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Business alliance makes accusation of illegal gaming

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TRINIDAD, Calif. -- It is definitely a question of class in California,
with the most recent controversy centering upon the distinctions between
Class II and Class III electronic gaming machines.

In a Jan. 17 letter to Gov. Arnold Schwarzenegger, California Tribal
Business Alliance Chairman Paula Lorenzo raised concerns over what CTBA
fears may be a proliferation of Class II machines "beyond those authorized
by the tribal-state gaming compacts."

Noting that "the expanding use of these electronic devices threatens the
integrity of the compacts and invites tribes to ignore their
responsibilities to the greater community in which they operate," Lorenzo
stated that her organization is "aware of several thousand purported Class
II machines being operated by [California] tribes with compacts which may,
in fact, not be Class II electronically-aided bingo games and which do not
have the approval of the [National Indian Gaming Commission]."

The CTBA letter also said that "tribes operating under the compacts have a
powerful incentive to operate devices that push and may exceed the
definitions of a Class II game to avoid revenue share payments, increase
the number of machines beyond those authorized by their compacts, and avoid
the mitigation of environmental impacts and other protections afforded by
the compacts."

Class II bingo machines pit player against player and do not require a
tribal/state compact. Class III slot machines play gamers against the
house, the use of which requires a state/tribal compact under federal law.

California Nations Indian Gaming Association Chairman Anthony Miranda
angrily responded to CTBA, saying that the contents of Lorenzo's letter
were "inappropriate, inflammatory, and insulting to the Tribal Nations of
California." He accused CTBA of making "misleading allegations that tarnish
the integrity of tribes throughout America."

"These egregious claims appear rooted more in a concern for profits than
the concern for the integrity of the 1999 compacts, which the business
alliance has repeatedly attacked," Miranda wrote.

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CTBA is comprised of six gaming tribes and was formed in 2004 "to safeguard
and enhance the success of the business enterprises of our tribal
government members." More than 55 federally recognized gaming and
non-gaming tribes form CNIGA, which has a similar mission. Both
organizations declare that their primary goal is to protect sovereignty in
the area of tribal government gaming.

The Pechanga Band of Luiseno Indians, a CNIGA member, said in a statement:
"Our compact also provides a clear process for the State to inspect our
gaming facility. In fact, on its several recent inspections the State had
no problem in identifying Class II games within the gaming facility. If a
difference of opinion should arise between the Tribe and State regarding
Class II games, the compacts contemplate resolution of that issue on a
government-to-government basis."

The statement continued, "Any suggestion that Pechanga is ignoring our
commitment to the greater community is totally without merit. We have
provided our neighboring communities with $8 million for road widening,
sound walls, and other improvements. The City of Temecula and Riverside
County have benefited substantially by our payments to the Special
Distribution Fund. In recent years we have contributed more than $1 million
to local schools. And last November, we provided $1.5 million to the Boys &
Girls Club of Southwest Riverside County."

The CTBA letter was written on the heels of CNIGA's 11th Annual Western
Indian Gaming Conference, held Jan. 11 and 12 in Palm Springs.

Spurred by Senate Committee on Indian Affairs Chairman John McCain,
R-Ariz., lawyers from the U.S. Department of Justice and officials from the
National Indian Gaming Commission scheduled meetings at the Palm Springs
conference and accepted comments on proposed changes regarding the Johnson
Act and policy affecting day-to-day gaming operations, including
clarifications between Class II and III games.

With only three such presentations in as many months by Justice, tribes are
calling for more of a government-to-government approach from federal
officials.

The NIGC is an independent regulatory agency established within the
Department of the Interior with a budget capped at $12 million and is
funded by gaming tribes with an estimated national annual gross revenue
topping $19 billion. NIGC Chairman Philip Hogen testified last April before
the Committee on Indian Affairs that "a great need currently exists to
bring clarity to the distinction between Class II technologic aids and
Class III electronic facsimiles and slot machines. This line has become
blurred, by advances in technology. This lack of clarity, as well as
different views on the applicability of the Johnson Act to legitimate Class
II technologic aids, undermines the regulatory structure that Congress
established for Class II and Class III Indian gaming in IGRA."

In his testimony before the Committee on Indian Affairs, Interior Inspector
General Earl Devaney said, "A giant step forward was achieved in 2002 when
NIGC promulgated the Minimum Internal Control Standards which established
minimum standards and procedures for Class II and Class III gaming." He
continued, "In our opinion, the NIGC needs additional resources to fulfill
their expanding role commensurate with the escalating growth of the Indian
gaming industry."