INDIAN GAMING

Preliminary Observations 

on the Regulation and 

Oversight of Indian Gaming

Statement of Anne-Marie Fennell, Director,

Natural Resources and Environment

Testimony 

Before the Committee on Indian 

Affairs, U.S. Senate

For Release on Delivery 

Expected at 3:30 p.m. ET

Wednesday, July 23, 2014

GAO-14-743T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-743T, a testimony 

before the Committee on Indian Affairs, 

U.S. Senate

July 23, 2014

INDIAN GAMING

Preliminary Observations on the Regulation and 

Oversight of Indian Gaming

Why GAO Did This Study

Over the past 25 years, Indian gaming 

has become a significant source of 

revenue for many tribes, reaching 

$27.9 billion in 2012. At that time, 

about 240 of the 566 federally 

recognized tribes operated more than 

420 gaming establishments ranging 

from bingo halls to multimillion dollar 

casinos across 28 states. IGRA, the 

primary federal statute governing 

Indian gaming, provides, among other 

things, a statutory basis for the 

regulation of Indian gaming to assure 

that it is conducted fairly and honestly.

Tribes, states, Interior, and the 

National Indian Gaming Commission 

have roles in regulating or overseeing 

Indian gaming.

This testimony is based on GAO’s 

preliminary observations from ongoing 

work that examines (1) the process 

Interior uses to ensure compliance with 

IGRA through its review of tribal-state 

compacts and the types of provisions 

contained in these compacts; (2) how 

states and selected tribes regulate

Indian gaming; and (3) how the 

Commission regulates and oversees 

Indian gaming and how, if at all, recent 

organizational changes have affected 

its regulatory or oversight approach.

In its ongoing work, GAO analyzed

compacts; visited three states and 

seven tribes (selected for geographic 

representations and revenue 

generation) to discuss the oversight of 

Indian gaming; reviewed Commission 

data on technical assistance and 

enforcement actions; and interviewed

Interior and Commission officials. GAO

will continue to collect information on 

these topics and produce a final report.

GAO is not making any 

recommendations in this testimony.

What GAO Found

The Department of the Interior (Interior) has a multistep review process 

designed to help ensure that compacts comply with the Indian Gaming 

Regulatory Act (IGRA). Such compacts are agreements between a tribe and 

state that governs the conduct of the tribe’s Class III (or casino) gaming

activities. Based on GAO’s preliminary review, Interior has approved 

78 percent (382) of the tribal-state compacts submitted since 1998. While the 

provisions in compacts approved by Interior are largely similar, they do vary 

in some respects, such as the terms of “revenue sharing” arrangements 

established between states and tribes. For example, some compacts do not 

provide for revenue sharing with states, while some require tribes to share 

significant portions of revenue with states. The remaining 22 percent (106) of 

compacts reviewed were either (1) considered approved without action by 

the Secretary of the Interior, (2) withdrawn, or (3) disapproved by Interior for 

various reasons, such as when they were not consistent with IGRA.

The roles of states and tribes in regulating Indian gaming vary and are 

established in two key documents: (1) compacts for Class III gaming and 

(2) tribal gaming ordinances, which provide the general framework for day-today tribal regulation of Class II (including bingo) and Class III gaming

facilities. Based on GAO’s preliminary observations of ongoing work, GAO 

found that the three states visited—Arizona, California, and Oklahoma—

varied in their approaches to regulating Indian gaming, as seen through 

differences in their regulatory agencies’ organization, staffing levels, and 

funding. For the seven tribes GAO visited, each has established tribal gaming 

commissions that perform various regulatory functions to help ensure that 

their gaming facilities are operated in accordance with tribal laws and 

regulations and, for Class III operations, the compact.

The National Indian Gaming Commission (Commission), an independent 

commission created by IGRA within Interior, plays an important role in 

regulating and overseeing Indian gaming by ensuring that Class II and Class 

III gaming facilities comply with IGRA and applicable federal regulations and 

tribal ordinances or resolutions. Among other things, the Commission 

monitors tribal gaming activities, inspects gaming premises, and takes 

enforcement actions when necessary. In 2011, the Commission implemented 

its Assistance, Compliance, and Enforcement initiative, which emphasizes 

providing assistance to tribes to achieve compliance with IGRA. Through this 

initiative, the Commission has sought to provide technical assistance and 

training to tribes so that compliance issues may be resolved early and 

voluntarily without the need for enforcement actions. According to 

Commission officials, in part, as a result of this initiative, the number of 

enforcement actions has decreased significantly. Also in 2011, as part of a 

broader organizational realignment, the Commission merged its Enforcement 

and Audits divisions into one Compliance Division. According to Commission 

officials, this merger was deemed necessary, in part, to better support the 

Commission’s emphasis on compliance assistance under its initiative.

View GAO-14-743T. For more information, 

contact Anne-Marie Fennell, (202) 512-3841, 

fennella@gao.gov. 
Page 1 GAO-14-743T 

Chairman Tester, Vice Chairman Barrasso, and Members of the 

Committee:

I am pleased to be here today to provide some preliminary observations 

from our ongoing review of Indian gaming oversight for this committee. 

Over the past 25 years, Indian gaming has become a significant source of 

revenue for many tribes. In fiscal year 2012, the Indian gaming industry 

generated revenues totaling $27.9 billion and included 420 gaming 

establishments in 28 states.

