S. HRG. 107–166

INDIAN GAMING REGULATORY ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING ON THE IMPLEMENTATION OF THE INDIAN

GAMING REGULATORY ACT

JULY 25, 2001

WASHINGTON, DC

(

INDIAN GAMING REGULATORY ACT

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74–522 PDF 2002

S. HRG. 107–166

INDIAN GAMING REGULATORY ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING ON THE IMPLEMENTATION OF THE INDIAN

GAMING REGULATORY ACT

JULY 25, 2001

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

DANIEL K. INOUYE, Hawaii, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado, Vice Chairman

FRANK MURKOWSKI, Alaska

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

PAUL WELLSTONE, Minnesota

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

PATRICIA M. ZELL, Majority Staff Director/Chief Counsel

PAUL MOOREHEAD, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

Statements:

Blackwell, Sharon, deputy commissioner, Indian Affairs, Department of

the Interior .................................................................................................... 9

Burris, Tracy, executive director, Oklahoma Gaming Commission ............. 49

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, vice chairman, Committee on Indian Affairs .............................................................. 4

Deer, Montie R., chairman, National Indian Gaming Commission .............. 12

George, Keller, president, United South and Eastern Tribes ....................... 36

Homer, Elizabeth, commissioner, National Indian Gaming Commission .... 15

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, chairman Committee

on Indian Affairs ........................................................................................... 1

Johnson, Tim, U.S. Senator from South Dakota ............................................ 7

LaSarte, David, executive director, Arizona Indian Gaming Association .... 45

McCain, John, U.S. Senator from Arizona ..................................................... 6

Poust, Teresa, commissioner, National Indian Gaming Commission .......... 15

Skibine, George, director, Office of Indian Gaming Management, Department of the Interior ...................................................................................... 9

Stevens, Jr., Ernie, chairman, National Indian Gaming Association .......... 32

Tucker, Daniel, J., chairman, California Nations Indian Gaming Association ................................................................................................................. 42

Van Norman, Mark, executive director, Indian Gaming Association ........... 32

APPENDIX

Prepared statements:

Blackwell, Sharon ............................................................................................. 60

Burris, Tracy ..................................................................................................... 534

Deer, Montie R. (with attachments) ............................................................... 64

DesRosiers, Norman H., commissioner, Viejas Tribal Gaming commission

(with attachments) ........................................................................................ 507

George, Keller (with attachments) .................................................................. 102

LaSarte, David .................................................................................................. 512

McCain, John, U.S. Senator from Arizona ..................................................... 59

Ohr, Bruce G., chief, Organized Crimes and Racketeering Section, Criminal Division, Department of Justice ............................................................ 62

Stevens, Jr., Ernie (with attachments) ........................................................... 77

Traverso, Robert, interim executive director, California Gambling Control

Commission (with attachments) .................................................................. 538

Tucker, Daniel, J. ............................................................................................. 500

Additional material submitted for the record:

An Analysis of the Economic Impact of Indian Gaming in the State

of Arizona ...................................................................................................... 523

Investor’s Daily, article .................................................................................... 782

Letters ............................................................................................................... 785

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INDIAN GAMING REGULATORY ACT

WEDNESDAY, JULY 25, 2001

U.S. SENATE, COMMITTEE ON INDIAN AFFAIRS, Washington, DC.

The committee met, pursuant to notice, at 10:29 a.m. in room

216, Hart Senate Office Building, Hon. Daniel K. Inouye (chairman

of the committee) presiding.

Present: Senators Inouye, Campbell, McCain, Johnson, and

Conrad.

STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM

HAWAII, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. The committee meets this morning to receive testimony on the implementation of the Indian Gaming Regulatory

Act. This is the first in a series of hearings that the committee has

planned to explore matters relating to gaming. Our next hearing

will focus on how other forms of gaming are regulated in the various States.

But today’s hearing is on the Indian Gaming Regulatory Act. As

the primary sponsor of the act in the Senate, I think it is important

that as we consider the information we will receive today, that we

have some context in which to place it.

Some of you may recall 14 years ago the United States Supreme

Court handed down its ruling in a case known as California v.

Cabazon Band of Mission Indians.

As we all now know, the Court found that notwithstanding the

delegation of authority to various States, including the State of

California, to exercise jurisdiction over certain enumerated crimes

on Indian lands, because the State of California did not criminally

prohibit gaming, the State could not enforce its gaming laws on Indian land.

Thereafter, I think it is fair to say that considerable pressure

was brought to bear on the Congress to address the Supreme

Court’s ruling. So we began the process of developing legislation in

consultation with tribal governments, the States, and representatives of the Government of the United States.

We developed draft legislation and held hearings to receive testimony on that legislation. Because some of you may not know what

was going on back then, you may be interested to know that the

Administration, the Government of the United States, was adamantly opposed to any Federal presence in the regulation of Indian

gaming. That was made very clear to all of us.
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This opposition was based, in part, on the perception that except

for those States in which all gaming was criminally prohibited,

meaning the States of Utah and Hawaii, most if not all of the

States had extensive regulatory systems in place that had the capacity to assume the responsibility for the regulation of Indian

gaming.

We knew that, for the most part, tribal governments did not, at

that time, have comprehensive regulatory systems in place. So one

of the most basic features of the act, the tribal State compact, was

premised upon the anticipation that States and tribes could enter

into negotiations, which would include discussions of how tribal

gaming could be regulated.

It was anticipated at that time that at least initially, the States

would share their experience with regulating gaming with the

tribes, and that the tribal governments could draw upon the States’ regulatory framework in developing a tribal regulatory structure.

It was thought that the Tribal State Compact would reflect a

transition over a period of time, from regulation that was predominately a State regulation, to either a shared regulatory structure,

or to tribal regulation, exclusively.

The act left it up to each State to decide and each tribe to decide.

But as it turns out, that presumption, the presumption that most,

if not all, of the States had extensive regulatory systems for gaming similar to those that existed in Nevada and New Jersey, was

not born out in fact.

Because we had a 200-year old history under our Constitution,

which clearly established that State laws did not apply in Indian

country, it was understandable that tribes were adamantly opposed

to State regulation of gaming.

But we had the Administration on the other side; an Administration that was dedicated to the protection of States’ rights; and they

were equally as opposed to any Federal regulation of gaming.

So as with most legislation, we ended up striking a balance. So

we established a National Indian Gaming Commission to serve

along with tribes as the regulators of tribal gaming.

At that time, we simply could not project and did not anticipate

the growth in the gaming industry generally, and the significant

expansion of Indian gaming, in particular.

So the Commission’s responsibilities were tailored to what we

knew at that moment. At that moment, we did not even know

whether there would be enough Indian gaming operations nationwide to warrant having three full-time Commissioners at the Commission.

We also did not know how technology might overtake the definitions of class II and class III gaming that are contained in the act.

We thought tribal gaming operations on different reservations

might be linked up via satellite; and that as long as the player was

on Indian lands, and that bingo was conducted on Indian lands,

then the regulatory framework of the act could take this into account and be consistently applied.

Perhaps the most challenging issue was what law would be applied to determine what we now call the scope of gaming. There

was little Federal law on that subject. There was the Johnson Act

prohibiting gambling devices on Federal lands, and accordingly on
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Indian lands. But there was no Federal law that was as specific as

the laws of Nevada or New Jersey, and once again, the Administration was opposed to having such a Federal law enacted.

Tribal laws on gaming were sparse, at best, and with rare exception, did not address what we think of as casino-type gaming.

All that was left were the laws of the States, and again, a presumption was made that all of the States had laws on gaming. As

it turns out, that was another erroneous assumption; because as

years passed and litigation ensued over the scope of gaming, and

the Congress was pressed to amend the act, this committee’s analysis of the laws of the 50 States found wide variation in those laws,

where such laws existed.

In some States, there was just a general prohibition against gaming. Over time, certain exceptions were carved out of that prohibition, such as the conduct of gaming for charitable purposes. That

was typical of many States’ laws.

In more recent times, exceptions from the general prohibition of

gaming and State laws were made for State lotteries. But in each

State the laws differed, so the generic approach that we took in the

Indian Gaming Regulatory Act, authorizing the States and tribes

to negotiate over class III gaming activities that are located in a

State that permits such gaming for any purpose by any person, organization, or entity, seemed the most fair way to assure that tribal governments were not foreclosed from doing what others in the

State were permitted to do.

The 11th amendment law was not well developed in 1988. So

Justice Department attorneys tell us now they could not have advised the committees of Congress that the remedy that the act set

up for addressing an impasse in negotiations between a tribe and

a State might later be found to be unconstitutional.

Having recounted this history, one might well ask how this act

has worked out at all, given all that we did not know then and all

that we do know at this moment. That is what we are here today

to examine.

How is the Indian Gaming Regulatory Act working? Is it working

at all? How many tribal governments have opted to conduct gaming

on their lands; and perhaps more importantly, how many have

really benefited from gaming?

Reading the front pages of our papers, one would get the impression that all of the tribes have millionaires. We know that some

have done very well; that is true. But how many tribal gaming operations have failed? We know that there have been some that are

only marginally profitable or which have had to close.

Are there disincentives in the act or obstacles to successful development in the act that have caused some tribal gaming operations

to fail?

Given what we know today about the expansion of the tribal

gaming industry, is this little commission that the law established

adequate to address the growth of the industry?

With the advent of lotteries and river boat gaming and such,

have States subsequently developed more comprehensive regulatory structures, and do these State systems serve the tribes well,

or not at all?
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As has been asserted in the past, is tribal gaming overly regulated? Are there adequate protections in place to assure that those

who may be injured on tribal lands have legal recourse for their injuries?

These are some of the difficult and often contentious issues that

that committee’s ongoing oversight of the act has raised.

What we do know is that Indian Gaming Regulatory Act has

given rise to the development of good working relationships between State governments and tribal governments; relationships

that in many cases did not exist, prior to the enactment of the Indian Gaming Act.

Across the country, tribal governments and State governments

have learned to work together to address mutually shared problems, and where tribal gaming has been successful, State and local

economies have thrived, also. Let there be no mistake about that.

Many non-Indian communities have benefited.

Whether or not the Congress decides to revisit this act to bring

it up-to-date with the contemporary realities of gaming, I do hope

that we have established a model that will defend the future of

tribal/State relations. Because overall, that model has worked well,

and has shown that governments can help one another in important and significant ways.

With those words, I apologize for the length of my statement, but

I felt that some foundation had to be set before we began receiving

testimony.

Now it is my pleasure to call upon the vice chairman.

STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM COLORADO, VICE CHAIRMAN, COMMITTEE ON

INDIAN AFFAIRS

Senator CAMPBELL. Thank you, Mr. Chairman, and I apologize

for being a little bit late. I did not hear your first few comments,

but I am always interested to hear what the experience of many,

many years in the Senate has taught you, particularly in dealing

with Indian problems. Thank you for doing a series of hearings on

the subject of Indian gaming.

I was on the House side when the Indian Gaming Regulatory Act

was signed into law in 1988. In fact, I was on the committee of jurisdiction, as you know, and worked on it very hard with thenChairman Mo Udall, who was always a great friend of the Indian

people.

I think gaming tribes have been very and rightfully vocal about

the economic boon it has produced for some, but certainly not for

all of them. Some tribes have done very well. They are usually the

ones that are blessed by geography and near an urban center.

Some have been able to provide jobs and certainly some problem

solving for their people, but have not gotten to the point, as some

of the tribes, with their huge per-capita payments; and, in fact, as

you mentioned, a few of them have gone broke.

But I do not think most tribes now believe that Indian gaming

is the total solution for all the economic problems. It is one of the

pieces, and it has given them some new opportunities, and I certainly have been a supporter of Indian gaming.
5

There have been some well documented studies that have shown

the positive impacts that Indian gaming has had on tribal communities, as well as local communities.

I happen to live, as you know, Mr. Chairman, about 200 yards

from a casino on the Southern Ute Indian Reservation. I know that

their success has been similar to the successes of many tribes in

many areas, in that they have provided probably half the jobs in

that casino for non-Indian people who live around the area.

So it has been good for the whole community, generally. There

have been a few problems, but I think generally it has been very

good.

But with the growth of casinos, with more and more coming on

line, and more and more tribes talking about opening them, I very

frankly think the day will come when the spendable money will be

divided and fewer and fewer tribes will be able to enter the gaming

market.

But in 1988, who would have ever known that Indian Gaming would grow to what it is now, a $10-billion industry; and certainly,

the recent events in California will mean that there is going to be

greater expansion. So I think it is really time to re-evaluate our

role as the Federal Government, and so I wanted to commend you

on these hearings.

It is true that revenues have increased significantly. It is also

true that when we passed IGRA, it was not the Congress’ intent

to have the Federal Government regulate class III gaming. It was

our intent to strictly limit the Federal activity in that arena.

But as you did allude to, we did have to make some concessions

to States and we did the best we could. Our intent was to make

local government—the States and the tribes responsible for the

conduct and regulation of class III gaming.

In the past several years, I have become increasingly troubled by

what I see as a growing gap between the duties of the National Indian Gaming Commission, as laid out in IGRA, and its expansion

and its mandate. I base these comments in part on letters we have

gotten from tribes and comments from tribes, who feel that very

often, they are not being consulted with, as the Commission grows.

I want to tell you, Mr. Chairman, I am second to none in my

commitment to a vigorous Federal regulatory presence in Indian

gaming; but I am also aware that tribes are regulated by the Federal Government, State government, and their own regulatory commissions.

I am not quite sure where we are going with the growth of the

Commission. But I would remind the committee that when I was

the chairman of this committee and with Senator Inouye’s help, I

proposed the only change ever made to IGRA, and that amendment

was to increase the fees to the Commission by 400 percent, from

$2 million to $8 million. The increased fees were to be used by the

Commission to fulfill its duties as defined by IGRA.

I know that the Commission now receives 100 percent of its operating fees from Indian casinos. As you know, they are interested

in doubling that amount, from $8 million to $16 million, which

would also come from fees assessed on Indian casinos.

I am not quite sure about the direction or the scope or the transparency of what the Commission is going, if the doubling to $16
6

million would be justified or not. But there are renewed calls for

greater regulation and more resources for the Commission.

So I am interested in these hearings. I am looking forward to the

testimony, and thank you very much for convening this, Mr. Chairman.

The CHAIRMAN. Now it is my pleasure to call upon a person I will

call my partner, because when this matter was thrust upon us, I

thank God that we had John McCain. He came from Indian country.

As we look back now, we spent hours and hours, and days and

weeks, visiting Indian country, talking to attorneys general and

Governors, and we came up with this bill and the law. So if there

is anyone who has lived through the misery and the glory of this

bill, it is John McCain.

STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM

ARIZONA

Senator MCCAIN. I thank you, Mr. Chairman, for your kind

words and your friendship, but most importantly, for your commitment to the betterment of Native Americans, which has characterized your entire distinguished career here in the U.S. Senate.

I thank you and Vice Chairman Campbell for scheduling this

committee hearing today. This committee has an important oversight responsibility.

