal Gaming Commission........ 39
Prepared statement........................................... 41
Stevens, Jr., Ernest L., Chairman, National Indian Gaming
Association; accompanied by Mark Van Norman, Executive Director 15
Prepared statement........................................... 17
Stevens, Hon. Tracie, Chairwoman, National Indian Gaming
Commission..................................................... 3
Prepared statement........................................... 5
Appendix
Monteau, Harold A., Attorney, Albuquerque, New Mexico, prepared
statement...................................................... 51
Response to written questions submitted by Hon. John Barrasso to:
John Meskill................................................. 54
Sheila Morago................................................ 55
ENFORCING THE INDIAN GAMING
REGULATORY ACT: THE ROLE OF THE
NATIONAL INDIAN GAMING COMMISSION
AND TRIBES AS REGULATORS
----------
THURSDAY, JULY 28, 2011
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:45 p.m. in room
628, Dirksen Senate Office Building, Hon. Daniel K. Akaka,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. DANIEL K. AKAKA,
U.S. SENATOR FROM HAWAII
The Chairman. The Committee will come to order.
Aloha and welcome to the Committee's oversight hearing.
This hearing is on enforcing the Indian Gaming Regulatory
Act: The Role of the National Indian Gaming Commission and
Tribes as Regulators.
When the Indian Gaming Regulatory Act was passed by
Congress in 1988, Indian gaming was a $100 million industry.
Today, it is a $26 billion industry and there are 236 Tribes
operating 422 gaming facilities in 28 States.
It is important that such a growth industry is well
regulated for Tribal Governments, patrons and the beneficiaries
of the gaming revenues, the Tribal members. The Tribes, as the
primary beneficiaries of Indian gaming, have the greatest
interest in making sure their operations are well run.
Tribal Governments use these gaming revenues to fund
essential government services such as education, health care,
cultural programs and Tribal infrastructure. But the Indian
Gaming Regulatory Act also created a role for States and the
Federal Government, thereby setting up a three-tiered
regulatory scheme for Indian gaming.
Today, there are approximately 2,800 regulators at the
Tribal level; 500 at the State level, and 100 at the National
Indian Gaming Commission. Tribal Governments spend
approximately $250 million each year to fund their gaming
commissions. The National Indian Gaming Commission is funded at
$16 million annually.
At today's hearing, we will hear from Tracie Stevens, the
Chair of the National Indian Gaming Commission. We are looking
forward to learning about her first year in office, the
Commission's activities during the past year, and their plans
going forward.
We will also hear from regulators and Tribal gaming
organizations who are on the ground every day protecting the
integrity of Indian gaming.
I would like to remind our witnesses that they have five
minutes to present their oral testimony, and their full written
testimony will be entered into the record. The hearing record
will also remain open for two weeks so any other interested
parties are welcome to submit written testimony for the record.
At this time, I would like to ask Senator Barrasso for any
opening statement he may have.
STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Thank you very much, Mr. Chairman. I
appreciate your holding the hearing, because as you have looked
into the statistics, I agree. I found the same things.
According to the National Indian Gaming Commission, gross
revenues for Indian gaming in 2010 was over $26 billion. That
is a lot of money and the activities that generate that kind of
money must be regulated effectively.
Obviously, gaming is a cash business and keeping the
business clean is critical. No one, be it contractors or
vendors or players or employees, should illegally benefit at
the expense of the Tribe or the gaming public.
According to the National Indian Gaming Commission 2009
Compliance Report, most Tribes did comply with the key
regulatory requirements. The 2010 Compliance Report is not yet
available to provide us with the most current information.
However, these reports do not assess how theft and crime at
Indian gaming facilities have been addressed. Also, some feel
that the decision in the Colorado River Indian Tribes case has
unduly limited the oversight role of the National Indian Gaming
Commission.
Of course, many Tribes disagree with that view, so
hopefully the Committee is going to be able to hear from the
Commission on that issue, as well as from the Tribal witnesses.
So, again, thank you for holding the hearing, Mr. Chairman.
The Chairman. Thank you very much.
Senator Udall, any comments?
STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM NEW MEXICO
Senator Udall. I would put my statement in the record so we
can proceed to the witnesses. Thank you very much, Mr.
Chairman.
[The prepared statement of Senator Udall follows:]
Prepared Statement of Hon. Tom Udall, U.S. Senator from New Mexico
The regulation of Indian Gaming is an important and difficult
issue. It is important that Tribal sovereignty is respected and
maintained while the existing laws and regulations are implemented.
I look forward to hearing from the Chair of the National Indian
Gaming Commission. I know Ms. Stevens has been in this position for
about a year now, and that this is the first time is several years that
there has been a fully appointed commission.
I am encouraged to hear that Chairwoman Stevens' focus on
conducting meaningful government-to-government consultation with Tribes
has continued throughout the last year since her appointment. I look
forward to hearing more about how that consultation is going.
There are many issues relating to gaming that Tribes and the NIGC
have been grappling with over the past years. I look forward to hearing
the views of the panel on the future of Indian Gaming regulation, and
what is needed in this area.
The Chairman. Thank you very much. It will be made part of
the record.
I would like to now welcome our first witness. Ms. Tracie
Stevens is the Chairwoman of the National Indian Gaming
Commission.
Ms. Stevens, please proceed with your remarks.
STATEMENT OF HON. TRACIE STEVENS, CHAIRWOMAN, NATIONAL INDIAN
GAMING COMMISSION
Ms. Stevens. Thank you, Chairman Akaka, Vice Chairman
Barrasso and Members of the Committee for inviting me to
testify here today.
My name is Tracie Stevens and I am a member of the Tulalip
Tribe. It is an honor to appear before you in my capacity as
Chairwoman of the National Indian Gaming Commission. With me
today is Commissioner Dan Little. I would also like to take a
moment to recognize my Vice Chairman from Tulalip Tribe, Glen
Gobin, who is also in the audience.
Today, I will provide a brief overview of the status of
Tribal gaming and an update on the Commission's progress with
our four priorities: consultation and relationship-building;
technical assistance and training; a review of the Commission's
regulations; and a review of agency operations.
Currently, 240 federally-recognized Tribes operate a total
of 422 Tribal gaming facilities in 28 States. Tribal growth
gaming revenues for 2010 essentially mirror 2009 revenues of
$26.5 billion. Approximately half of Tribal gaming operations
generate annual gross gaming revenues of $25 million or less.
Even modest revenues enable Tribal governments to provide much-
needed services to Tribal members and create jobs in
communities otherwise suffering from high unemployment.
IGRA establishes a framework under which Tribes, States and
the Federal Government regulate Indian gaming. Within the
Federal Government, multiple agencies take part in ensuring the
integrity of the industry, including DOJ, FBI, Treasury's
FinCEN, and BIA Law Enforcement. NIGC works in cooperation with
these law enforcement agencies to share information that may
potentially indicate a criminal violation of law.
In addition to NIGC, Tribal governments collectively employ
approximately 5,900 Tribal gaming regulators and States
collectively employ approximately 640 people to regulate Tribal
gaming. Thus, NIGC, Tribes and States combine to employ over
6,600 people to regulate Indian gaming.
I would now like to turn to our efforts on consultation and
relationship-building. We are in the final stages of revising
our Tribal consultation policy. It is through meaningful
government-to-government consultation that the NIGC will be
able to make well informed, fully considered decisions
concerning regulations and policies.
As part of our relationship-building, we work closely with
the FBI, DOJ, and U.S. Attorneys' Office when we receive
information indicating a violation of criminal law. This
relationship-building strengthens the collective ability of
Tribes, States and the Federal Government to protect Indian
gaming.
The Commission believes a strong, well-targeted technical
assistance and training program can preempt the need for
additional regulations or for enforcement actions, can reduce
compliance issues, and can enhance operations, performance and
integrity.
Since June 2010, we have provided 831 instructional hours
of training to over 2,800 Tribal leaders, Tribal regulators and
casino operations. We are also reviewing our training
catalogues with input from Tribes on how best to tailor NIGC
training to meet the needs of Tribal regulators and the
industry.
Training and technical assistance will be an evolving
process which will be aligned with Tribal needs, as well as to
ensure the integrity of the industry.
The Commission is also in the process of reviewing its
current regulations, examining their effectiveness, and seeking
input from Tribes, and also the public in an effort to identify
areas of improvement and any needed changes. We are proceeding
in a manner in which the Commission strives to circulate
preliminary discussion drafts for public comment before
proceeding with the rulemaking process.
As part of our regulatory review, we are examining Class
III minimum internal control standards, or otherwise known as
MICS in light of the CRIT decision. All Tribes have adopted
internal controls. Tribes and the public universally support
Class III MICS. We have heard a variety of suggested approaches
to the CRIT decision as discussed more fully in my written
testimony.
Let me be clear, however, that the Commission will solve
this issue in a manner that ensures the integrity of the
industry and that Tribes receive the revenues generated by
Tribal facilities.
As part of our regulatory review, we have held 11
consultations throughout the Country, including a consultation
that is being held right now at the Department of Interior and
these transcripts from this consultation and comments are
posted on our website as they become available.
We are also working to ensure that the NIGC in the 21st
century is the smartest, more transparent and better equipped
agency that continues to be responsive and adapted to the needs
of the Tribal gaming industry. We have partnered with OPM to
evaluate our operations and identify areas of improvement.
The Commission is committed to focusing resources and
maximizing cooperation and coordination with Tribal, State and
Federal agencies.
In conclusion, I want to stress my commitment to enforcing
the law. While the overwhelming majority of Tribal facilities
are model businesses and our goal is to keep Tribes in
compliance, make no mistake: serious violations have serious
consequences. When a third party unlawfully managed a facility
and took unconscionable amounts of revenue that should be going
to develop Tribal health and welfare, I issued a violation and
ordered them to pay those Tribal funds back.
When Tribes operate facilities in disregard of the law, I
work with State and Federal authorities to shut them down. I do
not hesitate to refer criminal matters to the FBI and the U.S.
Attorneys' offices and I will continue to do so to ensure that
Tribes are the primary beneficiaries of Indian gaming.
That concludes my testimony and I am happy to answer any
questions you may have.
Thank you.
[The prepared statement of Ms. Stevens follows:]
Prepared Statement of Hon. Tracie Stevens, Chairwoman, National Indian
Gaming Commission
The Chairman. Thank you very much for your testimony.
Chairwoman Stevens, your Commission has placed an emphasis
on training and technical assistance for Tribal regulators.
Have you noticed a decrease in enforcement actions as a result
of increased training for regulators?
Ms. Stevens. Thank you, Chairman Akaka, for your question.
My sense is that it is, although this particular initiative
is a long-term initiative and we have been in office for a year
and we are, like I said, revamping our curriculum. Technical
assistance and training is a statutory requirement for the
NIGC, but the Commission firmly believes that technical
assistance and training help Tribes stay in compliance. Our
basic principle is what we call ACE: assistance, compliance and
enforcement, and in that order. And technical assistance and
training is an essential component of that principle.
We have held 92 trainings since June of last year, with
2,800 attendees, 830 training hours, and over 200 Tribes
represented.
Now, I do want to clarify. We see training and technical
assistance a little differently. Training we have these
classroom-style trainings that we plan. Sometimes we do this
for individuals and sometimes we do this for regional Tribes so
that we can meet with multiple Tribes and conduct training.
Technical assistance, on the other hand, is unique to the
situation to the Tribes, and it is our field staff, which I
have to commend in our Enforcement Division and our Audit
Division and our General Counsel's Office, who work with Tribes
on a day-to- day basis. Every day, they are talking to Tribes,
providing assistance and guidance to keep them in compliance.
And that is ongoing.
As I said, I think my sense is that it is helping. We do
talk to our enforcement staff on a regular basis. They can keep
us informed and they are in most cases able to keep Tribes in
compliance and keep enforcement actions down and teach Tribes
how to stay in compliance.
The Chairman. Thank you.
After you became Chair of NIGC, you committed to
undertaking a comprehensive review of the Colorado River
decision and determining whether legislative action is
necessary. Where are you on that review process? And do you
have any recommendations for whether legislation is necessary?
Ms. Stevens. Thank you, Chairman Akaka, for your question.
I do recall that conversation last year, and we set out
immediately on looking at what I call the post-CRIT world. The
decision was made five years ago and I wanted to know more
about what the landscape was for Class III minimum internal
control standards, and directed the staff at the NIGC to start
researching that particular topic.
Our preliminary research shows that there are 24 States
that have Class III gaming compacts; 15 of those 24 States
require the Tribes to adopt comprehensive minimum internal
control standards that are as stringent as the NIGC's. That is
83 percent of the gross gaming revenue.
An additional nine Tribes' compacts require Tribes to adopt
specific controls or to develop their own internal controls. As
I said in my opening statement and in my written testimony as
well, is that all Tribes have minimum internal control
standards.
As part of this review, we have included the particular
topic in our regulatory review that we are undergoing that I
detailed in my written testimony, and are discussing this issue
with Tribes to get a better understanding of where they are in
their particular region or their State or with their compacts,
and how this impacts them.
In terms of a recommendation, we are still in the process
of reviewing what Tribes have to say because there have been a
number of different ways that this could affect Tribes. As I
said, if 24 States require this in compacts, I am a little
concerned about upsetting an apple cart there. But as I
mentioned in my written testimony, this may be a hybrid
approach that we may have to take in light of the decision.
We have heard from Tribes, some suggestions from Tribes
that the NIGC MICS are left in place or that we provide
guidance. We have also heard suggestions that this be addressed
in Tribal- State compacts and others suggest that NIGC MICS may
be adopted into Tribal ordinances.
As I said, we are still in the process of addressing this
administratively and we want to solve this particular matter in
a way that is respectful to all three sovereign governments:
Tribes, States and the Federal Government.
The Chairman. So from what you have just said, you look at
doing it administratively.
Ms. Stevens. We are doing that right now. I understand
there is not any legislation, and without language, I couldn't
comment in the absence of language. But I am trying to address
this administratively and be respectful to all the agreements
that are out there with the States and with the Tribes.
The Chairman. Thank you very much.
Now, I would like to call on Senator McCain for your
questions.
STATEMENT OF HON. JOHN McCAIN,
U.S. SENATOR FROM ARIZONA
Senator McCain. Well, thank you, Mr. Chairman.