The Indian Gaming Regulatory Act (IGRA) was enacted in 1988 to 

provide a statutory basis for the regulation of gaming on Indian lands. 

IGRA created three classes of gaming and sets out regulatory 

responsibilities for tribes, states and the federal government. Class I 

gaming consists of social games played solely for prizes of minimal value 

or traditional gaming played in connection with tribal ceremonies or 

celebrations. This type of gaming is within the exclusive jurisdiction of the 

tribes. Class II gaming includes bingo, games similar to bingo, and certain 

card games. Class III gaming includes all other types of games, including 

slot machines, craps, and roulette. Class II and Class III are subject to 

federal regulation or oversight; however, Class III is also subject to state 

regulation to the extent specified in compacts between the tribe and state 

that allow such gaming to occur. Compacts are agreements between the 

tribe and state that establish the terms for how a tribe’s Class III gaming 

activities will be operated and regulated, among other things. The 

Secretary of the Interior (Secretary) approves compacts and must publish 

a notice in the Federal Register before they go into effect.

IGRA also created the National Indian Gaming Commission 

(Commission), a commission within the Department of the Interior 

(Interior), and charged it with regulating and overseeing various aspects 

of Indian gaming. The Commission is composed of a Chair, appointed by 

the President and confirmed by the Senate, and two associate 

commissioners, appointed by the Secretary. The Commission maintains 

its headquarters in Washington, D.C. and has seven regional offices and 

three satellite offices and it has approximately 100 full-time employees. 

To help ensure compliance with IGRA and its implementing regulations, 

the Commission engages in various activities to monitor the work of tribal 

gaming regulators—such as examining records of gaming operations, 

inspecting gaming facilities, and assessing tribe’s compliance with 
Page 2 GAO-14-743T 

minimum internal control standards for Class II gaming.1 In addition, the 

Chair reviews and approves various documents related to gaming 

operations, including tribal ordinances or resolutions adopted by a tribe’s 

governing body.

2

This testimony reflects our preliminary observations from our ongoing 

review that examines (1) the process Interior uses to help ensure 

compliance with IGRA through its review of compacts and the types of 

provisions contained in these compacts; (2) how states and selected 

tribes regulate Indian gaming; and (3) how the Commission regulates and 

oversees Indian gaming and how, if at all, recent organizational changes 

have affected its regulatory or oversight approach.

In 2011, the Commission reorganized its oversight 

program by consolidating its Enforcement and Audit divisions into a single 

Compliance Division.

To determine the process Interior uses to help ensure compliance with 

IGRA through its review of compacts and the provisions contained in 

these compacts, we obtained a list from Interior of all Indian gaming 

compacts in effect as of July 2014 and analyzed the compacts to identify 

key provisions, including those provisions related to tribal and state 

regulation. We also obtained from Interior a list of all compact decisions 

(e.g., approved, disapproved) from 1998 to the present. We are in the 

process of verifying the accuracy of this list. We also examined written 

guidance and other relevant documentation describing Interior’s process 

for reviewing gaming compacts and we interviewed agency officials about 

how this review process helps ensure compliance with IGRA.

To determine how states and selected tribes regulate Indian gaming, for 

our ongoing review of Indian gaming oversight, we are in the process of 

contacting all 28 states that have Indian gaming operations. We are 

collecting information about how each of the 28 states oversees Indian 

gaming including information on the states’ regulatory organizations, 

staffing, funding and expenditures, and the types of monitoring and 

 1

Although the Commission’s regulations establishing minimum internal control standards 

applied to both Class II and Class III, in 2006, a federal circuit court ruled that IGRA did 

not authorize the Commission to issue regulations establishing minimum internal control 

standards for Class III gaming. Colorado River Indian Tribes v. Nat’l Indian Gaming 

Comm’n, 466 F.3d 134 (D.C. Cir. 2006).

2

While IGRA refers to both tribal ordinances and resolutions, this testimony will use the 

term tribal ordinances.
Page 3 GAO-14-743T 

enforcement activities conducted by state agencies. For our ongoing 

review, we are visiting 6 states—Arizona, California, Michigan, New York, 

Oklahoma, and Washington. We chose these states to provide 

geographic representation and because they are among the states with 

the greatest revenue generated from Indian gaming. We have completed 

visits to Arizona, California, and Oklahoma, which have about 45 percent 

of all Indian gaming operations.3 We are limiting the discussion of our site 

visits to these three states for our preliminary observations in this 

testimony. We are in the process of contacting the remaining 22 states by 

telephone. Given that there are over 200 tribes that conduct gaming, we 

will not be able to obtain information that is representative of all gaming 

tribes. Rather, for each of the 6 states that we visit, we are interviewing 

officials from at least one or two federally recognized tribes with gaming 

operations regarding their approaches to regulating Indian gaming.4 Our 

discussion today will focus on 7 tribes that we have already visited.5

To determine how the Commission regulates and oversees Indian gaming 

and how, if at all, recent organizational changes have affected its 

regulatory and oversight approach, for our ongoing review we are in the 

process of collecting information on the Commission’s policies and 

procedures related to its regulation and oversight of Indian gaming. Also, 

for fiscal years 2004 through 2013, we plan to obtain and analyze data 

from the Commission about (1) technical assistance and training provided 

to tribes, (2) monitoring activities and enforcement actions taken, and 

(3) tribal compliance rates. We are also obtaining information about the 

Commission’s recent consolidation of its Enforcement and Audit divisions 

into a Compliance Division, including impacts of this consolidation, if any, 

on the Commission’s regulatory and oversight approach.