As I understand it, this hearing is the first in a series of hearings that the Chairman intends to hold on Indian gaming issues

in the 107th Congress. It has been my pleasure to work with the

Chairman on this issue for over 14 years, and with our dear friend

and colleague from Arizona, Mo Udall, before that. There are few

issues which are of more significance for Indian communities.

I would like to just point out, since the passage of the Indian

Gaming Regulatory Act, the Indian gaming industry has grown beyond any expectations. We all know that it is now approximately

196 tribes, that are operating 309 gaming facilities, with revenues

that exceed $10 billion.

In my home State of Arizona, 17 tribes currently manage tribal

casinos. Income from Arizona Indian gaming has been reported to

support more than $250 million in purchases of goods and services

in the State of Arizona.

From time to time, we will hear about controversies in Indian

gaming, alleged misconduct of gaming officials or managers or

other problems with the act, that potentially interfere with responsible and sound regulatory structure. These are important issues,

and should be raised and discussed before this committee.

It is also important to recall that Indian Gaming Regulatory Act

is in place due to years of extraordinary efforts in the Congress to

establish a regulatory and statutory structure, where none had previously existed.

Before the law was passed, the 1987 Cabazon decision made

clear that tribes could operate gaming, unfettered from State regulation. There may be areas which require improvement, but we

should clarify for the record the status of regulation among the

three regulatory entities under IGRA: Tribal, State, and Federal.
7

In this hearing today and in those to come in the months ahead,

I hope to hear about the following: The adequacy of the Federal

regulatory structure, and whether the existing structure is adequate to deal with existing gaming industry and its potential

growth; areas where the law might need improvement; and investment by tribes in their regulatory structures.

Many assumptions were made about how Indian gaming would

be regulated when the law was passed. We are in a much different

position now. I know that Senator Inouye and I would agree that

we should do everything necessary to protect the integrity of the

gaming industry, and that is why we are here today.

I would just like to say, we could not invite every gaming tribe

to testify, to hear all those who may be concerned about Indian

gaming. We, on the committee, asked for testimony and comments

from every Indian gaming tribe, and their views will be considered.

I know that tribal leaders will agree that an appropriate regulatory structure is an important component of self-sufficiency;

whether it is for their government operations, general business enterprises, or Indian gaming.

Again, I thank the Chairman for his incredible service on this

and other Native American issues, and I thank my cochairman,

Senator Campbell, as well. Thank you, Mr. Chairman.

Mr. Chairman, I would like to have my complete statement made

a part of the record.

The CHAIRMAN. Without objection.

[Prepared statement of Senator McCain appears in appendix.]

The CHAIRMAN. Thank you very much, Senator. Your kind words

are deeply appreciated.

Now it is my pleasure and privilege to call upon a new member

of the committee. But when it comes to Indian affairs, he is an old

hand. He is from Lakota land: Senator Tim Johnson.

STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM

SOUTH DAKOTA

Senator JOHNSON. Thank you, Mr. Chairman. Again, I join Senator McCain’s commendation to you for your extraordinary leadership over a long period of time on very, very difficult issues, and

always with your heart in the right place, each and every time.

I want to commend my friend from Colorado, as well, Senator

Ben Nighthorse Campbell, for his leadership on this committee, as

well.

Mr. Chairman, I sought out a seat on both the Indian Affairs

Committee and on the Appropriations Committee for the 107th

Congress, in large measure, out of concern that we pursue in every

way possible ways to improve upon and to build constructive, respectful partnerships between the Federal Government, in a government-to-government relationship with our tribes, in order to facilitate the development of greater opportunity and prosperity in

Indian country.

In my home State of South Dakota, we have nine reservations;

eight of which have Indian gaming operations going on. But 3 of

the 10 most impoverished counties in America are South Dakota

Native American counties. On the northern plains, we have what

would have to be described simply as a desperate plight.
8

There are many factors that we can pursue that would contribute

toward breaking this cycle of poverty that has gone on for so long.

I invite all the members of the committee, and many of you have

been to South Dakota, but for those of you who have not, I would

invite you, because it is a shocking reality that goes on each and

every day, with unemployment in the high and 70 and 80 percentile range. It has public health issues that are disastrous, and all

the symptoms that go with poverty and a lack of economic opportunity.

I applaud your work, Mr. Chairman, and Senator McCain and

Senator Campbell’s work on the Indian gaming issues. As has been

noted, Indian gaming is not a cure-all. It is mixed in terms of the

opportunities that it extends to various tribes, based on their geographic locations and other factors at work.

But after having seen the consequences of over 100 years of no

economic progress whatsoever taking place in South Dakota, I

would have to say that this has been the first significant job creation opportunity that we have had in South Dakota. In many

ways, I wish that the opportunities were building computers or

doing other things.

But the reality is, this is the only thing that has happened, that

has created jobs by the thousands. It is creating the beginning of

a middle class in Indian country in South Dakota. It is giving people the financial resources to attend their tribal colleges, to develop

more teachers and nurses and managers and role models in the

communities.

It has put a few bucks in the pockets, modestly so, but nonetheless, a few bucks in the pockets of thousands of tribal members in

South Dakota.

That, in turn, has led to, by and large, better relationships with

the non-Indian community, and has also created an enormous number of jobs for non-Indian residents of our State, who live near

these reservations, and who often also share in a lack of economic

prosperity and opportunity.

We need to have these oversight hearings. There may be ways

that we can improve upon the regulatory structure, and we need

to always be open to that.

We also need, however, to recognize that we need to approach

these issues in a partnership basis with the tribes themselves. It

is not a question of our imposing solutions or strategies on the

tribes, but that our working with the tribes, in a constructive fashion, is what we need to pursue in this committee. That is the approach that you have always taken, Mr. Chairman.

So I look forward to the testimony here today, and I am very

hopeful and very confident that these hearings will, in fact, be constructive toward our ultimate goal of creating more opportunity,

more prosperity, and a larger private sector economy throughout

Indian country in general.

Thank you, Mr. Chairman.

The CHAIRMAN. I thank you very much, Senator.

We have eight witnesses, representing a wide spectrum of citizens who are interested in Indian gaming. I am certain that there

are many, many others who are interested in gaming, and would

like to have their views made known to us.
9

Therefore, this committee will be pleased to receive written testimony, which will be incorporated in the record of the hearing, and

the record will be kept open for this purpose until the end of August.

May I now call upon the Deputy Commissioner for Indian Affairs, Department of the Interior, Sharon Blackwell. She will be accompanied by George Skibine, Director, Office of Indian Gaming

Management, Department of the Interior; the Chairman, National

Indian Gaming Commission, Montie R. Deer; the Commissioners of

the Gaming Commission, Elizabeth Homer and Teresa Poust.

Ms. Blackwell, it is always good to see you; welcome, again.

STATEMENT OF SHARON BLACKWELL, DEPUTY COMMISSIONER OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR ACCOMPANIED BY GEORGE SKIBINE, DIRECTOR, OFFICE OF INDIAN GAMING MANAGEMENT

Ms. BLACKWELL. Thank you and good morning, Mr. Chairman,

Mr. Vice Chairman, and members of the committee.

My name is Sharon Blackwell. I am the Deputy Commissioner of

Indian Affairs. I have asked George Skibine, the Director of the Office of Indian Gaming Management, to sit here beside me.

I am pleased to be here today to present an overview of the role

of the Secretary of the Interior in the implementation of the Indian

Gaming Regulatory Act of 1988.

At the outset, let me state that the Department strongly supports the underlying purposes of the Indian Gaming Regulatory Act

(IGRA) to provide a statutory basis for the operation of gaming by

Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments.

Since the enactment of IGRA in 1988, many Indian tribes have

come to consider gaming as an effective means of generating revenue, to fund tribal programs, and to stimulate economic development on depressed Indian reservations and in Indian communities.

Although precise financial data may not be readily available,

there is no question that Indian gaming is a working tool for tribal

economic development, and as a matter of Federal policy, the department supports tribally-owned gaming under IGRA.

Congress has placed regulatory and enforcement functions under

IGRA with the National Indian Gaming Commission. The role of

the Secretary is to implement specific residual statutory functions

under that statute.

Those functions, and they will be defined and their implementation will be described in greater detail, very briefly are the approval of class III gaming compacts between Indian tribes and

States; the approval of revenue allocation plans for per capita payments of gaming net revenues to tribal members; for making a twopart determination, when newly acquired lands are sought to support Indian gaming ventures; promulgation of class III gaming procedures in circumstances where a tribe and a State cannot agree

on the terms of a compact; and finally, the appointment of two

Commissioners on the National Indian Gaming Commission.

In addition, although IGRA does not refer to these functions specifically, the Secretary is also involved in reviewing applications to

place lands in trust for gaming, reviewing gaming-related land
10

leases, reviewing certain gaming-related agreements for services

relative to Indian lands under 25 U.S.C. section 81, and making

legal determinations regarding whether parcels of land qualify as

Indian lands under IGRA.

IGRA provides that class III gaming activities shall be lawful on

Indian lands only if such activities are, among other things, conducted in conformance with a tribal State compact, entered into by

an Indian tribe and a State, and approved by the Secretary. This

remains one of the central roles of the Secretary of the Interior.

The statute provides that the Secretary may only disapprove a

compact, if the compact violates any provisions of IGRA, or any

other provision of Federal law that does not relate to jurisdiction

over gaming on Indian lands; or finally, if it would violate the trust

obligations of the United States Government to Indians.

The Secretary must approve or disapprove a compact within 45

days of its submission, or the compact is considered to have been

approved, but only to the extent that the compact is consistent with

the provisions of IGRA.

A compact takes effect when the Secretary publishes notice of its

approval in the Federal Register. As of today, the Secretary has approved 212 compacts in 24 States for class III gaming between Indian tribes and States. The department also takes the position that

amendments to compacts are subject to review and approval of the

Secretary.

If an Indian tribe and a State are unable to reach agreement

during the negotiations of a compact, IGRA provides a statutory

scheme that can result with the issuance of class III gaming procedures to be developed by the Secretary. To date, the Secretary has

issued class III procedures for only one tribe.

On April 12, 1999, at 25 CFR, part 291, the Secretary published

rules which authorized the Department of the Interior to promulgate class III procedures in those circumstances when a State and

a tribe are unable to voluntarily agree on a compact, and the State

has asserted its immunity under the 11th amendment, in response

to a suit brought by an Indian tribe.

To date, seven tribes have filed an application with the Bureau

of Indian Affairs [BIA] for class III gaming procedures. The BIA

has rejected three of these applications, and we are still considering the application of four other tribes.

The Secretary in response to a lawsuit which has challenged the

authority to promulgate these regulations, will, of course, abide to

a commitment made by her predecessor not to issue class III procedures for any tribe until a final judicial determination is rendered,

in any lawsuit brought by a State challenging the authority of the

Secretary to promulgate the regulations at part 291. The State of

Florida and the State of Alabama have jointly filed a lawsuit

against the Secretary regarding this matter.

Very briefly, under IGRA, the Secretary is charged with the review and approval of tribal revenue allocation plans that relate to

the distribution of net gaming revenues. Net gaming revenues from

class II and class III gaming may be distributed in the form of per

capita payments to members of an Indian tribe so long as the tribe

has prepared a tribal revenue allocation plan, which has been approved by the Secretary.
11

On March 17, 2000, the BIA published a rule at 25 CFR, part

290, which established the procedures for the submission, review,

and approval of tribal revenue allocation plans. To date, the BIA

has approved 55 such revenue allocation plans.

The decision to place land into trust for the benefit of an Indian

tribe, and particularly where the use of that land will be used for

gaming, is at the discretion of the Secretary, after consideration of

the criteria for land acquisitions in 25 CFR, part 151.

When an acquisition is intended for gaming, consideration of the

requirements of section 20 of IGRA also apply. Section 20 of IGRA

prohibits Indian tribes from conducting class II or class III gaming

activities on lands acquired in trust by the United States after October 17, 1988, unless one of several statutory exceptions apply.

To date, the department has approved 20 applications that have

qualified under the legislative exceptions to the gaming prohibition

contained in section 20.

However, if none of the specific legislative exceptions in section

20 apply, an Indian tribe may still conduct gaming activities on

newly-acquired trust lands, if it meets the requirements that are

specifically set forth in 20(b)(1)(A) of IGRA, which provides that

gaming can occur on the land if the Secretary, after consultation

with appropriate State and local officials and officials of nearly Indian tribes, determines that a gaming establishment on the newlyacquired land will be in the best interests of the tribe and its members, and will not be detrimental to the surrounding community;

but then only if the Governor of the State in which the gaming activities are to occur concurs with the Secretary’s two-part determination.

Since October 17, 1998, State Governors have concurred in only

three two-part Secretarial determinations for off-reservation gaming on trust lands that are newly-acquired.

The department published a proposed rule in the Federal Register on September 14, 2000, which would set forth the procedures

for an Indian tribe to follow in seeking a two-part Secretarial determination under section 20.

The Secretary of the Interior is in the process of evaluating the

merits of that proposed rule that had been issued by her predecessor.

Finally, I would like to touch just very briefly on the role of the

Secretary in approving gaming-related agreements under 25

United States Code Section 81. The National Indian Gaming Commission [NIGC] is charged under the Indian Gaming Regulatory

Act with the review and approval of management contracts.

As a matter of practice, all gaming-related agreements that are

submitted to the BIA are referred to NIGC, the National Indian

Gaming Commission. The National Indian Gaming Commission is

charged under IGRA with review and approval of management contracts.

As a practice for the BIA, any time a gaming-related agreement

is submitted to us by a tribe or any other entity, we refer that

agreement to the Gaming Commission for their review.

If the Commission makes a determination that a gaming-related

agreement is not a management contract, or is not otherwise subject to the Commission’s review and approval under IGRA, then the
12

agreement is forwarded to the BIA for a determination as to

whether or not that agreement is subject to the residual approval

authority of the Secretary under 25 U.S.C. section 81.

The department then determines if it is subject to section 81, and

it, of course, begins the deliberations as to whether or not, under

the Secretary’s broad trust responsibilities, that agreement should

be approved.

Congress substantially amended section 81 last year, and the Department recently published regulations at 25 CFR, part 84 to implement these amendmentsto section 81. The amendments that result in our authority for approval of agreements are limited to any

agreements that would encumber trust or restricted land for a period of 7 years or more.

This concludes my prepared statement. I am most happy to answer any questions that the committee may have of me, or I know

Mr. Skibine would be most happy to answer any questions that you

may have, with regard to the management of the BIA, Indian Gaming Office.

Thank you.

[Prepared statement of Ms. Blackwell appears in appendix.]

The CHAIRMAN. I thank you very much, Commissioner Blackwell.

Mr. Skibine, would you like to add anything?

Mr. SKIBINE. No; I do not, thank you.

The CHAIRMAN. Now it is my privilege to call upon the Chairman

of the National Indian Gaming Commission, Chairman Deer.

STATEMENT OF MONTIE R. DEER, CHAIRMAN, NATIONAL

INDIAN GAMING COMMISSION

Mr. DEER. Mr. Chairman, Mr. Vice Chairman, and members of

the committee, my name is Montie Deer, and I am chairman of the

National Indian Gaming Commission.