The question that I asked you I guess it was seven months
ago, do you believe that there is a need for a legislative fix
to the CRIT decision as it is known as. I ask you that question
again.
Ms. Stevens. Thank you, Senator, for your question.
Like I mentioned to Chairman Akaka, at this time I would be
remiss in trying to respond to language that I don't see.
Senator McCain. I don't understand that logic. There is a
problem as a result of the CRIT decision. That is the ability
or lack of capability of the Indian Gaming Commission to have
access to records and do the investigative work that was
envisioned when the legislation was passed. Being the coauthor
of that legislation, I am very intimately familiar with it.
Now, I ask you the question again seven months later. Is
there a need for a legislative addressing of the impact of the
CRIT decision? Now, how that is written would be the second
step, I might say. The first step is, is there a need for a
legislative result, seven months later. I asked that question
in the beginning. You said you would consult and find out and
give me an answer. You are not giving me an answer today.
Ms. Stevens. Well, as I said in my response to Chairman
Akaka, we are still in the process of discussing this with
Tribes.
Senator McCain. I see. And how much longer will you be in
this process of discussing?
Ms. Stevens. Right now, we are scheduled for the next six
months.
Senator McCain. So it will be 13 months from the time that
you were made the chairman before you are able to reach a
conclusion on this issue. That is really remarkable.
Are you aware that there was an FBI raid on the Choctaw
casino in Mississippi last Tuesday, I believe it was, or July
13th?
Ms. Stevens. Yes, I am.
Senator McCain. Do you know anything about that?
Ms. Stevens. That is an active investigation right now,
Senator, and as much as I would like to provide you with
information, I would not be able to.
Senator McCain. You do know about it?
Ms. Stevens. Yes, I do.
Senator McCain. According to testimony, you have also held
eight consultations ``to develop more effective ways to consult
with Tribes,'' according to your testimony. So in other words,
you have had eight consultations on how to consult.
Ms. Stevens. I guess you could put it that way. That is one
way to look at it. It is in response to the President's memo on
consultation with Tribal governments and being respectful to
Tribes, an also examining our consultation policy. We would
like to talk to Tribes before we change the policy.
Senator McCain. Well, may I say your predecessor had a
strong opinion about whether there was a need to address
legislatively a CRIT fix. I think it is really remarkable it is
going to be 13 months before you could reach a conclusion
whether there should be a legislative fix or not. I guess it is
another incredible waste of the taxpayers' dollars.
I have no more questions, Mr. Chairman.
The Chairman. Thank you, Senator McCain.
Senator Udall, your questions?
Senator Udall. Thank you, Senator Akaka.
Ms. Stevens, when you visited the Committee last year for a
similar hearing on gaming, you expressed intentions to increase
government-to-government relations with the Tribes. How has
that effort been going? Have you been successful? Where do you
need to do more work? How are you ensuring that all Tribes are
able to give input in any future changes in regulations made by
the NIGC and whether they game or not? And what is the status
of your draft consultation policy?
Ms. Stevens. Thank you, Senator, for your questions.
Upon coming into office, the three commissions met and we
mapped out these four priorities that I mentioned today both
orally and in my written testimony.
The first thing that was on our list is improving our
consultation process. We have changed our formatting. When we
consult with Tribes, we do it in a group forum so that Tribes
can hear what other Tribes have to say. We can hear common
problems and common solutions and it is an exchange and it is a
dialogue.
The other thing that we have done is we have brought out to
Tribes the NIGC to areas that don't normally see the NIGC. So
we are going to rural areas and putting the burden of travel on
the NIGC.
We also give adequate and timely notice prior to a
consultation so that Tribes can make arrangements to attend.
And if they are unable to attend, we put our transcripts on the
Internet. They are always available and have comment periods
that allow Tribes time if they are unable to meet with us in
person to give us their comments on any policy or changes that
we may be considering.
And our draft consultation policy right now, we received
input through those eight consultations that Senator McCain
mentioned, so that we could look back and see what worked
previously, what didn't work previously, and consider what
Tribes had to say before we started changing our policy.
We drafted a policy with Tribal input and we issued it in
April. We had about a 60-day comment period for that draft
consultation policy. We are in the process of reading those
comments from Tribes and we will be finalizing that. And
overall, we have had very supportive comments from Tribes on
our revamped and revised consultation policy.
Senator Udall. Can you give me, and maybe you can't because
of the status of this, but how the comments have been going?
And have they appreciated the consultation process that you
have developed, and that kind of thing?
Ms. Stevens. What we have heard so far is an appreciation
for, one, timely notice; two, inclusion prior to drafting
anything and that goes to honoring Executive Order 13175 that
states that Federal agencies should talk to Tribes first before
making changes. And that is one particular area that Tribes
have been very supportive of.
And then finally just the change in format. It took
everybody a little while to get accustomed to the new
roundtable format, but it has been very helpful to have our
format structured that way so that we can have very candid
conversations. And so far, it has been very supportive.
I have to say, Tribes don't always agree with what I have
to say and we are finding that out through our regulatory
review process. But just because we don't agree, doesn't mean
we can't be respectful.
Senator Udall. One of the major complaints I hear with my
Tribes in New Mexico, 22 Tribes, and some have gaming and some
don't, is the word. You used the word consultation. And I think
the fact that you are going out in advance before doing
regulations and consulting and spending the time with them and
giving them notice, I think that really makes a difference. It
may take some time, slow down some of the rest of the things
you are doing, but it is something that I think is a sore point
with many Tribes, that when it comes to various governmental
agencies that the word consultation is there, and yet the
governmental agencies don't do it.
And so I think they appreciate the effort that you are
taking, and I look forward to this Committee being briefed on
that as we move forward.
Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Udall.
I would like to say mahalo, thank you very much, Chairwoman
Stevens, for your testimony and your comments. We want to wish
you well, and as I look forward to the future, we need to make
every effort to keep things just and I think you folks are
striving to do that.
And so I want to wish you well and to keep in touch with
you on matters that affect the Indian Tribes. So thank you
again for being here.
Ms. Stevens. Thank you, Chairman, I look forward to keeping
the Committee informed.
The Chairman. Thank you.
I would like to invite the second panel to the witness
table: Mr. Ernest Stevens, Jr., Chairman of the National Indian
Gaming Association and Mr. Jamie Hummingbird, Chairperson of
the National Tribal Gaming Commissioners and Regulators.
Welcome to the Committee. It is good to have you here and
hear your testimony.
Mr. Stevens, will you please proceed with your testimony?
STATEMENT OF ERNEST L. STEVENS, JR., CHAIRMAN,
NATIONAL INDIAN GAMING ASSOCIATION; ACCOMPANIED
BY MARK VAN NORMAN, EXECUTIVE DIRECTOR
Mr. Stevens. Good afternoon, Mr. Chairman, Senator Udall.
It is an honor to be here this afternoon. I want to thank you
for this opportunity to testify on the role of Tribal
governments as regulators in Indian gaming operations.
I would like to ask that my written statement be placed in
the hearing record. My statement includes a number of
statistics that reinforce what Indian gaming means to Indian
Country and lists the significant benefits to our State and
local government neighbors.
Indian gaming is Tribal self-determination. Gaming is an
exercise of inherent authority affirmed, confirmed and guided
by the Indian Gaming Regulatory Act.
The Chairman. It will be included in the record.
Mr. Stevens. IGRA is largely a result of the Cabazon
Supreme Court case. That decision recognized President Reagan's
policy to support Tribal self-government and self-sufficiency;
237 Indian Tribes nationwide have made the Act work.
For many Tribes, Indian gaming is first and foremost about
jobs and rebuilding Tribal communities. For many Indian people,
Indian gaming has provided them with their first opportunity
for quality employment. And more importantly, it is bringing
entire families back to Indian Country. We like that, Mr.
Chairman. We are excited about that.
In 2010, Indian gaming generated a total of more than
600,000 direct and indirect jobs. These jobs go to Indian and
non-Indian alike. Without question, we are putting people to
work.
In times when States are struggling to meet budget
shortfalls, Indian Tribes are going out of their way to help
make up the difference. In many States, Indian gaming
charitable contributions are working to prevent layoffs of
teachers, health care providers and public safety officials.
In little more than 30 years, Indian gaming has helped to
begin to rebuild many struggling Native communities. New
reservation economies are enhancing living conditions
throughout Indian Country. Because of Indian gaming, Tribal
governments are stronger, people are healthier, and an entire
generation of Indian youth has hope for a better future.
So that is what is at stake. Tribal governments understand
that this progress wouldn't be possible without a strong
regulatory system and Tribes have committed significant
resources to regulation. IGRA established a three-tiered system
of regulation. The Act provides for a system of joint
regulation by Tribes and the Federal Government for Class II
gaming. With regard to Class III gaming, the regulatory system
developed between Tribal and State governments through the
compacting process. In addition, NIGC maintains a strong
oversight role with respect to Class III gaming.
As a result of this three-tiered system, Indian gaming is
subject to more stringent regulation and security than any
gaming operation in any jurisdiction of the United States. This
system employs 3,400 regulators and staff to protect Indian
gaming. In 2010 alone, Tribes spent approximately $345 million
to regulate their operations. We are not perfect. People have
tested our systems, but these people have been convicted, lost
their gaming license, and terminated never to work in our
industry again.
Against the backdrop of comprehensive regulation, the FBI
and the Justice Department have repeatedly testified that there
has been no substantial infiltration of organized crime in
Indian gaming. This is not an accident, Mr. Chairman. The
system is costly. It is comprehensive. And our record and
experience shows that it is working.
I would like to acknowledge the current Administration for
its commitment to agency-wide Tribal consultation. At the
Department of Justice, the increased cooperation and
coordination between Tribal gaming regulators, Tribal police
and the U.S. Attorneys sends a strong message that any crimes
in Indian Country or against Indian gaming operations will be
dealt with in accordance with the law.
Senator, if I can, I want to introduce Mr. Stanley Rocky
Papasodora, a long-time Indian gaming regulator. Rocky is the
Director of Security for the Leech Lake Band of Ojibwe. Rocky
is standing. I want to introduce Rocky quickly because he is
the Chairman of the Tribal Gaming Protections Network, a
national group of national regulators and security personnel.
Now, Rocky would be the first to tell you. He is an old
boxer so he still has that name, but his name is Stanley
Papasodora, and he is one of our leaders in this regulatory
industry. And his Tribe flew him out here to stand with us.
But he coordinates a national effort nationwide of national
regulators and security folks that talk about cheats and scams
throughout this Country. And he would be the first to tell you
that the strength lies within the more local and regional. But
they have to communicate because one goes here, the other one
is going someplace else. And we are on top of it and these
Indian security personnel are on top of it, and we stop crime
because of it regularly.
Thank you, Rocky.
The Chairman. Welcome. Nice to have you here.
Mr. Stevens. NIGA appreciates the increased government-to-
government consultation on the part of the NIGC. Consultation
has begun to repair relationships with Tribal governments,
which also has led to increased coordination and further
improvements to regulation.
That said, there are several areas where we must work
towards improvement. Given the complex nature of the
regulations, the frequency of revisions, there is a significant
need for increased training and technical assistance. In
addition, there is a longstanding need to bring stability and
clarity to Class II Indian gaming.
In conclusion, Mr. Chairman, I want to reiterate that
Indian gaming is working. It is rebuilding Tribal economies,
benefitting non-Indian communities, and providing hope for
future generations of Indian people. We are mindful of what is
at stake and the Tribes nationwide are committed to maintain a
strong, seamless and comprehensive system of regulation. Much
of the credit of this success goes to the Tribal leaders, Mr.
Chairman, who make the decisions to spend $345 million each
year to regulate their operations and to the thousands of men
and women who are the day-to-day frontline regulators of the
Indian gaming operations just like Mr. Papasodora and obviously
Mr. Hummingbird, too. I am looking to my right. I am right-
handed.
Mr. Chairman and to the Committee, this concludes my
remarks. I am trying to stay within my time limit, but again,
the emphasis I want to make to you, Mr. Chairman, is these
people have given their life and their heart to protect our
industry. We are doing a great job and work very hard at it,
and we spend a lot of resources doing so.
Thank you for hearing my comments today, Mr. Chairman and
Mr. Senator, sir.
[The prepared statement of Mr. Stevens follows:]
Prepared Statement of Ernest L. Stevens, Jr., Chairman, National Indian
Gaming Association
Introduction
Good afternoon Chairman Akaka, Vice Chairman Barrasso, and Members
of the Committee. My name is Ernest Stevens, Jr., Chairman of the
National Indian Gaming Association (NIGA) and a member of the Oneida
Nation of Wisconsin. NIGA is an interTribal association of 184
federally recognized Indian Tribes united behind the mission of
protecting Tribal sovereignty and preserving the ability of Tribes to
attain economic self-sufficiency through gaming and other economic
endeavors. I want to thank the Committee for this opportunity to
provide our views on the role of Tribal governments and the National
Indian Gaming Commission (NIGC) as regulators of Indian gaming
operations.
Indian Tribes As Governments
I testified one year ago today before this Committee about the
general state of Indian gaming. As I did then, I again would like to
first place Indian gaming in proper context, by briefly providing some
background about the Constitutional status of Indian Tribes in the
United States, and discuss briefly what Indian gaming means to Indian
country.
As this Committee well knows, before contact with European Nations,
Indian Tribes were independent self-governing entities vested with full
authority and control over their lands, citizens, and visitors to their
lands. The Nations of England, France, and Spain all acknowledged
Tribes as sovereigns and entered into treaties with various Tribes to
establish commerce and trade agreements, form wartime alliances, and
preserve the peace.
The United States Constitution specifically acknowledges the
importance of trade with Tribal governments in the Commerce Clause,
which states that ``Congress shall have power to . . . regulate
commerce with foreign nations, and among the several states, and with
the Indian Tribes.'' U.S. Constitution, Article I, section 8, clause 3.
The United States also entered into hundreds of treaties with Tribal
governments. Through these treaties, Tribes ceded hundreds of millions
of acres of Tribal homelands to help build this great Nation. In
return, the United States promised to provide for the education,
health, public safety and general welfare of Indian people. The U.S.
Supreme Court later acknowledged that this course of dealing with
Tribal governments established a trust relationship between Tribes and
the United States, with accompanying obligations on the part of the
United States towards Indian people.