 3

While the number of gaming establishments was 420 in 2012, as of July 7, 2014, the 

Commission reported 477 gaming establishments. About 45 percent of the gaming 

establishments (216 out of 477) were located in Arizona, California, and Oklahoma.

4

IGRA only authorizes federally recognized tribes—those recognized by the Secretary of 

the Interior as eligible for the special programs and services provided by the United States 

to Indians because of their status as Indians—to conduct gaming activities.

5

As of this testimony, we have visited the Salt River Pima-Maricopa Indian Community 

and the San Carlos Apache Tribe in Arizona; Shingle Springs Band of Miwok Indians, 

United Auburn Indian Community of the Auburn Rancheria, Yocha Dehe Wintun Nation in 

California; and Chickasaw Nation and the Muscogee (Creek) Nation in Oklahoma.
Page 4 GAO-14-743T 

We are conducting our ongoing work in accordance with generally 

accepted government auditing standards. Those standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence we plan to obtain will 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We provided a draft of this statement to Interior and the 

Commission for their review. The Commission provided technical 

comments which we incorporated as appropriate.

Since fiscal year 1995, revenue from Indian gaming has grown from 

$8.2 billion to $27.9 billion in fiscal year 2012 (see fig. 1). In fiscal year 

2012, about 240 of the 566 federally recognized tribes operated more 

than 420 Indian gaming establishments across 28 states. These 

establishments included a broad range of operations, from tribal bingo to 

multimillion dollar casino gaming facilities. Of these establishments, a few 

large operations account for a major portion of the revenue.

Figure 1: Growth of Indian Gaming Revenues, Fiscal Years from 1995 to 2012

Background
Page 5 GAO-14-743T 

IGRA is the primary federal statute governing Indian gaming.6

• Class I gaming consists of social gaming solely for nominal prizes or 

traditional gaming played in connection with tribal ceremonies or 

celebrations and is regulated solely by tribes and not subject to IGRA.

IGRA 

provides, among other things, a statutory basis for the regulation of Indian 

gaming to shield it from corrupting influences, assure that gaming is 

conducted fairly and honestly by both the operators and the players, and 

ensure that tribes are the primary beneficiaries of gaming operations. The 

act establishes the following three classes of gaming.

• Class II gaming includes bingo, pull-tabs,7 punch boards,8 and certain 

card games9

• Class III gaming includes all other forms of gaming, including casino 

games and slot machines, and although both Interior and the 

Commission play a role in overseeing certain aspects of Class III 

gaming, it is regulated by the tribes and the states pursuant to 

compacts.

and is regulated by the tribes and the Commission.

A tribe may only conduct Class III gaming activities if such activities are 

conducted in conformance with a compact, among other things. 

According to the relevant Senate committee report, IGRA was intended to 

provide a means by which tribal and state governments can realize their 

unique and individual governmental objectives.10

 6

Pub. L. No. 100-497, 102 Stat. 2467 (1988).

The Senate committee 

report also noted that the terms of each compact may vary extensively 

and may allocate most or all of the jurisdictional responsibility to the tribe, 

7

A pull-tab is a gambling ticket that is sold as a means to play a pull-tab game. The object 

of the ticket is to open the perforated windows on the back of the ticket and match the

symbols inside the ticket to the winning combinations on the front of the ticket. The 

winning pull-tab ticket is turned in for a monetary prize.

8

A punch board is a small board full of holes in which each hole contains a slip of paper 

with symbols printed on it; a gambler pays a small sum of money and pushes out a slip in 

the hope of obtaining one that entitles the gambler to a prize.

9

Class II card games are nonbanking card games that the state explicitly authorizes, or 

does not explicitly prohibit, and are played legally elsewhere in the state, and are played in 

conformity with state laws and regulations, if any, regarding hours, periods of operation, 

and limitations on wagers and pot sizes.

10S. Rep. No. 100-446 at 6 (1988).
Page 6 GAO-14-743T 

to the state, or to any variation in between.11

• the application of criminal and civil laws and regulations of the tribe 

and the state that are directly related to and necessary for the 

licensing and regulation of gaming,

These compacts are 

negotiated agreements that establish the states’ and tribes’ regulatory 

roles and specify the games that are allowed, among other things. IGRA 

specifies that compacts may include provisions related to

• the allocation of civil and criminal jurisdiction between the tribe and 

the state necessary to enforce those laws and regulations,

• state assessments of gaming activities as necessary to defray costs 

of regulating gaming,

• tribal taxation of gaming activities,

• remedies for breach of contract,

• standards for gaming activity operations and gaming facility 

maintenance, and

• any other subjects directly related to the operation of gaming 

activities.

IGRA authorizes the Secretary to approve compacts and only allows the 

Secretary to disapprove a compact if it violates IGRA, any other federal 

law that does not relate to jurisdiction over gaming on Indian lands, or the 

trust obligation of the United States to Indians. Compacts only go into 

effect when a Notice of Approval from the Secretary has been published 

in the Federal Register.

