<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
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S. Hrg. 109-443
INDIAN GAMING REGULATORY ACT AMENDMENTS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
ON
S. 2078
TO AMEND THE INDIAN GAMING REGULATORY ACT TO CLARIFY THE AUTHORITY OF
THE NATIONAL INDIAN GAMING COMMISSION TO REGULATE CLASS III GAMING, TO
LIMIT THE LANDS ELIGIBLE FOR GAMING
__________
MARCH 8, 2006
WASHINGTON, DC
U.S. GOVERNMENT PRINTING OFFICE
26-507 WASHINGTON : 2006
_____________________________________________________________________________
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COMMITTEE ON INDIAN AFFAIRS
JOHN McCAIN, Arizona, Chairman
BYRON L. DORGAN, North Dakota, Vice Chairman
PETE V. DOMENICI, New Mexico DANIEL K. INOUYE, Hawaii
CRAIG THOMAS, Wyoming KENT CONRAD, North Dakota
GORDON SMITH, Oregon DANIEL K. AKAKA, Hawaii
LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota
MICHAEL D. CRAPO, Idaho MARIA CANTWELL, Washington
RICHARD BURR, North Carolina
TOM COBURN, M.D., Oklahoma
Jeanne Bumpus, Majority Staff Director
Sara G. Garland, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
S. 2078, text of................................................. 3
Statements:
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.............. 43
Bullis, Paul, director, Arizona Department of Gaming......... 49
DesRosiers, Norman, commissioner, Viejas Tribal Government
Gaming Commission.......................................... 47
Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice
chairman, Committee on Indian Affairs...................... 37
His Horse Is Thunder, Ron, chairman, Standing Rock Sioux
Tribe...................................................... 44
Hogen, Philip, chairman, National Indian Gaming Commission... 37
McCain, Hon. John, U.S. Senator from Arizona, chairman,
Committee on Indian Affairs................................ 1
Appendix
Prepared statements:
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.............. 59
Bullis, Paul (with attachment)............................... 60
Crooks, Stanley, chairman, Shakoppee Mdewakanton Sioux
Community (with attachment)................................ 67
DesRosiers, Norman........................................... 81
His Horse Is Thunder, Ron.................................... 87
Hogen, Philip (with attachment).............................. 96
Spurr, Laura, chairwoman, Nottawaseppi Huron Band of
Potawatomi................................................. 116
INDIAN GAMING REGULATORY ACT AMENDMENTS
----------
WEDNESDAY, MARCH 8, 2006
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
485 Senate Russell Office Building, Hon. John McCain (chairman
of the committee) presiding.
Present: Senators McCain, Akaka, and Dorgan.
STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA,
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. Good morning.
In April 2006, the Committee on Indian Affairs began a
series of hearing that have taken an in-depth look at the
Indian Gaming Regulatory Act. IGRA was enacted in 1988,
following the decision of the Supreme Court in the Cabazon
case. Following the dictates of that case, Congress established
a regulatory structure for tribes that conduct gaming on their
lands.
The intervening 17 years has seen an astronomical growth in
Indian gaming, both in the amount of revenues generated and in
the number of gaming operations established. Yet the act has
not been amended to keep up with these changes.
Regulators have scrambled to keep up and lessons have been
learned about what is needed to create and maintain a fair and
well-regulated industry. In response to the growth of the
industry, on November 18, 2005, I introduced S. 2078, the
Indian Gaming Regulatory Act Amendments of 2005. Essentially,
this bill addresses three areas that I believe are in need of
reform.
First, the bill clarifies that the National Indian Gaming
Commission has authority to promulgate and enforce minimum
internal control standards as to class III gaming, a topic on
which this committee held a hearing last year.
Second, the bill tightens restrictions on off-reservation
gaming. Several committee hearings have focused on this problem
and the committee has received testimony from numerous parties
on all sides of these issues.
Last, the bill expands the NIGC chairman's authority over
contract approvals to include not only management contracts,
but also consulting, development and other significant
contracts. Unfortunately, when IGRA was drafted we unwittingly
tied the hands of the NIGC by requiring approval only for
management contracts. Among the lessons learned over the past
17 years is that in order to avoid NIGC review, some
unscrupulous contractors have fashioned agreements as
consulting or development contracts. That is, something other
than management contracts that require NIGC review.
In these cases, tribes run a risk that contractors will
enforce unfair contract terms and tribes and patrons run the
risk that the tribe will contact with unsuitable partners. S.
2078 extends NIGC approval to all significant gaming operations
related contracts, so that Indian tribes remain the primary
beneficiaries of their gaming operations, which was and remains
among the fundamental purposes for which IGRA was enacted.
I am aware that some tribes are concerned that the bill
language may overburden the NIGC and duplicate activities
already performed by their tribal and State regulatory
authorities. Amending IGRA to address concerns about these
consulting contracts and contractors, while maintaining an
efficient Federal regulatory agency, is a goal shared by all.
I look forward to hearing from the witnesses today,
anticipating that they will provide us a real world view of how
to achieve this goal.
I just want to reiterate a point. There are many Native
Americans, particularly gaming tribes, who have approached me
and said, we don't even need this issue reviewed, much less
changed. Any act, any legislation that is 18 years old clearly
needs review. And second of all, any operation that has gone
from $500 million to $20 billion a year and continues to go up
obviously needs to be scrutinized and looked at. Things have
changed since 1988.
So I steadfastly reject, steadfastly reject some kind of
allegation that we should not be reviewing and making necessary
changes to the Indian Gaming Regulatory Act. So this committee
will mark up on March 29 a bill, and it will be subject to
amendment, and we will try to move it to the floor of the
Senate.
[Text of S. 2078 follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
The Chairman. Senator Dorgan, welcome.
STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH
DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
Senator Dorgan. Mr. Chairman, thank you very much.
As you have indicated, this is a hearing, one of several
where we have reviewed various provisions of the Indian Gaming
Regulatory Act to determine whether the act needs to be
adjusted or changed or amended in any way. Part of the stimulus
for this comes from the Colorado River Indian Tribes decision.
I think it raises reasonable questions.
I have been helped enormously by these hearings because I
have been forced to go back and take a look at what the
original thinking was, what the history was with respect to the
construction of these laws. Your legislation is a starting
point. Some say that it goes too far in some areas. I share
that view.
On the other hand, I think to suggest that there is nothing
going on here that needs any Federal legislation is being
oblivious to the obvious. We do need, it seems to me, to take a
good look at what we have and what we should do. I commend the
chairman for stimulating this discussion. I think these
hearings are necessary, not just worthy, but necessary.
We have an Indian gaming industry now of nearly $20 billion
a year. It provides needed revenue to be helpful to the tribes
to meet their obligations and funding for some critical
services. I want to make certain that Indian gaming is as well
regulated as can be, to make certain that it continues to be
able to be a generator of revenue for the tribes with which to
do good things.
One way to do that is for us to have these kinds of reviews
and these hearings. So Mr. Chairman, I commend you for that. I
look forward to working with you as we proceed to a markup in
this matter.
The Chairman. Thank you very much.
Philip Hogen is the chairman of the National Indian Gaming
Commission. Welcome back, Mr. Chairman.