Over the past two centuries plus, the federal government has fallen
far short in meeting these solemn treaty and trust obligations. In the
late 1800's, the United States adopted and implemented a policy of
forced Assimilation, whereby the federal government took Indian
children from their homes, and placed them in military and religious
boarding schools where they were forbidden from speaking their language
or practicing their Native religions. The concurrent policy of
Allotment sought to destroy Tribal governing structures, sold off
treaty-protected Indian lands, and had the result of further eroding
Tribal land bases and devastating Tribal economies. Finally, the
Termination policy of the 1950's again sought to put an end to Tribal
governing structures, eliminate remaining Tribal land bases, and
attempted to relocate individual Indians from Tribal lands with the
help of one-way bus tickets to urban areas with the promise of
vocational education.
These policies resulted in death of hundreds of thousands of our
ancestors, the taking of hundreds of millions of acres of Tribal
homelands, the suppression of Tribal religion and culture, and the
destruction of Tribal economies. The aftermath of these policies
continues to plague Indian country to this day.
Tribal Government Self-Determination
Time and time again, these policies were revealed as failures. The
persistence and perseverance of Indian people demonstrated to the
federal government that Indian country was not going to fade away. On
July 8, 1970, President Nixon formally repudiated the policy of
Termination and adopted a policy supporting Indian Self-Determination,
which seeks to improve Indian education, fosters Tribal culture, and
enhances Tribal economic development, among other goals. Self-
Determination remains the Indian Affairs policy of the United States to
this day. Tribal governments have seen progress in rebuilding their
communities as a result of the Self-Determination policy.
In the late 1960's and early 1970's, Tribal governments took self-
determination to heart, and opened the first Indian gaming operations
to generate governmental revenue to fund essential Tribal government
programs and meet the shortfalls in the federal obligations to provide
for Indian education, health, and the general welfare of Indian people.
State governments and commercial gaming operations challenged the
rights of Tribes to conduct gaming on their lands. These challenges
culminated in the Supreme Court case of California v. Cabazon Band of
Mission Indians, 480 U.S. 202 (1987). The Cabazon Court upheld the
right of Tribes, as governments, to conduct gaming on their lands free
from state control or interference. The Court reasoned that Indian
gaming is crucial to Tribal self-determination and self-governance
because it provides Tribal governments with a means to generate
governmental revenue for essential services and functions.
In 1988, one year after the Cabazon decision, Congress enacted the
Indian Gaming Regulatory Act (IGRA). The stated goals of IGRA include
the promotion of Tribal economic development and self-sufficiency,
strengthening Tribal governments, and establishing a federal framework
to regulate Indian gaming. The Act also established the National Indian
Gaming Commission (NIGC). While there are dozens of forms of gaming in
America, the NIGC is the only federal commission to regulate any form
of gaming in the United States.
IGRA did not come from Indian country. A number of Tribal
governments strongly opposed the federal legislation. The Act is far
from perfect, and the U.S. Supreme Court has added to its
imperfections. However, for nearly 23 years, more than 200 Tribes
nationwide have made IGRA work to help begin to rebuild their
communities and meet the stated goals of the Act.
State of Indian Gaming
Indian gaming is the Native American success story. For more than
three decades, Indian gaming has proven to be the most successful tool
for economic development for many Indian Tribes. In 2010, 236 of the
565 federally recognized Indian Tribal governments operated gaming to
generate revenue for their communities.
Many Tribes have used revenue from Indian gaming to put a new face
on their communities. Indian Tribes have dedicated gaming revenues to
improve basic health, education, and public safety services on Indian
lands. We have used gaming dollars to improve Tribal infrastructure,
including the construction of roads, hospitals, schools, police
buildings, water projects, and many others. Gaming revenues also enable
Tribes to diversify their economies beyond gaming. Because of capital
provided by gaming, Tribes have invested in renewable energy projects,
retails operations, manufacturing and other entrepreneurial ventures.
For many Tribes, Indian gaming is first and foremost about jobs.
Indian gaming is a proven job creator, establishing and fostering over
600,000 direct and indirect American jobs in 2010. Indian gaming has
provided many individual Indians with their first opportunity at work.
Just as importantly Indian gaming is bringing entire families back to
Indian country. Because of Indian gaming, reservations are again
becoming livable homes, as promised in hundreds of treaties. These
American jobs go to both Indian and non-Indian alike. Without question,
we are putting people to work.
Indian gaming also benefits federal, state, and local governments.
A June 2011 National Public Radio report, titled ``Casino Revenue Helps
Tribes Aid Local Governments,'' acknowledged that revenue from the
Stillaguamish Tribe of Washington helped prevent additional layoffs at
the local Everett, Washington prosecutor's office. The article also
noted to the $1.3 million that the Tulalip Tribes recently gave to the
local school district after they heard about possible budget cuts and
teacher layoffs. These same scenarios are taking place in more than a
hundred local jurisdictions throughout the United States, saving
thousands of jobs for American health care workers, fire fighters,
police officers, and many other local officials that provide essential
services to children, elders, and others.
In 2010, Indian gaming generated close to $13 billion for federal,
state and local governments budgets through compact and service
agreements, indirect payment of employment, income, sales and other
state taxes, and reduced general welfare payments. Despite the fact
that Indian Tribes are governments, not subject to direct taxation,
individual Indians pay federal income taxes, the people who work at
casinos pay taxes, and those who do business with Tribal casinos pay
taxes. As employers, Tribes also pay employment taxes to fund social
security and participate as governments in the federal unemployment
system. Indian Tribes also made more than $100 million in charitable
contributions to other Tribes, nearby state and local governments, and
non-profits and private organizations. In short, Indian gaming has
become a vital piece of the national economy.
As this Committee has highlighted over the past several years, much
more needs to be done. Indian gaming is not a cure all, and many Tribal
communities continue to suffer the devastating effects of the past
failed federal policies. Too many of our people continue to live with
disease and poverty. Indian health care is substandard, violent crime
is multiple times the national average, and unemployment on Indian
reservations nationwide averages 50 percent. Again, only 236 of the 565
federal recognized Tribes are able to use gaming as a means of economic
development.
To broaden the economic success of Indian gaming, NIGA is working
with our Member Tribes to further encourage Tribe-to-Tribe giving and
lending. Through our American Indian Business Network, we work to
highlight the benefits of hiring Native owned businesses and
procurement of Native produced goods and services. Empowering Tribal
entrepreneurs and Tribal government owned businesses, will serve to
further diversify and strengthen Tribal economies.
In addition, we applaud the ongoing efforts of the NIGC to adopt a
regulation to implement the Buy Indian Act. The Buy Indian Act, states
simply: ``so far as may be practicable Indian labor shall be employed,
and purchases of the products of Indian industry may be made in open
market in the discretion of the Secretary of the Interior.'' 25 U.S.C.
47. Such a regulation should give preference to qualified Tribal
government-owned and individual Indian-owned businesses when the NIGC
procures goods or services. These efforts fully comport with the stated
goals of IGRA to foster Tribal economic self-sufficiency.
While much more must be done, Indian gaming has proven to be one of
the best available tools for Tribal economic development. Indian gaming
has helped many Tribes begin to rebuild communities that were once
forgotten. Because of Indian gaming, our Tribal governments are
stronger, our people are healthier, and an entire generation of Indian
youth has hope for a better future.
Tribal Government Regulation of Indian Gaming
That's what is at stake. Tribal governments realize that none of
these benefits would be possible without a strong regulatory system to
protect Tribal revenue and to preserve the integrity of our operations.
With regard to regulation, IGRA established a three-tiered system.
This Committee's 1988 report on the Act makes clear the original intent
for the regulatory system under the Act:
``[IGRA] provides for a system of joint regulation by Tribe and
the federal government for Class II gaming on Indian lands and
a system of compacts between Tribes and states for regulation
of Class III gaming. The bill establishes the NIGC as an
independent agency within the Department of the Interior. The
Commission will have a regulatory role for Class II gaming and
an oversight role with respect to Class III gaming.''
Senate Report 100-446, at 1 (Aug. 3, 1988).
This regulatory system vests local Tribal government regulators
with the primary day-to-day responsibility for regulating Indian gaming
operations. This only makes sense, because no one has a greater
interest in protecting the integrity of Indian gaming than Tribes.
This framework contrasts from the failed framework of criminal
jurisdiction in Indian country where Tribes rely on federal officials
to investigate and prosecute crimes that occur on Indian lands from
offices and courtrooms that are often located hundreds of miles from
Indian country. Despite recent reforms, this system is a proven
failure. Washington, D.C. is simply not equipped to police Indian lands
or make local decisions for Tribal communities.
While Tribes take on the primary day-to-day role of regulating
Indian gaming operations, IGRA requires on coordination and cooperation
with the federal and state governments (in the case of Class III
gaming) to make this comprehensive regulatory system work. The Tribal,
state, and the federal governments must all work hand-in-hand to ensure
the effective regulation of Indian gaming.
Under the Act, the NIGC has direct authority to monitor Class II
gaming on Indian lands on a continuing basis and has full authority to
inspect and examine all premises on which Class II gaming is being
conducted.
Class III gaming is primarily regulated through a framework
established through individual Tribal-state gaming compacts. Here the
two sovereigns agree upon a framework to regulate Class III gaming
based on arms length negotiations. As noted above, Congress intended
that the NIGC would maintain an oversight of Class III gaming. As a
result, under the Act, the NIGC:
reviews and approves Class III Tribal gaming regulatory laws
and ordinances;
reviews Tribal background checks and gaming licenses of
Class III gaming personnel;
receives and reviews annual independent audits of Tribal
gaming facilities, including Class III gaming (all contracts
for supplies and services over $25,000 annually are subject to
those audits);
approves all Tribal management contracts; and
works with Tribal gaming regulatory agencies to ensure
proper implementation of Tribal gaming regulatory ordinances.
This comprehensive system of regulation is expensive and time
consuming, but Tribal leaders know what's at stake and know that strong
regulation is the cost of a successful operation. Despite the
Recession, Tribal governments have continued to dedicate tremendous
resources to the regulation of Indian gaming. In 2010, Tribes spent
more than $345 million on Tribal, state, and federal regulation:
$250 million to fund Tribal government gaming regulatory
agencies;
$80 million to reimburse states for state regulatory
activities negotiated and agreed to pursuant to approved
Tribal-state Class III gaming compacts; and
$16 million to fully fund the operations and activities of
the National Indian Gaming Commission.
The Indian gaming regulatory system employs more than 3,400 expert
regulators and staff to protect Indian gaming. Tribal governments
employ approximately 2,800 gaming regulators and staff. Among the ranks
of Tribal regulators are former FBI agents, BIA, Tribal and state
police officers, former state gaming compliance regulators, military
officers, accountants, auditors, attorneys and bank surveillance
officers. In addition, state governments employ more than 500 state
gaming regulators, staff and law enforcement officers to help Tribes
regulate Indian gaming. At the federal level, the NIGC employs more
than 100 regulators and staff.
In addition to the NIGC, a number of other federal officials help
regulate and protect Indian gaming operations. Tribes work with the FBI
and U.S. Attorneys offices to investigate and prosecute anyone who
would cheat, embezzle, or defraud an Indian gaming facility--this
applies to management, employees, and patrons. 18 U.S.C. 1163. Tribal
regulators also work with the Treasury Department's Internal Revenues
Service to ensure federal tax compliance and the Financial Crimes
Enforcement Network (FinCEN) to prevent money laundering. Finally,
Tribes work with the Secret Service to prevent counterfeiting.
Tribal governments have also invested heavily in high tech state-
of-the-art surveillance and security equipment, and employ professional
personnel to operate these systems. Tribal surveillance systems are on
par with the best systems in the gaming industry, and exceed standards
employed by state and commercial gaming operations.
Against this backdrop of comprehensive regulation, the FBI and the
Justice Department have repeatedly testified that there has been no
substantial infiltration of organized crime on Indian gaming. This
system is costly, it's comprehensive, and our record and our experience
shows that it's working.
NIGA is encouraged by the Administration's rededication to agency-
wide government-to-government consultation with Indian Tribes. On
November 5, 2009, President Obama issued an Executive Memorandum
directing each federal agency to submit to the Director of the Office
of Management and Budget (OMB), a detailed plan to implement the
policies and directives of Executive Order 13175. Over the past two
years, all agencies have submitted and have begun to implement Tribal
consultation plans, and many have established offices of Tribal
government relations. These offices have opened countless doors and
programs to Tribes in agencies that were previously closed to Indian
country.
With regard to Indian gaming, at the Department of Justice, the
increased cooperation and coordination between Tribal gaming
regulators, Tribal police, and U.S. Attorneys sends a strong message
that any crimes in Indian country or against Indian gaming operations
will be prosecuted to the fullest extent of the law.
NIGA also appreciates the increased consultation on the part of the
NIGC. Increased consultation has begun to repair frayed relationships
with Tribal governments, and has led to increased coordination, and
further improvements to regulation.
NIGA is working with the NIGC to improve several areas, including
training and technical assistance, Class II gaming regulations, and the
facility licensing regulations. Tribal governments are encouraged by
the NIGC's ongoing regulatory review. While these areas are detailed in
comments to a variety of NIGC proposed rules, I will focus my testimony
on the need to review regulations relating to Class II gaming.
Class II Indian Gaming
Congress, in enacting IGRA, struck a careful balance among the
respective interests of three sovereigns: Tribal, federal, and state
governments. That balance was critically upset by the Supreme Court's
1996 decision in Seminole Tribe v. Florida, which found that a state
could refuse to negotiate Class III Tribal-state gaming compacts in
good faith. This decision has resulted in a number of states (that
condone and regulate other forms of gaming) exercising veto authority
over Class III Indian gaming. As a result, Indian Tribes in these
states rely solely on Class II gaming to generate governmental revenue
to provide essential services to meet the many needs of their
communities.
For most of the past decade, the NIGC has created great uncertainty
in the area of Class II Indian gaming. With little Tribal input, the
NIGC in past years developed unworkable gaming classification standards
that went beyond the statutory authority granted to the Commission in
IGRA and that threatened the economic viability of Class II gaming.
Many of these proposed regulations sought to limit Class II games to
only those in play in 1988. This view stands in direct conflict with
congressional intent. The Senate Committee Report to IGRA states the
following:
The Committee specifically rejects any inference that Tribes
should restrict Class II games to existing game sizes, levels
of participation, or current technology. The Committee intends
that Tribes be given the opportunity to take advantage of
modern methods of conducting Class II games and the language
regarding technology is designed to provide maximum
flexibility.