Class II and Class III gaming may only be conducted on Indian lands in 

states that permit such gaming. Indian lands, as defined in IGRA, are 

(1) all lands within the limits of an Indian reservation; (2) lands held in 

trust by the United States for the benefit of an Indian tribe or individual 

over which the tribe exercises governmental power; and (3) lands held by 

 11S. Rep. No. 100-446 at 14 (1988).
Page 7 GAO-14-743T 

an Indian tribe or individual that are subject to restriction against 

alienation and over which the tribe exercises governmental power.12

Interior has a multistep review process that helps to ensure that compacts 

comply with relevant IGRA provisions and other applicable laws. While 

compacts approved by Interior share similar provisions, they do vary in 

some respects, such as the terms of “revenue sharing” arrangements 

between states and tribes and the extent to which the compact addresses 

tribal interactions with local governments. Interior cited a variety of 

reasons for allowing compacts to take effect without Secretarial action 

(deemed approved) and for disapproving compacts.

Interior’s Office of Indian Gaming, under the supervision of the Deputy 

Assistant Secretary of Indian Affairs Policy and Economic Development, 

is responsible for reviewing compacts. According to Office of Indian 

Gaming officials, on the day that a compact is received, the Office of 

Indian Gaming date-stamps the compact and files the original version. 

The Office of Indian Gaming has 10 days to conduct an initial review of 

the compact. During this time, they will contact the applicant tribe or state 

if any additional information is needed. After this initial review, the Office 

of Indian Gaming sends a copy of the compact to Interior’s Office of the 

Solicitor to conduct a legal review of the compact. The Office of the 

Solicitor has 10 days to review the compact. After the Office of the 

Solicitor’s review is complete, the Office of Indian Gaming provides a 

copy of the compact and a summary of relevant information to the 

Assistant Secretary of Indian Affairs, who has 45 days to approve or 

disapprove the compact. Under IGRA, if a compact is not approved or 

disapproved within 45 days of its submission, then the compact is 

considered to have been approved (referred to as “deemed approved”), 

but only to the extent that it is consistent with IGRA.

On June 18, 2014, the Office of Indian Gaming provided us with a list of 

compacts that were approved, deemed approved, disapproved, or 

withdrawn each year from 1998 to the present. We are in the process of 

 1225 U.S.C. § 2703(4). In addition, IGRA generally prohibits gaming on lands acquired by 

the Secretary of the Interior in trust for the benefit of an Indian tribe after October 17, 

1988, although the act also contains several exceptions to the general prohibition. 

Alienation is the transfer of property.

Interior Uses a 

Multistep Review 

Process to Help 

Ensure That 

Compacts Comply 

with IGRA

Interior’s Process for 

Reviewing Compacts
Page 8 GAO-14-743T 

verifying the accuracy of this list. Based on our preliminary analysis of this 

list of compacts, the Secretary received a total of 490 compacts during 

this time period to review. Of these, 78 percent (382) were approved; 

12 percent (60) were deemed approved; 6 percent (28) were withdrawn; 

and 4 percent (18) were disapproved.13 The number of compacts 

submitted varied from year to year, from a high of 66 in 1999 to a low of 

8 in 2006.

The compacts approved by Interior share similar provisions but vary in 

some respects. For example, while IGRA does not authorize states to 

impose a tax or fee on tribes, apart from the assessment to defray 

regulatory costs, the Secretary has approved compacts that contain 

provisions for revenue sharing with states, so long as the states provide 

the tribe with a comparable benefit in return—a benefit to which the tribe 

would not otherwise be entitled. The amount of revenue sharing varied 

widely in the compacts we reviewed. Some compacts do not provide for 

revenue sharing, such as the 1991 compact between the Fond du Lac 

Band of the Minnesota Chippewa Tribe and the state of Minnesota, or the 

2011 compact between the Flandreau Santee Sioux Tribe and the state 

of South Dakota. In contrast, some compacts require the tribe to share 

significant portions of revenue with the state. For example, the 2010 

compact between the Seminole Tribe of Florida and the state of Florida 

establishes percentages of net revenue that the tribe must give to the 

state—as much as 25 percent—based on how much revenue the tribe 

makes each year.

Approved compacts had provisions that varied in other ways, such as the 

extent to which the compacts require the tribe to enter into agreements 

with local governments. For example, the 2003 compact between the La 

Posta Band of Diegueno Mission Indians and the state of California 

requires the tribe to consult with the county and other relevant local 

governments to develop agreements to prevent and mitigate effects from 

any proposed gaming facility. Some compacts make no mention of 

agreements with local governments.

 13For two of the compacts on the list provided by Interior, the decision was not indicated. 

We are following up with Interior to clarify the decision for these compacts.

Variety of Provisions 

Contained in Compacts 

Approved by Interior
Page 9 GAO-14-743T 

Compacts that are not approved or disapproved within 45 days are 

deemed approved,14

Of the disapproved compacts we reviewed, the reasons for disapproval 

varied. For example, compacts were disapproved because lands 

proposed to be used for gaming were not Indian lands as defined by 

IGRA or the compact established a management contract that did not 

meet the requirements of IGRA.

but only to the extent that they comply with IGRA. 