STATEMENT OF PHILIP HOGEN, CHAIRMAN, NATIONAL INDIAN GAMING
COMMISSION
Mr. Hogen. Good morning, Chairman McCain and Vice Chairman
Dorgan. I am delighted to be here on behalf of the National
Indian Gaming Commission. My fellow commissioner, Chuck Choney
from Oklahoma, is present here as well. So the full commission
as it stands today is here.
Indian country owes this committee a great debt of
gratitude for the work you did to create the Indian Gaming
Regulatory Act. That, of course, did not create Indian gaming,
but it created the structure that has permitted the development
of a very powerful industry that has brought economic
development to Indian country that languished in poverty for
generations. It has not solved all the problems, but it has
solved a lot of them.
So somebody in my position, who chairs the Federal
regulatory body that has oversight has a heavy responsibility
to make sure, as things go forward, they go in an orderly
fashion and they complement what is happening, not complicate
it.
But I certainly agree with the sentiments that have just
been expressed that given the passage of time, the growth, the
development of the industry, it is appropriate to look at the
Act and to see if there are things that might be improved or
revised.
The two areas I want to comment on this morning are the
clarification of NIGC's class III authority. I testified in
September of last year about this and want to associate these
remarks with that testimony because all of that is still true.
The Chairman. I think we will see it is not a fine line
between class II and class III.
Mr. Hogen. Well, that is a significant challenge, but in my
testimony in September I attempted to point out how we got into
the regulation of class III to begin with. I think at the time
IGRA was designed, many thought it will always be bingo. Well,
it wasn't, and 80 percent of it is not bingo; 80 percent of it
is class III gaming. That is where the money, that is where the
action is. So to that end----
The Chairman. These are slot machines that look----
Mr. Hogen. Slot machines and house banked games, blackjack
and so forth. Yes.
So recognizing this in 1999, starting in 1998, the National
Indian Gaming Commission developed minimum internal control
standards. We did not invent the concept. We just adopted it
and tried to improve it and applied it to all of Indian gaming,
class II and class III. We said these are the rules you have to
follow at a minimum to track the dollars as they flow through
the gaming operation and they go to the tribe. These are the
things you have to do to ensure that the game is fair.
So for the first time, we had a rulebook, we had a
yardstick, and we were able to go out and measure the
performance of tribes' gaming operations and regulation. I
think it worked splendidly. Most tribes probably were ahead of
the game, were already there, but there were a lot of tribes
that were not. So we were able to bring them up to that
standard.
Of course, since that time, we have gone out to look
periodically at how those performances measure up. We have done
nearly 40 audits of individual facilities since we adopted
those regulations. We found a lot of violations. We found over
2,300 violations of minimum internal control standards. That
probably sounds like a lot. It is a lot, but it is not a lot
compared to all of the compliance that occurs. But to say that
nothing is wrong out there would be a misstatement.
The average number that we would find in these
approximately 40 MICS audits would be about 64 relatively
serious violations at each facility. The kinds of things we
would find is a failure of the tribe to regularly do an
analysis of the statistical performance of their gaming. They
should monitor each slot machine to see if it is performing as
the specs say it should. If it is not, there are questions to
raise, and either somebody is taking the money or something is
wrong with the machine.
We found ineffective key control. That is, all these
machines and cages and so forth are locked, and not everybody
is following the rules with respect to that. The jackpot fill
and drop process is not always tracked the way it should be.
Occasionally, cash variances occur and they are not always
investigated as the controls say that they ought to be.
Sometimes there is not the appropriate segregation of duties
within the facilities, if the same guy is counting and doing
the approval, and that sort of thing.
Internal audits have not been satisfactory, they are
getting a lot better, but there was a time when there just was
not an appropriate internal audit effort at the facilities. One
of these situations will not necessarily mean a disaster, but
let me just share with you an incident that we currently are
working with where a couple of these things combined to result
in a significant tribal loss.
The tribe was not monitoring the statistical analysis of
its machines. When we did our audit, we observed this. When
they got around to doing that, they found that there were some
significant shortages or inconsistencies with what the dollars
that they were counting were compared to what was projected.
It was also discovered that there was a blind spot with
respect to their surveillance system. When they finally put all
of this together, it was discovered that some of the drop team
was taking the money before it got to the cage. We do not know
for sure how much was taken, but maybe over $250,000. Had the
MICS been followed from day one, I think that would have been
avoided.
Now, does this mean that there has to be a Federal rule and
a Federal agency to do this? Not necessarily. The tribes could
do this on their own, but obviously they do not always do that.
So without the ability to promulgate these rules and to apply
them to class III gaming, instances like this are going to
occur.
The Chairman. And to oversight.
Mr. Hogen. Say again?
The Chairman. And to oversight.
Mr. Hogen. Absolutely, yes.
The regulation sometimes is the stepchild of the system.
That is, it is not a revenue generating part of the business.
So there are temptations to shortcut it. But if you have
somebody looking over your shoulder and saying these are the
rules you have to play by, there is less of a temptation to do
that.
We have an all Indian system here. That is, we have the
National Indian Gaming Commission, the law you wrote says you
have to have two members on that commission that are tribal
members. Of course, they oversee, then, what the tribes who do
the heavy lifting, who do all the day to day stuff, do. So if
we continue to have the authority that we started with back in
1999, as I say, I think it has worked beautifully, I think we
can continue to ensure the integrity that the industry needs.
People come to the tribal gaming facilities in droves and
part of the reason they do that is they have a good reputation
for having a fair game, for having integrity, and of course the
fruits of the operation, building tribal communities and so
forth. But if that starts to erode, starts to disintegrate, I
think it bodes ill for the future of this industry.
So I refer the committee to my testimony where I attempt to
track the history of how we got into this, where we went, and
why it is effective, but if we are handcuffed, if we cannot
look over 80 percent of these revenues, I think that the
industry will suffer.
Also attached to my testimony is a chart, and this was also
submitted to the committee in September, that looks at the
tribal-State compacts that tribes enter into for class III
gaming. Those compacts vary greatly, but many of them adopt the
NIGC minimum internal control standards. Some unfortunately
have no reference to internal control standards, and so if we
are not out there, we are afraid what needs to be done will not
get done.
So if there is one thing we would ask for at the top of the
list with respect to any revision of the Indian Gaming
Regulatory Act it would be clarification of that authority. We,
of course, have the Colorado River Indian Tribes v. NIGC case
or decision on appeal, but we cannot predict how that will come
out, and I think it would be better if, rather than doing that
in a judicial forum, if Congress would say, this is what we
intended: A Federal oversight role with respect to the dominant
form of gaming.
The Chairman. Mr. Chairman, when do you expect the Court of
Appeals to rule on that case?
Mr. Hogen. The briefing schedule is just being implemented,
later this month, the first briefs will be filed, and then of
course it is a 60- or 90-day schedule. You cannot predict when
the argument will be or how long.
The Chairman. We are talking about a minimum of 3 or 4
months, at a bare minimum.
Mr. Hogen. Absolutely.
The Chairman. More likely 1 year.
Mr. Hogen. It could well be. Of course, that is not
necessarily the end of the line. The Supreme Court might want
to visit the issue.