Thank you for giving us the opportunity to appear before you

today, to testify on the activities of the NIGC. I, along with Vice

Chairman Elizabeth Homer and Commissioner Teresa Poust, thank

you for your ongoing support and interest in tribal governmental

gaming regulation and the NIGC.

This statement will summarize my written submission and,

therefore, reflect my three goals for this morning. First, I will highlight the magnitude of the rapid growth of the Indian gaming industry.

Second, I will discuss the history, activities and accomplishments

of the NIGC. Finally, I will summarize some of the more pressing

challenging facing the NIGC in our attempts to keep up with this

growing industry.

Simply stated, the Indian gaming industry has experienced exponential growth since the passage of the Indian Gaming Regulatory

Act of 1988, when annual gross revenues totalled $100 million. In

the year 2000, the industry generated over $10.6 billion in gross

gaming revenues.

I would refer to chart number 1, which is the bar graph. It is included in the package. You will notice on the bar graph that in

1997, when we received the $8 million cap, that Indian gaming was

at $7.451 million. In 1998, it goes up to $8.5 billion. In 1999, it
13

goes almost to $10 billion, and then it is over $10 billion in the

year 2000, while we remain at a flat $8 million budget.

So at the same time the Commission’s experiences are slow in

proportion to little growth, we are increasing from a $3-million per

year operation to a $8-million per year operation, with 77 employees.

After Congress authorized the additional resources in 1997, the

Commission used those additional resources to build a structure for

improved regulation and oversight of Indian gaming. Before the expansion, 20 percent of our employees were working in the field.

Today, more than 45 percent of our employees work in the field.

As I have noted previously, the 1997 increase in our budget authority occurred in an environment where the Indian gaming industry was growing at a very rapid rate.

This growth, coupled with our $8 million cap fee means that we

have been able to set fees at the modest rate of eight one-hundredths of a percent of gross gaming, after allowing the tribe to exempt the first $1.5 million. Thus, a tribe that generates $11.5 million in gaming revenue would pay an annual fee to the NIGC of

$8,000.

Although the Commission has taken a careful and disciplined approach to expanding our institutional capacity and presence in Indian country, industry demands on the Commission resources are

quickly exceeding our capacity to meet the regulatory needs effectively.

We were especially hard hit by the explosion in gaming in California. As you know, California passed proposition 1A in the year

2000, in March. There are 109 federally-recognized tribes in California; 74 of the California tribes have approved gaming ordinances

and 62 have approved compacts.

This year, seven new gaming operations have opened and more

are under construction. Our Sacramento office has been consumed

by the demands on Commission resources to meet regulatory needs

effectively.

In addition to spending 60 percent of their time visiting sites, the

region chief and our three field investigators in Sacramento are

running weekly training sessions to help the tribes accomplish

some of the basic regulatory functions such as licensing and background investigation.

The other major impact on the Commission resulting from the

change in California has been the wave of management contracts.

Once the gaming industry satisfied itself that casino-style gaming

in California was lawful, there was a rush to enter contracts with

Indian tribes for the management of tribal gaming.

The number of management contracts received in 1998 before

proposition 1A was 17. The number received in 2000 was 27, an increase of nearly 60 percent.

Industry predictions for California Indian gaming have ranged

anywhere from $3 billion to $10 billion in annual revenues. We, at

the Commission, are not sure where it will end up, but the impact

of the industry, as a whole, and ultimately, this Commission, is undeniable.
14

The Commission’s 77 full-time employees are divided among office headquarters and five field offices, and I believe we remain a

lean organization. We have divided the staff into seven divisions.

If you will look at chart 3, you will see the organizational chart

and where the folks are located. It is hard to read, I know, but you

do have a copy. You will notice that in the compliance section is

where most of our people are located.

The Commission continues to place a high priority on encouraging and supporting strong, effective, independent tribal gaming

Commissions. As governments, tribes provide the front-line, day-today regulation of tribal governmental gaming activities, and they

generally do that through a tribal gaming Commission.

The Commission, that is Commissioner Poust and Vice Chairman

Home and I, have embarked on an aggressive training program initiative for tribal gaming Commissioners and regulators. Clearly,

the integrity of Indian gaming depends, however, most heavily

upon those efforts of tribal regulators who work with the operations on a daily basis.

We, however, provide training in relatively formal sessions,

where our representatives talk to gatherings of tribal representatives. We also do it on informal sessions, where field investigators

or auditors work on-site with the tribe.

It is probably safe to say that on almost every work day, somewhere a representative of the NIGC is providing face-to-face advice

or assistance on IGRA compliance to someone involved in the operation of regulation of an Indian gaming operation.

I am also pleased to report that the Commission’s partnership

with the National Judicial College at the University of Nevada at

Reno, to offer a course entitled, ‘‘Essential Skills for Tribal Gaming

Commissions,’’ has been successful. Ninety tribal gaming Commissioners have attended that course in the first two sessions.

Vice Chairman Homer, Commissioner Poust, and I are deeply

committed to the principles of government-to-government relationship with the tribes, and respect for tribal sovereignty. These principles are not always easily reconciled with our role as regulators,

but we certainly have tried.

Our rulemaking has been carried out using tribal advisory committees, and we hold public hearings on our proposed regulations

in locations that are accessible to tribal representatives.

Furthermore, the Commission has held quarterly consultations

across the country, in order to obtain input from tribal gaming representatives and leaders. This Commission has conducted four government-to-government consultations with more than 60 tribes.

The consultations consist of small meetings between the Commission and the leaders of the individual tribes. The process by which

we conduct these consultations has become a hallmark of this Commission.

In closing, the Commission finds itself at a critical juncture during this period of unprecedented growth in Indian gaming for all

the reasons I have touched upon. Thus far, the Commission has

been able to meet the challenges that we feel are presented by Indian gaming, although I am frankly concerned about our future, at

this point.
15

We have a staff of dedicated, skilled professionals, who are committed to the proposition that gaming revenue can make a positive

different in Indian country, and that balanced, effective regulation

is the key to keeping the Indian gaming industry healthy.

With our current force of auditors, it will take between 20 and

30 years to conduct an audit of the internal controls of every Indian casino. These audits should be occurring every 5 years.

While the background investigation work that we do on management contracts is covered by fees from the applicants, our financial

analysts are stretched too thinly, and compliance with the National

Environmental Policy Act has required us to divert staff members

from other assignments and to expand scarce funds on expert consultants.

We can and will continue to get the job done with the resource

limits that Congress sets. But I would be remiss if I did not ensure

that this committee understands how the NIGC is faring in this

face of dynamic change in the Indian gaming industry.

I hope this testimony and the written testimony has been responsive to your request. I thank you for your attention, and I will be

happy to address any questions.

[Prepared statement of Mr. Deer appears in appendix.]

The CHAIRMAN. Thank you very much, Chairman Deer.

Now may I call upon Vice Chair Homer.

STATEMENT OF ELIZABETH HOMER, COMMISSIONER,

NATIONAL INDIAN GAMING COMMISSION

Ms. HOMER. Thank you, Mr. Chairman. I just wanted to say to

you this morning how much we appreciate this opportunity to raise

our concerns with committee, and to emphasize again the points

that the Chairman has made this morning with regard to issues

confronting the National Indian Gaming Commission.

We work very hard, Mr. Chairman, to ensure that we have proper and ongoing communications and input from the tribal leadership and from the tribal gaming associations around the country,

and with NIGA, in particular. We work very hard to understand

what the tribes are confronting in their attempts to comply with

our regulatory efforts. We thank this committee for this opportunity to be here this morning.

The CHAIRMAN. I think you very much.

May I now call on Commissioner Poust.

STATEMENT OF TERESA POUST, COMMISSIONER, NATIONAL

INDIAN GAMING COMMISSION

Ms. POUST. Thank you very much, Mr. Chairman. I would just

like to echo Chairman Deer and Vice Chairman Homer in thanking

you all for giving us the opportunity to be here today. I really have

nothing to add to the previous testimony. It is always difficult coming third with these two remarkable individuals. So I would be

more than happy to answer any questions that you may have.

The CHAIRMAN. Thank you very much.

May I proceed questioning first with the Chairman, if you do not

mind?
16

You have testified that the gross revenue for Indian gaming is in excess of $10 billion. What is the gross revenue nationally for

all gaming in the United States?

Mr. DEER. I do not have that fact in my brain this morning, but

I will get it to you. I do not know.

The CHAIRMAN. I have been told, and I have no documentation,

that Indian gaming consists of about 10 percent of the national

gross?

Mr. DEER. I have been told seven percent.

The CHAIRMAN. Mr. Chairman, could you describe the process

that the Commission follows in carrying out its responsibilities

under the act to review all management contracts and collateral

agreements?

Mr. DEER. I would be happy to, Mr. Chairman. When a contract

is received by the NIGC, if it says it is a management contract, it

goes directly to the management contract division. If it is not designated as to what it is calling itself, it goes to the Office of General Counsel for legal review.

If the document is said by General Counsel that it is, in fact, a

management contract, then General Counsel notifies the parties

that we find that, regardless of what you have called the document,

it is a management contract, and you are going to have to resubmit

it to the management contract division.

There are other contracts that we do not consider to be management contracts. When we get that type of a contract, one of three

things occurs. We send it back and we say, this is not a management contract, by our definition and under the act.

We will forward it to the BIA for their review, and if we think

there are problems with it, then what we say is, we find some concerns about this contract that you have with the tribe. Would you

please address the following things and items that we have placed

in the letter, and we wait for a response.

If we say we really do not know, but we have our concerns that

it might be a management contract, we are going to give this to enforcement for their review by auditors and field investigators, et

cetera.

Now the interesting thing, Mr. Chairman, is that any contract

entered by a company with a tribe that is found to be a management contract without approval is a void contract. They are also

subject to enforcement by us for management without a contract.

We have had two recent ones; one against JPW, that went all the way to the 11th Circuit, in which our fine of $3.4 million was

upheld, that they were actually managing without a contract.

So it behooves both parties to make sure that we review all documents, and it does behoove them to provide us with the information

that we have requested.

Now let us go back to whether it is a management contract.

Three things occur there. We first look at the contract itself to see

if it follows what is found in IGRA, the details of the contract.

Second, we do background investigations, both criminally and financially, of the parties, if it is a class II and class III management

contract. Under IGRA, we do not have the right to ask for resources or repayment for the investigation of backgrounds of financial and criminal matters, when it only is a class III contract. But
17

rest assured, if we have any information, we spend our own money

to do that.

Finally, we have NEPA, which is giving us a large problem in

California, because it is new construction, and we have to approve

of any problem that might occur with an environmental impact

with that contract.

So if it is a contract, three things occur. We look through it. We

compare it to the act. We do the background investigations, which

are paid for by the persons submitting the contract.

We probably get 80 to 95 percent of that, because we use those

people for other jobs, as well, who do that background investigation, such as training. Then, of course, we have NEPA. I do not

know if that answered your question.

The CHAIRMAN. I am asking that because many Indian nations

have complained about the over-regulation and the commission’s

heavy hand, as some have described it. I realize that every application is unique and different. But on an average, how long does that

process take?

Mr. DEER. It is all different, because of the fact that we do not

always necessarily get all the things that we need to look at. So

on our web site, we actually have prepared by Fred Stuckwich a

list of items which we tell the tribes that they need to submit to

us before we can continue with it. I would defer to staff as to what

an average time is.

The CHAIRMAN. Are you satisfied with the relationship that has

developed between your Commission and the Interior Department?

I ask this question because I realize that the law requires close collaboration and work.

Mr. DEER. Yes; we have a very good relationship. George’s committee and our people meet probably at least once a month. We

have a MOU on land issues at this time.

The CHAIRMAN. Does the department advise the Commission of

its disposition on the contracts submitted to the department by the

Commission?

Mr. DEER. Could you say that again?

The CHAIRMAN. Once you submit a contract to the Interior Department, do they advise you as to what they did with it?

Mr. DEER. Not in a formal manner, but I understand that Mr.

Skibine does tell our people in the informal meetings what they

have done with them, if anything.

The CHAIRMAN. Why not in a formal manner?

Mr. DEER. That I do not know. You would have to probably ask

Interior. I do not know.

The CHAIRMAN. I notice the Vice Chairman is eager to respond.

Ms. HOMER. I was going to actually whisper to the Chairman

that it is our understanding that those contracts may be reviewed

in the regional offices of BIA, and sometimes that information may

not come back.

The CHAIRMAN. Does the Commission believe that it has the authority, or is required by the act, to review a contract that terminates a management contract?

Mr. DEER. Mr. Chairman, if you will look at 2711, and I think

it is B(6), it talks about termination in regard to contracts. In that

regard, it specifically says that the Chairman does not approve a
18

termination contract. Yet, at the same time, it says that we must

make sure that there is a termination clause in the contract.

The CHAIRMAN. Would you advise the committee why the Commission is proposing to make a change to the regulations, which

address the definitions of electronic or electro-mechanical facsimiles of a game of chance?

Mr. DEER. With all due respect, that was a 2-to-1 vote, Mr.

Chairman, and I did not vote on that proposal in the affirmative.

So I would ask that either one of my colleagues make their remarks toward that.

If you would like to know my position of why I voted no, I would

be more than happy to give it to you in written form.

The CHAIRMAN. That is fine, sir.

Vice Chair?

Ms. HOMER. Thank you, Mr. Chairman.

Let me just say that in attempting to provide a meaningful distinction between technical aids and electronic facsimiles, the first

permitted and the second prohibited under IGRA, and to make

sense of the latter term, the Commission promulgated regulations

in 1992, defining electronic facsimile as any game of chance, as any

gambling device, as defined by the Federal Gambling Devices Act,

also known as the Johnson Act.

While this definition was convenient, it was also very broad, and

this has resulted in a significant amount of litigation over time.

Some of this litigation has recently culminated in a series of Federal Circuit Court decisions, in which the Courts have generally ignored the NIGC definition; preferring, instead, a plain meaning approach to the term. Please note that these courts, arguably, would

have been obliged to reach a different conclusion, had they applied

the NIGC definition.

We now find ourselves in a situation where the Commission’s

own rule is inconsistent with the legal interpretation of IGRA by

three separate Federal Circuit Court of Appeals. Obviously, this

presents a serious impediment to the effective regulation of gaming, which is why the Commission has published for comment a

proposed amendment of this definitional regulation.

The proposal would enable the Commission to apply the term according to its plain meaning, as the Courts have uniformly done.

This approach will have two clear benefits. First, the Commission,

in applying its expertise in any given case, will be using the standard likely to be used when and if the case is appealed to the

Courts, leading to a greater consistency and greater deference to

Commission determinations.

Second, this will remove the potential for the Commission’s classification decisions to foreclose Johnson Act enforcement actions or

otherwise create confusion with regard to Federal criminal law.

Because the Commission need not necessarily make a Johnson

Act determination to determine whether a game is within class II

or class III of IGRA, some would argue that incorporation of the

Johnson Act has injected needless confusion into what should be a

simple term, by its own plain meaning.

The CHAIRMAN. I will have to analyze that. [Laughter.]

