[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                THE INDIAN GAMING REGULATORY ACT OF 1988

  Mr. McCAIN. Mr. President, before the 103d Congress comes to a close, 
I would like to take this opportunity to inform my colleagues and the 
American people about the efforts of the Committee on Indian Affairs to 
enact amendment to the Indian Gaming Regulatory Act of 1988.
  Since the enactment of the Indian Gaming Regulatory Act in 1988, 
there has been a dramatic increase in the amount of gaming activity 
among the Indian tribes. Indian gaming is now estimated to yield gross 
revenues of about $4 billion per year and net revenues are estimated at 
$750 million. There are about 160 class II bingo and card games in 
operation and there are now over 100 tribal/state compacts governing 
class III gaming in 20 states, including my own state of Arizona. 
Indian gaming comprises about 3 percent of all gaming in the United 
States. Gaming activities operated by State governments comprise about 
36 percent of all gaming and the private sector accounts for the 
balance of the gaming activity in the Nation.
  Indian gaming has become the single largest source of economic 
activity for Indian tribes. Annual revenues derived from Indian 
agricultural resources have been estimated at $550 million and have 
historically been the leading source of income for Indian tribes and 
individuals. Annual revenues from oil, gas, and minerals are about $230 
million and Indian forestry resources revenues are estimated at $61 
million. The estimated annual earnings on gaming now equal or exceed 
all of the revenues derived from Indian natural resources. In addition, 
Indian gaming has generated tens of thousands of new jobs for Indians 
and non-Indians. On many reservations gaming has meant the end of 
unemployment rates of 90 or 100 percent and the beginning of an era of 
full employment.
  Under the Indian Gaming Regulatory Act, Indian tribes are required to 
expend the profits from gaming activities to fund tribal government 
operations or programs and to promote tribal economic development. 
Profits may only be distributed directly to the members of an Indian 
tribe under a plan which has been approved by the Secretary of the 
Interior. Only a few such plans have been approved. Virtually all of 
the proceeds from Indian gaming activities are used to fund the social 
welfare, education, and health needs of the Indian tribes. Schools, 
health facilities, roads, and other vital infrastructure is being built 
by the Indian tribes with the proceeds of Indian gaming.
  In the years before the enactment of the Indian Gaming Regulatory Act 
and in the years since its enactment we have heard concerns about the 
possibility for organized criminal elements to penetrate Indian gaming. 
Both the Department of Justice and the FBI have repeatedly testified 
before the Committee on Indian Affairs and have indicated that there is 
not any substantial criminal activity of any kind associated with 
Indian gaming.
  Some of our colleagues have suggested that no one would know if there 
is criminal activity because not enough people are looking for it. I 
believe that this point of view overlooks the fact that the act 
provides for a very substantial regulatory and law enforcement role by 
the States and Indian tribes in class III gaming and by the National 
Indian Gaming Commission in class II gaming. The record clearly shows 
that in the few instances of known criminal activity in class III 
gaming, the Indian tribes have discovered the activity and have sought 
Federal assistance in law enforcement.
  Nevertheless, the record before the Committee on Indian Affairs also 
shows that the absence of minimum Federal standards for the regulation 
and licensing of all Indian gaming has allowed a void to develop which 
will become more and more attractive to criminal elements as Indian 
gaming continues to attract more patrons and generate increased 
revenues.
  Mr. President, during the 102d Congress, the distinguished chairman 
of the Committee on Indian Affairs, Senator Inouye, convened three 
oversight hearings on the implementation of the Indian Gaming 
Regulatory Act of 1988. Those hearings revealed that most States and 
Indian tribes were working with each other to resolve disagreements and 
enter into compacts to govern class III gaming. The Department of 
Justice advised the committee that there was no evidence of substantial 
criminal activity associated with Indian gaming. Appointments to the 
National Indian Gaming Commission had been delayed, but the Commission 
was finally up and running and in the final stages of issuing the 
regulations necessary to regulate class II gaming and carry out the act 
by late 1922.