With respect to the contracting provision, NIGC has
complained for years that there are contracts out there that
under the relatively narrow definition of management contracts,
that IGRA now provides we could not adequately provide the
oversight we think Congress intended. The committee has been
responsive. S. 2078 expands the scope of what we might do. As
we have studied this, we are asking ourselves, maybe we have
asked for a little too much, or maybe now that we are better
informed, we could be a little more articulate with respect to
just how best to address the situation.
I think it is important first of all to distinguish what
NIGC does, as opposed to other gaming jurisdictions with
respect to contracts and contractors. Many established gaming
jurisdictions are concerned about contractors, those folks that
do business with the casinos and the bingo halls. To that end,
they license the people that do that business. They do
suitability determinations, background investigations, but
thereafter they kind of let the parties do as they wish. If the
casino wants to make a bad deal with the contractor, they are
free to do that.
Well, at NIGC we have an additional mandate. Not only do we
want to make sure the folks that deal with tribes are suitable
to do so, but that in our role as the trustee, we want to make
sure that tribes are not taken undue advantage of. To that
extent, we go over those management contracts that IGRA tasked
us with with a fine-toothed comb, and we make sure that what
IGRA says, the manager cannot get more than 30 percent of the
proceeds, it cannot last for more than 5 years, is adhered to.
Where we found it problematic was, as you mentioned in your
opening statement, Mr. Chairman, agreements were written that
were not called management contracts, but actually did get the
third party into the management, and we were not there
scrutinizing that. We were not making suitability
determinations. So we asked that we have an expanded authority.
Tribal gaming operations enter into literally thousands of
contracts. They buy paper towels. They buy poker chips. They
enter into consulting agreements, things like that. I think
there is a risk that if NIGC were tasked with looking at each
and every contract, that would be overkill. We might become a
bureaucratic bottleneck and tribes probably know a whole lot
more about buying paper towels than the NIGC would.
The Chairman. Well, suggest language to us on how we can
differentiate between what you think is correcting an abuse,
and not installing micromanagement. Okay? Have you got an idea
there?
Mr. Hogen. We do, and my staff has been working with the
committee staff to try and put together language that would
narrow the category of gaming contracts wherein we would have a
role. But there are instances where nefarious people have
gotten into casinos kind of through the back door we think that
maybe there should be a permissive category there where we
could reach out and identify, and say we would like to look at
this garbage disposal contract and background that firm to make
sure organized crime is not trying to come in from another
direction.
So I think we can get there without becoming this
bottleneck that I am concerned about, but clarity is required.
We have some specifics in that connection in our testimony and
we will continue to work with the committee staff and the
committee to try and achieve that.
So that fairly well summarizes what is contained in my
statement. I ask that it be included in the record and I stand
ready to respond to questions that might arise.
[Prepared statement of Mr. Hogen appears in appendix.]
The Chairman. I thank you very much for coming back, Mr.
Chairman. I think we need to correct the Colorado River
decision. I don't know if we can or not, but I think it is
obvious. Many times, I do not understand judicial decisions,
but I certainly do not understand that one because IGRA was
framed with having in mind oversight of a commission. To deny
them that necessity, in my view, is hard to understand. That is
why I have some confidence in the appeals process, but we
probably, at least in my view, have to fix it legislatively.
I thank you, Mr. Chairman, you were very clear and
straightforward as always.
Senator Dorgan.
Senator Dorgan. Mr. Chairman, could you introduce the other
commission members? You said all of the commission members are
here with you.
Mr. Hogen. Both of us are here. Our three-member commission
group is down to two.
Senator Dorgan. Okay.
Mr. Hogen. Commissioner Chuck Choney from the Comanche
Tribe, a retired FBI agent, is our other commissioner.
Senator Dorgan. Thank you very much.
And what is the prospect of filling the third?
Mr. Hogen. Well, I know that that is on the desk of the
folks at the Secretary of the Interior's office and White House
Personnel, but we have not been told more about that.
The Chairman. How long has it been empty?
Mr. Hogen. Nelson Westrin went home to Michigan on December
31, so it is just a little over 1\1/2\ months.
Senator Dorgan. I do not want to ask a lot of questions
here. I will send you a good number of questions that relate to
the kind of thing that Senator McCain just asked you about, how
to tailor some of the provisions that I think might be broader
than is advisable.
Let me ask about the audit activity of the commission and
the commission staff. Can you give me some sense of what kind
of auditing goes on during the year and what those audits are
finding?
Mr. Hogen. Okay. We have a staff of auditors. One of the
main things they do all day every day is go in a group, we will
take several auditors to an individual facility. They will say
we want to look at the records to see, (a), what your rules
are; and (b) did you follow them?; and is there a paper trail
there to document this? They will spend a couple of weeks,
maybe longer depending on the size of the operation, review
those kinds of things.
They will work with the staff at the gaming facility, with
the tribal gaming regulators to ask questions and make sure
they understand what happens. At the end of that exercise, they
will prepare a report and they will list the exceptions, the
deficiencies that they have identified. They are auditors. That
is their business. They go nitpicking. They look for that
stuff, and they almost always find.
After that is done and they send the report to the gaming
facility, they say, will you please address each of these
exceptions that we have identified, and give us a report. We
are going to come back and see if those have been solved.
Now, in some instances they will say you misunderstood; we
were not doing that wrong; here is why we are doing it right.
In other instances, they will say we will fix it.
Senator Dorgan. Mr. Hogen, I would understand that to be
the approach, but I am talking about what quantity of work is
done relative to the number of gaming facilities across the
country?
Mr. Hogen. I wrote some of those numbers down.
Senator Dorgan. You can submit that for the record if you
wish.
Mr. Hogen. There are nearly 400 operations and we have only
done about 40 audits.
Senator Dorgan. So about 10 percent.
Mr. Hogen. Let me add that one of the things our minimum
internal control standards require is that when this annual
independent financial audit is done, that auditor, that CPA
firm must also look at the tribe's compliance with the MICS,
prepare a report, and send that to us. That, of course, helps
us select where we are going to go with our next audit.
Senator Dorgan. If you would, you could submit this to us.
Do you believe that the commission should be given expanded
authority to monitor and enforce tribal revenue allocation
plans? Give us examples of why you believe the commission would
need that expanded authority.
Mr. Hogen. Okay. NIGC is responsible for taking enforcement
action if there are violations of the Indian Gaming Regulatory
Act, our regulations in the CFR, and that tribal gaming
ordinance that the tribe adopts to get into gaming. If they are
going to do per capita payments, they have to adopt a revenue
allocation plan that is approved by the Secretary of the
Interior.
After the Secretary approves that plan, she has no further
responsibility or authority to monitor its compliance or to
take action if it is not complied with. But because it is a
creature of the Indian Gaming Regulatory Act, I think NIGC has
the responsibility to inquire, is it being complied with. It is
not crystal clear in the act that that is one of our duties,
but I think by reasonable implication that we should look
there.
It would be useful to know if we should do that with
greater specificity. There have been instances where a plan has
been approved by the Secretary of the Interior, and the tribe
is actually distributing, and that plan typically will limit
the percentage that can be made, for example, for per capita
payments.