It takes a little while to get here. [Laughter.]
19

I will come back to questioning again, but I have just one last

question for you, Mr. Chairman, if I may. You have indicated that

as the growth of the industry can be described as being exponential, I think is the word you used, the amount that you are

budgeted to receive has remained constant.

What would you consider to be a reasonable amount, that would

provide you enough so that you can carryout your responsibilities

in the best way possible?

Mr. DEER. We have had skull sessions about that, and I think

probably somewhere in the range of $12 million would be appropriate.

The problem is, you see, Mr. Chairman, at some point, there is

going to reach a plateau, and there is not going to be any more Indian tribes to have gaming. So the growth is going to have to level

off, too. When that occurs, would that occur after California; who

knows?

The CHAIRMAN. May I now call upon the vice chairman? Thank

you very much, sir.

Senator CAMPBELL. Thank you, Mr. Chairman.

I am going to have to analyze Ms. Homer’s testimony, too. But

as I remember, it was one of the things that I asked the Commission to do, so I thank you for looking into that.

You know, Mr. Chairman, most of the testimony that we have

heard, I think just at first blush, a person that has never watched

these proceedings before would get the impression that the only

people that regulate Indian gaming are working at the NIGC,

which is far from the case, as you know.

I was looking at some of the other testimony, which is yet to be

presented, and I noticed, in fact, the Oneida Nation is an example.

That Commission, the Oneida Gaming Commission, spends approximately $8.8 million every year to regulate and protect its

gaming operation.

That cost enables the nation to pay for 206 employees that are

engaged in regulating gaming operations at Turning Stone Casino

and Resort, which includes audits and all the other things that go

with the regulatory process. So I think it needs to be said for the

record that the NIGC is not the only body that is involved in this

regulatory business.

Let me ask a few questions, and maybe I will start it with Sharon Blackwell. Sharon, as I understood your testimony, since IGRA

has been enacted, a total of three applications for off-reservations

have been approved by the department, which is roughly one every

four years or so. Clearly, there is not a big rush to do those.

Do you think that process needs to be overhauled? I want to tell

you, I think it is probably good that we are very careful in doing

it. You mentioned the input needed from local communities and the

Governor, and I think that is all really important when you talk

about non-contiguous land that may be put in trust for the purpose

of gaming.

It is a really dicey thing that we get into, with local government,

as you know. We talk about overruling local zoning and land use

policies and so on. But I wonder with the slowness of processing,

if we need to make changes to improve that?
20

Ms. BLACKWELL. There have been three such processes. Of the

two-part determination that required concurrence by the Governor,

there have been three that have received the Governor’s concurrence.

Senator CAMPBELL. How many applicants are you processing now

or looking at?

Ms. BLACKWELL. How many?

Senator CAMPBELL. Mr. Skibine.

Mr. SKIBINE. How many have we considered since the enactment

of IGRA?

Senator CAMPBELL. Yes.

Mr. SKIBINE. I think probably a dozen or so. I do not have the

figure right here.

Ms. BLACKWELL. The process is time consuming. It involves, as

the committee knows, consultation, and the consultation involves

discrete groups. Nearby tribes are consulted with.

Senator CAMPBELL. I support that.

Ms. BLACKWELL. The department strives to achieve some kind of

consensus, and in many instances, the consultation fosters side negotiations.

I do not know how you would speed up that process, without setting some kind of artificial timeframes on it. We would be happy

to work with the committee, however, on any ideas you may have.

Senator CAMPBELL. Well, do you think you need any legislative

authority to do that, or is there a way you can streamline the process within your existing authority?

Ms. BLACKWELL. It depends, in large part, on the will of the people that we are consulting with.

Senator CAMPBELL. I see. Let me ask you one other thing, too.

As I understand it, after Seminole v. Babbitt, you are looking at an

alternative procedure for compacting. What is the status of the

Seminole application for that so-called alternative compacting procedure?

Ms. BLACKWELL. I am going to ask Mr. Skibine to answer that.

He has been working on that particular case.

Senator CAMPBELL. Okay.

Mr. SKIBINE. The department is currently considering the application of the Seminole Tribe and also the Miccosukee Tribe of Florida. Both applications are pending in our office.

On January 19 of this year, the department issued a scope of

gaming decision which was, by agreement of the parties, the first

issue to be resolved since the dispute between the tribe and the

State, resolving the scope of the gaming decision.

The new Administration, as you may know, has withdrawn that

opinion, in order to give the new Administration and the new assistant secretary, who just came on board, and the new solicitor,

who will be on board shortly, the opportunity to review the complex

legal issues that are involved in this process.

Senator CAMPBELL. All right, that will do; thank you.

Let me ask Montie Deer several questions, too. The Commission

has cited explosive growth in California as the main reason it

needs more funds, but there are limited duties.
21

Have you calculated how many operations will begin operating in

California over the next few years, and how that is going to affect

the Commission?

Mr. DEER. Yes, we have, Mr. Vice Chairman. Prior to proposition

1A, there were 39 gaming operations. Today, there are 46. The best

estimate, through 2003, is 60. I told you, I think, that approved

gaming ordinances approached 74, and tribes with tribal State

compacts in California is 62.

Senator CAMPBELL. The IGRA does not delegate the responsibility of regulating class III gaming to NIGC, does it?

Mr. DEER. Well, I think there might be a difference of opinion

there. In the past, if I can refer to class III and what has been said

by this Commission in the past, and where we feel we get the authority, you might say that it is apparent on the face of the 1988

act.

When you enacted IGRA in Congress, among other things, it was

to protect gaming as a means of generating tribal revenue. Congress explicitly created the Commission to establish Federal standards for gaming on Indian lands. Congress provided that the Commission would approve tribal gaming ordinances for class II and

class III gaming.

Congress provided that net revenues from tribal gaming will be

used only for specified purposes. Congress specified that annual

outside audits must be conducted over both class II and class III,

and provided to the Commission. I would assume that this presumes that the Commission would bear some responsibility for protecting the integrity of their revenue stream that underlies the audits in revenue allocation plans.

So in light of the expressed Congressional purposes, it follows

that there must exist some rules for handling of cash and the

tracking of transactions which occur with great frequency in a

gaming operation. There appears to be no good reason perhaps to

think that only exists for class II.

Second, in 1997, when you all amended IGRA, we were told that

we could now collect fees from gaming from class III. I do not think

it stands to reason that we should be able to collect fees from class

III, with no authority to regulate.

That has been the position of the Commission in the past. Of

course, there is also 2713, that gives us authority to issue notice

of violation, fines, and closure orders, for violation of our regulations, and so on and so forth.

Senator CAMPBELL. Let me refer to the committee report that

was processed when we passed IGRA in the first place. On page

3. Let me just read it to you.

S. 555 recognizes primary tribal jurisdiction over bingo and card parlor operations, although oversight and certain other powers are vested in the federally-established National Indian Gaming Commission.

For class III casinos, parimutuel, and slot machine gaming, the bill authorizes

tribal governments and State governments to enter into tribal State compacts to address regulatory and jurisdictional issues.

Mr. DEER. I know that is in there, and I have read it before. You

must remember, too, when you look at the act, we have no authority to do backgrounds for those compacts for the class III gaming,

because it was assumed that the compacts would cover background

investigations, both financial and criminal. They do no all do that.
22

Senator CAMPBELL. I see. Thank you for clarifying that.

Let me go to your pie charts here, since we had talked once be- fore about increasing the authority to collect $16 million up from

the $8 million.

I am looking at your own pie chart. I have a small one up here.

Seventy-three percent of the allocation for 2001 goes to salaries. Is

that correct?

Mr. DEER. That is correct. That is for 77 employees.

Senator CAMPBELL. Okay, if you divide the 77 employees by the 73 percent, which is $5.4 million, it comes out to $75,800 per employee annually, as a salary. If your authority was increased to $16 million to collect from the

tribes, can the committee assume then that the proportionate

amount of the additional $8 million would also be the $75,800 per

employee average?

Mr. DEER. Well, of course, if Congress gives everybody that is a

Federal employee a raise, I have a little problem saying that, probably.

Senator CAMPBELL. Let me just ask maybe one or two more questions. You have testified that NIGC was ‘‘unaware’’ of the great potential for industry growth in California. Now I understand that.

Nobody has a crystal ball.

But as I recall, in November 1998, is when the California voters

authorized tribal gaming. Is that correct?

Mr. DEER. That is correct.

Senator CAMPBELL. Well, that is the same month that I, along

with the help of Senator Inouye, introduced an amendment to increase the budget from $2 million to $8 million. How is it that you

did not start planning at that time, when we quadrupled the budget, if we knew, by the vote of California, that there was going to

be an increase of gaming?

Mr. DEER. Of course, I was not at the Commission then. But if

you will recall, there was a letter sent, I believe, to the committee

from former Vice Chairman Phil Hogan, in which we outlined what

we thought the growth and procedure would be.

Then I recall meeting with all of you, and I remember Senator McCain asked me the question of whether I thought the $8 million

would be enough. I told him, well, we had not got there, yet, and

I really honestly do not know.

That was when we decided to get the field investigators out of

the back seats of their cars and trunks of their cars, and put them

in buildings where the tribes knew where they could find them.

Senator CAMPBELL. Considering the growth in California, have

you done some kind of a detailed strategic plan, which contains

some performance goals and projects, how they will be reached by

your agency?

Mr. DEER. We are working on that at the present time. The problem we are having in California, as you know, internally, we do not

know with the California compacts, when they are going to be implemented, and what is going to happen.

For example, with licensing, under their compacts, we do not like

to interpret that. But yes, we have a long term going on with our

field investigators in enforcement to do that. We will be more than

happy to supply that to you when it is completed.
23

Senator CAMPBELL. Thank you, Chairman Deer, and thank you,

Mr. Chairman.

Before I yield, may I ask unanimous consent to introduce into

the record an article that came out in the Investor’s Daily on July

24. It is entitled, ‘‘Punishing Success; Feds Should Remove Barriers

to Indian Wealth.’’

I thought it was a very good article, talking about the successes

that Indian tribes have had with gaming, and I would like to introduce that into the record.

The CHAIRMAN. Without objection, so ordered.

[Referenced document appears in appendix.]

Senator CAMPBELL. I thank the Chairman, and yield my time.

The CHAIRMAN. Thank you very much.

Now may I call upon Senator McCain.

Senator MCCAIN. Thank you, Mr. Chairman.

Ms. Blackwell, we are aware that the growth of Indian gaming

has been accompanied by a growth in applications for Federal recognition of Indian tribes. Would you agree?

Ms. BLACKWELL. Senator, I had an opportunity to look at the applications for recognition. We had provided, I believe, the committee with some of those statistics.

Senator MCCAIN. Have you seen a growth or not, Ms. Blackwell?

Ms. BLACKWELL. Well, yes, there is.

Senator MCCAIN. Thank you very much.

Are you aware of a Wall Street Journal story, and I would like

to quote from it, on July 18, it says,

What this currently entails is evident in the controversy over Clinton Administration decisions by then-BIA Director Kevin Gover and Deputy Director Michael Anderson.

The decisions were documented in a Boston Globe expose that

was not widely reported.

On his last day in office, Mr. Gover rejected staff findings and

granted Federal recognition to the Chinook Indians of Washington

State. Mr. Gover personally rewrote the staff’s findings, the Globe’s

reporter, Shawn Murphy, reported, inserting his own conclusions to

affirm the tribe’s authenticity, while editing out years of work by

Government historians, anthropologists, and genealogists.

Mr. Gover stepped aside on January 3, and named Mr. Anderson

as Acting Director. Mr. Anderson then recognized the Suquamish

of Seattle as a tribe, reversing an earlier Interior Department finding.

On President Clinton’s last day in office, Mr. Anderson recognized the Nipmuc of Massachusetts as a tribe, rejecting the findings of Interior Department historians, according to the Globe. Is

that accurate?

Ms. BLACKWELL. The information or the facts are that there were

positive proposed findings for, I believe, the Nipmuc 69a, and that

would have subjected the proposed findings for publication in the

Federal Register for an 180-day comment period. It was not a final

determination.

For Nipmuck 69b, my recollection is that was a negative determination. Then finally for Duwamish, it was a proposed positive

final determination, which would be published in the Federal Register, and subject to a 90-day period for reconsideration.
24

Senator MCCAIN. Let me ask you then, Mr. Gover rejected the

staff’s finding, and granted Federal recognition to the Chinook Indians from Washington State; true or false? Did he reject staff’s

findings and grant Federal recognition to the Chinook Indians of

Washington State?

Ms. BLACKWELL. The staff made a recommendation. Mr. Gover

did not follow the recommendation.

Senator MCCAIN. Thank you; did he personally rewrite the staff’s

findings?

Ms. BLACKWELL. I am unaware of that.

Senator MCCAIN. On the Globe’s inserting his own conclusions,

he did not insert his own conclusions, to affirm the tribe’s authenticity, while editing out years of work, by Government historians,

anthropologists, and genealogists. You do not know if that is true

or false?

Ms. BLACKWELL. I am aware that the Assistant Secretary has the

authority to make a determination.

Senator MCCAIN. Are you aware of whether he rewrote and inserted his own conclusions?

Ms. BLACKWELL. I am unaware of any actual rewriting.

Senator MCCAIN. Well, the staff should know, should they not,

whether their conclusions and recommendations were rewritten

and edited out?

Ms. BLACKWELL. That would be in the file, and I would be more

than happy to supply copies of our files to you for the record.

Senator MCCAIN. I would like for you to ask the staff members

who wrote the recommendations, as to whether their findings were

rejected and rewritten. Can you do that?

Ms. BLACKWELL. I certainly can.

Senator MCCAIN. All right, now did Mr. Anderson reverse an earlier Interior Department finding, by recognizing the Duwamish of

Seattle; yes or no?

Ms. BLACKWELL. Mr. Anderson made the positive final determination. I am unaware of the exact facts, and I am very sorry. I

am unprepared to respond to acknowledgment issues.

Senator MCCAIN. Are you aware of whether he reversed an earlier Interior Department finding, in recognizing the Duwamish

tribe of Seattle?

Ms. BLACKWELL. There was a recommendation that had been

made from the staff earlier.

Senator MCCAIN. When you recognized the Nipmuc of Massachusetts, did he reject the findings of Interior Department historians?

Ms. BLACKWELL. Again, there were recommendations made by

Interior Department historians. I would be happy to supply those.

Senator MCCAIN. Do you know what those recommendations

were?

Ms. BLACKWELL. It is my distinct recollection that they were

against the positive finding.

Senator MCCAIN. Do you think this is a little unusual?

Ms. BLACKWELL. It may be unusual. The regulations provide that

the Assistant Secretary ultimately is responsible for making these

determinations, for reviewing staff work, and for making these determinations.
25

I think that the comment period is a very strict comment period,

in which members of the public, peer review, and others outside

the Department of the Interior are given an opportunity to comment.

Senator MCCAIN. Are you aware of previous cases where either

the Director or the Acting Director have reversed the recommendations of the staff and historians, and anthropologists and geologists?

Ms. BLACKWELL. I am unaware of any cases that I could cite to

the Senator now. I will say that there is extensive discussion

among the historians and the anthropologists that are at the BIA

before its recommendations are made.