Senate Report 100-446, at 9 (Aug. 3, 1988).
To better meet these intentions, the NIGC should make it a priority
to revisit regulations that affect Class II Indian gaming in
consultation with all Tribal governments and Tribal regulatory
agencies. Specific areas with regard to Class II gaming that deserve a
closer look include the Class II Minimum Internal Control Standards,
technical standards for Class II gaming, and self-regulation of Class
II gaming, among other areas.
In this area, NIGA acknowledges the significant efforts of the
Tribal leaders, Tribal regulators, and industry experts of the Indian
Gaming Working Group. This Group invested a considerable amount of time
and thought into comments and proposals to improve this area of the law
and bring it closer to the original congressional intent.
Conclusion
In conclusion, the Indian Gaming Regulatory Act has worked well to
promote ``Tribal economic development, self-sufficiency, and strong
Tribal governments,'' as Congress intended. Indian gaming is a true
success story for Indian country and the Nation as a whole.
Tribal governments are mindful of what's at stake, and Tribes
nationwide have committed significant and precious resources to
maintaining a strong, seamless, and comprehensive system of regulation.
Much of the credit for this success goes to the Tribal leaders who made
the decision to spend more than $345 million to regulate their
operations, and to the thousands of men and women who are day-to-day
front line regulators of Indian gaming operations. In short, Indian
Country is proud of its gaming regulatory history and we are working
hard to ensure that Tribal gaming regulation remains strong into the
future.
Mr. Chairman and Members of the Committee this concludes my
remarks. Again, thank you for this opportunity to testify today.
The Chairman. Thank you so much for your testimony.
And now we will hear from Mr. Hummingbird. Will you please
proceed with your testimony?
STATEMENT OF JAMIE HUMMINGBIRD, CHAIRMAN,
NATIONAL TRIBAL GAMING COMMISSIONERS/REGULATORS
Mr. Hummingbird. Thank you, Mr. Chairman.
I want to say on behalf of the National Tribal Gaming
Commissioners and Regulators that I am pleased to appear before
you today to provide insight into the regulatory side of the
Indian gaming industry from the perspective of a Tribal gaming
regulator.
As Mr. Stevens mentioned, my name is Jamie Hummingbird. I
am a member and citizen of the Cherokee Nation where I serve as
the Director. And I have been serving in my capacity as a
regulator for 13 years. Before that, I had served in various
capacities with the nation and have served my nation for 20
years.
Prior to the enactment of the Indian Gaming Regulatory Act,
or IGRA, in 1988, Tribal gaming regulatory authorities, or
TGRAs, played a pivotal role in overseeing the conduct of
gaming offered on Indian lands. It was in the pre-IGRA era that
the regulatory principles and responsibilities of gaming
regulators were established and continue to be the foundation
for each TGRA today, namely the protection of Tribal assets,
protecting the integrity of the gaming environment, and
accountability of the gaming operations.
One constant concept in the minds of Tribes and TGRAs as
these principles were expressed was that they were and remain
an exercise of the Tribe's inherent sovereign authority to
determine the conduct of its operations. The IGRA required
Tribes to draft gaming ordinances establishing their respective
gaming regulatory authorities. The Act further clarified the
role of Tribal gaming regulators by specifying that Indian
Tribes have the exclusive right to regulate gaming on Indian
lands.
In seeking balance of interests of the Federal Government
and the State governments, IGRA also created the National
Indian Gaming Commission to provide Federal regulatory
oversight and, as necessary, various States were expected to
utilize their existing regulatory bodies or to create them
pursuant to the terms of a Tribal State compact.
Further, IGRA allowed Tribes to offer games that were not
expressly prohibited within the State in which they reside, and
IGRA created gaming classifications and designated
responsibility for regulating the various classes of gaming
where Tribes are the sole regulators of Class I gaming and the
primary regulator in Class II gaming, with the NIGC maintaining
and oversight role.
Tribes also share responsibility for regulation with States
under the terms of the Tribal-State compacts.
The Tribal gaming ordinances which are subject to the
review and approval of the Chairman of the NIGC, fulfill basic
requirements for Tribal propriety, revenue distribution,
audits, the environment, public health and safety, and
management background investigations.
Tribal gaming regulatory authorities must evaluate their
gaming environment and devise rules and regulations that are
fitting to their unique circumstances. As extensions of the
gaming ordinances, these regulations clarify the duties,
authorities and methods by which Tribal gaming facilities are
to be governed.
The regulations address the licensing of gaming facilities,
individuals and vendors, approval of games that are to be
offered, handling tort and prize claims, surveillance,
security, auditing and overseeing compliance with environmental
and public health and safety activities.
Tribes also utilize internal control standards as a tool to
gauge a gaming facility's level of compliance with applicable
laws and regulations. There are numerous other tools and
processes that are utilized in these efforts, beginning with
the employment of qualified personnel.
Currently, and has been stated previously, the Tribal
gaming industry is directly or indirectly responsible for
employing over 600,000 individuals where there are
approximately 4,000 Tribal gaming regulators monitoring and
ensuring the maximum effective level of compliance with all
gaming laws and regulations.
TGRAs also maintain strong lines of communication with
Federal law enforcement agencies, among them the Internal
Revenue Service, the Financial Crimes Enforcement Network, the
Office of Foreign Asset Control, and the Secret Service. Tribes
also maintain healthy relationships with the State and the NIGC
regulatory offices as they each have a role to play in the
regulation of Indian gaming.
Over the past several decades, Tribal gaming facilities
have increased the level of sophistication of their gaming
activities by using technology available as provided for by
IGRA. Tribal regulators have also attained highly sophisticated
levels of security and the qualifications of regulatory
personnel have also increased. It is not uncommon for a TGRA to
employ credentialed professionals such as certified fraud
examiners, certified internal auditors, network security
administrators and background investigation specialists. Each
of these disciplines aids in the development and the refinement
of Tribal gaming regulations and internal controls.
The TGRAs must remain up to date as technology advances. In
the recent past, gaming vendors have introduced wireless gaming
and systems-based gaming and presently Internet gaming has
become a topic that has garnered a great deal of attention by
everyone in the gaming industry, including Tribes. And this
issue and its potential impact on Tribal gaming will be
carefully monitored by Tribes.
In conclusion, Chairman Akaka, while everyone involved in
Indian gaming can probably agree that the IGRA is less than
perfect, it has proven to be a stable base for regulation. The
IGRA has survived numerous amendment attempts due to the many
successes that we have shown that overshadow its relatively
minor shortcomings.
Tribes have consistently demonstrated substantial
compliance with all Tribal, Federal and where applicable, State
laws and regulations. Tribal gaming regulators are capably
performing the due diligence necessary to protect the Tribes
and are proud of our history of protecting the integrity of the
Indian gaming industry.
The responsibility of regulating Tribal gaming facilities
is a task that Tribal gaming regulators take very seriously,
and it is the obligation to our Tribal citizens that drive us
to excel.
On behalf of the National Tribal Gaming Commissioners and
Regulators, I thank you for the opportunity to appear before
you today and welcome any questions that you may have.
[The prepared statement of Mr. Hummingbird follows:]
Prepared Statement of Jamie Hummingbird, Chairman, National Tribal
Gaming Commissioners/Regulators
Good afternoon Chairman Akaka, Vice-Chairman Barrasso, and Members
of the Committee. My name is Jamie Hummingbird, Chairman of the
National Tribal Gaming Commissioners/Regulators and member of the
Cherokee Nation where I serve as Director of the Gaming Commission.
The National Tribal Gaming Commissioners/Regulators is an
organization comprised of Tribal gaming regulators from across America
whose purpose is to promote the exchange of thoughts, information and
ideas in the pursuit of regulatory practices that are consistent,
stable, and fair.
On behalf of the National Tribal Gaming Commissioners/Regulators I
would like to express our thanks for begin provided the opportunity to
offer comments before the Committee from the perspective of a Tribal
gaming regulator. I would also like to thank the Committee and the
National Indian Gaming Commission (NIGC) for the approach you have
undertaken in seeking input from Tribes and their Gaming Commissions
and Agencies in a transparent manner.
The following comments are based upon the views of the membership
of the National Tribal Gaming Commissioners/Regulators (NTGCR)
experiences and their familiarity with the subject of today's hearing.
Hopefully the comments will assist with a better understanding as to
the manner by which the day-to-day regulators of Indian gaming
operations view the role of the NIGC and the Tribal regulators in
regard to their specific responsibilities.
Defining the Regulatory Structure
Prior to the enactment of the Indian Gaming Regulatory Act (IGRA;
the Act) in 1988, each Tribe's Tribal Gaming Regulatory Authorities
(TGRA) played a pivotal role in overseeing the conduct of gaming
offered on its respective Indian lands. It was in this pre-IGRA era
that the principles of regulation, roles and responsibilities of gaming
regulators were established, namely: protection of the Tribe's assets;
protection of the integrity of the gaming environment; and
accountability of the gaming operations. These principles of regulation
were included as part of the IGRA and remain the foundation for each
TGRA today.
One constant concept incorporated in the regulations developed by
the various Tribes and their TGRAs was that they were and remain an
exercise of the Tribe's inherent sovereign authority to determine the
conduct of their own affairs. This concept, although stated in a
different manner, was articulated in the discussions and hearings held
by the Select Committee on Indian Affairs leading up to the passage of
and contained within the bill that would become the Indian Gaming
Regulatory Act, Senate Bill 555. This concept of Tribal sovereign
authority is reflected in the primary goal of the IGRA, which is to
``preserve the right of Tribes to self-government.'' The senate report
discussing S. 555 stated:
``In determining what patterns of jurisdiction and regulation
should govern the conduct of gaming activities on Indian lands,
the Committee has sought to preserve the principles which have
guided the evolution of Federal-Indian law for over 150 years.
The Committee recognizes and affirms the principle that by
virtue of their original Tribal sovereignty, Tribes reserved
certain rights when entering into treaties with the United
States, and that today, Tribal governments retain all rights
that were not expressly relinquished.''
The Committee also sought to balance the interests of the states
and the federal government along with those of the Tribes. The language
contained in the IGRA provided the foundation on which the Indian
gaming regulatory structure would be built.
IGRA required Tribes to draft gaming ordinances that established
their respective regulatory authorities to preside over the regulation
of gaming activities occurring on Tribal lands. The Act further
clarified the role of Tribal gaming regulators at 25 USC 2701 by
specifying:
``The Congress finds that . . .
(5) Indian Tribes have the exclusive right to regulate
gaming activity on Indian lands if the gaming activity is not
specifically prohibited by Federal law and is conducted within
a State which does not, as a matter of criminal law and public
policy, prohibit such gaming activity.''
The Act also created the NIGC to provide the federal presence in
the Indian gaming regulatory realm. When necessary, the various states
were expected to utilize their existing regulatory bodies or create
them pursuant to the terms of a Tribal-state compact.
With the advent of game classifications, games were placed in
various categories which were subject to different regulatory systems.
The responsibility for regulating the various classes of gaming was
delineated as follows:
Class I Gaming--social or traditional games played as a part of
Tribal ceremonies or celebrations falls under the exclusive
jurisdiction of the Tribes.
Class II Gaming--bingo, pull-tabs, instant bingo, non-house
banked card games and other similar games wherein the Tribal
gaming regulatory authorities were established as the primary
regulators over gaming activities with the NIGC providing
oversight.
Class III Gaming--all other forms of gaming that are not Class
I or Class II, which are traditionally considered slot
machines, horse-racing, and house banked card games, could only
be played in accordance with the terms of a Tribal-state
compact in which regulatory responsibility was shared between
the states and Tribes.
Tribal Gaming Regulatory Authorities--Roles and Responsibilities
IGRA required Tribes to enact gaming ordinances, subject to the
review and approval of the Chairman of the NIGC, that provides six (6)
basic requirements:
1. The Indian Tribe will have the sole proprietary interest
and responsibility for the conduct of any gaming activity;
2. Net revenues from any Tribal gaming are not to be used for
purposes other than:
a. to fund Tribal government operations or programs;
b. to provide for the general welfare of the Indian Tribe and
its members;
c. to promote Tribal economic development;
d. to donate to charitable organizations; or
e. to help fund operations of local government agencies;
3. Annual outside audits of the gaming, which may be
encompassed within existing independent Tribal audit systems,
will be provided by the Indian Tribe to the Commission;
4. All contracts for supplies, services, or concessions for a
contract amount in excess of $25,000 annually (except contracts
for professional legal or accounting services) relating to such
gaming shall be subject to such independent audits;
5. The construction and maintenance of the gaming facility,
and the operation of that gaming is conducted in a manner which
adequately protects the environment and the public health and
safety; and
6. There is an adequate system which ensures that background
investigations are conducted on the primary management
officials and key employees of the gaming enterprise and that
oversight of such officials and their management is conducted
on an ongoing basis.
In order to fulfill this mandate, TGRAs must evaluate their Tribe's
gaming environment and devise a set of rules and regulations that is
compatible with their unique circumstances. As extensions of the gaming
ordinances, these regulations clarify the duties, authorities, and
methods by which Tribal gaming facilities are to be governed. The
licensing of gaming facilities, individuals and vendors, approval of
games that are to be offered, handling tort and prize claims,
surveillance, security, auditing, and overseeing compliance with
environmental, public health and safety activities.
Tribes also utilize internal control standards as a tool to gauge a
gaming facility's level of compliance with applicable laws and
regulations. As you may be aware it was the National Indian Gaming
Association (NIGA) and the National Congress of the American Indians
(NCAI) Tribal Leaders Task Force in the 1990's that had the foresight
to organize a group composed of Tribal regulatory professionals to
develop Tribal Minimum Internal Control Standards based upon gaming
industry standards. This group developed the first set of Tribal
Minimum Internal Control Standards (MICS) that was later adopted by the
NIGC as its MICS as a regulation. Since that time the NIGC has called
upon Tribal professionals to review and/or assist in the development of
various Indian gaming regulations.
In addition since the development of the NIGA/NCAI Task Force,
Tribes developed their own internal policies, procedures, and
regulations in regard to day-to-day regulation. The NTGCR has assisted
Tribes in developing their own internal regulations and procedures that
have assisted many if not most TGRAs to be independent of the possible
influence of Tribal politics.