But there have been instances where they are doing a whole
lot more per capita payment than is set forth in the plan, and
because of competition in the area, their revenues go down, and
it becomes politically unpopular at the local level to say
let's cut that per capita, and tribal programs that otherwise
would be funded by tribal gaming revenue suffer. Nobody is
watching the store if NIGC does not come out there and inquire
into that.
Senator Dorgan. All right. I will submit some additional
questions. Mr. Hogen, it is helpful for us and for our staffs
as well to be able to have access to you and to receive your
recommendations and suggestions as we think through the range
of opportunities for legislation and what we should be
considering.
So thank you very much for appearing.
Mr. Hogen. Thank you.
The Chairman. Senator Akaka.
STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR FROM HAWAII
Senator Akaka. Thank you very much, Mr. Chairman.
I want to thank you, Chairman McCain and Vice Chairman
Dorgan, for holding this hearing.
After hearing your testimony, I share the concern that you
have and also the concern of many here with regard to
considering oversight and ensuring accountability of not only
gaming tribes, but also the contractors that they do business
with. Although S. 2078 will have a substantial regulatory
impact on tribal gaming, we cannot ignore that this legislation
may impact the ability of Indian nations to exercise their
sovereignty. That is a personal concern.
Tribal governments have established gaming regulatory
systems and have demonstrated their vested commitment to comply
with the IGRA. As we move forward to address the regulatory
authority of your group, the NIGC, I am hopeful that we can
proceed in a manner that acknowledges and strengthens the
government-to-government relationship between the United States
and tribal governments.
My question to you is one that has to do with oversight. Is
there a schedule that you have of oversights?
Mr. Hogen. We do not have a strict schedule, for example,
that says every third Tuesday we will be visiting a particular
facility, but we have five regional offices plus our region
here on the East Coast out of the Washington, DC office, with a
team of investigators and auditors at each of those regions.
They visit all of the facilities in their region, hopefully
several times a year. Of course, there will be facilities that
have some problems that will be visited more often than that,
but every year we will visit the facility, hopefully several
times, and then we select a number of tribes or a number of
operations each year to do a comprehensive minimum internal
control standard audit.
We will be able to do more of those more recently than we
were able to before because we have more auditors now, and we
are still hiring auditors. Ideally, we would get to maybe 20 a
year, as opposed to the 10 or so that we have been able to do
up to this point. But at each facility not only do we receive
their records, their audits, and do we look at it that way, but
we actually walk in the door, talk to the people, and discuss
the operation at the site.
Senator Akaka. I look forward to members of this committee
having the opportunity to fully review any proposed changes in
the future to this bill. Also again, my interest in having the
tribal governments, giving them the opportunity to look at this
legislation as well, and what impact it may have on them.
Mr. Chairman, I would like to just place my statement in
the record. Thank you very much.
The Chairman. Without objection.
Thank you very much, Mr. Chairman. We will appreciate your
continued fine work, and thanks for coming back.
The next panel is Ron His Horse Is Thunder, chairman,
Standing Rock Sioux Tribe; Norman DesRosiers, who is the
commissioner of the Viejas Tribal Government Gaming Commission;
Paul Bullis, who is the Director of the Arizona Department of
Gaming.
Welcome.
We will begin with you, Chairman His Horse Is Thunder.
STATEMENT OF RON HIS HORSE IS THUNDER, CHAIRMAN, STANDING ROCK
SIOUX TRIBE
Mr. His Horse Is Thunder. Mr. Chairman and honorable
members of this committee, my name is Ron His Horse Is Thunder.
I am the great-great-great-grandson of Chief Sitting Bull. I am
the chairman of the Standing Rock Sioux Tribe in North and
South Dakota.
I appreciate the opportunity to testify before the
committee on this legislation. I have a longer written
statement which I wish to submit for the record, and I will
summarize our position on this legislation.
The Chairman. All the written statements will be made part
of the record. Please proceed.
Mr. His Horse Is Thunder. Thank you.
Mr. Chairman, while I appear as a representative of my
tribe and our position, it is shared by 32 members of the Great
Plains Indian Gaming Association covering the States of North
Dakota, South Dakota, Nebraska, Iowa, and Kansas, as well as
the member tribes of the Minnesota Indian Gaming Association
and the six member tribes of the Montana Indian Gaming
Association.
These tribes are strongly opposed to the provisions of S.
2078 and in particular to the provisions conferring power on
the National Indian Gaming Commission to adopt and enforce
minimum control standards and other regulations on class III
Indian gaming.
It is important to understand that the Indian Gaming
Regulatory Act did not empower tribes to engage in gaming
activities. That right arises from the status of Indian tribes
as sovereign nations under Federal Indian law. That right was
made clear in the 1987 decision of the Supreme Court in the
Cabazon case. This was, of course, before Congress passed the
Indian Gaming Regulatory Act.
The fact of the matter is that IGRA was a limitation
imposed by Congress on that right. Most tribes were opposed to
the enactment of the legislation restricting their rights to
get involved in gaming activities, but the anti-Indian forces
of the day were strong enough for Congress to force it to act.
The few friends the tribes had in Congress had to make
several compromises with anti-Indian forces. One of these
compromises involved tribal class III gaming. Against the
wishes of tribes, IGRA provides that class III gaming on Indian
lands will be illegal without tribal-State class III compacts.
This was because the States insisted that they have the right
to be involved in the regulation of all class III gaming. We
did not like it, but that was what we were stuck with.
Even after the Supreme Court decision in the Seminole case
that prohibits tribes from suing States as provided in IGRA,
most Indian tribes involved in class III gaming have been able
to reach some kind of compact with the States. As intended by
IGRA, these compacts make provision for the regulation of
tribal gaming. These compacts provide for the sharing of
regulatory power between the tribe and the State. Some compacts
provide for a lot of State regulation and some don't. That is a
decision made by the State and the tribes.
In the 1990's, NIGC, over the strong opposition of tribes,
promulgated its MICS. These MICS imposed the most detailed kind
of regulation on class II and class III gaming. Even though
most tribes already had their own regulatory schemes under the
compacts, they had to conform to the NIGC MICS by the year
2000.
Finally, one tribe challenge the right of the commission to
enforce its MICS. Last year, the Federal court here in
Washington, DC found that the Indian Gaming Regulatory Act did
not confer that power on the National Indian Gaming Commission.
Now, we are faced with legislation that would overturn this
Federal court victory for tribal rights, and specifically
confer that right to regulate class III gaming on the
commission.
Mr. Chairman, we do not understand why the legislation is
necessary. In the State of North Dakota, the leading Indian and
non-Indian officials are satisfied with the State-tribal
compact, that the compacts make adequate provisions for
effective regulation of our gaming. We thought that that was
what IGRA intended.
In 2004, approximately $7 million was spent on regulation
of tribal gaming in North Dakota alone. Over 300 personnel were
assigned to this very function. For the five tribes in North
Dakota, approximately 15 percent of the total gaming personnel
are involved in regulatory activities.
The North Dakota tribal-State compact requires that the
five tribal nations, Governor and the attorney general must
meet every 2 years to review and adjust any problems concerning
regulatory and policy issues. These biennial reviews have taken
place with both Democratic and Republican attorneys general and
two different governors.