Senator MCCAIN. That is a great answer, but it is not my question.

Ms. BLACKWELL. I am unaware of any cases specifically, right

now.

Senator MCCAIN. Thank you very much.

Mr. Deer, the Mohegan leaders gave investors Trading Cove Associates, headed by Saul Kirschner, creator of the Sun City Casino

and Resort, 40 percent of gaming revenues, but also exclusive

rights to develop and manage a hotel at the casino site.

The deal never got scrutiny from the National Indian Gaming

Commission, because of a disputed interpretation of a portion of

the regulations. The rights were later bought back from Kirschner

trading for a whopping $430 million. Then there was an additional

amount for the development of the hotel, that totalled $800 million

in compensation, that was paid to Mr. Kirschner and Trading Cove

Associates.

Is that a normal kind of thing that takes place in these contracts,

Mr. Deer?

Mr. DEER. I would say it is not normal.

Senator MCCAIN. Do you think that it might be described as disturbing or even outrageous?

Mr. DEER. You know, Senator, hindsight is a great animal that

we have. Today, we might say that. But I was not there at the

time, and I have no comment. I think the law was followed, as it

is written in the act.

Senator MCCAIN. So you have no comment?

Mr. DEER. That is correct.

Senator MCCAIN. Let me just followup for 1 second.

Mr. DEER. Sure.

Senator MCCAIN. The intent of the law was that a maximum 30

percent, and in some cases, a maximum 40 percent, of revenues

would be given to outside sources. Do you think that, at least, is

keeping with the spirit of the law?

Mr. DEER. Senator, under 2711(b)(6), there is a section called termination clause.

Senator MCCAIN. I am not asking about the legal part of it, Mr.

Deer. I am asking whether you think that this was an appropriate

thing to happen or not.

Mr. DEER. Well, you know, tribes also looked this over, too. This

is a policy call. If the tribes had very good attorneys there, and I

believe they did, and tribes wanted this deal, it then becomes a policy call of the Congress of the United States to decide, at what
26

point does the trust relationship cease, and the tribes have the

right to make their own decisions?

Senator MCCAIN. So then we probably should not have had the

30-percent requirement, according to your logic that you are using

right now, Mr. Deer.

You said you voted against the decision on Internet gambling,

and you said you wanted to submit it in writing. Maybe you could

tell us verbally.

Mr. DEER. Sure, it is not Internet gaming. It is on the definition

of a facsimile. It is a question of separation of power from my judicial experience.

I believe if one reads the Cabazon case out of this district, and

one reads the colloquy between, for example, Senators Inouye and

Reid, that the Johnson Act means exactly what it means.

When a judge tells us that is the only definition possible under

the act and there is no ambiguity, so Chevron does not apply, then

I think it behooves us to leave it alone.

Senator MCCAIN. Ms. Blackwell, we will be submitting additional

questions on these decisions. A lot of interesting things happened

in the last days of the Clinton administration, and this is one of

them. We intend to get some more answers on this issue.

I thank you, Mr. Chairman.

Ms. BLACKWELL. If I may, Senator McCain, the Inspector General of the Department of the Interior is also conducting an investigation.

Senator MCCAIN. Thank you very much, and I thank the witnesses.

The CHAIRMAN. Thank you very much, Senator McCain.

Chairman Deer, there have been many, many articles over the

past decade suggesting that organized crime has been deeply involved in Indian gaming. In your experience as Chairman of the

Commission, have you found infiltration of Indian gaming by elements of organized crime?

Mr. DEER. As you are aware, we have civil enforcement. If we

find something, we turn it over. You have read the report from Justice that says, they have heard of nothing, and I have heard of

nothing.

The CHAIRMAN. Yes; I am glad you brought that up, because we

invited the Department of Justice to appear this morning to testify,

but they declined, stating that they are not fully staffed.

However, they did submit a statement, and I am quoting from

that statement.

The department has found no evidence of a systematic infiltration of Indian gaming by elements of organized crime.

Do you find that that conclusion is not farfetched?

Mr. DEER. I do not find it farfetched.

The CHAIRMAN. Ms. Blackwell, if I may follow the questioning of

Senator McCain, who has the authority to review and approve

these applications, the staff or the Assistant Secretary?

Ms. BLACKWELL. The Assistant Secretary for Indian Affairs has

that authority under our regulations.

The CHAIRMAN. Does the law require the Assistant Secretary to

abide with the findings of the staff?
27

Ms. BLACKWELL. I am unaware of any specific requirement that

requires the Assistant Secretary to abide by the recommendations

of the staff. That would, of course, rob that position of the discretion to make a determination that is lodged in the Assistant Secretary’s office.

The CHAIRMAN. The decision made by the Secretary is public, is

that not so?

Ms. BLACKWELL. There are a number of steps during the Federal

recognition process, which require publication in the Federal Register and an invitation to members of the public and interested parties to opine, to scrutinize the information included in petitions,

and, in essence, provide a push back from the community with regard to the very awesome and important decision to acknowledge

a group as a federally-recognized tribe.

The CHAIRMAN. Before I proceed with the questioning, I have

been advised, Chairman Deer, that you have another engagement

that you must attend to. If you must, you are free to go.

Mr. DEER. I believe so, yes.

The CHAIRMAN. Then we thank you very much for your presence

here.

Mr. DEER. Thank you, Mr. Chairman.

The CHAIRMAN. Ms. Blackwell, does the Indian Gaming Commission ever submit contracts or agreements that have been submitted

to the Commission by tribal governments to the Interior Department for the Secretary’s review under section 81?

Ms. BLACKWELL. Yes, Mr. Chairman; it is quite common for the

Commission to send agreements to us, after the Commission has

determined that the agreements are not management contracts,

and thus are termed related gaming agreements, generally.

The CHAIRMAN. Does the department notify the Commission of

the disposition or the determination that the department has

made?

Ms. BLACKWELL. Not as a formal matter; as was stated earlier

before this committee, there is ongoing, informal communication

between the BIA and the Office of Gaming Management, and the

Commission and their staff. For many years, that has been on a

monthly basis. There is no formal report back to the Commission.

I believe that Ms. Homer flushed that out a little bit.

As a matter of fact, the BIA, when the gaming-related agreements are submitted to us from the Commission, we scrutinize

them, first of all, at the Indian Gaming Office, with the assistance

of our attorneys.

Then a determination is made with the regional directors in the

12 regional offices out in Indian country, whether or not with those

agreements, it would be more appropriate for the regional director

and their staff to do the approval authority under 25 U.S.C. 81.

The CHAIRMAN. Now on the term ‘‘encumber,’’ if a contract encumbers Indian land, it must be reviewed by the department. Is

that not so?

Ms. BLACKWELL. That is correct under the amendment to 25

U.S.C. 81.

The CHAIRMAN. What is your interpretation of the term ‘‘encumber?’’
28

Ms. BLACKWELL. Well, Mr. Chairman, in proposed regulations,

we have defined ‘‘encumber’’ to mean a claim, a lien, a charge, a

right of entry or liability, to real property. The examples that are

given are leasehold mortgages, easements, and other contracts or

agreements that, by their terms, could give to a third party exclusive or nearly exclusive proprietary control over tribal land.

The CHAIRMAN. Under that interpretation, as an Indian leader,

I could submit a contract to the Interior Department to build a

hotel, because it encumbers tribal lands. Is that not so?

Ms. BLACKWELL. That is correct.

The CHAIRMAN. Then I would submit a management contract to

the Commission, because I am going to have a gambling operation

in that hotel. Is that not so?

Mr. DEER. Correct.

The CHAIRMAN. And if you are not informing each other of your

decisions, is it not possible that the fee might exceed 40 percent,

because the same manager is handling gaming and hotel?

Mr. DEER. I think, Mr. Chairman, if I could break in, it comes

to us first. If we determine that it is a management contract, then

it is subject to the 30 percent, or perhaps even as high as 40 percent, et cetera.

If we find that it is not a management contract, and we have no

jurisdiction, then it is sent to BIA for their use of the term ‘‘encumbered.’’ The CHAIRMAN. But what about a hotel that they determine is

encumbering, but you handle not the hotel portion, but just the

gaming portion?

Mr. DEER. If we found it to be a management contract, then we

could hold them to IGRA. But if it is not a management contract,

there are many things out there, Mr. Chairman, called lease agreements on machines.

There are matters all over the book of what innovative lawyers

call these agreements. Many times, they do not fit the category of

a management contract.

If we still have problems, if we have questions, we can find out

who is really calling the shots here. If it is a consulting agreement,

can the tribe automatically turn down whatever the consultant

says that they should be doing?

So there are other things that we look at. That is what has happened in the past with JPW and Pan American. We spent a lot of

money and a lot of time, but we were able to prove that they were

managed without a contract; but that is time intensive.

The CHAIRMAN. So under the process that is being implemented,

Indian tribes could be paying much more than they should be?

Mr. DEER. Under the act, yes.

The CHAIRMAN. Do you have any proposal to make that would

clarify this, so that Indian nations are not snookered?

Mr. DEER. Well, I would hope that we are becoming more astute,

in that the tribes with the good lawyers that they have are looking

over these other agreements that are not ‘‘management contracts.’’

But there are some loopholes there.

That goes back to the policy issue, Mr. Chairman. At what point

do we let tribes conduct their own businesses, and at what point

are we the trustee of that business?
29

You had put in the act the management contract. But there are

exceptions to that. I want you to know that we are diligent at my

business, at our place, and we look over those matters that say

they are simply not a management contract. We have legally gone

after at least two, and they resulted in large fines.

Ms. BLACKWELL. Mr. Chairman, if I may, I would just to clarify

this.

The CHAIRMAN. Yes.

Ms. BLACKWELL. All agreements are submitted to the Gaming

Commission first, and they make the determination. They cull out

those that fall under their jurisdiction. If at any time during the

process we receive an agreement that we feel may be subject to

their jurisdiction, we submit it to them independently, and ask for

their review.

Essentially, when we receive the gaming-related contracts and

agreements, the transmittal to us makes it clear that those are

subject, as determined by the Commission, to our review under residual trustee authority, 25 U.S.C. 81.

I would agree with Mr. Deer that in large part, it depends upon

the imagination of attorneys in writing agreements that would escape management contracts, and would also now escape the limitations in 25 U.S.C. 81; that such agreements must encumber the

land, and the term must be for more than 7 years.

The CHAIRMAN. It has been noted, Ms. Blackwell, that there have

been many, many articles suggesting that groups of people, Indians, have been applying for only one purpose, to carryout a gaming

operation.

However, is it not true that there have been many, many applications that have been filed, and still pending applications, before

the Cabazon decision?

Ms. BLACKWELL. Yes, Mr. Chairman; and thank you for this opportunity to clarify some statistics that my staff has quickly pulled

together.

That is, prior to the enactment of IGRA in 1988, we had received

letters of intent from 116 Indian groups seeking Federal recognition. Since that time, after the enactment of IGRA, an additional

133 groups applied.

There has been somewhat of a larger number that have letters

of intent that we have received, but not an appreciable large number, since the passage of IGRA.

I think it might also be important to point out that Federal recognition as an Indian tribe by the United States does not automatically, in and of itself, give such a tribe a land base, or any kind

of land holdings.

The determination as to whether or not land is to be taken in

trust for a tribe depends, in part, on this Congress, on legislation

that this Congress has passed over time that sets aside land bases

when they congressionally recognize tribes, or through our land acquisition program, and the regulations that are set forth in 25

CFR, part 151; nor does, necessarily, acquisition of land or a land

base for a newly-recognized tribe imply that they can conduct gaming on those newly-acquired lands. That is a separate third and

equally rigorous process.
30

The CHAIRMAN. Just as a matter of curiosity, of the 116 that had

applied before IGRA, how many have been approved?

Ms. BLACKWELL. Prior to the enactment of IGRA in 1988, there

were seven tribes that achieved Federal recognition. Post-IGRA,

following the enactment of IGRA in 1988, Mr. Chairman, there

have been seven tribes that have achieved Federal recognition

through our Federal regulatory process.

The CHAIRMAN. So that is seven out of 130-something?

Ms. BLACKWELL. There were 116 letters of intent received before

the passage of IGRA. There have been 133 received since the passage of IGRA.

We analyzed some of the jumps. One jump was between 1994, in

which there were 9 letters of intent received at that time; and in

1995, in which there were 17 letters of intent received.

Our analysis reveals that that was probably due, in large part,

to the White House Conference on Federal Recognition, and then

the publication of our guidelines and our revised regulations. So

there was more information out there.

The CHAIRMAN. So out of the total 249 applications, you have approved 14?

Ms. BLACKWELL. We have approved 14, pursuant to the department’s process.

The CHAIRMAN. So it is not an avalanche?

Ms. BLACKWELL. As I had mentioned earlier before this committee, there has been an increase. I believe that was in response to

Senator McCain’s question, and indeed, there is an increase. I

could not characterize it as an avalanche.

The CHAIRMAN. Are there any further questions?

Mr. Vice Chairman.

Senator CAMPBELL. Thank you, Mr. Chairman.

I note that we will be having a vote in about another 25 minutes,

so I will not prolong the questions. But this has been a very interesting discussion, and I appreciate some of your questions of Ms.

Blackwell, too.

Some of those applicants, though, have waited 25 or 30 years. Is

that not correct?

Ms. BLACKWELL. Mr. Vice Chairman, as this committee knows

we have received approximately 256 letters of intent since 1979. In

short, there have been a number of applicants that have been

pending in excess of 5 years or more.

We do have a GAO report that is due by late August, which examines the process and looks generally at the issues of how Federal recognition is achieved.

Senator CAMPBELL. Well, I will be looking forward to that report.

I know there has been an increase, and there is no question in my

mind that money has something to do with it.

We are seeing now, in some cases, where groups of people who

want to be recognized as tribes because of this detailed process that

they have to go through in Interior, they will get a friendly Senator

or Congressman to introduce a bill for legislative relief and try and

do an end run around the whole thing, which I do not support.

But I know we have dealt with that a couple of times. I mentioned one hearing that I sat in on some years ago, when one group
31

was applying and had a bill introduced to recognize them as a

tribe.

I remember asking them some questions about things that anybody that is close to their own culture would know. I asked them

about their stories of creation, as they are called. They said they

did not know that. They did not have that.

I asked them about their traditional tribal dress, and they did

not know that. I asked them about their songs and their dance and

their art styles, and they did not know that.

After about 10 questions in which they said they did not know

any of that, I asked them, well, what do you have that makes you

a tribe? They said ‘‘we have got a corporation.’’ I did not think that

qualified, but that was it. [Laughter.]

That did not get through, by the way. That was a long time ago,

and I will not mention who it was.

But there is no doubt about it, you know, in Indian country, you

probably know that there is kind of a joke that years and years

ago, it was not nearly so in vogue to be Indian. I think there has

been much more interest, now that there is a possibility of getting

per capita if you can get on a roll or getting recognized.

But the joke, of course, was in the old days, even when the Indian kids played cowboys and Indians, they all wanted to be the

cowboys. Nobody wanted to be the Indians. [Laughter.]