  The hearings in the 102d Congress also revealed that the act had 
resulted in substantial litigation between Indian tribes and States 
over the issue of the scope of gaming activity that should be subject 
to negotiation for inclusion in a class III compact between an Indian 
tribe and a State. Under the 1988 Act, the scope of permissible gaming 
is determined by reference to State law in accordance with the 1987 
decision of the United States Supreme court in the case of Cabazon Band 
of Mission Indians v. California. In States such as Wisconsin and 
Connecticut the litigation over the scope of gaming ultimately resulted 
in final determinations by the Federal courts of the so called ``scope 
of gaming'' permitted under State laws. In other States such as New 
Mexico, Florida, and Alabama no final determinations about the scope of 
gaming have been reached through negotiation or litigation. In these 
other States the provisions of the Act which provide for a final 
determination by the Federal courts have been frustrated by the 
assertion by the States of defenses based on the 10th and 11th 
amendments to the United States Constitution.
  Early in the 103d Congress, the Committee on Indian Affairs was 
called on by State and tribal leaders to consider amending the act to 
resolve issues related to the scope of gaming and the 10th and 11th 
amendments to the Constitution. In addition, legislation was introduced 
in both the House and Senate to amend the Act to address these issues 
and concerns about the adequacy of regulation of Indian gaming. Here in 
the Senate, S. 1035 was introduced by Senators Reid, Bryan, Graham, and 
Simpson on May 26, 1993.
  In March 1993, Senator Inouye initiated a series of meetings with 
Governors, State attorneys general, Federal officials and tribal 
leaders to see if a dialogue among all of the parties would yield a 
consensus on amendments to the Act. After a series of separate meetings 
with each of the parties, the Committee on Indian Affairs convened a 
joint meeting of the parties on July 2, 1993. That meeting resulted in 
the establishment of State and tribal work groups and negotiation teams 
to try to hammer out legislative language and a consensus on necessary 
amendments.
  The negotiation teams met for a week during July 1993 and agreed upon 
a conceptual framework for amendments. In subsequent meetings during 
July and early August, substantial progress was made toward the 
development of legislative language. Unfortunately, at the National 
Governors Association meeting in August 1993, the Governors rejected 
the proposed compromise. After that, little progress was made until 
October, when the Committee again convened a meeting of the Governors, 
the attorneys general, Federal officials and tribal leaders to see if 
the impasses could be broken.
  At the meeting the Governors suggested a new framework for an 
agreement on the scope of gaming issue which the tribal leaders agreed 
to consider. A followup negotiation session was held in November but it 
quickly resulted in another impasses. The committee urged the parties 
to meet again early this year, but no negotiations were convened.
  When it became apparent that the parties could not reach agreement, 
Senator Inouye and I announced that the Committee on Indian Affairs 
would hold hearings in April and May to provide all interested parties 
with an opportunity to formally identify problems with the 1988 act and 
to propose solutions. Based on the record of those hearings, the prior 
negotiations between the tribes and the States, and the recommendations 
of Federal officials, Senator Inouye and I introduced S. 2230, the 
Indian Gaming Regulatory Act Amendments Act on June 23 of this year.
  As introduced, S. 2230 provided for a major overhaul of the Indian 
Gaming Regulatory Act of 1988. It authorized a direct Federal presence 
in the regulation and licensing of class II and class III gaming as 
well as all of the industries associated with such gaming. This would 
be accomplished through the establishment of an expanded Federal Indian 
Gaming Commission which would be funded through assessment on Indian 
gaming and fees imposed on license applicants.
  The bill also provided a new process for the negotiation of class III 
compacts which would allow the States to opt out of the negotiations if 
they so choose. Consistent with the 1987 decision of the United States 
Supreme Court in the case of Cabazon Band of Mission Indians v. 
California, the bill contained new provisions intended to reduce 
disagreements between tribes and States over the scope of gaming and 
to provide for prompt resolution of any disputes which may arise. 
Provisions of the Bank Secrecy Act will be applied to Indian gaming 
activities to the same extent that the Act is applied to any other 
gaming activity.

  The Committee on Indian Affairs held hearings on the bill on July 19 
and July 25. Following those hearings, we developed a proposed 
amendment in the nature of a substitute and circulated it to interested 
parties during the August recess for review and comment.