According to Federal Register notices or decision letters that accompany 

the compacts, Interior might not take action on a compact within the 

statutory deadline for a variety of reasons. Federal Register notices 

indicate that some compacts take effect without Secretarial action 

because they only change the expiration date of a previously approved 

compact and do not require additional review. According to decision 

letters accompanying other compacts, the compacts were deemed 

approved because they contained provisions that the Secretary found to 

be questionable but not outright objectionable. For example, the 2014 

compact between the Mashpee Wampanoag Tribe and the state of 

Massachusetts contained terms that could provide the possibility in the 

future for the state to regulate certain Class II games, which IGRA does 

not authorize, and Interior’s letter cautioned the state and tribe against 

implementing the compact in a way that violated IGRA.

15

Compacts establish the responsibilities of both tribes and states for 

regulating Class III gaming and identify the standards for the gaming 

operation and maintenance of gaming facilities, as well as the state and 

tribal laws and regulations that will be used to regulate the gaming, 

among other things. In addition, tribal gaming ordinances, which apply to 

Class II and Class III gaming, provide the general framework for tribal 

regulation of gaming facilities. The ordinances include specific procedures 

that must be followed by tribes and standards that they must meet, 

among other things. Based on our preliminary observations of ongoing 

 14Interior uses the term “deemed” approved to refer to those compacts that take effect 

without Secretarial action, as opposed to those the Secretary approves outright.

15A tribe many enter into a management contract for the operation and management of its 

Class II or Class III gaming activity. A management contract is any contract or collateral 

agreement between a tribe and contractor, or a contractor and subcontractor, that 

provides for the management of all or part of the gaming operation. Management 

contracts must be approved by the Chair of the Commission.

Reasons Compacts Are 

Deemed Approved 

or Disapproved

State and Tribal 

Regulation of 

Indian Gaming
Page 10 GAO-14-743T 

work, we found that the approaches of the three states we have visited to 

regulating Indian gaming vary, as seen through differences in their 

regulatory agencies’ organization, staffing levels, and funding. For the 

seven tribes we have visited, each has established tribal gaming 

regulatory agencies that govern the day-to-day operations of their gaming 

facilities. These agencies perform various regulatory functions to help 

ensure that their gaming facilities are operated in accordance with tribal 

laws and regulations and, for Class III operations, the compact.

The roles of states and tribes in regulating Indian gaming vary and are 

established in two key documents: (1) compacts for Class III gaming and 

(2) tribal ordinances for both Class II and Class III gaming. Compacts that 

govern Class III gaming on Indian lands lay out the responsibilities of both 

tribes and states for regulating gaming. For example, compacts may 

include, but are not limited to, provisions allowing the state to conduct 

inspections, certify employee licenses, and review surveillance records. 

They may also include tribal responsibilities to notify the state when they 

hire a new employee or when they make changes to their gaming 

regulations or rules for gaming.

In addition, IGRA requires a tribe’s governing body to adopt, and the 

Commission Chair to approve, a tribal gaming ordinance before a tribe 

can conduct Class II or Class III gaming. According to the Commission, 

the tribal gaming ordinances are a key part of IGRA’s regulation for tribal 

gaming, providing the general framework for tribal regulation of gaming 

facilities, and including specific procedures and standards to be met. For 

the Chair to approve the ordinances, they must provide, among other 

things, that

• the tribe will have sole proprietary interest in the gaming activity;

• gaming revenues will only be used for authorized purposes;

• annual independent audits of gaming operations will be provided to 

the Commission;

• the construction, maintenance, and operation of the gaming facilities 

will be conducted in a manner that adequately protects the 

environment, public health and safety; and

• the tribe perform background investigations and the licensing of key 

employees and primary management officials in accordance with 

certain requirements.

Compacts and Tribal 

Gaming Ordinances 

Establish the Roles of 

States and Tribes
Page 11 GAO-14-743T 

Along with the ordinance, a tribe must also submit other documentation to 

the Commission, including copies of all tribal gaming regulations. The 

Chair has 90 days after submission of a tribal gaming ordinance to 

approve or disapprove it; if the Chair does not act within 90 days, the 

ordinance is considered to have been approved but only to the extent it is 

consistent with IGRA.

Based on our preliminary observations, the three states that we have 

visited—Arizona, California, and Oklahoma—vary in their approaches to 

regulating Class III gaming. As illustrated in table 1, the three states differ 

in their organization, funding, and staffing levels.16

Table 1: Preliminary Information on State Approaches to Regulating Class III Indian Gaming, Fiscal Year 2013

For example, 

California divides its regulatory responsibilities between two agencies, 

whereas Arizona and Oklahoma each have one agency. We also 

observed that state budgets for the regulation of Class III Indian gaming 

ranged from $1.1 million to $19.8 million and staffing levels ranged from 3 

to 136 full-time equivalents.

Dollars in millions

State

Number of 

Indian gaming 

facilities State regulatory agency

State budget 

for regulating 

Indian gaming

Number of 

regulatory staff

Arizona

a

23 Arizona Department of Gaming $11.5 100

California 60 California Gambling Control Commission and the Bureau of 

Gambling Control

$19.8 136

Oklahoma 101 Office of Management Enterprise Services, Gaming 

Compliance Unit

$1.1 3

Sources: GAO analysis of data provided by state regulatory agencies. | GAO-14-743T

a

We also observed that the three states engaged in a variety of regulatory 

activities, including conducting background checks on current and 

prospective employees, licensing gaming devices, inspecting gaming 

operations, and reviewing the gaming operator’s surveillance.