Well, it is certainly changing, and I think to the good, in some

respects. But I really am almost gun-shy about groups that want

recognition, when behind the scenes, you know that some of them,

and certainly not all, are cutting deals to get a casino, and they are

going to enter all these agreements.

I know in my own case in my own hometown, where I was born

and raised in Auburn, CA, I knew many of the Indian people who

lived there, the Mountain Mowoks and the Pomos. They lost their

Federal recognition in the 1950’s, during the Termination Acts.

Ms. BLACKWELL. Yes.

Senator CAMPBELL. They came back to see me about getting

some help with being reinstated. I knew them when I was in high

school, some of these very same people that came to talk to me.

I said, do you want to be re-recognized so you can get a casino?

They said no. It is just cultural identity.

This kind of interests me, because certainly in the Chairman’s

ancestry, or in a Black American’s ancestry and so on, we do not

expect the Government to give us each a number in those minorities: Hispanic American, Black American, Japanese American, or

whoever. We do not expect the Federal Government to identify

each one of us and give us a number to keep track of us.

Years ago, there was some resentment in some circles in Indian

country about being identified and kept track of, too, as you know.

Ms. BLACKWELL. That is right.

Senator CAMPBELL. I have one last comment. As a policy matter

when we talk about whether tribes should be able to negotiate

their own deals or not, I am inclined to think they ought to, even

if they negotiate a bad deal.

I mean, we all do that. In a free enterprise system, it comes with

the territory. You have got to read the legal contracts. If you can-
32

not, you have got to get somebody that will read them for you. You

have to be able to live up to the parameters of those contracts.

If you, as a tribe, knowingly sign an agreement, where somebody

is going to get 40 percent out of the deal, then I would say, you

may have made a mistake. But if that is what you want and that

is your mistake as a tribe, then you ought to go with it.

We should not try to oversee it and tell them, well, you poor innocent people, you made a bad deal, and we are going to try and

bail you out now. That is part of the learning process, but that

seems to me that is what real sovereignty and self-determination

is all about.

Well, I have no further questions, Mr. Chairman, but I look forward to the next panel.

The CHAIRMAN. Thank you very much.

Because of the complexity of the matter under discussion, may

we submit questions to you for your response?

Mr. DEER. You certainly may.

Ms. BLACKWELL. Absolutely, yes.

The CHAIRMAN. It has been a long morning for you, Mr. Chairman, and Ms. Blackwell. Thank you very, very much.

Mr. DEER. Thank you.

Ms. BLACKWELL. Thank you.

The CHAIRMAN. Our next panel consists of the following people:

Ernie Stevens, Jr., chairman of the National Indian Gaming Association, accompanied by Mark Van Norman, the executive director

of the National Indian Gaming Association; Keller George, president, United South and Eastern Tribes of Nashville; Daniel J.

Tucker, chairman, California Nations Indian Gaming Association of

Sacramento; David LaSarte, executive director, Arizona Indian

Gaming Association of Phoenix; and Tracy Burris, executive director, Oklahoma Indian Gaming Commission, Norman, OK.

Gentlemen, I welcome you. I know you have been waiting a long

time. I will be sitting here to listen to all of your testimony, but

we may be interrupted by votes.

So may I now call upon the chairman of the Indian Gaming Association, Mr. Stevens.

STATEMENT OF ERNIE STEVENS, JR., CHAIRMAN, NATIONAL

INDIAN GAMING ASSOCIATION, ACCOMPANIED BY MARK

VAN NORMAN, EXECUTIVE DIRECTOR

Mr. STEVENS. Good morning, Mr. Chairman, it is an honor to be

here before you. I will try to summarize my comments as best I

can. Obviously, our full testimony is available and has been submitted.

The CHAIRMAN. All of your complete statements will be made

part of the record.

Mr. STEVENS. Good morning, Mr. Chairman and Vice Chairman

Campbell. As the chairman of the National Indian Gaming Association, it is my honor to be here before you. I thank you for the opportunity. Joining me today is Mark Van Norman, our executive director.

The National Indian Gaming Association is a non-profit association of 168 Indian tribes dedicated to preserving the tribal sov-
33

ereignty and inherent right of tribal governments to operate gaming enterprises to raise governmental revenue.

Thank you for this opportunity to testify once again, Mr. Chairman. This morning I will touch on four points: The benefits of tribal governmental gaming; tribal regulatory systems; the NIGC and

its regulations; and some concerns that NIGA member tribes have

with IGRA.

Regarding the benefits of tribal gaming, the United States has

consistently recognized that Indian tribes are sovereigns with governmental authority over their members and their territories.

Through IGRA, Congress sought to promote tribal economic development and recognize that Indian tribes have the inherent authority to engage in gaming for governmental purposes.

The results achieved by Indian tribes through gaming have been

amazing. Indian gaming provides jobs and economic development

for Indian tribes and their non-Indian neighbors. Indian gaming

has been an important source of employment and economic development for Indian tribes, generating 250,000 jobs nationwide.

In Wisconsin and other areas, Indian gaming has proven to be

the best welfare-to-work program. In some cases, welfare-to-work

has put some people in situations where they go to work, but cannot pay for their child care and related bills. Indian gaming provides good pay, good benefits, and in some cases, even child care,

for all of our employees, Indian and non-Indian, alike.

Indian tribes use gaming revenue to build schools, health clinics,

water systems, and roads; and to fund education, health care, child

care, and elder services.

The Oneida Nation is particularly proud of our Turtle School, an

elementary school where our Indian youth go to school. They learn

their language and learn a good quality education in a brand new,

state-of-the-art school. We are very excited about that, and we are

also very proud of the services offered to our elders.

In addition, gaming has provided tribal governments with the

capital necessary to develop new enterprises. More recently, we

worked with the National Indian Business Leaders, small business

vendors in Indian country, and are currently working to try to promote their efforts out there in Indian country.

Tribal gaming benefits neighboring communities with jobs for

State residents, and revenue for State and local governments

through payroll and other taxes.

NIGA recently did a study of charitable giving, and found that

Indian tribes gave $68 million to charity, including donations on

off-reservation hospitals, schools, law enforcement vehicles, and

other local needs.

Many Indian tribes use gaming revenue to help other tribes. For

example, the Forest County Potawatomi Tribe assists the Red Cliff

Band and the Sakaogon Band of Chippewa on an ongoing basis,

and funds a Milwaukee Indian school for the benefit of all Indians

in Milwaukee.

I have asked to submit this for the record. It is a pictorial tour

that I did with the Potawatomi casino, throughout their casino and

one quadrant of the community which they support.
34

It is a community where I grew up in, and a lot of poverty, crime,

and violence exists. They funded several organizations, and this is

just one of four quadrants that they support in Milwaukee.

It is an outstanding note of what the Indian gaming is doing to

help enhance the services and the safety in the city of Milwaukee.

Of course, we know that tribes have a lot of work to do. Tribes

continue to have serious unmet needs, and many of our people live

in poverty, and face diabetes and heart and liver disease.

We know we still have a long ways to go to catchup with the rest

of America, and it is our commitment to continue those efforts.

On tribal regulatory systems, I would like to point out that Indian gaming is the most highly regulated form of gaming in the

Nation. It is subject to the regulation of three jurisdictions: Tribal,

Federal, and State.

Tribes regulate their own gaming through tribal gaming commissions and tribal justice systems. States regulate tribal gaming at

a level negotiated through tribal State compacts. The Federal Government regulates tribal gaming on several levels. The NIGC is

main regulator at the Federal level.

In addition, the Department of Justice, through the FBI; the Interior, through the BIA; and the Treasury, through the IRS and

FINSIN, all have a role in regulating tribal gaming.

Under IGRA, tribes serve as the primary regulators of Indian

gaming, and over the past decade, tribes have developed worldclass regulatory systems.

In addition, we are very proud that we have an outstanding

check and balance system within our tribes. I can only speak of one

tribe in this brief time that I have to speak to you. Obviously, my

tribe, the Oneida in Wisconsin, has an audit committee. They have

an internal audit that oversees the entire tribe, and then they have

internal auditors within the gaming operation.

In addition to that, they have the Gaming Commission. They

have their own investigators. We have tribal police who also have

their own investigators.

In addition, to expand from that, we have associations, regional,

local, and State associations, that tribes, working together, have

helped do a lot of service in helping to regulate our casinos and

fight crime in Indian Country. I think they have done a really good

job, and we are very proud of them.

The tribes realize that good regulation is the cost of a successful

gaming operation. We have made regulation a priority, and we can

demonstrate that.

In 1998, a NIGA survey indicated that 147 tribes spent over

$127 million on tribal regulation in Indian gaming. Based on

NIGA’s current survey, we estimate that this year, the tribes will

spend $150 million to regulate Indian gaming operations. In addition, we estimate that tribes will pay over $30 million for State regulation of their operations.

Against the backdrop of comprehensive regulation, the Justice

Department has repeatedly reported that there has been no infiltration of organized crime on Indian gaming. A national gambling

impact study commission confirmed this finding.

As I stated above, the NIGC is the main Federal regulator of Indian gaming. The Commission’s $8 million budget is funded en-
35

tirely by tribal governments. Over the past 3 years, NIGC’s personnel increased over 200 percent. With 77 employees and 5 field offices, the National Indian Gaming Commission is fully equipped to

provide a secondary level of oversight to Indian gaming.

Regarding their proposed environmental health and safety regulations, in our view, the NIGC should stay close to its core mission

of regulating Indian gaming. However, the Commission’s proposed

environment, public health, and safety regulations go beyond its

core mission.

We already work with the EPA on environment issues. We have

our own building codes, and we work with our own fire departments, or work with local departments, to address safety issues.

We do not need another layer of Federal bureaucracy in this area.

On the proposed definition changes, in its initial definition regulations, the NIGC wrongly defined the term ‘‘facsimile’’ as any gambling device, as defined under the Johnson Act. The NIGC recently

decided to remove that reference to the Johnson Act. We ask you

to support the NIGC’s efforts to correct its earlier mistake.

On the concerns with IGRA, the Indian Gaming Regulatory Act

has generally worked for Indian tribes. However, the Supreme

Court decision in the Seminole case severely tipped the balance of

the compacting process in favor of the States. This leaves the tribes

with the right to good faith negotiations, but no way of enforcing

that right.

In 1999, the Secretary of the Interior enacted regulations that

permit tribes to request alternative class regaming procedures. We

ask this committee to support and ratify these regulations, which

restore the balance between tribes and the States that IGRA envisioned. The committee never intended the States to have a veto

power over the compacting process.

I would like to say a few words about the Federal acknowledgement process. Recent reports wrongly characterize the process as a

gaming issue. It is not.

Many of the tribes that have petitioned for recognition did so 10

years before the enactment of IGRA. Most of the tribes that have

been recognized since 1988 do not engage in gaming.

I struggle, Mr. Chairman, with my emotions, when we talk about

the Indian people, that have survived the attempts to eliminate the

genocide against my people, and try to make that a gaming issue.

We know and we have been able to highlight where there are serious difficulties for people trying to get recognition, and we know

who Indian people are.

We talk about the Duwamish and Chief Seattle. He said this is

where we come from, the land, from our Mother Earth, and the city

of Seattle is named after him. So I really struggle with that. I do

not want to cloud my testimony, but I think if they are Indian people, we will know who they are, and they know how to explain who

they are.

I also know there are so many things like those tribal songs, tribal regalia, their traditional customs. That was all part of the genocide which was taken from them. In more contemporary times, we

have tried really hard to regain those.

So that is always a struggle, and we appreciate that, Mr. Vice

Chairman, that scrutiny; because the last thing we want is people
36

who are not Indian to be recognized. At the same time, we want

to recognize Indian people that fought back through so much genocide, to stand up as who they are, as Native people from this land.

In conclusion, Mr. Chairman and Mr. Vice Chairman, I just

wanted to say that. I apologize, but it is a very emotional thing for

me and my people.

Regarding the Wolfe/Shays bill, you know, we are a little bit disturbed about that. We are prepared to step up to the plate and answer all those questions again, if we have to.

We believe the Impact Study Commission has done that. We believe our brother and sister tribes out there have done that. We

will do it again if we have to, but we have a lot of important things

on our plate, and we would like to work on those.

So in conclusion, I believe tribal gaming is fully regulated, and

it is working to benefit both the tribal governments and the surrounding communities.

I would like to thank you at this time for allowing me to testify.

I appreciate it very much. As I said, we have submitted our testimony, and we are definitely here to answer any questions that you

may have, Mr. Chairman.

[Prepared statement of Mr. Stevens appears in appendix.]

The CHAIRMAN. Mr. Chairman, I thank you very much for your

statement. I can only say that if a people cannot be described with

emotion and passion and pride, those people will disappear.

Now may I call upon President George of the United South and

Eastern Tribes.

STATEMENT OF KELLER GEORGE, PRESIDENT, UNITED

SOUTH AND EASTERN TRIBES

Mr. GEORGE. Mr. Chairman, I appreciate the opportunity of

being able to come here and give testimony before this committee

again. I have submitted quite a large written testimony, trying to

cover all the issues that all of the tribes within USET have to deal

with.

We have 24 federally-recognized tribes in our organization. We

come from Maine all the way to Florida, as far west as Texas, comprising 12 States.

Some tribes are large, some tribes are small, and some tribes are

in the middle. So we have various different degrees of success in

our gaming operations.

Within the Eastern Region, we have probably two of the most

successful tribes, the Mashantucket Pequot and the Mohegan Tribe

in Connecticut.

USET has played an integral role in these tribes and things that

have been going on in the States that we have our tribes reside in.

In USET, we have nine tribes that are in class III gaming. We

have six tribes that conduct class II gaming.

For example, the Penobscots in Maine conduct a bingo operation,

but only on weekends, on like Friday or Saturday nights. So there

is not a large amount of revenue that is generated from that gaming operation.

The Miccosukee and the Seminole in Florida conduct class II

gaming, because they have not been able to get a compact. We all
37

know of the Supreme Court decision in the Seminole case. Also, the

Poarch Band of Creeks in Alabama come under that same category.

However, we do have tribes in the State of Louisiana, for example, where we have three tribes that have gaming operations. One

tribe that has been recognized, the Gina Band of Choctaws, has

been denied getting into class III gaming, basically because the

Governor will not sit down at the table and negotiate with them,

because of the Seminole decision, where the tribes can no longer

take the States to Federal Court.

We have the same thing in Massachusetts. They did manage to

get a compact negotiated. The Governor was willing to sign it, but

the legislature stepped in and said they had to approve it, and they

chose not to approve it.

With the Narragansett Tribe in the State of Rhode Island, they

had been prohibited on a rider that was introduced in the Senate

on an Appropriations bill that prohibited the Narragansetts from

going into gaming.

All of their attempts to get into gaming have been thwarted, and

there are numerous other tribes that would like to get into gaming,

but because of the situations there, and the ruling on their territories in Maine, it is just not feasible for them to do that.

However, in the USET area, there have been a lot of benefits of

gaming for the nine tribes that have class III gaming operations.

They vary in size, again, the Mashantucket Pequot, and the Mohegan being the largest; and some of the smaller operations such as

Chitimacha, Tunica-Biloxi, and Oneida. We have been very successful in some of those operations that we have had.

