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Class II gaming decimation feared in wake of Metlakatla decision

Part two

WASHINGTON - Concern - sometimes amounting to manifest distress in Native communities that rely on revenue from Class II gaming - has arisen that the Indian Class II industry could be going down hard after a June 4 ruling of the National Indian Gaming Commission. NIGC Chairman Phil Hogen denied a modification to the Metlakatla Indian Community Tribal Gaming Ordinance, stating that its intended Class II machines would actually offer facsimiles of electronic games of chance - illegal for Class II operations under the Indian Gaming Regulatory Act of 1988.

But according to his critics, Hogen hasn't appreciated sharp language like the following, from Senate Report No. 100-446, of the Indian Affairs Committee, clarifying congressional intent with regard to IGRA: ''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.''

Hogen argues that Congress understood gaming technology would evolve for Class III games. He said Congress did not foresee that gaming technology would evolve for Class II games as well.

His critics come back that it's a pretty weak understanding on which to base the possible decimation of Indian Class II gaming, though of course passages in IGRA and its clarifying reports can also be found to bolster Hogen's positions. All sides seem to agree that courts will settle it.

But court processes may grind too slowly for Indian Class II gaming, according to its advocates, especially if gaming machine manufacturers embargo the activating infrastructure of ''one-touch'' machines, fearing for their distributor licenses in the aftermath of Hogen's June 4 ruling on the Metlakatla modification. Scenarios vary, and all are speculative at this point. But however it were to happen, said David Qualls, chairman of the Oklahoma Indian Gaming Association, the Class III gaming industry as a whole stands to gain from killing the Class II Indian gaming industry.

''I don't know if there's a handshake deal with any firm,'' he added, referring to the timely submission to NIGC of Metlakatla's singularly detailed, game-specific amendment request for a modification to include one-touch machines. ''But something about this smells pre-determined. ... I think there's people who are capitalizing on his [Hogen's] passion. ... I think the outcome of this is going to be an edge in the market for other people, gaming manufacturers, states, nontribal gaming jurisdictions.''

Metlakatla representatives acknowledged at a National Indian Gaming Association-hosted meeting in Washington that the proposed one-touch, game-specific amendment had been a work in progress for two years, unbeknownst to other Class II tribes in Oklahoma at least, Qualls said.

Hogen acknowledged that NIGC had been forewarned the Metlakatla request would be game-specific. Metlakatla's so-called uncompacted status meant the tribe's game-specific proposal could only be for Class II gaming purposes. A modification to its existing Class II gaming ordinance would have been for one-touch purposes, predictably enough for anyone of Hogen's experience. He testified before the Senate Indian Affairs Committee April 17 that most purported Class II one-touch machines in Indian country actually offer Class III games of chance.

''All of a sudden,'' Qualls said, ''a small Alaska tribe with 40 machines, compared with 30,000 in Oklahoma, submits a gaming ordinance ... and within six days, which is record time for NIGC to do anything, within six calendar days they issue a full opinion.''

Hogen responded that there was never a handshake deal between NIGC and any other entity concerning the Metlakatla submission. ''We carry no brief for the Class III industry.''

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He denied any intent to give any entity an edge in the Indian gaming market, but added that machine manufacturers who have worked from NIGC advisory opinions might have one.

He explained the celerity of the Metlakatla decision as follows: Indian gaming cannot take place at all without NIGC approval of an ordinance, but the ordinances have always been site-specific, involving lengthy research into issues of tribal land status. ''This was the first time we've had a game-specific ordinance.''

There was no reason to wait, he said; no reason not to make haste.

''We didn't want to hide the ball ... and for God's sake we've been working on this for five years.''

Should the Metlakatla decision end up in court, Hogen will consider it a good thing. ''That will move the process along,'' he said.

John Tahsuda, of Navigators LLC in Washington, explained that it's a better thing for Hogen, a former U.S. attorney, and NIGC than it was before. With the Metlakatla decision, he said, ''He wants to give himself standing [in court] ... where he can say, 'We did take action on this.'''

He has more latitude with an NIGC denial of a tribal ordinance modification, Tahsuda said, than he would in the case of a tribally initiated action that he disapproved under IGRA. In a hearing involving an NIGC denial, the burden of proof shifts for Hogen from enforcing against a regulation in light of IGRA, to enforcing an ordinance in light of NIGC regulation.

''And it affects the way the issue is presented,'' Tahsuda said.

In a general bench trial, proof has been developed in light of IGRA and a judge can call his or her own expert witnesses. NIGC must prove its case and prove the facts it rests on.

In a hearing on NIGC ordinance enforcement, by contrast, no agreed-upon body of facts exists.

''Essentially, Hogen gets to hold a hearing on his own opinion. He's 0 for 4 in court on Class II,'' Qualls said.