There has been no major problem that has been reported
concerning our tribal governmental gaming regulatory activities
to date. In fact, the Attorney General on several occasions has
commented on his outstanding working relations with the tribal
nations of North Dakota concerning his oversight
responsibilities in regards to the tribal-State gaming compact
regulatory requirements.
There is no scandal in North Dakota regarding our gaming.
The rights of participants in our gaming activities are being
effectively and adequately protected through regulations under
our compact. Nor are we aware of any significant scandal in the
regulation of Indian gaming in other States. We have followed
the hearings this committee has had on this issue in the last
year. We have not seen any record made that would justify the
further erosion of our tribal sovereignty and the right of
self-government.
Mr. Chairman, we know that some have compared the amount of
money the State of Nevada spends on regulations of its gaming
industry with a budget of the National Indian Gaming
Commission. I have been told that Nevada spends $80 million a
year, while the commission spends $8 million a year. If that is
the measure, of course it looks like Indian class III gaming is
not being adequately regulated. However, it totally ignores the
fact that Indian tribes spend over $200 million a year on their
own regulatory efforts. This does not even include the millions
that we pay to State agencies under the compacts for their
regulatory efforts.
To discount and disregard the millions of dollars that
tribes spend for their own regulatory efforts is to show a
regrettable disrespect for the ability of Indian people to
govern their own affairs. It is to say to my Indian people that
the non-Indian world believes that we as Indians cannot be
trusted to regulate ourselves and to protect our participation
in our gaming enterprises.
Mr. Chairman, I know the hearing was to be limited to the
class III provisions of S. 2078. However, as I noted, my tribe
and many of the other tribes are very much opposed to the other
provisions of the bill. These include the provisions to subject
our day to day contracting to NIGC's control, to permit the
Secretary of the Interior to decide if our tribal decision to
make per capita payments is a reasonable method of providing
for the general welfare of our members, and to eliminate the
ability of tribal and State governments to decide if an off-
reservation land transfer to Indian gaming is okay.
Mr. Chairman, the tribes I represent are opposed to the
MICS provision of S. 2078 and all of the other burdensome
provisions. I would close my statement with a comment that this
legislation, which is supposed to be for the benefit of Indian
tribes, does not contain a provision fixing the problem created
by the Seminole decision. When Congress made class III gaming
on Indian land illegal unless done under State-tribal compact,
it was putting tribes at the mercy of States. That is why
Congress authorized the tribes to sue the States if they
refused to negotiate or negotiated in bad faith.
When the Supreme Court struck that provision down, it
opened up Indian tribes to coercion by the States. They now tax
us when this was prohibited by the Indian gaming regulatory
practices.
The Chairman. Mr. Chairman, your time has expired.
Mr. His Horse Is Thunder. Thank you, Mr. Chairman.
[Prepared statement of Mr. His Horse Is Thunder appears in
appendix.]
The Chairman. Commissioner DesRosiers, welcome.
STATEMENT OF NORMAN DesROSIERS, COMMISSIONER, VIEJAS TRIBAL
GOVERNMENT GAMING COMMISSION
Mr. DesRosiers. Thank you, Mr. Chairman, Mr. Vice Chairman.
It is an honor and privilege to have been invited here to
speak to you again today on behalf of my regulatory colleagues
and myself. As you know, we are the ones that are going to be
ultimately responsible for implementing and enforcing whatever
our elected leaders enact. Based on that, first, we would like
to really express our appreciation and compliment the committee
on their willingness to hear from us regulators.
We have commented on a number of areas that have been
submitted for change in IGRA, but my comments here will focus
on gaming-related contracts and contractors. Forgive me for
reading those comments, but I think time constraints dictate
that.
We fully understand and recognize that there have been
abuses in the past where unscrupulous contractors have taken
advantage of tribes. We understand the desire to address this
issue in amending the act. Section 2703, paragraph 11 attempts
to define gaming-related contracts.
Throughout that definition, there are numerous references
to gaming activity. Without a very clear definition of gaming
activity, this section is open to very broad interpretations
which would virtually be all-inclusive of any contract that the
tribes' casinos entered into, such as training or IT
assistance, marketing studies, et cetera.
We also believe that the tribes should be free to develop
economic enterprises such as hotels, golf courses, shopping
centers, et cetera, without NIGC involvement in contracts.
However, a broad interpretation of the word ``ancillary'' in
paragraph (b) could be argued to include all other such tribal
economic enterprises.
Paragraph (a)(2) of this section suggests that any contract
which includes a contractor advising or consulting with a
person that exercises material control over gaming activity
will require NIGC approval, with suitability findings of the
contractor. This is very broad and all-inclusive, and as a
matter of practicality, we really feel NIGC is going to be
unable to manage this.
As drafted, the language would require NIGC to review and
approve hundreds of contracts every year for every tribal
gaming facility in the country, bringing business to a halt in
many instances. The broad definition of gaming-related
contracts in section 11 would encompass numerous contracts for
services by contractors with no ability to significantly affect
the management of the facility.
Because there is no threshold, no dollar threshold
mentioned in the provisions that would trigger review by NIGC
of every contract, and section 11 encompasses any contract
related to the operation or management of gaming activity, even
a contractor or a contract for $500 worth of chairs carved by a
local woodcarver for purchase in a local casino poker room
would require that small vendor at his own expense to submit
his contract to NIGC. Established small vendors in rural areas
where many tribal gaming facilities are located, providing
service such as electrical work or catering work, would be
unable to afford the cost of doing business with tribes and
unable to compete.
Paragraph (b) of the gaming-related contract definitions
suggests that development or construction contracts of $250,000
or more would require NIGC approval. We believe this dollar
threshold is unreasonably low. Most gaming facilities are in
constant motion with remodeling, expansion, or improvement
projects that involve contracts of $250,000 or more. To require
every one of these contracts to have NIGC approval and every
contractor to be found suitable would be overly burdensome and
impose major delays to projects which would negatively affect
tribal gaming operations.
Tribal casinos need to be able to quickly and immediately
respond to catastrophic failures of infrastructure, structures
or equipment. They would be unable to do that and go out and
immediately fix things and buy the necessary equipment under
contracts if they required prior NIGC review.
The scope of contracts related to the construction of
gaming and ancillary facilities would capture such vendors as
waste water consultants, architects and environmental engineers
who are critical components for keeping a casino functioning in
an environmentally sound manner, but who have absolutely no
control over any gaming activity.
This next area, which I can personally attest to, being
caught in this quagmire, I think is important. If these
contracts should happen to be with publicly traded companies,
an entirely new set of complexities come into play. Very often
these publicly traded companies are wholly-owned subsidiaries
of other publicly traded companies, and in many of these, five
percent or more of the stock is held by other publicly traded
investment companies. So it is easy to see how NIGC could get
bogged down in backgrounding officers and directors of a myriad
of different companies just for one contract with a tribe by
one of those companies.
I see my red light is on, so I will jump toward the end.
For these reasons, we believe any Federal approval of
gaming-related contracts should be submitted only that affect
tribes and companies that have entered into management or
consulting agreements, or finance agreements, that have their
fees based on a percentage of net revenues. I think that is
where most of the abuses have been in the past.
Also, any contractors, of course, which exercise
significant material control over the gaming facility.