Staff figures are in full-time equivalents.

 16These differences are not, by themselves, an indication of effectiveness.

States Vary in Their 

Approaches to Regulating 

Class III Indian Gaming
Page 12 GAO-14-743T 

The Commission recognizes that tribal governments are responsible for 

the day-to-day regulation of gaming conducted on Indian lands. While 

tribal governments have the authority to engage in gaming, the 

Commission stresses the importance of tribes establishing a 

comprehensive regulatory framework for gaming. According to the 

Commission, comprehensive regulation by tribes is a necessary 

component to ensure the integrity of the games and to protect the interest 

of the tribe.

Each of the seven tribes we visited in Arizona, California, and Oklahoma 

for our preliminary observations have established tribal gaming regulatory 

agencies—also called tribal gaming commissions or tribal gaming 

agencies—that perform various regulatory functions to ensure that their 

gaming facilities are operated in accordance with tribal laws and 

regulations and, for Class III operations, the compact. For each of these 

tribes, the tribal gaming regulatory agency was established by the tribal 

government for the exclusive purpose of regulating and monitoring 

gaming on behalf of the tribe. In general, the regulatory functions that can 

be performed by tribal gaming regulatory agencies include

• developing licensing procedures for all employees of the gaming 

operations,

• conducting background investigations on primary management 

officials and key employees,

• obtaining annual independent outside audits and submitting these 

audits to the Commission,

• ensuring that net revenues from any gaming activities are used for the 

limited purposes set forth in the gaming ordinance,

• promulgating tribal gaming regulations pursuant to tribal law,

• monitoring gaming activities to ensure compliance with tribal laws and 

regulations, and

• establishing or approving minimum internal control standards or 

procedures for the gaming operation.

As part of our ongoing work, we plan to visit additional tribes to discuss 

their approaches to regulating Indian gaming, and we will summarize our 

findings in our final report.

Tribes Are Responsible for 

the Day-to-Day Regulation 

of Indian Gaming
Page 13 GAO-14-743T 

The Commission plays an important role in regulating Class II gaming 

and overseeing Class III gaming to ensure compliance with IGRA and 

applicable federal and tribal regulations. Among other things, the 

Commission monitors Class II gaming, inspects Class II gaming 

premises, and takes enforcement actions when necessary. In 2011, the 

Commission implemented its Assistance, Compliance, and Enforcement 

(ACE) initiative, which emphasizes providing assistance to tribes to 

achieve compliance with IGRA. Through this initiative, the Commission 

has sought to provide technical assistance and training to tribes so that 

compliance issues may be resolved early and voluntarily without the need 

for a Notice of Violation, which we refer to as an enforcement action. Also 

in 2011, as part of a broader organizational realignment, the Commission 

merged its Enforcement and Audits divisions into one Compliance 

Division. According to Commission officials, this merger was deemed 

necessary, in part, to better support the Commission’s emphasis on 

compliance assistance under its ACE initiative.

IGRA established the Commission within Interior to provide federal 

regulation of Class II and oversight of Class III Indian gaming. Among 

other things, the Commission

• monitors tribal Class II gaming activity;

• inspects Class II gaming premises;

• reviews licenses issued by tribes for key employees and primary 

management officials;

• audits and reviews financial records of Class II gaming operations 

(and Class III operations when tribal gaming ordinances provide for 

it);17

• provides technical assistance and training to tribal gaming 

commissions and operations, and;

• when appropriate, undertakes enforcement actions for violations of 

IGRA, the Commission’s regulations and approved tribal gaming 

ordinances.

 17Notwithstanding the decision in Colorado River Indian Tribes v. Nat’l Indian Gaming 

Comm’n, Commission officials told us that some tribal gaming ordinances authorize the 

Commission to conduct audits and reviews of Class III gaming activities.

The Commission’s 

Regulation and 

Oversight of Indian 

Gaming and Impacts 

of Recent 

Reorganization

The Commission Is 

Responsible for Ensuring 

That Gaming Facilities 

Comply with IGRA and 

Applicable Federal and 

Tribal Regulations
Page 14 GAO-14-743T 

The Commission also monitors tribal compliance with minimum internal 

control standards, which specify in detail the minimum practices tribes 

must establish and implement for gaming activities. The Commission 

adopted these standards for gaming operations on Indian lands in 1999; 

however, in 2006, a federal circuit court ruled that IGRA did not authorize 

the Commission to issue regulations establishing minimum internal 

control standards for Class III gaming.18 Commission officials explained 

that the impact of the court’s decision is tempered by compacts requiring 

tribes to adopt tribal internal control standards for Class III gaming and 

that, in most cases, these standards are at least as stringent, if not more, 

than the Commission’s Class III minimum internal control standards. 

