NIGC’s Hogen rejects committee request for technical advisers, document posting

WASHINGTON – National Indian Gaming Commission Chairman Phil Hogen has rejected requests from tribal representatives to have technical advisers participate in the process of reviewing proposed gaming machine regulations and to post the representatives’ letters and contact information on the commission’s Web site.

The tribal representatives are members of MTAC – the Minimum Internal Control Standards Tribal Advisory Committee – were selected by their tribal leaders and empanelled by NIGC a year ago to review proposed changes to MICS in Class II and Class III gaming machines.

In an Aug. 21 letter to committee members, Hogen responded to concerns tribal representatives expressed in a story published in Indian Country Today [Vol. 29 No. 11]. The representatives asked to have technical advisers sitting at the table during meetings to answer questions and explain the more technical aspects of the proposed revisions, but Hogen rejected the request.

“We have to be mindful that this is a government-to-government process. The advisory committee members have been specifically designated as official governmental representatives by their respective tribal governments. To allow parties other than designated governmental representatives with the authority to speak on behalf of their tribes puts the NIGC at risk of running afoul of the Federal Advisory Committee Act,” Hogen wrote.

Richard Chissoe, Osage Tribe’s gaming commissioner and an MTAC member, told ICT the selection of technical advisers should be at the members’ discretion, and he doubted their presence would put NIGC at risk of violating FACA.

“If the NIGC does in fact view this committee and our participation as a government-to-government consultation process, and our government leadership has allowed us to speak on behalf of our Indian tribes, why would that authorization not be applicable to any technical adviser that we would choose?” Chissoe said.

Hogen said the tribes were free to have their technical advisers write to NIGC’s IT specialist and gaming systems engineer with questions and comments.

Chissoe said MTAC members haven’t met the NIGC’s technical advisers and have had no direct contact with them or knowledge of their expertise.

MTAC members said in an Aug. 24 letter to Hogen, “it was clear that neither the committee members nor the NIGC staff could explain the meaning of certain proposed technical language, the intent of the standard or even what the rule is meant to address.”

“We got into this very protracted dialogue, perhaps it means this, perhaps it’s referring to this,” Chissoe said about a recent MTAC-NIGC meeting in Alabama. “And at some point, the committee had to say, look, we don’t think it’s proper for NIGC to be proposing regulations that the NIGC itself cannot explain.”

He said it would be particularly problematic for him as a gaming regulator to be responsible for enforcing regulations that no one has been able to explain.

“And on the point of submitting questions in writing and having them answer in writing, that’s not true dialogue and it is not true consultation. What if the answer is something the committee members don’t understand or it prompts further questions? I think to propose that it would be adequate as some sort of meaningful consultation process is just asinine.”

Tribal representatives were also concerned that a proposed regulation requiring jackpot payouts to be validated by a backroom accounting system is really a technical standard masquerading as a MICS. They said the regulation, if passed, would force gaming operations to purchase expensive new equipment from a particular manufacturer or to pay the manufacturer a royalty fee to use its proprietary technology.

Hogen, refuting that claim, said “no technical specifications” are being proposed.

“The contemplated MICS in no way impose a mandate for tribes to invest in specific technology, with the possible exception of necessary ticket validation equipment. The MICS are simply meant to establish control standard for certain technology if it is in use at a tribe’s gaming operation,” Hogen wrote.

Not quite, Chissoe said.

“I would characterize it this way; it’s like saying we’re not saying you have to buy a Chevrolet, but if you don’t buy a Chevrolet you’re going to have a hard time operating in compliance.”

A concern expressed by tribal representatives is that the proposed jackpot payout regulation would favor only a few manufacturers’ systems, and if federal regulations imply a virtual monopoly by those few manufacturers, how will costs be affected?

“It doesn’t take a lot of imagination to predict the cost of those systems would increase dramatically and they’re already very expensive, up to tens of millions of dollars for some of these systems,” Chissoe said.

Hogen also rejected the committee’s request to post all of their letters and related documents and their contact information on the NIGC Web site. He said NIGC already posts draft regulations and other documents. He suggested the committee set up its own Web site.

Chissoe said the request was based on the committee’s desire for transparency about its role in the process.

“There’s been concern that the work of the committee could somehow be misrepresented. That’s something all members of the committee would not like to see happen. We’d like to have some sort of assurance that all parts of this process that we’ve agreed on and parts that we’ve expressed concern about would be communicated out there.”

Chissoe also wants to assure skeptics of the committee’s good faith efforts.

“There have been some comments that the MTAC may be viewed somehow as a co-conspirator in some NIGC agenda and I really want to disagree with that. I think for this committee to not participate would not help anyone; for one thing it would allow NIGC to finalize regulations with no chance of revision by the industry. I think it’s important that we engage in this process, embrace this process in the hope of developing more workable regulations for our industry.”