Again, I would like to emphasize, we understand the desire
to address the issues of the contracts and contractors. It is
neither our intent nor desire to appear as overly critical or
as obstructionist. However, this is a highly complex area
requiring a great deal of thought to make it workable. We share
the same goals as the committee, to keep undesirables out of
Indian gaming and for tribes to be the primary beneficiaries of
their tribal gaming revenues. At the same time, we must
endeavor not to stifle or inhibit economic progress.
I want to thank you again for the opportunity to speak here
and I would be happy to answer any questions.
[Prepared statement of Mr. DesRosiers appears in appendix.]
The Chairman. Thank you very much.
Mr. Bullis, welcome.
STATEMENT OF PAUL BULLIS, DIRECTOR, ARIZONA DEPARTMENT OF
GAMING
Mr. Bullis. Thank you, Mr. Chairman. Good morning, Mr. Vice
Chairman.
My name is Paul Bullis. I am director of the Arizona
Department of Gaming. We are the State agency which, along with
Arizona's Indian tribes and the National Indian Gaming
Commission, oversees Indian gaming in Arizona. Thank you for
the opportunity to speak today.
I would like to address some of the provisions of S. 2078
from the perspective of a State regulator. More importantly, I
speak from the perspective of a State regulator where the State
and tribes have developed a successful partnership for the
effective oversight of Indian gaming. That partnership between
sovereign governments has as its cornerstone our tribal-State
compact. Although the compact is the cornerstone of our
partnership, what makes that partnership work is communication,
discussion, engagement and a process for resolving issues.
My overall message is that when considering amendment to
the Indian Gaming Regulatory Act, the committee should take
into consideration success stories such as Arizona.
Senator Dorgan. Mr. Bullis, can you pull that microphone a
bit closer?
Mr. Bullis. Yes; I am sorry, Senator Dorgan.
I would hope and request that any amendments would be
crafted to not disrupt those successes.
I will first address those provisions of S. 2078 that deal
with the National Indian Gaming Commission's role in approving
gaming-related contracts and determining suitability of gaming-
related contractors. These provisions would create overlap
between the activities of the Arizona Department of Gaming and
the NIGC. Let me discuss the role of the Arizona Department of
Gaming in this area.
Under our tribal-State gaming compact, the Arizona
Department of Gaming certifies all persons other than regulated
lending institutions that provide financing to tribes for
gaming facilities, all management contractors engaged by a
tribe to assist in the management or operation of the gaming
facility, all manufacturers and distributors of gaming devices,
and all persons providing gaming services in excess of $10,000
in any 1 month.
Our certification process involves a determination of
suitability. Each company, each principal of a company, and
each individual providing gaming services must undergo a
thorough background investigation. This includes a criminal
history, credit history, financial background, regulatory
history, and other pertinent information.
Manufacturers and distributors of gaming devices and other
items used in the play of class III games undergo a
particularly rigorous investigation, including site visits and
face to face interviews. Tribal regulators are also required to
license each of these persons and companies.
The universe of persons required to be certified by the
Arizona Department of Gaming I believe is larger than and
includes the universe of gaming-related contractors defined by
S. 2078, which would also have to be approved by the NIGC. This
is the area of overlap where both the Arizona Department of
Gaming and the NIGC would be approving the same gaming-related
contractors.
There is, though, a role laid out for the NIGC under S.
2078 in this area where there is no overlap. That is the area
of review and approval of gaming-related contracts. The Arizona
Department of Gaming reviews only the suitability of the
vendors. We do not review the terms of the agreements
themselves, nor do we approve those agreements. That would be
solely within the purview of the NIGC.
In that area of overlap where the Department of Gaming does
play a role, we would hope that the intent of Congress would
not be to preempt our role, especially where we have performed
it effectively, nor to preempt the efforts of other States that
are also performing effectively.
I would also like to address the proposal contained in S.
2078 to clarify the NIGC's authority to promulgate minimum
internal control standards. Governor Janet Napolitano has
previously addressed this issue in her letter of October 4,
2005 to this committee. Let me summarize Governor Napolitano's
position. When the State and tribes were negotiating the
current compact, the NIGC's minimum internal control standards
applying to class III gaming were in effect.
The State and tribes recognized the importance of internal
controls in the operation and regulation of casinos, and so
incorporated the NIGC's MICS in one of the appendices to the
compact. If the NIGC had not issued its minimum internal
control standards, which had to be complied with by the tribes
in any event, I am quite certain that our compact would not
contain comparable controls.
The point to be made is that the existence of the NIGC's
MICS issued under the NIGC's presumed authority at the time was
instrumental in making Arizona's compact as strong as it is in
terms of protecting the integrity of gaming. We therefore
support language in S. 2078 clarifying that the NIGC has
authority to issue minimum internal control standards governing
Class III gaming.
Thank you.
[Prepared statement of Mr. Bullis appears in appendix.]
The Chairman. Thank you very much.
I want to thank the witnesses for being here.
Mr. DesRosiers, I am somewhat unclear on your testimony
regarding so-called participation agreements between tribes and
slot machine manufacturers. You indicate that requiring the
slot machine manufacturers to have background checks would
change the way the industry does business. Is that correct, in
your testimony?
Mr. DesRosiers. That is not what I intended. We already
background all the machine manufacturing companies and license
them. Every contract, though, there are contracts, hundreds of
them, with participation agreements which require a percentage
of each machine in these wide area progressive banks to be
paid. For every one of those contracts, which I personally
review, but to have to go to NIGC would be overly cumbersome.
The Chairman. Do you acknowledge there may be a need for an
expanded NIGC authority? If you were making changes, what area
would you address, perhaps expanded authority for the NIGC?
Mr. DesRosiers. I am not sure where I would put that. We
support the notion of, and I do not speak for all tribes and
tribal regulators, our tribe supports the notion that they
should have authority over Class III minimum internal controls,
to preserve the public perception of the integrity of Indian
gaming. As Chairman Hogen already testified, virtually all the
tribes are there anyway. I mean, we are already complying with
those MICS.
In the past, in years past, not in this testimony, I would
have liked to have had NIGC to have the authority to help me on
my request, not to be mandated to be in charge of it, but to
assist me in backgrounding some contracts and contractors.
There are occasions where companies that are so large think
that they do not need my tribe's business and don't want to be
bothered with the attempts that we make to background and
license them.
The Chairman. And do you agree that there have been cases
of unscrupulous individuals or companies coming in and signing
these contracts and basically exploiting the Native American
tribes by taking too much money from them. Would you agree with
that?
Mr. DesRosiers. I would have to agree. I have seen that
first hand.
The Chairman. Mr. Bullis, would you agree with that?
Mr. Bullis. Yes; Senator McCain.
The Chairman. Mr. Bullis, this legislation calls for the
NIGC to perform background investigations and make suitability
determinations on a wide range of persons. Your background and
your experience is pretty important. Can you share your
experience with us? For example, how long a process is it for
your agency to do a background investigation and make a
determination?
Mr. Bullis. Certainly. It is important to recognize that
our agency divides up the different kinds of vendors and
contractors. The most significant types are those vendors that
provide equipment that is used in the play of Class III games.
In Arizona, there are about 70 in that category right now. We
have about 460 vendors that provide goods and services that are
otherwise used in casinos. They do not receive the same depth
and degree of scrutiny. Clearly, those vendors that are
providing equipment used in the play of class III games get the
much more in-depth level of scrutiny.