Specifically, as of July 2014, Commission officials said 115 compacts in 

six states require tribes to adopt tribal internal control standards that are 

at least as stringent as the Commission’s Class III standards. In addition 

to these compact provisions, Commission officials said that 15 tribes in 

California have gaming ordinances that provide for Commission 

enforcement of the Commission’s Class III minimum internal control 

standards in lieu of the tribe ensuring compliance with tribal internal 

control standards and state verification of that compliance. However, 

Commission officials expressed concern that its minimum internal control 

standards are out of date since the Commission does not have the 

authority to amend these standards for Class III gaming. For example, 

gaming reporting functions have improved since the Class III minimum 

internal control standards were promulgated in 1999, and now this 

reporting is in digital format rather than in the analog format that the Class 

III minimum internal control standards suggest.

In 2011, the Commission implemented its ACE initiative, which 

emphasizes, among other things, providing assistance to tribes to 

achieve compliance with IGRA. Through this initiative, the Commission 

seeks to provide technical assistance and training to tribes so that 

compliance issues may be resolved voluntarily without the need for 

enforcement actions. However, Commission officials told us that 

enforcement actions will still be taken when necessary.

 18Colorado River Indian Tribes v. Nat’l Indian Gaming Comm’n, 466 F.3d 134 (D.C. Cir. 

2006).

The Commission’s Recent

Initiative Seeks to Resolve 

Tribal Compliance Issues 

Voluntarily, When Possible
Page 15 GAO-14-743T 

As part of its ACE initiative, the Commission provides guidance, technical 

assistance, and training to tribes to help build and sustain their capacity to 

prevent, respond to, and recover from internal control weaknesses and 

violations of IGRA and Commission regulations. To improve the technical 

assistance and training that the Commission offers to tribes, the 

Commission tracks the number of training and technical assistance 

events it offers, their length in hours, the number of people the training 

and technical assistance reaches, and satisfaction rates with the training 

the Commission offers. In fiscal year 2013, the Commission held 

194 training and technical assistance events that provided 754 hours of 

training and technical assistance and reached 2,751 participants who 

were largely satisfied with the training and technical assistance provided, 

according to a Commission report (see table 2).

Table 2: National Indian Gaming Commission Assistance to Gaming Tribes, Fiscal Years 2011 through 2013

Training and technical assistance 2011 2012 2013

2011-2013 

performance goal

2014–2018

performance goal a

Events held 83 84 194 70 82

Participants attending 2,309 2,013 2,751 2,000 2,000

Percent of tribes attending 84% 65% 81% 70% 70%

Percent of attendees satisfied 86% 93% 91% 85% 85%

Hours 659 748 754 b

Sources: GAO analysis of National Indian Gaming Commission performance reports and its strategic plan. | GAO-14-743T

b

a

The National Indian Gaming Commission refers to its performance goals for fiscal year 2011 to 2013 

as benchmarks in its Summary Performance Dashboard reports.

b

As indicated in table 2, the Commission has met or exceeded its goals for 

training and technical assistance, with the exception of the percentage of 

tribes attending training in fiscal year 2012.

No performance goal has been set.

To monitor tribal compliance with IGRA and applicable federal and tribal 

regulations for both Class II and Class III operations—another component 

of the Commission’s ACE initiative—the Commission conducts site visits 

and audits and evaluations of tribal gaming facilities, among other things. 

The Commission has developed various performance measures related 

to these compliance activities to help measure progress toward achieving 

its goals. As shown in table 3, the Commission met its goals for 
Page 16 GAO-14-743T 

conducting site visits and audits in fiscal years 2011 and 2012, but it did 

not meet its goals for these activities in fiscal year 2013.19

Table 3: National Indian Gaming Commission Compliance Activities, Fiscal Years 2011 through 2013

Compliance activity 2011 2012 2013

2011-2013 

performance goal

2014–2018

performance goal a

Site visits conducted 640 568 426 500 500

Audits conducted 13 21 7 12 20

Audit reports received within timelines 95% 96% 99% b 99%

Fee worksheets received within timelines 87% c 86% 99% b 99%

Sources: GAO analysis of National Indian Gaming Commission performance reports and its strategic plan. | GAO-14-743T

a

The National Indian Gaming Commission refers to its performance goals for fiscal year 2011 to 2013 

as benchmarks in its Summary Performance Dashboard reports.

b

To be determined.

c

The Commission also tracks tribal compliance with what it defines as 

eight primary obligations under IGRA, which are

Tribes use fee worksheets to establish the amount they owe in fees to the National Indian Gaming 

Commission.

• obtaining a compact approved by Interior prior to conducting Class III 

gaming;

• submitting investigative reports and suitability determinations on each 

key employee and primary management official, summarizing the 

results of the tribal background investigation;

• submitting fingerprint cards to the Commission for processing;

• submitting gaming employee applications to the Commission at the 

commencement of employment;

• adopting a gaming ordinance for Class II or Class III gaming that has 

been approved by the Commission;

• paying a fee assessment to the Commission based on gaming 

revenues;

• issuing a separate license for each facility where gaming is 

conducted; and

 19The Commission scaled back site visits in 2013 due to the automatic, across-the-board 

cancellation of budgetary resources in fiscal year 2013, known as sequestration.
Page 17 GAO-14-743T 

• submitting an annual independent audit of each Class II gaming 

operation to the Commission.

In its 2012 report to the Secretary regarding tribal compliance with these 

obligations, the Commission stated that tribes were in compliance with 

most of the obligations. However, the report stated that a number of tribes 

did not meet established deadlines for submission of fee payments and 

audit reports.20

In recent years, the Commission has rarely initiated enforcement actions. 