The next MTAC-NIGC meeting will be held Oct. 6 – 8 at the Santa Ana Star Casinos in Albuquerque, N.M.

Interview with NIGC Chairman Phil Hogen, Sept. 2, 2009

Indian Country Today: In rejecting the request from MTAC members to have technical advisers at the table, you said, “This is a government-to-government process. … To allow parties other than designated governmental representatives with the authority to speak on behalf of their tribes puts the NIGC at risk of running afoul of the Federal Advisory Committee Act.” But doesn’t the fact that committee members are indeed “governmental representatives with the authority to speak on behalf of their tribes” eliminate the risk that NIGC would be violating FACA if they request tribal advisers be present? Phil Hogen: I don’t know that it would. Perhaps it would and I suppose we’ll look into that further, but this is an important process. Timing is important, technology is passing us by and we need to move promptly to get it done and get it done right, and certainly we could use all the good advice that we can get. Now, the FACA has an exception to the process that you have to follow if you form a federal advisory committee that would include people such as gaming managers and so forth, people that are not members of a tribal government, so out of an abundance of caution we’re going to stick with the tried and true process we’ve used for some years now, and certainly we hope our advisory committee members will reach out and try to gather not only information, but questions to pose and they will certainly be addressed in this process. But to have more people at the table than those who represent the federal government and the tribal governments would put this process at risk and I don’t choose to do that. We’ve thoroughly considered it and we think we’ve made the right decision. ICT: MTAC members and many tribal leaders continue to disagree with your statement that proposed MICS do not include technical standards and would not require casino operations to spend money to be in compliance. How can these two opposing views be reconciled? PH: Well, we certainly will look at our product. We’re in the drafting stage right now and we don’t want to require the tribes to spend a nickel more than they ought to, but there are occasions when it’s a good investment to get equipment or to get expertise to make sure tribal revenues and tribal assets are protected and this is becoming an extremely complex area. There was the day when you only saw the dice roll or the bingo balls go up and down or the cards shuffled, but now we trust what’s in the box and you’ve got to have electronic monitoring of that and sometimes that can require an investment, not an inappropriate investment, and if there are other ways to skin that cat, we’re willing to consider that. ICT: I’m not really clear about your answer. Are you saying the proposed regulations may involve investments? PH: Well, the investment for the most part is already there. People who have online accounting systems find they’re worth their weight in gold because it lets them monitor what’s going on and catch errors and infractions. We want to make sure if and when they employ that equipment that it’s the right equipment and that Indian gaming doesn’t become a dumping ground for equipment of that nature that’s not up to standard. ICT: How will you respond to MTAC’s request to post letters and other documents on the NIGC Web site? PH: Well, we have employed a process of posting the draft regulations, posting the committee’s comments, posting revisions. I don’t know that we’ve posted every piece of paper we get in connection with the process because there has to be some limits and certainly there are other forums that can be utilized. It doesn’t take much creativity to set up a Web site that would be available to those interested. So if we’re not posting all the information that some parties want we invite them to try to make it available. We’ll try to keep the committee process very transparent as we’ve done in years past. ICT: I have another question that wasn’t on the list, if that’s ok. I received an e-mail from somebody that said there was a possibility that you would be working as a consultant for IGT when you leave NIGC. Is that something you’re considering? PH: Absolutely not! That’s the first time I’ve heard that concept mentioned. There’s absolutely no substance to it, but certainly there are those that want to distract from the real rigorous objective of trying to get good strong regulations. You want to make sure that those people that are involved in the process are honest and objective, but you ought not make up stories to add confusion to the process. ICT: Do you have a time line for these regulations to be implemented? PH: When we started all of this what really threw us for a loop was the invention of electronic bingo. That was new science that hadn’t been addressed by our MICS, so for the last two years we focused on that and, unfortunately, had to neglect some of these other things. We’re now trying to catch up and we’re trying to make Class II and Class III current and consistent. We had hoped that by the end of 2009 or early 2010 the commission could be done with that task. This current drafting discussion has gone a little slower than we’d hoped, but I don’t think it will appreciably slow down the process and, of course, it’s my hope and expectation that somebody beside me will be in one of the drivers’ seats when they get to that point, but that was the commission’s goal when we undertook the process. I would hope in the early part of next year there would be a final set of regulations. One of the things that this demonstrates is it might appropriately be said that this is kind of overwhelming to the NIGC. We’ve got people that are well informed and we reach out for tribal assistance and so forth, but it’s just another example of why it’s good to have someone who makes rules on a national basis, because if each of the 230 gaming tribes were tasked with coming up with their own standards, why, they’d be all over the map and certainly they all have unique characteristics they’d want to address, but certainly to have a national forum like this I think serves a very worthwhile purpose.