NIGA to Obama: No new gaming regulations until NIGC’s Hogen replaced

WASHINGTON – The National Indian Gaming Association has asked President Barack Obama to appoint a new chairman to the National Indian Gaming Commission immediately, and stop the current commission from publishing proposed revisions to gaming regulations until the new official is in place.

In a letter to the president, the association said the commission violates government-to-government consultation rules and is revising gaming machine regulations that are “ill-advised” because they would impose huge and unnecessary compliance costs on tribal gaming operations, and “overreaching” because they exceed the NIGC’s statutory authority.

The association asked Obama and Interior Secretary Ken Salazar to immediately replace NIGC Chairman Philip Hogen, who “is holding out for almost five years past his original term,” and appoint a new commissioner to fill a seat that has been vacant for years. The chairman’s position requires a presidential nominee approved by the Senate.

A draft of the letter and a memo concerning the issues was sent to NIGA’s 184 members. The nonprofit represents Indian nations, organizations and businesses engaged in tribal gaming enterprises, and acts as an educational, legislative and public policy resource for tribes, policymakers and the public on Indian gaming issues and tribal community development.

This is NIGA’s second request for a new chairman. NIGA members voted unanimously in April on a resolution calling for Hogen’s “immediate resignation,” and seeking the president’s action to “ensure that the National Indian Gaming Commission follows the rules and regulations governing federal agencies.”

“The fact is that Phil Hogen refuses to acknowledge that the former president put out a presidential order that no new regulations were to be issued and President Obama’s chief of staff extended the order until the regulations could be reviewed by President Obama’s newly appointed administrators. Those guys (at NIGC) are out of control,” said J.R. Matthews, Quapaw Tribe of Oklahoma vice chairman and NIGA treasurer.

NIGC did not respond to requests for comment.

The association’s letter was sparked by a meeting Matthews attended in early August at the Poarch Creek Reservation in Alabama at which the commission reviewed proposed revisions to gaming machine regulations with its Tribal Advisory Committee, known as MTAC. The “M” stands for Minimum Internal Controls Standard, the set of regulations the committee was formed to review.

Tribal members were neither informed of nor invited to the meeting, Matthews said. Indeed, the lack of participation and meaningful consultation is one if the biggest beefs tribal leaders have with NIGC.

“If you take a look at the history of how NIGC has promulgated regulations and other things, Phil does these things in a very controlled and thoughtful way in that he will publish regulations in December right as Congress goes into recess, or right before Thanksgiving or Christmas so everybody’s tied up in other things,” Matthews said.

He said NIGC’s consultation meetings violate federal directives. “They come to regional meetings. They walk in and say, ‘Do you have any questions about what we’ve been doing?’ They give us 20, 30, 45 minutes to talk with them and take a photo with them, and they call it ‘consultation.’ There’s nothing meaningful about any of these meetings. They are not laid out as government-to-government consultations.”

Matthews said NIGA intends to fight the proposed regulations.

“If this thing moves forward we’re going to end up in litigation and then we’re going to have amendments to some very poorly written regulations.”

NIGA members have joined the call to seek new NIGC leadership.

Barbara Kyser-Collier, Quapaw Tribal Gaming Agency director, has written to Obama seeking “urgent action” in appointing a new NIGC chairman.

Under Hogen’s leadership the commission “persists” in revising regulations that the courts have ruled to be beyond the commission’s authority, Kyser-Collier wrote. She cited the landmark Colorado River Indian Tribe’s case, known as the CRIT decision, in which the Court of Appeals for the District of Columbia Circuit in 2006 upheld a lower court decision that NIGC has limited authority under IGRA to issue regulations related to Class III gaming.

The proposed rules discussed at the Alabama meeting would again extend NIGC’s authority beyond its statutory limits, Kyser-Collier wrote.

For example, NIGC has inserted into the proposed MICS a technical standard that would require a jackpot payout be validated by the backroom accounting system. This would require a type of technology that is usually patented in a manufacturer’s gaming system, requiring the gaming operation either to have that particular manufacturer’s system or to pay the manufacturer a royalty fee to use its proprietary technology.

“The NIGC characterizes these potential regulations as ‘internal control standards,’ when in fact they constitute product standards. A most important danger is that such rules could favor certain manufacturers and drive tribal costs higher,” Kyser-Collier said.

Matthews estimated it would cost Oklahoma casinos alone more than $100 million to meet that particular standard, which could wipe out smaller Indian gaming operations completely.

Kyser-Collier compared NIGC’s current efforts to the firestorm of controversy surrounding Hogen’s previous efforts to draw “a bright line” between Class II and Class III gaming by establishing “classification standards” that potentially would have wiped out Class II gaming.

“It is beyond understanding that a federal agency established to protect tribal gaming as a source of revenue for tribal governmental services and functions, in fact, would persist in efforts to disseminate regulations that will inflict financial damage to Native American tribes,” Kyser-Collier said.

Matthews and Kyser-Collier objected to the NIGC staff members’ disregard for the etiquette of public meetings, such as referring to tribal leaders attending the meeting as “the peanut gallery,” calling individuals by first name instead of their tribal titles, and texting while tribal leaders addressed the commission.

“It was horrible,” Matthews said.