Our analysis of the last 10 years of publicly available Notices of 

Violation—documents that describe the circumstances surrounding the 

violation of the law, Commission regulation or tribal ordinance and 

measures required to correct the violation—peaked in fiscal years 2008 

and 2009 (see table 4) before the implementation of the ACE initiative. 

Prior to fiscal year 2010, the Commission issued Notices of Violation most 

frequently to address untimely submissions of annual audit statements or 

untimely fee statements.

Table 4: National Indian Gaming Commission Notices of Violation, Fiscal Years 2004 through 2013

Reason cited 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total

Failing to submit an agreed upon procedures 

report 0 a 0 0 1 1 0 0 0 0 0 2

Class III gaming without a compact 1 0 0 0 0 0 0 0 0 0 1

Gaming without an ordinance 0 0 0 0 1 0 0 0 0 0 1

Gaming on ineligible land 0 0 0 0 1 0 0 0 0 0 1

Unlawful proprietary interest 0 b 0 0 0 0 0 0 2 0 0 2

Failing to forward background investigations 0 0 2 1 1 0 0 0 0 0 4

Untimely quarterly statement or fee submission 2 9 5 0 0 38 1 0 0 0 55

Untimely annual audit report submission 4 3 9 3 19 6 1 0 0 0 45

Operating under an unapproved management 

contract 0 1 3 1 0 0 0 1 1 0 7

Inappropriate use of gaming revenue 0 0 0 0 0 0 1 0 0 0 1

Improper per capita payment made 0 c 0 1 0 0 1 0 0 0 0 2

Total 7 13 20 6 23 45 3 3 1 0 121

Source: GAO analysis of Notices of Violation published on the National Indian Gaming Commission website. | GAO-14-743T

 20National Indian Gaming Commission, Report to the Secretary of the Interior on 

Compliance with the Indian Gaming Regulatory Act, Dec. 31, 2012.
Page 18 GAO-14-743T 

a

Agreed upon procedures reports are assessments to verify whether a gaming operation is in 

compliance with the Commission’s minimum internal control standards and/or a tribe’s internal control 

standards, or a system of internal control standards that provide at least the same level of controls as 

the Commission’s minimum internal control standards.

b

Under the Indian Gaming Regulatory Act tribes must have the sole proprietary interest and 

responsibility for conducting gaming unless a tribal ordinance or resolution provides for Class II 

gaming entities other than the tribe on Indian lands.

c

Commission officials attributed the decline in the Commission’s 

enforcement actions since fiscal year 2009 to its more proactive, 

preventative approach taken to help ensure compliance as called for by 

the ACE initiative. Specifically, the ACE initiative seeks to prevent 

violations from occurring since Commission officials are working 

collaboratively with tribal regulators. Under the ACE initiative, 

Commission officials said that enforcement is generally viewed as a tool 

of last resort. Also, the Commission modified its regulations in 2012 so 

that fees or quarterly statements submitted late are now subject to a fine 

rather than a Notice of Violation.

A tribe may use net gaming revenues to make payments directly to tribal members, called per capita 

payments, if the tribe has a revenue allocation plan approved by the Secretary of the Interior. This 

plan describes how the tribe intends to allocate net gaming revenues among the allowable uses 

under the Indian Gaming Regulatory Act, which includes funding of tribal government operations or 

programs and promoting tribal economic development.

21 As these were the most common 

enforcement action initiated prior to fiscal year 2010, some decline in 

enforcement actions would be expected. We are continuing to collect and 

analyze data related to the Commission’s regulations and oversight of 

Indian gaming, and we will present that information in our final report.

In 2011, as part of a broader organizational realignment, the Commission 

merged its Enforcement and Audits divisions into one Compliance 

Division. According to Commission officials, this merger was deemed 

necessary, in part, to better support the Commission’s emphasis on 

compliance assistance through its ACE initiative. These officials 

explained that centralizing compliance, enforcement, and auditing staff 

into one division improves communication among these staff and allows 

the Commission to identify compliance issues early. Early identification of 

compliance issues, in turn, allows the Commission to provide assistance 

to tribes before an issue becomes more serious. In keeping with the ACE 

initiative, Commission officials said they would prefer not to let 

 21Late payments are those received between 1 and 90 days late. Payments received after 

90 days are failures to pay, which subjects the tribe to a potential notice of violation and 

civil fine assessment.

The Commission’s 

Reorganization Appears to 

Align with Its Emphasis on 

Compliance Assistance
 

Page 19 GAO-14-743T 

compliance issues reach the enforcement stage. We will continue to 

collect information on the Commission’s reorganization, and we will 

present this information in our final report.

Chairman Tester, Vice Chairman Barrasso, and members of the 

Committee, this completes my prepared statement. I would be happy to 

respond to any questions that you or other members of the Committee 

may have.

If you or your staff members have any questions about this testimony, 

please contact me at (202)-512-3841 or fennella@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this statement. Key contributors to this 

testimony were Jeff Malcolm (Assistant Director), Amy Bush, Jillian 

Cohen, John Delicath, Justin Fisher, Paul Kazemersky, Jeanette Soares, 

and Lisa Turner.

GAO Contact and 

Staff 

Acknowledgments

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