Numerous other tools are utilized in these efforts, none more
effective than the employment of qualified personnel. The array
educational and training skill sets of regulatory personnel range from
former law enforcement and former military personnel to accountants,
auditors, surveillance, and information systems professionals. This
does not include other professionals retained by gaming regulators in
the performance of their duties, such as professionals in the areas of
law, environmental health, and risk management.
It is estimated that there are over 628,000 persons employed by or
in service to Tribal gaming facilities. These persons are employed by
the gaming facility, vendors, and third-party lessees. The vast
majority of these individuals must successfully complete a background
investigation in order to be considered eligible to work in a Tribal
gaming facility. Most often, the background investigation is performed
by the TGRA, but may also be conducted by a state regulatory agency
pursuant to a Tribal-state compact. The results of all investigations
are provided to the NIGC for their review. Further, these
investigations are performed at regular intervals after a person and/or
vendor receives their initial gaming license, a large number of which
must undergo the process on an annual basis.
Currently, there are an estimated 3,500 individuals directly
employed by Tribal gaming regulators that oversee all Tribal gaming
operations on a daily basis. In addition, the National Indian Gaming
Commission directly employs roughly 100 people to carry out its
responsibilities. After accounting for the regulatory staff employed by
the respective state gaming agencies and there are approximately over
4,000 individuals that monitor and ensure the maximum level of
compliance with all gaming laws and regulations across the nation in
Indian country.
These resources, including those utilized by the state and federal
governments, are paid for by Tribes. Some individual TGRAs, by virtue
of the number and/or size of their gaming operations, maintain
operating budgets that rival that of the NIGC.
According to data contained in the NIGA 2009 economic impact report
on Indian gaming, there are 237 Indian Tribes operating 446 gaming
facilities in 28 states. As a part of this, Tribes spent over an
estimated $350 million in the following areas to regulate Indian
gaming:
$260 million to fund Tribal gaming regulatory authorities;
$80 million to fund state regulatory agencies;
$14 million to fund the National Indian Gaming Commission.
TGRAs also call upon outside agencies as necessary to address
issues warranting their particular expertise. Tribal, federal, and/or
local law enforcement may assume control over any potential criminal
activity. Likewise Tribal prosecutors, local district attorneys, or the
United States Attorney General's office may prosecute any crime
identified at a Tribal gaming facility. Across the country, state and
federal attorneys have successfully prosecuted those that would
jeopardize the integrity of the gaming facilities.
The Department of the Treasury, through its various agencies,
receives regular contact from Tribal gaming regulators and casino
personnel as a part of maintaining strict oversight of transactions.
Whether complying with the requirements of the Internal Revenue
Service, the Financial Crimes Enforcement Network, or the Office of
Foreign Asset Control, Tribes maintain strong lines of communication
with federal agencies.
Tribes also work closely with the Secret Service in the event any
potentially counterfeit currency is confiscated. These relationships
have led to several major arrests and prosecution of the offenders.
Tribes have also assisted federal task forces investigating money
laundering. These same cooperative relationships have been established
with local police departments and sheriff's offices.
Indian Gaming--Past, Present, and Future
Tribes have historically maintained a regulatory presence at its
gaming facilities since their inception. This presence, although
similar to the current state of Indian gaming regulation, began at a
time when the number of Tribes participating in gaming and the number
of facilities they operated were a fraction of the number currently in
operation. The early regulatory systems were simpler in nature and
relied heavily on records to be maintained either manually or within
limited electronic data systems.
Over the past several decades, Tribal gaming facilities began to
expand their locations and increased the level of sophistication of its
gaming activities by using the technology available at the time as
permitted by the IGRA. Tribal regulators also grew in sophistication.
Now, Tribal gaming facilities and regulators use state-of-the-art
surveillance systems and computer monitoring systems to keep a watchful
eye over Tribal assets and gaming facility activities.
In addition to utilizing the newest technology to assist in
overseeing Tribal gaming operations, TGRAs have become more adept in
using qualified third parties for support. It is not uncommon for a
Tribal gaming regulatory authority to employ individuals with
credentials such as Certified Fraud Examiner, Certified Public
Accountant, Certified Internal Auditor, Software Engineer, Systems
Administrator, and Network Security Administrator, Pre-employment
Screening and Background Investigation Specialist to name just a few.
Each of these disciplines has aided in the development or refinement of
Tribal gaming regulations and internal controls.
Educating Tribal gaming regulators is a continual process,
requiring constant monitoring of the gaming environment in an effort to
prepare for emerging technology as well as changes in the legislative
setting. TGRAs have led the way in developing meaningful regulations
for their operations and continue to impact regulation development at
the state and federal level. Tribal working groups working in various
states as well as those formed to address federal regulations offer a
collaborative means to creating effective and efficient regulations.
That is not to say that once a regulation has been adopted that the
process ends. Regulations must be regularly reviewed to determine their
validity and effectiveness in relation to the state of the gaming
industry. For example, in the past several years, gaming vendors have
introduced wireless gaming and systems-based/server-assisted games.
Most recently, Internet gaming has become a topic that has garnered a
great deal of attention by everyone in the gaming industry, including
Tribes, regardless of their role. This issue and its potential impact
on Tribal gaming, like so many other developments in the gaming
industry over the past three decades, will be carefully monitored by
Tribes so that a system of regulation can be established.
Several amendments to the Indian Gaming Regulatory Act have been
proposed over the years. Two (2) of the more recent proposed amendments
focused on off-reservation gaming and expanding the role and
authorities of the National Indian Gaming Commission in light of the
decision rendered in the Colorado River Indian Tribes v. National
Indian Gaming Commission, 466 F.3d 134 (D.C. Cir. 2006)(i.e. the CRIT
case). Tribes, too have sought to amend the Indian Gaming Regulatory
Act so to address the decision rendered by the Supreme Court in the
Seminole Tribe of Florida v. Florida, et. al., 517 U.S. 44, whereby the
Court ruled that IGRA requires compacts are to be negotiated in good
faith by both the states and Tribes.
While everyone that deals with Indian gaming may agree that the
IGRA is less than perfect, it has proven to be a stable base on which
so much has been built. The Act has survived numerous amendment
attempts due in large part to the great many successes that overshadow
the few failures that have been experienced. Tribes have consistently
demonstrated substantial compliance with all Tribal, federal, and,
where applicable, state laws and regulations. These facts have been
attested to by both state and federal oversight officials.
Conclusion
Indian gaming had humble beginnings, as did the Tribal gaming
regulators. The growth of Indian gaming under the IGRA has contributed
to success of Tribal economic development and has led to the building
of world-class gaming facilities. Along the way, Tribal gaming
regulators have evolved into world-class regulators. The responsibility
of regulating Tribal gaming facilities is a task that Tribal gaming
regulators take very seriously. It is the obligation to our people that
drives us to excel.
It is our membership's belief that Tribal gaming regulators are
capably performing the due diligence necessary to protect the assets of
the Tribes and are proud of our history of protecting the integrity of
the Indian gaming industry.
The Chairman. Thank you very much, Mr. Hummingbird.
Mr. Stevens, thank you so much for your statement. Let me
specifically ask you this question about an issue. Do you think
the Colorado River decision weakened Class III regulation at
the Tribal level?
Mr. Stevens. No, sir. Absolutely not. I believe that our
systems are as strong or stronger today than they were five and
a half or so years ago when this decision came down.
Indian Country, and many of them are in the room today, has
been real responsible about developing regulations to protect
our industry. I think Mr. Hummingbird has the honor of not just
representing his own Tribe, but working with all these Tribes
to put together a solid foundation in Indian gaming regulatory
responsibility, and we believe that we are on top of the game.
We don't think we are perfect, but every day we are working
hard to get better at it, sir.
The Chairman. Well, it is good to hear that.
Mr. Hummingbird, how has the role of Tribal gaming
regulators changed in the 23 years since IGRA was enacted?
Mr. Hummingbird. The Tribal gaming regulators today have
seen their potential augmented by the work that has been done
in the last 23 years. In those early days of Indian gaming
under IGRA, the systems were much simpler. The operations were
a little smaller. But as the years have seen the growth of
Indian gaming just increase almost exponentially, so too has
the experience and the effectiveness of Tribal gaming
regulators.
We have learned what the IGRA's intent is. We have made
IGRA work. We are on the frontlines every day looking to
advance, as Mr. Stevens just mentioned, looking for ways to
improve what it is that we do. And not just because it is a
requirement under IGRA, but because it is a part of our
fulfillment of our obligation to our Tribe. We always seek to
do better. We always want to stay ahead of the curve because we
know there that things are out there that are coming our way.
Just as we started this journey 23 years ago, I don't think
anybody really contemplated where IGRA would take Tribes in the
gaming arena. But now that we have had that 23 years and we
have seen what has happened over the past two decades, we can
anticipate and expect to have that same experience in the
future. So we are always looking to evolve. We are always
looking to advance.
The Chairman. Well, thank you for those remarks. You know
that as you become more successful, as you are seeing, it
requires stronger regulations and I am glad to hear that you
are keeping up with that.
I have a question for both of you. There are some who
believe IGRA should be opened up to revision. What are your
thoughts on whether IGRA needs to be revised? And what, if any,
legislative changes would you recommend?
Mr. Stevens?
Mr. Stevens. I apologize. I didn't introduce Mr. Van Norman
because I didn't want to cut into my five minutes. So if I
could, I want to introduce Mr. Mark Van Norman. He is the
Executive Director of the National Indian Gaming Association.
He is a lawyer and long-time veteran here in Washington, D.C.,
and he is a member of the Cheyenne River Sioux Tribe. I would
like to have him give a quick summary of NIGA's position
regarding that, as directed by the Tribal leadership.
The Chairman. Thank you. We would love to hear from him.
Mr. T4Van Norman. Thank you, Senator.
We feel that there is already a strong system in place
under the Indian Gaming Regulatory Act and that the NIGC does
have authority. And they have been going out to Tribes to
conduct reviews of the Tribal audits that are submitted to them
on an annual basis.
In addition, they have authority under the Act to review
the Tribe's enforcement of the Tribal gaming regulatory
ordinances that the NIGC approves. So when they go out for
these audits, they can also review the Tribe's performance
under their own Tribal laws.
And this is a good system because it recognizes Indian
sovereignty and self-determination and gives a level of
oversight from the Federal Government that is not unduly
intrusive on the legislative authority of Tribes. So we believe
that the system is strong that is in place.
One failing that there has been is that the Supreme Court
struck down the safeguard for the Tribal-State compact system,
and the Tribal-State compact system is set up as a system for
two sovereigns, the Tribe and the State, to sit down and
negotiate a regulatory framework and issues related to Class
III gaming.
And good faith is presumed on the part of the State, but if
the State refuses to negotiate or does not negotiate in good
faith, the Tribe may commence litigation. But in the Seminole
case, the Supreme Court said that Congress did not have
authority to waive the State's 11 th Amendment immunity. And we
feel that if there were any legislation that that is the
primary issue to be addressed.
Thank you.
The Chairman. Thank you very much.
Mr. Stevens. Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Hummingbird?
Mr. Hummingbird. Thank you, Mr. Chairman.
I believe that, just as Mr. Van Norman has stated, I think
Tribes would not necessarily be in favor of opening up IGRA to
amendment simply because what we have built and what we have
come to know as Indian gaming regulation has been made possible
and has functioned well under the terms of IGRA as it is
currently written.
However, IGRA is open. I would highly suggest and highly
recommend that there be equal representation. That there would
be a good process that would allow Tribes and States and the
Federal Government to maintain a level of parity that is equal
to all.
It is important I think to have regulatory input into such
discussions as individuals in my field offer a great deal of
insight into what constitutes and what can help lead to the
development of meaningful regulation or meaningful policy.
But in short, I would say that IGRA is working fine. There
is an old saying, if it ain't broke, don't fix it.
The Chairman. Thank you very much, Mr. Hummingbird.
Mr. Udall, I'll ask for your questions.
Senator Udall. Thank you, Chairman Akaka.
Mr. Hummingbird, in your testimony you spoke about Tribal
gaming regulatory authorities. How can the NIGC be more
effective in supporting Tribes in establishing their gaming
regulations and monitoring? And does the technical assistance
provided by NIGC help? And how could that be more effective?
Mr. Hummingbird. Thank you, Senator Udall.
I think the role and the efforts that Chairwoman Stevens
and her administration have undertaken are very beneficial to
Tribes. I applaud the approach that she has taken with the
consultations in seeking out from Tribes their input on what
their needs are, as I believe that is one of the primary
responsibilities that the NIGC has under IGRA.
Tribes have come a long way. We are very effective at what
we do, but that does not mean that we sit on our laurels and
don't look to grow, and that we don't look to advance. And as
people come into the regulatory world, as oftentimes turnover
does lead to new people coming in, it is important to get the
technical assistance and technical training out to Tribes. But
it is important also for the NIGC to know what kind of training
is needed out there and make a very targeted approach to
meeting the needs of the Tribes.
So I think the process that Chairwoman Stevens has
undertaken will lead to a much better and a much more effective
approach in providing the technical assistance that Tribes
need.
Senator Udall. And your sense is that the Tribal
regulators, they get a lot of assistance and they are getting
additional assistance from the NIGC, and that is an ongoing
process that as it needs to be.
Mr. Hummingbird. And continuing education is always a
never-ending process. Organizations such as mine, we provide
training to Tribal regulators specifically. NIGA provides
training and there are other areas for that, but NIGC has a
unique role to play in this and I think that they are on the
right track to meeting that goal.
Senator Udall. Shifting direction back to Mark Van Norman
and Mr. Stevens on this issue of opening IGRA up, as I
understood Mark's testimony, what he was saying is that if
there was any area that Congress ought to look at it is this
whole good faith negotiation area. And what you can have happen
is the statute says that there should be good faith
negotiations between States and Tribes. But if it doesn't
happen, then Tribes have no place to go, basically.
Is that what we are saying? I mean, they can go to court,
but we have the ruling that the statute did not waive the 11th
Amendment immunity. And so they can go to court, but then the
State's put up immunity so there is no place for them to go.
How many Tribes are in that situation now? Do you have a
sense of that? Somebody is whispering in your ear there.