In terms of the time period that it takes us to do those
types of investigations, it certainly varies in terms of any
issues we find and the type of provider. What we do have in
place, though, to kind of mitigate those concerns are, first of
all, within 20 days if we have identified within the first 20
days no concerns about the vendor and upon request of the
tribal gaming office, we will issue a temporary certification
allowing that vendor to do business with the tribe. That allows
us whatever time is necessary to continue our in-depth
investigation.
The Chairman. But things are going well in Arizona?
Mr. Bullis. I believe so. I believe so.
The Chairman. Thanks to the compact that was entered into
between the State and the tribes.
Mr. Bullis. The strength of the compact, as well as the
communication and the partnership that we have developed with
the tribes. I will tell you, when I first got on the job about
three years ago, I thought the most important thing was getting
together, reaching agreement on issues, and moving on. I have
learned that the most important thing is not that we reach
agreement on items, on issues, but how we go about doing that,
how we interact with each other, how we communicate regularly.
The Chairman. Mr. Chairman His Horse Is Thunder, since your
statement said that this legislation is based on anecdotal
anti-Indian press reports on Indian gaming, the overblown issue
of off-reservation gaming, and pin the blame on the victim
reaction to the Abramoff scandal, I have no questions. We are
too far apart in our views of what this committee is trying to
do in the 20 some years that I have been involved on behalf of
Native Americans.
Senator Dorgan.
Senator Dorgan. Chairman His Horse Is Thunder, on the issue
of class III gaming, let me say I share the chairman's thoughts
about that. That is a statement that does not at all compare to
the facts. This committee has worked very hard to receive
comments and opinions and suggestions from a wide range of
interests, including many Indian tribes from across the
country.
While I think the chairman's bill is broader than it should
be, for example, in the area of contracts and so on, I also, as
you know, having visited with you and the other tribal chairmen
in our region, I also believe that class III gaming ought to be
subject to regulation by the National Indian Gaming Commission.
So we have approached this very carefully, very
thoughtfully, and I do not share the sentiments in your
testimony that were expressed. They should not certainly be
attributed to any actions or any attitudes by the current
chairman or the members of this committee. I think we have
approached this very carefully.
Now, let me say this as well. My view, and let me just take
class III for a moment, my view of class III is this. It is not
believable to me that the construct of establishing a
commission for the purpose of providing both investigatory
capabilities and enforcement capabilities would have
anticipated that we would not do that for class III gaming. I
mean, it is just not believable to me. The Colorado decision I
think needs to be addressed. I believe this committee will
address it. I do not know whether the full House or the full
Senate will address it, but I believe this committee should
address it.
There are other portions of the legislation that the
chairman has offered that we will I believe change and alter
and amend as we get additional testimony and thoughts from
tribes and the commission and so on.
This is a $20-billion industry. In North Dakota, for
example, the only State for which I have a great deal of
information, although I have some about Arizona and some other
States, in North Dakota, the State enforcement is by two part-
time people working at the attorney general's office. That is
not, with all due respect, enforcement.
I am not suggesting the attorney general is not doing his
job. That is not my suggestion at all. I am just suggesting
there is not an aggressive enforcement mechanism at the State
level. They have not funded it and it just does not exist.
I believe with a $20-billion industry, the way to preserve
and protect this industry to be able to provide the resources
and the income stream in the long term for the tribes that have
gaming, is to make sure that we do not have scandals, and that
we have adequate management, and that we have enforcement of
standards.
One final point I wanted to make. My understanding of the
North Dakota compact is that the North Dakota compact on gaming
includes the minimum internal control standards that were
established by the National Indian Gaming Commission. Is that
true, Mr. Chairman?
Mr. His Horse Is Thunder. I believe so.
Senator Dorgan. And if that is the case, why on earth would
we not have the National Commission be enforcing that standard
and auditing that standard? If we have in fact adopted that
standard, would we want to fall short of the enforcement of
that standard?
Mr. His Horse Is Thunder. No; we would not, sir.
Senator Dorgan. And so, I guess, that makes my point. I
know there is strong feeling out there about a lot of things.
Some of it I think stems, Mr. Chairman, from anger and concern
about the lack of resources for health care, the lack of
resources for housing, and education. There is a lot of strong
feeling.
But that ought not replace good commonsense when we try to
evaluate what to do about gaming and what to do to make sure
that we have enforcement that is adequate. As I understand it,
we have several levels of enforcement at the present time: the
tribe, and Mr. DesRosiers, you are a compliance officer for a
tribe. You have worked there for, is it 14 years, I believe?
Right?
Mr. DesRosiers. Yes, sir.
Senator Dorgan. You have an enforcement mechanism for the
tribe itself.
Mr. Bullis, you represent a State. I think that perhaps
Arizona has the most aggressive, if you simply measure it by
people, you probably have more people and are spending more
money on enforcement than most other States, so you have a
legitimate mechanism at the State level. And some of the tribal
chairs will say, well, if we have the tribal enforcement, you
have State enforcement, you do not need triplicate levels of
enforcement. But the honest fact is, most States do not have an
aggressive State enforcement mechanism and they are not funding
it. That is just the honest facts.
That is why I come to a conclusion different than you, Mr.
Chairman, and the other chairmen of the tribes in the Northern
Great Plains. I really believe it is in the interests of Indian
tribes, as the other two witnesses have suggested, for this
Congress to proceed with some legislation.
Now, having done that, or preparing to do that, at least,
let me make a couple of other observations. Contracts, I think,
Mr. DesRosiers, you and Mr. Bullis have both pointed out that
the contracting provision in the proposed legislation probably
should be altered. And I think also the commission chairman
suggested the same thing. I happen to feel the same. My guess
is that the offering of the chairman, well I know this to be
the case, was an attempt to put something out there and then
let's evaluate how you make some changes to it in a way that
makes some sense.
Obviously we do not need to have some sort of national
scrutiny for somebody providing linens for a gaming facility in
Northern South Dakota, for example. So I think the testimony
you have given today about that is very helpful. I think not
only that, but in three or four other areas, background checks
and other things, are helpful.
One thing that I would like to ask about is the number of
vendors. You indicated there are some 400 vendors, Mr.
DesRosiers, providing gaming machines. Are those national or is
that just in Arizona?
Mr. DesRosiers. No; I am sorry. I don't know where you came
up with that.
Senator Dorgan. How many different vendors, let's assume
that you want to buy new slot machines. How many vendors would
you look to and how many vendors exist in this country from
which you might make that purchase? And you are going to want
to know about suitability?
Mr. DesRosiers. Right. I would say typically, just slot
machine type vendors, and I think Paul would agree, there are
40 to 50 of those. And then other gaming equipment vendors,
whether it be bingo or card games and that kind of thing, there
are probably another 30 or so vendors.
In our facility, we have 260 backgrounded and licensed
vendors, but those include anybody that is doing any business
with the casino of $25,000 or more. But just if you limit it to
machine manufacturers and suppliers and gaming equipment, I
think as Paul said, they have somewhere in the neighborhood of
80 such vendors. That is about right.