I would point out that as far as IGRA, in our opinion in the East,

the Indian Gaming Regulatory Act is working. Sometimes, it may

be not as fast as we would like it to, but the reason for the act was

to promote tribal economic development, tribal self-sufficiency, and

strong tribal governments. We believe that act is doing that.

One of the former Assistant Secretaries recently called gaming, ‘‘The only Federal Indian economic initiative that ever worked,’’

and we believe that is correct.

Prior to the advent of Indian gaming, many Indian Nations,

while legally recognized as sovereign governments, they were not

able to provide basic governmental services to their people. They

had all the legal attributes of sovereign nations, but did not have

the practical ability to be an effective government for their members.

At the Oneida Indian Nation, our children were facing a future

consisting of food stamps, minimum wage, broken down trailer

homes, and our once expansive homelands in Central New York

were reduced over the years from 6 million acres to 32 acres.

The Mississippi Band of Choctaws also, before their economic development, were considered one of the poorest of the poor tribes,

when unemployment was over 80 percent.

Tribal gaming, for many, has reversed a cycle of poverty. But I

would like to point out at this time, the Oneida Nation has been

successful, but those 8 years of success do not outweigh over 200

years of poverty that we have endured.

So that is one of the things that we would like to point out, because most of the tribes now that have been successful in gaming
38

for over 200 years, existed in poverty and alcoholism and all of

that.

Even with all of the success that we have had over the years, Indian people are still not on the level as others in this great country

that we call America, because of diabetes, alcoholism, child abuse,

spousal abuse, and all of those things that are things that we need

to work on. That is where the revenues that have been generated

for gaming are going, to the most part.

My nation does not issue or does not give per capita payments

from gaming revenues. We have decided to do it in other ways, by

providing full scholarships to our Indian people to go to any university or school that they would like to go to; by initiating a health

care insurance policy for each and every member.

No matter where they live, on the reservation, or if it is in California or Washington, DC or wherever they are, they are given that

ability to access this insurance policy that covers them on health

care.

In Oneida, we have over 3,000 employees, of which 86 percent

are non-American Indian. Proceeds of gaming go directly to providing governmental services. We have our own home ownership programs. We do not use HUD anymore. We have affordable housing.

As I mentioned, we have the health care insurance program.

We have our own police force, that is one of the few police forces

in the entire country that has Colea certification. There are not

that many police forces, Indian or non-Indian, that have that.

We have our own legal department and our tribal court system.

We have a very active language and cultural retention program.

We have even extended our language program this year to include

house visits. For whatever reason, if the family members cannot attend the sessions in the evening or during the day, we now go to

the homes and attempt to teach the language of the Oneidas.

Now we are having more of our youngsters, in particular, that

are communicating in our Native language, that somehow almost

died out. It is coming back strong, and we believe that the money

that has been used is a good thing.

The Mashantucket Pequot Nation has built one of the best stateof-the-art museums and research centers in the country, along with

the Cherokees in North Carolina, that have revamped their museum in Cherokee, NC, to tell the story of their tribe. It teaches

some of the culture of the Cherokees.

The Choctaws have built a health care, hospital, boarding high

school. They have law enforcement and tribal courts, and they also

just unveiled the state-of-the-art fire protection where they do mutual aid to the counties around them; because I think there are

eight different distinct communities that comprise eight different

counties, that their checkboarded reservation involves. So they provide fire protection, not only to the reservations, but to the local

communities around them, with mutual aid agreements.

Mr. Chairman, we talk a lot about economic development.

The CHAIRMAN. Mr. President, I will have to leave to vote. So can

we resume this upon my return?

Mr. GEORGE. Yes, sir.

The CHAIRMAN. We will stand in recess for 10 minutes.

[Recess.]
39

The CHAIRMAN. The hearing will please come to order.

May we now resume our hearing. President George, you were not

quite finished yet.

Mr. GEORGE. Thank you, Senator.

I would like to get into how some of the local economies benefit

from Indian gaming. At Turning Stone Casino Resort, payroll exceeds $63 million. Payments to vendors exceeded $123 million.

Capital expenditures are about $20 million. This is over the 8-year

period that we have been open, since 1993.

We have a economic development report that is done by Zogby

International, who is a renowned pollist that does a lot of political

reporting.

We have that available that I would like to enter into the record.

Also, we have an economic development report that has been done

for the Mississippi Band of Choctaws. This is done by the Southern

Mississippi School. We would also like to include this in the record.

The CHAIRMAN. It will be received.

Mr. GEORGE. Thank you.

[Referenced documents appears in appendix.]

Mr. GEORGE. The Oneida Nation has over 3,000 employees.

About 86 percent of those people that we employ are non-Natives

in our casino, because we are a small nation, and we do not have

the labor force that we need. Therefore, 86 percent of our employees are non-Native.

Also, the Mohegan Tribe, for example, has approximately 8,500

employees, or will reach that figure in a couple of months, when

their expansion hits full gear.

As Senator Campbell points out, the Oneida Nation spends $8.8

million in regulation every year. That is only one casino. I know

there was an article that I read that Nevada spends about $80 million.

But if you will take into consideration that in the Eastern Region

of the nine casinos, we spend in excess, conservatively, $50 million

a year in regulation of the nine casinos in our Eastern Region.

I do not know about the other areas, but I do know about the

Eastern Region. I have been a gaming commissioner and chairman

of our Gaming Commission for 8 years. Prior to that, I was in the

area of learning how to be a gaming commissioner, and studying

the issues. I also was on the Negotiating Committee that negotiated our Nation’s State compact for my tribe.

Also, I would like to point out, at Choctaw, they have 2,243 Indian employees, and they have 3,570 non-Indian employees, which

gives them a total of 5,822 employees. At the end of 2002, when

their new Pearl River Casino Resort is finished, that will probably

double.

So Indian gaming has been beneficial to not only the tribes, but

the surrounding communities. In our area, in 1993, when we were

going to open our casino, Griffith Air Force Base closed. That

meant there was a loss of over 4,000 jobs. We stepped in and provided jobs for some with that kind of help with that job crunch of

losing that many jobs at one time.

Also, we have provided moneys for the local governments around

us and the schools around us. For example, we have given over $7
40

million to build a water and sewer line, and turned it over to the

town of Verona for administrating. We gave them $350,000 for a new town hall, and also over $2

million in grants to education. This is where we give money to the

local schools, not to the counties, but to the local school boards, to

use in whatever way that we see fit.

In Cheryl, they have used that money to buy computers. Another

school district has put on teachers in special education for those

children that need that extra help. We do not put any strings on

it. They can use those moneys for whatever projects that they want

to use them for. In our mind, Indian gaming is a win/win situation

for tribes and our neighbors.

There is a lot of talk also about regulation. You know, I have

been President of USET for going on eight years now, and over 8

years, as I mentioned, as a gaming commissioner. I think I know

a little bit about the regulations that we have to go through.

Under my gaming commission, we have a staff in the Internal

Audit Division of six people that audit internal controls. We, by

law, have to submit a audit of the entire operation to the NIGC annually. So, yes, we are providing those audits on a timely basis,

and that is what a large portion of those moneys that we spend go

to.

We support strict regulations because when we negotiated our

compact, and we welcomed that. We have the New York State Racing and Wagering Board, which is the entity that co-regulates on

our reservation all of the tenants of the compact, to make sure that

we are not in violation, and we welcome that.

Also, the New York State Police Department does all of the background checks, and we have to pay them for all of this. So part of

that $8.8 million in regulation is because we have to reimburse the

State. Last year, it was $3.5 million that we reimbursed the State

for their part in the regulation of the casino.

So we feel like we have been doing a really good job on regulation. We also have, in our compact, the criteria that any non-gaming vendor that comes in, if it is the trash haulers or whatever

their job is, that if they do $50,000 or more business with us in a

calendar year, we do a background check on those companies, to

make sure there is no organized crime element coming into the casino.

With all of the vendors that provide gaming-related services, we

do what we call GER, gaming registrants for those companies. We

do a strict background check on the principles of those companies,

no matter which company it is; if it is Polsom or any of the vendors

that we use for gaming-related items and supplying gaming-related

materials for us or services. That is in our compact that we negotiated.

So in that area of regulation, this is the compact and the gaming

regulations that we use. It is quite a thick document. So there are

a lot of things that are very specific that we have to do.

I would also like to submit this to the committee as an attachment for what our regulation is about. This document right here

spells out, from A to Z, what the regulation is, including the rules

of the game, all of the appendices that we have to be in compliance

with.
41

The CHAIRMAN. That will be received for the file.

[Referenced document appears in appendix.]

Mr. GEORGE. Thank you.

Some of the benefits of Indian gaming, as I mentioned one time

before, are that we do not give per capita payments, but do it in

other services for our tribal members: Education, scholarship

money, health insurance, social services, natural resources, police,

fire protection. All of these, we do with our own dollars.

We are in the third year now of moneys that we have, the TPA,

the Tribal Protection Allocation moneys, that were getting from the

BIA. We turn that back each year to the BIA to be used in the

Eastern Region of some of those tribes that may not be doing as

well as we are.

To date, that totals approximately $5 million that we have

turned back to the BIA, and have been redistributed among the 23

other tribes, paying more attention to some of the tribes that need

that help that do not have any type of economic development. So

we are very proud of the fact that we have been able to do that.

In conclusion, Mr. Chairman, I would just like to say that we

have really appreciate the opportunity to come before you. One of

the sessions that I would like to just say a little bit about, that we

went into detail in our written testimony, was about the recognition process.

USET is on record saying that we believe that the process should

stay within the BIA and the Assistant Secretary for this particular

reason because the criteria that they used, and I know people have

mentioned this before, is that the only reason the tribes are petitioning for recognition is because of gaming.

But I must point out, Mr. Chairman, that gaming is not one of

the criteria that the BIA uses under their bar process for recognition of Indian tribes. In the Eastern Region, there has only been

one tribe that was recognized after 1988, that is in gaming.

So although we do know that is the motivation of some tribes

that have petitioned for it, we feel that the process is working. It

may need a little tweaking and revising, to make it not as lengthy,

because as was noted earlier, there are petitions that have been

presented to the BIA for recognition for over 30 years that still

have not been dealt with.

So that is the reason why we think it is in the best interests to

keep it at the BIA and under the Assistant Secretary, and just refine it so that it will be easier to tribes to access.

But I still think, as Vice Chairman Campbell has pointed out,

that some of the criteria used is the songs, the culture, the language, and all of these types of things. They are very important to

us, as Indian people.

Because of the dollars that we have been able to generate

through gaming, as I mentioned, it has enabled us to build a big

cultural center. Now we have displays where the outside communities come in, and in agreement with the school systems, we now

have materials that we can easily give to the teachers.

This was the biggest problem that they had, because the research materials that they need to teach about the Iroquois Confederacy were very hard to get. But now we are putting together those

types of things that can be used in the school systems.
42

By New York State law, for 2 weeks, they have to teach about

the Iroquois Confederacy in the New York school system. So now

we are able to get some of those material available to the teachers

that are teaching those.

Keeping all of what we have talked about in context, while Indian gaming has worked for many tribes, it has not solved all of

our problems; far from it. According to the U.S. Census Bureau,

American Indians are still nearly 21⁄2 times as likely to be living

below the poverty line as the rest of the U.S. population.

Infant mortality rates, alcoholism, and diabetes are proportionately higher among Native Americans than other groups. Unemployment on Indian reservations is four times the national average.

So, yes, Indian gaming has been very successful for some of us,

but we still have got a long way to go. As I said earlier, the few

years of success do not outnumber the 200 years of poverty that we

have been suffering through.

Thank you, Mr. Chairman, and we will be glad to answer any

questions.

[Prepared statement of Mr. George appears in appendix.]

The CHAIRMAN. Thank you, President George.

Now may I call upon Chairman Tucker.

STATEMENT OF DANIEL J. TUCKER, CHAIRMAN, CALIFORNIA

NATIONS INDIAN GAMING ASSOCIATION

Mr. TUCKER. Good morning Mr. Chairman and Mr. Vice Chairman. It is an honor for me to be here. I really enjoy being here and

talking with you.

My name is Daniel Tucker. I am the chairman of the California

Nations Indian Gaming Association out of Sacramento, CA. There

are 109 federally-recognized tribes in California; 76 of those tribes

are members of the California Nation’s Indian Gaming Association.

Although we have been very successful in a lot of tribes in the

gaming process out there, there are still some who have not been

successful. But on the other hand, our success has not been without

its detractors, however.

Try as we might, through organizations like California. NIGA, to

get the facts before the public, false impressions continue to be

spread about the ability of tribal governments to regulate gaming.

Millions of dollars that could be used for basic tribal needs are

put right back into regulations, because we recognize it is important. It is sad, then, that after all these years, all the significant

legislation, every regulatory development, and millions of dollars

expended for regulatory costs, that we still hear reports that paint

a landscape that is generally uninformed and misleading about our

ability to regulate gaming on our lands.

But we will persist in our efforts to correct those misimpressions

and, therefore, welcome the opportunity do so today in this hearing. I believe that under the existing system, under IGRA, regulation of tribal government gaming has been very effective.

With respect to the gaming operations themselves, the NIGC has

enacted extensive regulations setting minimum internal control

standards, which tribal gaming projects must meet or exceed.
43

In addition, tribes must also abide by titles 12 and 31 of the

United States Code, which govern specific procedures and reporting

requirements for cash transactions.

Among the results of this commitment to regulation and compliance, the Justice Department has testified before this committee on

many occasions about the virtual absence of organized crime in

tribal gaming operations.

Concerning regulation of the California compacts, this is very important, Senator. Sixty-one California tribes have entered into virtually identical compacts with the State of California.

I would note that earlier it was testified that there are 39 tribes

before Proposition 1(A) that were in gaming, and we talked about

the explosion in gaming in California. But there were only five

other tribes after proposition 5 has been passed, which means there

are 44 tribes that have gaming right now.

There are 61 with compacts, but yet those tribes have not gone

into gaming, as of yet. You know, we said we have the revenue

sharing process, which I will be bringing out further in my report

here.

To facilitate that process, California tribal governments are required to maintain independent tribal gaming agencies or tribal

gaming commissions at the first line of regulations. The new compacts provide for a more explicit process for licensing and performing background checks that are set out in Federal law.

Our new compacts flush out construction, environmental, health,

safety, and other issues related to the facility. Our compact also details requirements for lenders, investors, and gaming suppliers.

Compliance with procedures and laws that minimize opportunities for fraud, theft, skimming, or money laundering are a must.

The compacts provide specific requirements for tribal gaming

regulators, including who can serve, freedom from conflicts of interest, and require prompt removal of any member violating those

rules.

The compacts also provide for the meaningful participation by

State regulators in the regulation of tribal governmental gaming,

including State inspections and auditing rights, as well as a process for State review; as suitability certifications for critical employees and others associated with the gaming projects.

The State has the use of both the State Attorney General’s Office, through the Division of Gambling Control, for investigative

and enforcement purposes, and the independent Gaming Control

Commission for appeals and policy matters.

Unfortunately, the division of authority and the actual practice

between those two State agencies still seem somewhat blurred.