Mr. T4Van Norman. We have a sense that Tribes have actually
been very active in terms of engaging with the States and
engaging with the public. And that there is a high level of
support for Indian gaming among the public. We have been doing
polling for years and what we have seen is a level of about 65
percent public support. When people have a little bit of
opportunity to come out to Indian Country and see the
facilities, you see the support going up to 75 percent or more.
So some of the Tribes who have been frustrated in the
compact process have been able to go to the ballot and have
successfully done initiatives to get some of their compacts
going.
We have other Tribes, as in New Mexico, that have worked
with the legislature to get compacts going. California, they
have waived the 11th Amendment immunity, but there have been
some Tribes that have been frustrated by the States raising
11th Amendment immunity. I think Montana, it would be an issue
up there.
So that is still an outstanding issue. We had a case in the
Fifth Circuit and the court was split on the Secretary's
regulations that were intended to fill that gap, and two of the
judges said the Secretary either didn't have the authority or
had not done it right. And one of the judges said the Secretary
was spot-on.
So that is an area that if there were going to be any
legislation that Tribes would like to see remedied. I think in
general, as Chairman Hummingbird mentioned, Tribes are not
eager to amend the Indian Gaming Regulatory Act because I think
folks are not convinced that Tribal rights would increase
through that legislative process.
Senator Udall. And so really what you are saying is that
there are other avenues, though. There may not be avenues in
court, but there may be avenues to go to public opinion. You
can go to the legislature. You can get a referendum or some
process you have citizens vote on. So there is some of that
going on.
And I know in New Mexico, the Governors, whether it is
Democrats or Republicans, know that there are gaming facilities
out there and they are enjoyed by people that like to go there.
And so if an issue comes up of another Tribe wanting to do
something, they are willing to negotiate with them. But I guess
there are some areas where Tribes are blocked.
Mr. T4Van Norman. Well, I could think of in Louisiana,
there is one of the Tribes that is more newly recognized and
the other Tribes have compacts, but then they were not able to
get a compact and the Governor more recently has not been
willing to negotiate with the Tribe that was newly recognized.
So there are situations where the Tribes are completely
blocked. But Tribes have worked hard under the Act to make the
Act work.
Senator Udall. Yes, and I think that statement is very
true, your last statement. They have worked very hard to make
it work.
Thank you, Mr. Chairman. Thanks for your courtesy. Sorry
about going over a little bit there.
Mr. Stevens. Mr. Chairman, if I could, Mr. Chairman.
Senator, I wanted just to tag onto the question of training
and technical assistance. NIGA has advocated for many years
that this be made a high priority. Now, we are, as Chairman
Hummingbird has indicated, encouraged by the current National
Indian Gaming Commission's posture regarding this as a
priority. But we appreciate you asking that question because it
is something that is very important to us and something that
will help us to build the integrity in our operations. It is
something that is of high priority of the 184-member Tribes
that we represent.
Thank you.
The Chairman. Thank you very much for your responses. I
want to tell you that your responses have been valuable to us
and will help us proceed with you. And again, I want to stress
that it is important that we keep in touch and continue to work
together on these issues.
So I want to thank you very much for being here today and
helping us in this respect.
Mr. Stevens. Thank you, Mr. Chairman. We will make sure
this information gets out to our member Tribes. And they will
utilize their voice maybe to submit comments through the
written process.
The Chairman. Thank you, Mr. Stevens.
Thank you, Mr. Hummingbird.
Mr. Hummingbird. Thank you for the opportunity to be here
today.
The Chairman. Thank you.
Now, I would like to invite the third panel to the witness
table: Mr. J. Kurt Luger who is Executive Director of the Great
Plains Indian Gaming Association; Ms. Sheila Morago, Executive
Director of the Oklahoma Indian Gaming Association; and Mr.
John Meskill, Executive Director of the Mohegan Tribal Gaming
Commission. I want to welcome you to the Committee.
Mr. Luger, will you please proceed with your testimony?
STATEMENT OF J. KURT LUGER, EXECUTIVE DIRECTOR, GREAT PLAINS
INDIAN GAMING ASSOCIATION
Mr. Luger. But I am going to throw some quantitative
figures at you that you very seldom get to hear.
I represent 36 Tribes in the Great Plains region, that is
Montana, North Dakota, South Dakota, Wyoming, Iowa, Kansas and
Nebraska. So I go from Kansas to the Texas border. You can see
why I have to wear a hat on my bald head to get by.
With that said, first of all, I want to give you our
feelings on NIGC currently. We feel they are on the right
track. Unfortunately, Senator McCain left here kind of in a
huff, which is getting to be predictable, and quite frankly, we
are getting tired of it.
But the current NIGC has quantified in this regard. They
have complied with Indian Educators v. Kempthorne. That is
important to us. It is Indian preference in our Indian
bureaucracies, Executive Order 13175 supported by Clinton, Bush
and Obama. During Chairman Stevens' tenure, she has complied
with that. Chairman Hogan, her predecessor, would not.
What does it say? Respect for Tribal self-government and
sovereignty, provide Tribes with maximum administrative
discretion as possible, encourage Tribes to develop their own
policies to achieve objectives, defer to Tribal standards where
possible, and otherwise preserve the prerogatives under Indian
authority.
I don't see anything too darn wrong about that.
Let's take North Dakota, for example. My dear friend, then
Governor Hoeven, now Senator Hoeven, presided over three terms
of our compact process. I have a strong message from our
Tribes. We would like more respect for our Tribal Gaming
Commissions. We know what the score is. We know damn well that
we need to keep our customers satisfied and that we have to
keep our doors open vis-a-vis three tiers of regulation. We are
not idiots.
If we don't comply and we don't regulate, we have no
revenue. We have no option. We must be credible to our
customers and we damn well are.
Senator McCain picked out one FBI case, one out of a $26
billion industry. That is a pretty damn good record. He doesn't
say anything about the ones we have caught using our State and
gaming compact people, our Tribal officials and Federal
officials. It is a success story.
In North Dakota, my little five operations in a State of
800,000 people spent $7.1 million in regulatory costs last
year. They have 325 regulators in our field in these little
tiny, small, modest operations. We are regulated upon
regulation upon regulation.
In South Dakota, they spent $6.5 million in regulatory
expenses last year. All the North Dakota Tribes and South
Dakota Tribes have worked diligently through a State gaming
compact process that needs to be recognized. We are under the
gun. We meet every two years with our State Minority Leaders,
Majority Leaders, Attorneys General, the Governor's Office. How
are things going and do we need to make any adjustments.
I would think that Senator Hoeven would tell you he has a
pretty good understanding of how these relationships work. And
obviously, being the authorizing body for three terms and felt
more than comfortable with it, he certainly was satisfied and
so was his Attorney General, both Republican.
Our compacts provide GAAP IGRA standards for accounting,
regulation, testing, reporting for machines to the State,
regulations for table games, background checks conducted by the
State Attorney General's Office, and licensing standards by our
Tribal Gaming Commissioners, random inspections by the State
Attorney General's Office. He can call up anytime and look at
any dang thing he wants to, and Tribal gaming commissioners.
I know for a fact, and I am sorry that Senator Hoeven was
not feeling well today, but he has a great respect for the
Tribal nations. You can see by the amount of votes that he won
in that State to take this seat. And part of that, a large part
of it is the way he handled one of the largest business we now
operate which is gaming.
And to think that we might need more regulation, I use
Senator McCain's words, talk about a waste of taxpayers'
expense in a recession we want to consider more regulation on
our industry? I don't get it. Approximately, look at the
economic impact. We are the epitome of IGRA in my region; 4,000
full-time working people in the States of North and South
Dakota with full benefits, including insurance. That is unheard
of when I grew up there.
Mr. Chairman, Mr. Udall, other Members of the Committee,
you have known of projects over decades and decades that have
failed and failed, but by God, this one didn't. It provided the
employment feature. It provided us the relationship with the
financial institutions to finally get a loan once in a while.
It has enhanced our relationships regionally, locally, and
politically.
In 2010, our in-State purchasing in North and South Dakota
was $125 million; 122 communities in North Dakota got checks
from our casinos; 91 communities in the State of South Dakota
got checks from our casinos. It is working.
Federal and State reporting requirements, that would be a
problem. We do have some redundancy in there, but that seems to
be formatting in nature, things that can take place.
And I have to stop to say hello to my dear and good friend,
Senator Hoeven. I just got done bragging you up, Senator. I am
sorry.
[Laughter.]
Mr. Luger. You will see it in the testimony. And as Senator
Hoeven sits, I am here to tell you that I doubt there are few
in Congress, and I am bragging on Senator Hoeven's part, that
would have the unique responsibility of dealing with these
treaty issues on a day-to-day basis in the Executive Branch for
three terms. And he left there, I could not say that this man
would have any more respect for our Tribal membership, our
veterans, and our businesses than you can have.
And I am here to tell you, I am ready to answer the two
questions. We damn well don't need a legislative fix. It is the
last thing we need. The predecessor he was talking about in my
opinion and many in Indian Country was a personal bone and it
is time to bury that bone. There has been no ill effects out of
the Colorado River case. We are more astute than that. If
anything, our radar screens went on even higher to make sure
that there wasn't. But the fact remains that you can go out to
the Attorney General's Office and the Governor's Office and say
what is wrong out there in Indian Country. Where are all these
crimes taking place?
And I am here to tell you under Governor Hoeven, his
Attorney General and their law enforcement people, our Tribal
gaming enforcement people, and our State law enforcement people
worked together. And whenever we did find a problem, the only
question was where could we send them to the maximum
jurisdiction for sentencing? And it was a cooperative effort
led by this fine gentleman right here, now Senator Hoeven.
And in closing, I would like to say that it has almost
become predictable for this legislative fix to come up and I
can't see how it would ever get into law anyway. I just don't
see a legislative track for it because I am telling you, for
me, as I am here testifying, that I don't see the need for it.
There is no hue and cry for it out there in the Executive
Branch world and our State governments or their Attorneys
General office.
In closing, I would like to thank the Honorable Members of
the Commission for their continued support of our veterans, our
beloved veterans. They need care of their in-service and when
they come back from service. Senator Hoeven is a perfect
example of somebody that went out of his way to do everything
he could. He has buried several of our Tribal members; has been
there; has seen the sorrow; has seen the needs.
And with that said, I cannot thank you enough to the
Members I know on this Committee of your previous support for
our veterans' affairs.
And the last thing is, and I reflect directly on this man
here as well as myself, the flood damage on the Missouri River.
Please don't forget that. That is a huge story that is not
being played out in the media. Our good Senator lost his own
home. I lost my home. There are many others out there that have
and it still continues today.
So I want to thank the Members of this Committee for their
time. I am honored to be here and stand ready to answer any
questions that you have of me.
Thank you.
[The prepared statement of Mr. Luger follows:]
Prepared Statement of J. Kurt Luger, Executive Director, Great Plains
Indian Gaming Association
Good Morning, Chairman Akaka and Members of the Committee. Thank
you for inviting me to testify this morning.
My name is Kurt Luger and I am a member of the Cheyenne River Sioux
Tribe. I grew up on the Standing Rock Sioux reservation in North Dakota
on my family ranch and my family operates a grocery store and small
business in Fort Yates, North Dakota.
I serve as the Executive Director of the Great Plains Indian Gaming
Association which covers North Dakota, South Dakota, Nebraska, Iowa,
Kansas, Wyoming, and Montana. GPIGA was in 1997, and we have 289 Tribes
as Members. Together these Tribal nations exercise jurisdiction over
fifteen (15) million acres of federal trust land.
At GPIGA, our mission is to bring together the federally recognized
Indian Nations in the Great Plains Region who are operating gaming
enterprises in a spirit of cooperation to develop common strategies and
positions concerning issues affecting all gaming Tribes; to promote
Tribal economic development and its positive impacts within the Great
Plains; to provide pertinent and contemporary information for the
benefit of the GPIGA member nations; to draw upon the unique status of
those Great Plains Indian Nations which have treaties between
themselves and the United States; and to provide our Member Tribes with
information about national legislation and issues affecting Tribal
economic development.
The National Indian Gaming Commission was established to assist
Indian Tribes with the regulation of Indian gaming. Under IGRA, Tribal
gaming regulators are the primary day-to-day regulators of Indian
gaming and they regulate Indian gaming under Tribal gaming ordinances,
which are approved by the NIGC provided that they conform to minimum
federal statutory standards.
It bears repeating that Tribal regulators are the primary
regulators of Indian gaming. In North Dakota for example, Tribal
governments employ more than 325 Tribal regulators and staff. Tribal
governments spend more than $7.4 million on Tribal and state regulation
of Indian gaming in North Dakota. That's $1.48 million per Tribal
government and we run relatively modest operations. In the future, our
Tribal government's regulatory efforts and expenditures need to be
recognized to provide an accurate overall picture of regulatory
expenditures in Indian country.
Naturally, we are concerned about the manner in which the NIGC
approaches its mission to assist Tribes in regulating Indian gaming.
Under the previous administration we found an uncooperative environment
and often Tribes were left with the impression the NIGC had chosen to
write regulations without Tribal input. In addition, we were concerned
with the lack of training and technical assistance on those regulations
to Indian Tribes and Tribal regulators. Under the current NIGC
Commission chaired by the Honorable Tracie Stevens, the atmosphere is
one of greater cooperation and understanding of the role of the Tribal
gaming commissions. The current Commission has improved the
relationship between our Tribal gaming industry and the federal
regulatory authority. They have taken sincere steps to improve
government to government relationships with our Tribal nations through
the implementation of a real Tribal consultation policy. The current
Commission has complied with Indian Educators Federation v. Kempthorne,
which ruled that Indian preference in hiring applied to all ``positions
in the Department of the Interior, whether within or without the Bureau
of Indian Affairs, that directly and primarily relate to providing
services to Indians . . .''
The current Commission has taken great strides to strengthen the
United States' government-to-government relationships with Indian
Tribes. In 2000, President Clinton issued Executive Order No. 13175,
which directed Federal agencies to consult and coordinate with Indian
Tribes on Federal rulemaking and agency actions that had substantial
direct impacts on Tribal self-government, Tribal lands and treaty
rights. The Executive Order provided that agencies shall adhere to the
following criteria:
Respect for Tribal self-government and sovereignty, treaty
and other rights that arise from the Federal trust
relationship;
Provide Tribes with the maximum administrative discretion
possible; and
Encourage Tribes to develop their own policies to achieve
objectives, defer to Tribal standards where possible, and
otherwise preserve the prerogatives authority of Indian Tribes.