Senator Dorgan. Mr. Bullis, you could probably have been
expected to come here and suggest that there is no need for the
NIGC to take a look at class III because you probably have the
resources and you feel like you have the capability. So why
have you not come to tell us that? Why do you believe that
class III enforcement is appropriate for the commission?
Mr. Bullis. Senator Dorgan, as I mentioned 1 moment ago, I
know that the fact that the NIGC had issued its MICS allowed
the State of Arizona in its compact to incorporate that MICS
into our compact and make it stronger. I think it benefits
Indian gaming, certainly in Arizona and nationally as well.
I think the importance is to strike the proper balance in
each particular State between the State, the Federal and the
tribal regulators, and to allow each of those regulatory legs
of the stool to devote resources and to apply resources as
necessary. I think in Arizona we have struck a proper balance
among all the different jurisdictions.
Senator Dorgan. Chairman His Horse Is Thunder, how
important is gaming to your tribe? Your tribe is a North Dakota
and South Dakota tribe. You are a former college president. You
have just been elected as a new tribal chair. You inherit a
tribe that has enormous challenges, as do most of our tribes in
the Northern Great Plains. You have a gaming facility. I
believe one facility, is that correct?
Mr. His Horse Is Thunder. We have two, one in North Dakota
and one in South Dakota.
Senator Dorgan. And tell me how important is that gaming
facility and the revenue from it for the social services and
other revenue needs that the tribe has?
Mr. His Horse Is Thunder. It is absolutely imperative,
given the budget constraints that we are under today. It
provides necessary services that otherwise would go unmet.
Senator Dorgan. If this committee and this Congress
proceeds to enact legislation that addresses the Colorado
decision, and gives the commission authority over class III
gaming, along with some other issues, what is your response to
that?
Mr. His Horse Is Thunder. I would agree with you, Senator,
that the MICS are important. They are. We do believe that the
rest of the provisions go too far in constraining tribes.
Senator Dorgan. Do you see any risk at all in us doing
nothing, a risk that would attend to circumstances where there
is not sufficient tribal regulation, there is virtually no
State regulation, and we have dealt the commission out of class
III gaming, which is the one that would attract probably the
greatest area of abuse, if there were to be abuse by some? Do
you see any risk at all?
Mr. His Horse Is Thunder. Senator, given your hypothetical
that there is lack of tribal regulation, lack of State
regulation, then I think at that point in time there needs to
be some oversight, but again, that is where I think the MICS
are appropriate, but the rest of it goes too far.
Senator Dorgan. Mr. Chairman, I think we are getting a lot
of good information from people. One of the things that you and
I have both talked a lot about is consultation. I think we
should, as we proceed to a markup, we should keep open a record
and seek to receive consultation from any tribal leaders that
wish to offer that consultation in the form of written
statements, so that we can have as broad a consultation as is
possible from the tribes.
I think that is needed on the contracts and background
checks, and a whole range of things. But I do want to say that
consultation to me includes a strong feeling on my part that we
as a committee should proceed to address the issue of class III
gaming and the jurisdiction of the National Indian Gaming
Commission. That is not anti-tribe. That is, in my judgment, in
the long term the very best interests of Indian tribes in this
country, and the maintaining of the economic opportunity that
exists with gaming facilities in the long term.
So I hope we will perhaps write to tribes, invite them to
provide us information, and then use that information, because
there are a number of variances of how we do three or four
areas of this bill, that we can, should and perhaps will change
as a result of this consultation.
So I think this hearing has been very important. I
appreciate all three witnesses. Let me also say that Chairman
His Horse Is Thunder is a new chairman. He has inherited the
leadership of a tribe with a lot of challenges. I look forward
to working with him on those challenges as well, in dealing
with housing, health care and education.
Thank you very much to all three witnesses.
The Chairman. Thank you.
I want to thank the witnesses. We have gotten some good
advice and recommendations on narrowing the definition of
gaming-related contract. We certainly do not want to create
bottlenecks, Mr. DesRosiers. I think we can put some parameters
around it. Obviously, we are trying to eliminate an obvious
evil that was a loophole in the original bill. I think most
people acknowledge that, that there have been contracts where
management or something entered into by the tribes which have
really caused them to suffer enormous financial burdens which
they never should have. It certainly was not the intent of the
legislation.
So I think that is very helpful, and your other
recommendations are.
Mr. Bullis, I do not often tout what we do in our State. It
is kind of a waste of time sometimes. Everybody knows what kind
of a wonderful place we live in. But the process that we went
through in Arizona of proposing a compact, negotiating with the
tribes, and then submitting it to the voters of our State for
ratification was an open process.
I meet quite frequently with Arizona tribal chairmen, both
gaming and those who have difficulty in gaming because of the
remoteness of their location. I think this sharing revenue,
sharing the slot machines has been a marvelous thing for tribes
that have not been able to take advantage of the large
population areas.
Everything I can see is that things work very well. Is that
your view?
Mr. Bullis. Absolutely, Senator McCain. I think things are
working well. I think the relationship, I hope, between the
State and the tribes in the area of gaming is a successful
partnership, and we strive to make it that way.
The Chairman. That might serve as a model in the future
because the people of Arizona were allowed to vote, to decide
whether we wanted to enter this compact or not, both Indians
and non-Indians. And a majority of them, a significant
majority, decided they wanted that. I think that that has been
a beneficial part of the process.
Senator Dorgan. Mr. Chairman, might I just observe that
part of your population this time of the year are Dakotans.
[Laughter.]
If you would like to take some credit, we would like to
receive some of the credit for all those Dakotans that bring
some commonsense to the Southwest.
The Chairman. And we are very, very grateful for them
coming and spending the winter with us. They are notoriously
cheap, but other than that we are always pleased to have those
wonderful people come down and spend time with us, as many of
us enjoy in the summer months to come and visit your beautiful
State, and its Indian reservations. [Laughter.]
So it is a nice reciprocal relationship we have.
I thank the witnesses.
The hearing is adjourned.
[Whereupon, at 10:45 a.m., the committee was adjourned, to
reconvene at the call of the Chair.]
=======================================================================
A P P E N D I X
----------
Additional Material Submitted for the Record
=======================================================================
Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator from Hawaii
Thank you Mr. Chairman and Mr. Vice Chairman for holding this
important legislative hearing. I share the concern of many present here
today, with regard to ensuring accountability of not only gaming
tribes, but also the contractors they do business with.
Although, S. 2078 will have a substantial regulatory impact on
tribal gaming, we cannot ignore that this legislation may impact the
ability of Indian nations to exercise their sovereignty. Tribal
governments have established gaming regulatory systems and have
demonstrated their vested commitment to comply with the Indian Gaming
Regulatory Act [IGRA]. As we move forward to address the regulatory
authority of the National Indian Gaming Commission, I am hopeful that
we proceed in a manner that acknowledges and strengthens the
government-to-government relationship between the United States and
tribal governments.
Due to the complex nature of the issues raised in this committee,
there has been a long tradition of operating in an inclusive and
bipartisan manner. I look forward to members of this committee having
the opportunity to fully review proposed changes to this bill. I also
firmly believe that it is in the best interest of the committee to
consider the concerns raised by some tribal governments that this
legislation may adversely impact them.
I thank the witnesses here today and look forward to their
testimony.
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