Kyser-Collier and Matthews described the NIGC’s interaction with the Tribal Advisory Committee as “disrespectful and inexcusable.”

NIGC has set a “meeting rule” whereby the commission can have its legal and technical experts at the table, but committee members, who represent around 230 tribal governments, cannot.

Matthews said he worried the NIGC would “run over” the committee members.

“They can state their objections and everything, but when NIGC finally publishes these rules it’s going to say it met with MTAC, and MTAC is going to be held up as co-conspirators, pretty much.”

Interview with Richard Chissoe Richard Chissoe is the Osage Tribe’s Gaming Commissioner and a member of the Minimum Internal Control Standards Tribal Advisory Committee. MTAC members were appointed by the National Indian Gaming Commission in 2008 to review and revise MICS regulations. Indian Country Today: Can you comment on the claim that the National Indian Gaming Commission is inserting technical standards into MICS; what is your nation thinking in terms of these events. Richard Chissoe: As a member of the MICS Tribal Advisory Committee, I would say that I do not believe based on the material that I’ve seen, that the committee is actually objecting to the development of technical standards. I think the concern is the approach that’s being taken here and that approach is the NIGC, just in a wholesale manner, is adopting language and standards and regulations from the (state of) Nevada MICS. Right now there’s emerging technologies with back of house systems, or what we call the casino management system, there’s emerging technologies in terms of downloadable gaming, in server based gaming going beyond Class II platforms into Class III and commercial platforms. I really believe that many of these technologies are issues for the Tribal Gaming Regulatory Authority to determine and to decide for our individual jurisdictions how we’re going to certify these technical standards in the operation of our gaming. One of the problems I have with the standards that are being proposed is they largely leave the TGRA – who is identified as the primary regulatory authority under the Indian Gaming Regulatory Act – absent of this process. ICT: Is that exceeding NIGC’s authority? RC: You know, that’s an interesting question and I think that would depend on who you ask, and at the end of the day it might very well be for the attorneys to decide. ICT: What about the Colorado River Indian Tribe ruling? RC: My understanding of the CRIT decision is the court found NIGC lacks enforcement authority over Class III MICS. Now does that mean NIGC has no authority to promulgate Class III standards? I’m not sure. Again, at the end of the day that might well be decided by a court. ICT: Are you alone in your position on the committee, or do your colleagues agree with you? RC: I think there are many points we do agree on and I think one point is the concern with some of the technical implications of these proposed standards. I think there’s concern that there seems to be a general lack of research that’s been done on these proposed standards, and again I think it’s clear that NIGC adopted language from the Nevada MICS and I think it’s questionable if they are even relevant to tribal gaming operations. I think the reality is that the Indian gaming industry is distinct and its technologies are distinct and to just import technical standards or internal standards from Nevada regulations is not necessarily going to cover everything. I really think the NIGC has a great opportunity to do a tremendous service to Indian country and to our industry in convening and developing some sort of technical working group. Let’s bring technical expertise to the table, let’s bring lab personnel, let’s bring manufacturers, let’s bring people who can really answer these questions and talk about the emerging technologies and identify the vulnerabilities, and therefore identify what would be proper internal controls and technical standards to address these new technologies. That’s the process I think we should be following as opposed to adopting the Nevada standards and trusting they’re just going to cover everything. ICT: Were the proposed standards presented at the Alabama meeting or did you work on them with the NIGC? RC: The document was distributed to members of the Tribal Advisory Committee about four or five weeks before the meeting took place. ICT: Who wrote the document? RC: That’s a good question. We’re not sure who within the NIGC picked and chose from the Nevada MICS but it’s a product of NIGC. ICT: It wasn’t a collaborative process? RC: No. ICT: Have you individually or collectively told NIGC how you feel about this? RC: I think throughout this process over the last year, yes, in different discussions, the committee has expressed concern about not having technical experts sitting at the table with us. As we come through sections of the MICS, not just gaming machines, there’s very technical language and the committee has recommended that we have technical experts available but thus far the NIGC has not accommodated that request. ICT: Why not? RC: Their position has been, ‘Well, we distributed the document to you beforehand. We expect you’ll seek technical consultation before the meeting.’ I don’t think that’s the best approach because, really, as we sit at the table and discuss the proposed regulations we still don’t have that technical perspective available. So, that’s the kind of disadvantaged position the committee is in. ICT: One tribal leader worried the NIGC would ‘roll over’ the committee and be seen as a ‘co-conspirator’ if the proposed regulations are published. RC: I can tell you that the committee has worked in good faith and will continue to work in good faith, but at the same time I think I speak for the whole committee when I say we in no way want to see our participation misrepresented in any way, because once again, the committee can make recommendations, but the NIGC has the final say on the documents that are going to ultimately be published or presented to Indian country. ICT: What’s the committee’s next step? RC: We only got through about half of the proposals, so the committee did recommend that we have a follow up meeting the first week of October to review the rest of the document. As of this moment the chair has not responded to that. ICT: Is the document posted on the NIGC Web site? RC: No. The NIGC doesn’t post it. They make it available to committee members and it might get circulated when they go back to their respective jurisdictions, but I’ve never seen NIGC posting until the review is finished. If these proposed regulations are published in the Federal Register, there will first be a comment period. I would expect a very vibrant response from Indian country and from tribal leadership on these proposed regulations.