The Executive Order also directed Federal agencies to consider the
need for the regulation in light of Tribal interests, take Tribal
concerns into account, and use consensual mechanisms for
decisionmaking, including negotiated rulemaking, where appropriate. On
September 23, 2004, President Bush issued an Executive Memorandum
directing Federal agencies to adhere to Executive Order 13175. On
November 5, 2009 President Obama signed a memorandum which directed
each agency head to submit a detailed plan of how they would implement
the policies and directives of Executive Order 13175. With the current
Commission's extensive consultation schedule the Federal-Tribal
government-to-government relationship has become more meaningful.
In closing, we encourage the NIGC to continue the direction of
cooperation and mutual respect for our Tribal economic development
ventures.
The Chairman. Thank you very much.
Ms. Morago, will you please proceed with your testimony?
STATEMENT OF SHEILA MORAGO, EXECUTIVE DIRECTOR, OKLAHOMA INDIAN
GAMING ASSOCIATION
Ms. Morago. Thank you, Chairman Akaka and distinguished
Members of the Committee. On behalf of the Oklahoma Indian
Gaming Association and its 22 member Tribes, allow me to extend
my deepest appreciation for this opportunity to provide
testimony to you today.
My name is Sheila Morago. I am a proud member of the Gila
River Indian Community. I am the Executive Director of the
Oklahoma Indian Gaming Association, a position I have held for
the last two months.
While my tenure at OIGA has recently begun, I have been in
the business of Indian gaming since 1994. Most recently, I
spent eight years as the Executive Director for the Arizona
Indian Gaming Association.
Tribal governmental gaming in Oklahoma has come a long way
from our first days in bingo halls in the early 1980s to now
being the fourth-largest gaming jurisdiction in the United
States, doing over $3 billion in business. We are surpassed
only by Nevada, California, and New Jersey in size of total
gaming revenues generated.
In 2009, the gross rate of gaming in Oklahoma led the
Nation. Oklahoma is home to 39 Tribes, 33 of whom engage in
gaming as a form of economic development. These 33 Tribes
operate 111 gaming facilities, which range in size from a fuel
stop with a few machines to large, full-scale destination
resorts.
While many think that we have become large overnight, our
growth has been slow and deliberate. Since the early days in
Oklahoma, Tribes have used their gaming revenues to better the
lives of their Tribal members. Gaming revenue has been used to
backfill ever-shrinking Federal funds and we have used these
revenues to educate our children, take care of our elders,
improve our infrastructure, and taking to heart the true
meaning of IGRA.
The first Tribal-State compacts were signed in 1992, which
allowed horse racing wagers in Tribal casinos. The current
compacts in Oklahoma were approved by the citizens of the State
through referendum in 2004. Through these compacts, for the
first time the Tribes share their revenues from compacted games
with the State. This revenue-sharing with the State of Oklahoma
has now grown to exceed $100 million annually.
While the 2005 compacts expanded Class III gaming options
available to our customers, Oklahoma remains a very strong
Class II market. For that reason, we occupy a very unique niche
in the Indian gaming industry and we understand our business
very well as evidenced by the continued strong growth of our
gaming business. We have applied these lessons learned with
every expansion we have undertaken.
We also understand how to regulate our gaming very
effectively. While I say that with pride, it is not a
meaningless boast. The Tribal gaming regulators from Oklahoma
are among the most highly regarded regulators in the Country.
In fact, many State regulators have come to visit our
regulators seeking the benefit of their expertise.
One of the reasons Oklahoma Tribes have developed such a
strong regulatory pedigree is they realized early on that in
the development of smart and effective regulations, our Tribal
regulators had to work closely with our facility operators.
This process has worked very effectively for many years in
jurisdictions like Nevada. It has enabled them to promulgate
regulations that are workable because the regulations are based
on real business operations that take place in the casinos.
This regulatory development process has been very important
in Oklahoma because our Tribes have been leaders in Class II
gaming to where it is today, including the tremendous
technological innovations we have made.
There are many unique features to our machines. To be smart
and effective in our regulatory efforts, we have had to develop
processes and procedures specifically tailored to Class II
gaming. So to be honest, our Tribes were disappointed when the
prior NIGC Chair and his staff did not respect our many years
of expertise and refused to consider opinions we offered on how
the NIGC can best write effective regulations, particularly
with regard to the Class II games.
We never expected NIGC to agree with us on all matters all
the time. However, we merely asked for respectful consideration
of our views. We are very pleased now to say that from our
perspective, the current NIGC Chair and her staff have taken
the time to hear our views and to carefully deliberate on how
to develop the most effective regulations.
Again, we do not anticipate the NIGC to agree with us on
all matters all the time. However, we greatly appreciate the
respectful consideration of our opinions. The OIGA member
Tribes have been pleased with the deliberate pace at which the
NIGC has proceeded in its regulatory review. It has been our
desire to have the most effective and efficient regulations,
and we believe that it is important to take our time to get it
right.
Unlike commercial gaming, Oklahoma Tribes use their gaming
revenues for governmental purposes. We are responsible to our
Tribal members to operate our gaming facilities in the most
efficient and effective manner possible in keeping with sound
business and good regulatory practice. Every dollar that is not
wisely spent in our gaming operations and regulation are
dollars that do not go to educate our children, provide health
care to our elders, and build safer roads or any of the other
myriad government responsibilities we have.
This current consultation and regulatory schedule we
believe will result in the right regulations. Furthermore, it
will provide the NIGC with the time to ensure they will be able
to fulfill their Federal trust responsibilities under IGRA. And
finally, having regulations that are drafted so they fit our
unique industry will end the constant redrafting and reworking
of Class II Federal regulations that have taken so much time
and exhausted Tribal resources that are needed badly elsewhere.
Thank you, Members of the Committee, for the opportunity to
present our views of the OIGA member Tribes. I stand ready to
answer any questions you may have.
[The prepared statement of Ms. Morago follows:]
Prepared Statement of Sheila Morago, Executive Director, Oklahoma
Indian Gaming Association
Good afternoon Chairman Akaka, Vice Chairman Barrasso, and
distinguished members of the Committee.
On behalf the Oklahoma Indian Gaming Association and its 22 member
Tribes, allow me to extend my deepest appreciation for this opportunity
to provide testimony to you today. My name is Sheila Morago and I am a
proud member of the Gila River Indian Community. I am the Executive
Director of the Oklahoma Indian Gaming Association, a position I have
held for the last two months. While my tenure at OIGA has really just
begun, I have been in the business of Indian Gaming since 1994. Most
recently I spent 8 years as the Executive Director of the Arizona
Indian Gaming Association.
Tribal Governmental Gaming in Oklahoma has come a long way from our
first days as bingo halls in the early 1980s, to now being the fourth
largest gaming jurisdiction in the United States doing over $3 billion
in business. We are surpassed only by Nevada, California and New Jersey
in size of total gaming revenues generated. In 2009 the growth rate of
gaming in Oklahoma led the nation.
Oklahoma is home to 39 Tribes, 33 of whom engage in gaming as a
form of economic development. These 33 Tribes operate 111 gaming
facilities, which range in size from fuel stops with a few machines, to
large full-scale destination resorts. While many may think that we have
become large overnight our growth has been slow and deliberate.
Since it's earliest day's Tribes in Oklahoma have used their gaming
revenues to better the lives of their Tribal members. Gaming revenues
have been used to back-fill ever shrinking federal funds and we have
used these revenues to educate our children, take care of our elders,
improved our infrastructure and taking to heart the true meaning of
IGRA.
The first Tribal state compacts were signed in 1992, which allowed
horseracing wagers at Tribal casinos. The current compacts in Oklahoma
were approved by the citizens of the state through a referendum in
2004. Through these compacts, for the first time, the Tribes shared
their revenues from compacted games with the state. This revenue
sharing with the state of Oklahoma has grown to now exceed $100 million
annually.
While the 2005 compacts expanded the Class III gaming options
available to our customers, Oklahoma remains a very strong Class II
gaming market. For that reason we occupy a unique niche in the Indian
gaming industry. And we understand our business very well, as is
evidenced by the continued strong growth in our gaming businesses. We
have applied our lessons learned to each expansion we have done.
We also understand how to regulate our gaming very effectively.
While I say this with pride, it is not a meaningless boast. The Tribal
gaming regulators from Oklahoma are among the most highly regarded
regulators in the country. In fact, many state regulators have come to
visit with our regulators seeking to benefit from their expertise.
One of the reasons the Oklahoma Tribes have developed such a strong
regulatory pedigree, is they recognized early on that to develop
``smart'' and effective regulations, our Tribal regulators had to work
closely with our facility operators. This process has worked very
effectively for years in jurisdictions like Nevada. It has enabled them
to promulgate regulations that are workable because the regulations are
based on the real business operations that take place in the casino.
This regulatory development process has been very important in
Oklahoma. Because our Tribes have been the leaders in advancing Class
II gaming to where it is today, including the tremendous technological
innovations we have made, there are many unique features to our games.
To be smart and effective in our regulatory efforts, we have had to
develop processes and procedures that are specifically tailored to
Class II gaming.
So to be honest, our Tribes were disappointed when the prior NIGC
chairman and his staff did not respect our many years of expertise and
refused to consider the opinions we offered on how the NIGC can best
write effective regulations, particularly with regard to Class II
games. We never expected the NIGC to agree with us on all matters all
the time. However, we merely asked for respectful consideration of our
views.
We are very pleased now to say that, from our perspective, the
current NIGC chair and her staff have taken the time to hear our views,
and to carefully deliberate on how to develop the most effective
regulations. Again, we do not anticipate that the NIGC will agree with
us on all matters all the time. However, we greatly appreciate the
respectful consideration of our opinions.
The OIGA member Tribes have been pleased with the deliberate pace
with which the NIGC has proceeded in its regulatory review. It has
always been our desire to have the most efficient and effective
regulation, and we believe that it is important to take the time to get
it right.
Unlike commercial gaming, Oklahoma Tribes use their gaming revenues
for governmental purposes. We are responsible to our Tribal members to
operate our gaming facilities in the most efficient and effective
manner possible, in keeping with sound business practices and good
regulatory practices. Every dollar that is not wisely spent in our
gaming operation and regulation, is a dollar that does not go to
educate our children, provide healthcare to our elders, build safer
roads, or any other of the myriad governmental responsibilities we
have.
This current consultation and regulatory promulgation schedule we
believe will result in the ``right'' regulations. Furthermore, it will
provide the NIGC with the time to insure they will be able to fulfill
their federal trust responsibilities under IGRA. And finally, having
regulations that are drafted so they fit our unique industry will end
the constant redrafting and reworking of Class II federal regulations
that has taken so much time and exhausted Tribal resources that are
badly needed elsewhere.
Thank you members of the Committee for the opportunity to present
the views of the OIGA member Tribes, and I stand ready to answer any
questions you may have.
The Chairman. Thank you very much for your testimony.
Mr. Meskill, will you please proceed with your testimony?
STATEMENT OF JOHN MESKILL, DIRECTOR, MOHEGAN TRIBAL GAMING
COMMISSION
Mr. Meskill. Thank you, Chairman Akaka, Members of the
Committee and staff.
My name is John Meskill. I have been the Director of the
Mohegan Tribal Gaming Commission since April of 2001. Prior to
my employment by the Mohegan Tribe, I served as the Executive
Director of the Mashantucket Pequot Gaming Commission, and
before that, I served for four and a half years as the
Executive Director of the State of Connecticut's Gaming
Regulatory Agency, the Division of Special Revenue.
I was also a member of the NIGC's Minimum Internal Controls
Advisory Committee in 2004 and 2005.
I appreciate the opportunity to testify today regarding the
role of Tribal regulators as the primary regulatory authority
of Tribal gaming operations. In my 19-plus years as a gaming
regulator, I have seen first-hand the serious commitment the
Tribes have to protect the integrity of their gaming
operations. This commitment involves considerable resources
expended by the Tribes.
For example, in fiscal year 2011, the Mohegan Tribe will
spend over $26 million on regulatory costs for its own
employees, including police, public safety and compliance
personnel, plus outside auditors and an additional $6.8 million
for costs assessed by the State of Connecticut for regulatory
services the State provides related to Mohegan Sun. Detail on
these regulatory services and expenses are set forth in
schedule A that is attached to my testimony.
Under the Mohegan Tribe's compact with the State of
Connecticut, I work closely with the State Gaming Agency in
administering a comprehensive regulatory framework that is
closely tailored to the types of games and scope of gaming
which are enjoyed under the constant development of Mohegan
Sun.
Under our Tribal-State compact, which was first signed and
approved in 1994, the State Gaming Agency and the Commission I
oversee jointly regulate all aspects of Class III gaming on the
Mohegan Reservation through standards of operation and
management.
Each proposed change to the standards of operation and
management, which are necessarily frequent, is required to be
sent to the State Gaming Agency for its review and comment, and
in certain sensitive areas such as cage operations and
technical standards for slot machines, State approval is
required before such standards may be implemented.
This process, which also includes outside certification,
for example, of new gaming equipment, can be lengthy and
detailed. So my agency appreciates the NIGC as a valuable
resource when it comes to developing and enhancing standards.
However, we also appreciate that the Commission's role for
Class III gaming does not extend a third layer of review and
regulation over those standards of operation and management,
which of necessity need to be adaptable to the needs of a
particular Tribal gaming jurisdiction.
By compact, the State Gaming Agency also licenses Mohegan
Sun's gaming employees after a background investigation for
each employee has been completed by the Connecticut State
Police. While we don't always agree with the State on all
regulatory issues, we are usually able to find common ground in
resolving our differences.
In the 15 years the Mohegan Tribe has operated its casino,
the State has never alleged that the Tribe has failed to comply
with the provisions of the State gaming compact.
Over the years, I have also worked closely with NIGC and I
have a great deal of respect for the wide range of expertise
that has been assembled at that agency. While the CRIT decision
has altered the mission of the agency, the NIGC continues to be
a valuable resource for Tribal regulators when we seek advice
on accounting and auditing issues, and questions about gaming
technology that they have reviewed in other jurisdictions, and
best practices for internal controls. I have always found the
staff at NIGC to be informative and responsive.