  Mr. President, it is important to understand this background in order 
to understand that the Committee on Indian Affairs has made every 
effort during this Congress to find a consensus on amendments to the 
Indian Gaming Regulatory Act. We have been assisted in our efforts by 
outstanding leaders such as Governor Mike Sullivan of Wyoming who 
represented the National Governors Association; Attorney General James 
Doyle of Wisconsin who represented the National Association of 
Attorneys General; Mr. Rick Hill, President of the National Indian 
Gaming Association, and Mr. Gaiashkibos, president of the National 
Congress of American Indians. Several members of the Committee on 
Indian Affairs, including Senators Ried, Campbell, Wellstone, Domenici 
and Gorton have expended countless hours of their time on this issue. 
Despite all of these efforts by all of these individuals, it is now 
clear that we will not be able to secure passage of legislation to 
amend the Indian Gaming Regulatory Act in the few days which remain in 
this Congress. I deeply regret that this is the case because I believe 
that the need for amendments is urgent.
  I also believe that the States and the tribes have generally been in 
agreement for most of the past year on the need for amendments to the 
Act. Agreement exists on the need for a new process for the negotiation 
of class III compacts and the determination of the scope of gaming 
activity permitted under the laws of a State. There is also agreement 
on the need for minimum Federal standards to govern the regulation of 
Indian gaming.
  Despite these areas of agreement, it has not been possible to reach 
agreement on legislative language. When S. 2230 was introduced it was 
strongly opposed by the Indian tribes. The proposed amendment in the 
nature of a substitute which was circulated in August is strongly 
opposed by the States.
  Agreement on bill language has proven elusive for several reasons, 
not the least of which is the complexity of the act itself. The 
delicate balance of tribal and State interests and authority also makes 
this a difficult issue. Notwithstanding these obstacles, I have 
observed that at several points during the past 2 years that the 
parties were extremely close to agreement, only to find a blizzard of 
legal technicalities raised by those, including some lawyers, who 
believe that their interests would be better served by litigation 
rather than by amendments to the Act.
  This is not a strategy which has the development of sound public 
policy as its objective. Inevitably the Supreme Court of the United 
States will be called upon to review the constitutional issues which 
have arisen under the act. Once the court rules, the losing side will 
be before us seeking relief. Whether that is the States or the tribes, 
it is not likely that this Congress will be able to fashion any remedy 
which is more balanced than those already agreed to in concept by the 
tribes and States and contained in S. 2230 or the proposed substitute. 
Those who favor continued litigation rather than legislation will 
primarily succeed in enriching lawyers and creating animosity between 
the Indian tribes and States rather than providing a sound basis for 
the regulation and conduct of Indian gaming.
  The failure to enact amendments to the Indian Gaming Regulatory Act 
will be viewed by the proponents of more litigation as a victory. I 
want to caution everyone that it is a hollow victory. It is also a 
victory which may ultimately lead to the demise of Indian gaming. The 
Act must be amended to address the issues of scope of gaming and the 
compacting process.
  More importantly, it must be amended to establish minimum Federal 
standards for the regulation of Indian gaming. In the absence of such 
standards it will only take one serious incident to call into question 
the integrity of all Indian gaming. Once that occurs the non-Indians 
who so avidly patronize Indian gaming will look elsewhere to spend 
their gaming dollars. The single greatest economic opportunity the 
tribes have had will fade away.
  The Congress has an obligation to the Indian tribes and to the 
patrons of Indian gaming to make sure that Indian gaming activity is 
regulated in a manner which minimizes the chances for any criminal 
activity to occur. If such activity should occur we must also have the 
procedures and mechanisms in place to deal with it promptly and 
effectively. I believe that the tribes and some States are doing an 
adequate job at present, but as Indian gaming continues to grow the 
ever larger cash flow will become increasingly attractive to criminals. 
The time to act to ensure the integrity of Indian gaming is now. If we 
wait until there is a crisis, it will be too late.
  I urge the States, the Indian tribes, Federal officials and all of my 
colleagues to join Senator Inouye and I in the 104th Congress as we 
continue to seek to strengthen the Indian Gaming Regulatory Act.

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