And in closing, I also want to thank the Committee for
scheduling this hearing to coincide with NIGC consultation,
which I am also attending with the Vice Chairman of the Mohegan
Tribe, James Gessner. I know that the Mohegan Tribe appreciates
this Committee's longstanding respect for the government-to-
government relationships between the Tribes and the Federal
Government and the Tribe also appreciates NIGC's renewed
efforts to consult with the Tribes in all aspects of the
regulatory rules and rulemaking.
Again, I would like to thank the Chairman and the Members
of the Committee for the opportunity to testify today.
Thank you.
[The prepared statement of Mr. Meskill follows:]
Prepared Statement of John Meskill, Director, Mohegan Tribal Gaming
Commission
The Chairman. Thank you very much, Mr. Meskill.
Now, we will have questions for you. I would like to defer
first to Senator Udall for questions.
Senator Udall. Chairman Akaka, I would defer to Senator
Hoeven. I have had an opportunity to question here, and if he
has any questions or any statement he wants to make, I would
let him go first. Thank you.
The Chairman. Senator Hoeven?
STATEMENT OF HON. JOHN HOEVEN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Hoeven. Thank you, Mr. Chairman.
I would like to thank all of the witnesses for being here
today.
Kurt, good to see you again. During my 10 years as
Governor, I had the opportunity to work with Kurt and others on
our gaming compacts on behalf of Native Americans in our State.
And it has been a tremendous working relationship. And I think
he is right. I think if it works that well in other States, it
really is not in need of a legislative solution. We were always
able to come together both through the Governor's Office and
through Kurt as our State Director, working with the Tribal
Chairman; a tremendous mutual respect and great working
relationship. And it has been tremendously beneficial to the
Tribe.
And the other thing is through Kurt's good work that I hope
happens in other States is there was also the opportunity to
reach out to our legislature and engage them not just on issues
that related to Tribal gaming, but the whole gamut of other
issues that really opened a door. The working relationship that
was established both between the Executive Branch in North
Dakota and the Legislative Branch with the Tribes through the
work we did on our gaming compacts opened up the door to other
opportunities in regard to economic issues, for example,
drilling oil wells on particularly one of our reservations,
which now is a tremendous economic activity.
And again, I think that relationship really developed out
of a lot of the work that Kurt had helped facilitate through
the gaming compacts, but also on social issues, law
enforcement, education, as well as just the opportunity to
build those personal relationships that created some bonds and
some trust.
The Luger family also raises and trains horses, and as a
matter of fact, we had many occasions to ride horses together.
Nobody trains them better than Kurt and his brother.
My point being I think you can get things done when you
build those kind of relationships. So however we approach this
at the Federal level, it is still going to come back to the
people and building those bonds and those relationships and
that aspect of trust I think to truly make progress.
So I am really pleased you are here. I think you have so
much to offer in terms of how to do this. Kurt also worked for
Senator Daschle at one time, and so he understands not only
both sides of the aisle, but also the federal-state-Tribal
relationship.
And so I really want to commend our Chairman for inviting
Kurt to be part of the panel and these other outstanding panel
members as well. Also, I really would look, Kurt, maybe to you
to just I guess give us some of your thoughts in terms of as
we, I mean from either a Federal or a State perspective, what
are the three keys to making sure that we handle these gaming
compacts well? And then also a couple of keys as we wrestle
with some of these tough issues like Internet gaming, which can
also be very controversial. Just your thoughts.
And then I would ask the other panel members for their
thoughts in both regards. What makes for a successful State
relationship, in your opinion? How do we really make sure we
have the framework from a Federal perspective to have those
successful State relationships with the Tribal nations, to just
address for a minute the Internet gaming issue that obviously
is a big issue right now.
Mr. Luger. The three at the top of the list are very easy
for me. I practice them every day. One is trust. You have to
take the time and energy, the Tribes, to engage the legislature
and the Executive Branch and build those relationships. You
have to. There is no other way around it. There is no easy cut.
People need to know you before they trust you.
Transparency. I think now-Senator Hoeven, then-Governor
Hoeven will tell you that the key to our relationship was
transparency and being able to trust when one said something,
we were going to stick to it. It is a must in any relationship,
and if you don't know somebody, you can't build to that.
And the third, i.e. the Internet, is we have to be able to
as Tribes to be able to report accurately to our State
counterparts and our colleagues and quantify what the actual
data is. What is the score? How well are you doing? What are
your activities, whether it be criminal activities or revenue,
things of that nature.
But I get back to those trusting relationships. This
Committee is very lucky. This man is committed to Indian
Country; has been for a long time. And the trust that we got
during his Administration led to a lot more baloney sandwiches
in Indian Country than before he got there. And it is key and
it is not easy. You have to get to know each other and stay
engaged.
And that would be my advice to Tribes not to shy away from
State legislatures and the Executive Branch; engage them
because it is part of the story. We have all been used to
engaging in the Federal end of things, but times are changing.
And Senator Hoeven and I had a common goal, and we were the
epitome of it: jobs, jobs and jobs.
We got 4,000 new jobs in the State of North Dakota. That is
hard to create. And so if that is what you are looking for,
that you want your people gainfully employed, their quality of
standards brought up, you can figure out the obstacles that are
in between those two central thoughts.
And again, I cannot tell you, the Committee, that you are
going to enjoy the presence of our dear former Governor is a
tremendous fellow and a dear, dear friend.
Senator Hoeven. Mr. Chairman, I see my time has expired, so
I will defer if that is best. I can come back. I would like to
ask about Internet gaming for just a minute when there is time,
and to the other panel members, thank you.
The Chairman. Senator Udall?
Senator Udall. Thank you, Chairman Akaka.
Kurt, you mentioned the Colorado River case, and I think
you said, I don't want to quote you directly, that our radar
went up. And then you said something, we took additional
actions. And I am wondering what did that case mean to the
three members of the panel? And were there things that you did?
And any thoughts you have on that issue?
Mr. Luger. Mostly from a sensitive point of view. We had
been doing the technical things, but we were beat up badly by
the media and that is where this disrespect. We kept wondering,
well, this is one case, one scenario. But at the same time, we
felt, the rest of us in Indian Country were being disregarded
on all the good work that we were doing.
We spend our checkbook and work our buns off I know in the
State of North Dakota to make sure that our games are clean.
And I tell you what, if we are not doing that, the Attorney
General is standing right there with that State Indian compact
reassuring that it gets a secondary eyeball there. So there is
a lot of attention to it.
To answer your question, it would be the sensitivity that
that case represented to everybody, when in fact our gaming
commissions have worked diligently from day one.
And the other thing I think is forgotten in here, and I
know Senator Hoeven knows well about this of a particular case
that we had in Spirit Lake. We have invested in the best
technology out there when it comes to security and
surveillance. We all have. And that stuff is expensive. I can
pick the pigment out of your skin in every one of my casinos.
Just drop a card and I will pick you up. And that is expensive
and it is top of the line, first class stuff, the same thing
that Las Vegas uses, if not better and we don't get credit for
that.
And so those are the things that we just doubly check the
i's and cross the t's in making sure that our main thing, and
you know this, that our customers are assured that when they
come into our house of entertainment, that the games are
credible.
Senator Udall. Ms. Morago or Mr. Meskill, do you have any
thoughts on that issue?
Ms. Morago. Senator Udall, I do. I could repeat everything
because I thoroughly agree with Kurt and the other panelists on
this.
But I would like to give you one additional thought
process. There have been many financial commitments based on
current law. And one of the things we have to think of is when
you change current law, what does that do to financial
commitments? People have loans. People have bonds out. So we
have to take a look at that, too. And I agree with Kurt
completely on the parts and pieces where Tribes are doing well
on this. If it ain't broke, don't fix it.
Mr. Meskill. Senator, I think that probably the CRIT
decision just reinforced to us what our role was. We always
knew we were the primary regulator and we knew we were the
first line of defense for the Tribe. So I think it just
instilled in us that we have to do that much better a job and
we have to work better with the State.
But I would say that those minimum internal control
standards that the NIGC has in place. It is about a 100-page
document. It is a good base document, but every Tribe I have
dealt with has internal controls that far exceed those MICS. So
the Tribes are well ahead of the curve anyway, I think. And the
CRIT decision I think just reinforced that we are the front
line.
Senator Udall. Thank you very much.
Thank you, Chairman Akaka. I don't have any more questions.
The Chairman. Thank you very much, Senator Udall.
Let me defer to Senator Hoeven for further questions.
Senator Hoeven. Well, I just wanted to follow up a little
bit maybe with all three of the panel members on your feelings
on Internet gaming. Because you know that is a hot topic and an
issue now. And are having experience, and you see it on the
ground every day and how it affects people and so forth. I
would just like, from all three of you, your perspective on it
is good, is it bad, how should it be addressed, and what the
impacts would be.
Mr. Luger. Obviously, Senator, as you know better than
most, is the brick and mortar operations. In a rural setting
like the States of North Dakota, South Dakota, Montana, are
dear friend Mr. Udall in your area, and we see it as this. The
Federal prohibition has played its role. It is still in play.
There is a lot of talk that there are a lot of pressures coming
from certain States to bring it from that direction.
But as we speak now, Indian Country is very concerned that
the State gaming compact process be maintained and respected.
We took years to work those regulatory items; two, that Federal
taxes are not applied to those. We feel strongly about that.
And three, that the current foreign operations, and I think
somebody quoted me the other day that they are now quantifying
it as a $10 billion industry out there in the Caymans and so on
and so forth.
We need to be assured that there is going to be a fair
playing field when it comes to regulation. Now, as it is, poker
is the only game in town. That is what everybody is talking
about. But we are very concerned that anything that comes down
the road that the respect for our current Federal-State gaming
compact relationship, the fact that we feel strongly that this
is something that should amount to a Federal tax for us, and a
strong consideration that the brick-and-mortar systems which we
in the domestic market are relying upon, especially in North
and South Dakota, have a way to participate.
And I will just give you an idea. We are currently talking
about a consortium and a collective effort. The Internet is a
huge place. And you know, Senator, if someone puts their little
finger up in the air, I don't know if it is ever going to
attract enough attention. So the branding of that aspect to
create a business acumen that we have to apply to it is
certainly a challenge to us.
But from a policy point of view, we are very concerned that
our State gaming compact relationship is reviewed and
considered. We feel strongly that we shouldn't be paying taxes
with it. And this is something that needs to be moved along
very, very carefully because of the infrastructure investment
that we already have in our brick-and-mortar systems.
Ms. Morago. Senator, NIGA came up with some general
principles about the Internet last year that all the Tribes
agreed upon. And having said that, we support all those general
principles.
But I think we have to look at it in terms of any past
legislation that has been put forth that specifically deals
with commercial gaming. And it gives commercial gaming a real
step up on this economic development. And I have to say that we
are as capable as a commercial gaming entity of doing this
economic adventure.
So while we are looking at this and drafting, I think it is
important for us to look at it in terms of commercial and
Nevada isn't the only game in town. We are perfectly capable of
operating and regulating this new adventure. And I think that
while you are looking at these proposals being put forward that
you have to remember that. This shouldn't be a monopoly for the
commercial gaming industry where we don't have access to it.
So we think whatever legislation comes down the pike, it
has got to be open for everybody to have access to it and not
just for the few people that can do it.
Mr. Meskill. Senator, I concur with everything that has
been said. It seems like Internet gaming is going to happen. It
is a question of when. I know the Tribe that I work for if it
occurs, they certainly would like to be in a position that they
can protect their investment that they have in their facility,
you know, the billions of dollars that they put into their
facility.
So if consideration is given to the Tribes to participate,
it would somehow be complementary to the facilities that they
have built over the years. And I think it is important that the
Tribes' interests are protected when that legislation happens
because, as Sheila said, if it is left exclusively to the
commercial casino operators, Tribal gaming is going to suffer
greatly.
Senator Hoeven. Well, again, I want to thank you. Did you
have anything else, Kurt, or anyone else to add? If you have
any other thoughts on Internet gaming because obviously it is
something we will be dealing with. And so we certainly want
your thoughts.
Mr. Luger. Briefly, I just happen to have something that I
know would be of great interest to you. We have six principles
that we put together from our Great Plains Tribes and I will
provide a draft to the Committee. But they are as follows.
Indian Tribes and Tribal governments are ready to operate,
regulate, tax and license Internet gaming and those rights must
not be subordinated by non- Federal authority. Internet gaming
authorized by Indian Tribes must be available to customers in
any locale where Internet gaming is not criminally prohibited.
Consistent with long-held Federal law and policy, Tribal
revenues not be subject to tax. Existing Tribal government
rights under State compacts must be respected. And five, the
legislation must not open up the Indian Gaming Regulatory Act
for amendments. And our sixth plank that we submitting to NIGA
is Federal legalization of Internet gaming must provide
positive economic benefits for Indian Country.
So thank you very much for your time.
Senator Hoeven. Thanks, Kurt.
Any other thoughts? Again, I want to thank the panel
members and I want to thank the Chairman for bringing in people
who are very knowledgeable on this important issue.
Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator, for your
questions.
In the interests of time, I do have questions. I will
submit my questions for the record.
It is good to hear from you and directly from the Tribes,
and we want to maintain that relationship with you and continue
to communicate with you on issues that can in some cases
improve what is happening here.
One of the questions that we are asking was whether some of
these changes, if changes are needed, should come
administratively or legislatively. And so this is what we can
work on as we continue here.
And as I said, you have really been successful. Your whole
industry is increasing and proceeding quickly. And as a result,
I think you will agree with me that we need to work hard at
keeping up with the law and also to apply justice to what we
have out there. And of course, to continue to help our Tribes
with their needs.
So again, I want to thank you so much and thank the Members
of this Committee, as well as the staff on both sides of the
aisle of this Committee for the work that they have done. We
will, of course, again look down the line and see where we are
in regards to gaming. And so let's keep working together on
this.
So let me express again my mahalo and thank you very much
to the witnesses today. The Committee, like the NIGC and Tribal
regulators, takes its oversight role over Indian gaming very
seriously, and Indian gaming has proven to be the single most
effective economic development that the Tribes can participate
in, and provide services for their Tribal members.
I am encouraged by what I have heard today from the Federal
and Tribal regulators. The diligence that you show every day in
ensuring that Indian gaming is being conducted as intended
under IGRA is commendable.
So let's continue this, and again thank you very much.
And this hearing is adjourned.
[Whereupon, at 4:25 p.m., the Committee was adjourned.]
A P P E N D I X