They have been charged with uncertainty about whether there will

be duplicative and, therefore, inefficient and cumbersome regulation by the State.

Tribes, therefore, have been addressing that issue in various

ways, including appearing at hearings before the State legislature,

holding meetings with the State officials, and seeking dialog

through the compact’s own mechanisms.

The tribes’ dedication to regulation is not in doubt. As already

noted, tribes spend millions of dollars a year on regulating their op-
44

erations, and contemplate regulatory participation by the State and

Federal Government.

The tribal/State association is a unique element of the California

compact. Further demonstrating the focus that tribes have placed

on regulation is the compact’s creation of a tribal/State association.

The association is made up two representatives from each California compact tribe’s Gaming Commission, and two delegates each

from the State’s Division of Gambling Control and Gambling Control Commission.

State regulations in respect to tribal gaming operations are subject to a review and approval process through the association that

that body offers an ongoing opportunity for dialog between the

State and tribal regulators. It has been meeting regularly since the

compacts went into effect.

This is important; the tribal revenue sharing and sharing with

other tribes. This is based on tribes not going into gaming, per se,

because we do not want them to, because of the expansion of gaming in California, the explosion that was testified to earlier.

This kind of confuses me, because most tribes, or about 80 percent of the tribes, will gain revenue sharing from the tribes will

have gaming, and will get those funds, whether they go in gaming

or not, under the compact. So those tribes who do not get into gaming are still getting the benefits from the tribes that do. This is a

first for this process in this country.

A stark feature of the California compacts are the provisions for

sharing gaming revenues with tribes that are either not in gaming

or have limited operations.

Under the compacts, revenue sharing provisions, fees for licenses

to operate slot machines in excess of the base allowance under the

compact, are paid to the State in trust for the tribes eligible to

share in that fund. To date, more than $40 million has been set

aside for distribution to non-gaming tribes, or those with limited

operations that qualify to share in the fund.

With me, I have a report from the California Gaming Control

Commission. This is from the supplemental distribution of funds

from the Indian gaming revenue sharing trust fund. In the May 9

report, it said that there are only 68 tribes who are eligible for

profit sharing.

They came back with a supplemental report, and I would like to

put this in the record, that now there are 84 tribes that are eligible

for the profit sharing in California. Another note is that the tribes

in California who have facilities, who can handle the machines that

they have, are only allowed up to 2,000 machines.

There are only a handful of tribes who have that right now. Because some of the tribes are so far out, they maybe have 500 or

maybe 700 machines at the most, because the market allows it to

be that.

So it is a market driven policy, and the people who can afford

the 2,000 will do so. Those who cannot, will not have 2,000 machines. So we are limited. We have a peak right there, but we cannot go any further than 2,000 machines at this time.

The situation in California, whether you have 2,000 machines or

500 machines, we still turn our audits into the NIGC every year.

It may be a little more expensive for us to do, but we cannot see
45

why it would be more expensive for the NIGC, needing more people, because the audits are the same, but the numbers are just bigger. Yes, the numbers are bigger, and I am not going to deny that.

The numbers are bigger, but the work is still the same.

On sharing with the local communities, the California tribes

enter into numerous agreements with local governments to lessen

the off-reservation impacts of gaming operations. These efforts

have included strengthening tribes’ own services, to extend them to

local communities.

Additionally, tribes have helped with funding fire engines, squad

cars, extra law enforcement personnel, installing traffic lights, contributing to air quality enforcement resources, providing support

for mental health and gambling addiction programs, and meeting

the other needs of local governments and communities directly.

Added to that has been a tradition of making substantial charitable

contributions, totalling in the millions each year.

In conclusion, I hope that by our testimony, we have demonstrated the priority that we give to gaming regulation and sharing the benefits of tribal government gaming. Indian tribes are effective regulators, successful operators, and are making historic

strides as governments.

On behalf of the California Nations Indian Gaming Association

and California tribes, we thank you for this opportunity to testify

today.

If there are any questions, I would really love to answer those

for you. I have also our executive director from Cal. NIGA, Jacob

Drine, here to help answer those questions, if allowed. Thank you.

[Prepared statement of Mr. Tucker appears in appendix.]

The CHAIRMAN. Thank you very much, Chairman Tucker.

Now may I call upon Mr. LaSarte.

STATEMENT OF DAVID LASARTE, EXECUTIVE DIRECTOR,

ARIZONA INDIAN GAMING ASSOCIATION

Mr. LASARTE. Mr. Chairman, Mr. Vice Chairman, my name is

David LaSarte, and I am an enrolled member of the Couer d’Alene

Tribe of Northern Idaho. But I am here today as the executive director of the Arizona Indian Gaming Association, representing 17

sovereign tribal governments. On their behalf, I thank you for the

opportunity to speak today.

In the interest of time, I am only going to highlight certain sections of my written testimony, in order to provide you with a brief

snapshot of Indian gaming in Arizona, as it exists today.

In Arizona, as elsewhere, tribal governments have historically

not had any significant source of governmental revenue that they

need to provide services for their people.

However, since the Indian Gaming Regulatory Act was put into

place, tribal gaming in Arizona has provided a critical revenue

stream for tribal governments to provide essential services to their

people, as well as develop their infrastructure and jump start their

economies.

When we speak about essential services to their people, we are

talking about things that most Americans take for granted. We are

taking about things like paved roads, electricity, running water, in-
46

door plumbing, police and fire protection, medical clinics, and adequate schools.

While the level of unmet need in tribal communities in Arizona,

as well as the rest of the country, continues to be staggering, gaming has allowed some tribes to make great strides in addressing

these problems.

In South Arizona, the Tohono O’odham Nation lies along the

Mexican border. It has responsibility for 2.86 million acres of reservation land, and it has responsibility for 24,000 enrolled tribal

members. Its gaming operation currently provides 50 percent of its

total governmental revenues for tribal operations.

Tribal departments of fire safety, health care, economic development, and education are all 100 percent funded by gaming revenues.

The tribal fire department now employees 37 employees, 16 fire

trucks, and four substations that serve the reservation. For health

care, there is a new medical clinic to serve the rural western part

of the reservation. There is a new on-reservation 60 bed nursing

home, so that tribal elders can spend their golden years in their

own communities, and there is a new kidney dialysis center.

For economic development, there has been $15 million in small

business grants made to over 150 recipients. In education, the

tribes have given over $24 million in scholarships, and it has also

started the Tohono O’odham Community College, so that tribal

members can achieve their educational goals in their own community.

In addition, gaming provides two-thirds of the budget for the

Tohono O’odham police department, which employees 213 employees. That police department in the year 2000 intercepted 13 tons

of illegal drugs and 20,000 undocumented aliens crossing the U.S./

Mexican border. It provided benefits not just to the tribe, but to the

State and to the nation, in general.

Before gaming, these programs simply did not exist in many

cases, and in other cases, they existed, but at a much diminished

capacity.

It is important to realize that even now with these significant efforts that have been made, and even now with Tohono O’odham

being one of the most successful gaming operations in Arizona,

there are still communities on that reservation who were living

without the basic necessities of running water, electricity, and

phone service.

This just goes to illustrate what has already been said today by

other people, that the level of unmet need that continues to exist

in tribal communities is truly overwhelming, but at least in the

last 8 years, the tribes have been able to begin addressing those

serious problems, that historically, they were not able to address.

In Central Arizona, the Salt River Pima-Maricopa Indian community is located right in the midst of the metropolitan Phoenix

area. They have only had gaming since 1998. But in that short

time, they have cut their tribal unemployment from 32 percent to

approximately 15 percent. It is still well above the national average, but it is a great improvement.
47

The most pressing needs for that reservation are a $100-million

project to upgrade and install a public water system, and another

$57 million to plan, design, and implement a new sewer system.

Finally, that tribe has purchased their own telephone company,

so that for the first time, all tribal members on the reservation

have access to phone service.

Again, we are talking about essential services and needs: Running water, adequate sewage, the ability to use a telephone. It is

important to note that even the Salt River Indian community,

which is surrounding on three sides by the affluent communities of

Phoenix, Scottsdale, and Mesa, that there are still people on this

reservation who do not have access to those essential services.

These infrastructure requirements, which are obviously vital for

the quality of life for tribal members on the reservation, are even

more necessary if these tribes are going to be able to attract offreservation businesses, and to diversity their economies, which is

the ultimate long-term goal, I believe, of all the gaming tribes.

In Northern Arizona, the Yavapai-Apache Nation has turned

around their tribal economy to become the largest employer in the

Verde Valley, with over 750 people working for the casino and various other tribal programs.

Every tribal member now, for the Yavapai-Apache Nation, who

wants a job, can have one. The tribe can now provide in-house

training, educational assistance, and has founded a corporate university to provide skills for the tribal members that will be needed,

as that tribe also seeks to diversity their economy, now having over

seven tribally-owned enterprises that are non-gaming.

After years and years of substandard housing on that reservation, over 80 percent of the homes have been able to be renovated

in the last years. The tribes also establish their own police and fire

departments, their own roads and public works departments, and

finally, their own tribal court, which comes complete with legal

services, treatment, and rehabilitation programs.

Finally, that nation has been able to increase the number of

members that they have in college, from less than 20 to over 130

today.

That information that I gave you is deliberately brief in the interest of time. I have more extensive information on each of those

tribes that I would like to submit for the record.

In addition to all the benefits that are taking place in the tribal

communities, in the non-Indian communities in the State of Arizona, there are significant positive impacts, as well.

Over 9,000 employees work for tribal gaming in Arizona. Over

one-half of those are non-Native; although in the rural areas,

where the tribes need the most help, the percentage of tribal members as employees goes as high as 84 percent.

The tribes in Arizona spend over $254 million in goods and services. They pay over $28 million in Federal and State payroll taxes,

and they generate an additional $40 million in additional State and

local taxes, indirectly.

Finally, the Udall Center for Public Policy Studies estimates that

the indirect economic impacts simply of tribal gaming operations

approaches half a billion dollars in economic activity in the State.
48

None of this would be possible, the impacts on the tribal communities or the impacts on the non-tribal communities, without strong

public confidence in the integrity of Indian gaming operations in

the State.

In Arizona, we currently have 19 tribal gaming operations operating, and I believe we have two more that are in the design and

planning stages. To my knowledge, at this point, only one of those

tribes, operating one gaming facility, uses outside management to

run their facility. All the rest of them are owned and operated completely by the tribe.

In Arizona, as in other States, independent tribal regulatory

commissions take the primary responsibility, and are on the front

line to regulating Indian gaming in the State, subject to the oversight of the Arizona State Department of Gaming.

Over 515 people in the State and $25 million are dedicated annually to regulating Indian gaming in the State of Arizona. It is important to realize again, when looking at that 515 people and that

$25 million, combined between the tribes and the State, that gaming operations in Arizona are subject to more strict limitations

than many of the States in the country.

Casinos are not allowed to have more than 500 slots, and there

are strict limits on the number of slots per tribe. So in many ways,

the operations are smaller than the rest of the country.

To provide an objective assessment, an independent assessment,

of the regulatory efforts in the State, the Arizona State Auditor

General reviewed the performance of the Arizona Department of

Gaming 2 years ago, and the adequacy of tribal State regulatory

efforts.

The State Auditor General identified three primary goals for regulation of Indian gaming: To ensure the fairness of gaming activities; to ensure the safety of patrons; and to prevent any infiltration

of organized crime into tribal gaming.

They issued a 40-page report, but it basically summarized into

three points: That the regulation of Indian gaming in the State of

Arizona, between the tribal regulatory entities and the State, is extensive, well defined, consistently implemented, and effective in

achieving those goals; that tribal and State activities are consistent

with the best regulatory practices used nationally, including in the

States of New Jersey and Nevada; and indeed, the State Auditor

General found that the regulatory approach in the State was so extensive and so effective, and there was so much overlap between

tribal and State regulation, that one of the alternatives that the

Auditor General proposed to the State legislature was that the

State activities be streamlined.

Although the legislature did not ultimately adopt that approach,

I do think it is indicative of the level of comfort that the State and

tribes have with the regulatory structure in the State of Arizona.

In summary, Arizona Indian gaming is providing invaluable assistance to the tribal governments in providing for the needs of

their people and for rebuilding their economies which, as has been

pointed out, have been destroyed in the last 200 years. Second,

they provide a significant, positive economic impact to the State of

Arizona.
49

Third, it is extensively and effectively regulated with such public

integrity that over two-thirds of the people in Arizona have consistently supported Indian gaming in Arizona by tribal governments on

tribal lands. They have been supported in numerous public hearings, numerous polls, and at the ballot box, and we expect that

support to continue.

Thank you for your time, and I, too, am willing to answer any

questions about Indian gaming in Arizona.

[Prepared statement of Mr. LaSarte appears in appendix.]

The CHAIRMAN. I thank you very much, Mr. LaSarte.

Mr. Burris.

STATEMENT OF TRACY BURRIS, CHAIRMAN, OKLAHOMA

INDIAN GAMING ASSOCIATION

Ms. BURRIS. [Greeting in Native tongue.] Greetings, Mr. Chairman and Mr. Vice Chairman. I am Tracy Burris. I am the chairman of the Oklahoma Indian Gaming Association.

I am a member of the Chickasaw Nation of Oklahoma. I also

serve as the Gaming Commissioner of the Chickasaw Nation. I

have been involved in Indian gaming in Oklahoma for more than

12 years. I started as a floor worker in a tribal gaming facility.

Now, I serve as a regulator for my tribe.

Today, no tribe in Oklahoma has been successful in entering into

a meaningful compact with the State of Oklahoma. As a result,

tribal gaming facilities in Oklahoma derive nearly all of their revenues from Class II gaming, which is limited to bingo and other

games like bingo.

Our tribal governments largely depend on these revenues to pay

for tribal governmental programs. Our survival is dependent on

making bingo profitable.

One of the primary issues that Indian tribes in Oklahoma face

is determining whether a particular game is class II or class III.

The Indian Gaming Regulatory Act defines class II gaming as

bingo and other similar games to bingo, as well as certain nonbanking card games that are permitted under State laws.

It allows the use of technological aids to play bingo and similar

games, while also expressly prohibiting the play of facsimiles of

any game of chance.

Without a compact determining the difference between a Class II

technological aid and a class III facsimile, it has been a source of

great confusion.

Most of the confusion comes from the National Indian Gaming

Commission’s definitions regulations. The regulations define the

term ‘‘facsimile’’ so broadly that it is almost any electronic bingo or

pull tab game that meets the definition of a Johnson Act device.

To address this problem, the National Indian Gaming Commission has issued a proposed rule that would rescind the NIGC’s current definition of facsimile. The Oklahoma Indian Gaming Association strongly supports this action as a step toward bringing the National Indian Gaming Commission’s regulation out of conflict with

IGRA and recent Federal Court decisions.

The decisions of three Federal Courts of Appeal made clear the

need for the National Indian Gaming Commission to reform its definition regulations. The Washington, DC Circuit Court of Appeals
50

recently ruled that the Lucky Tab II is a class II machine, without

the benefit of clearly articulating classification standards from the

National Indian Gaming Commission.

On behalf of the Oklahoma Indian Gaming Association, I want

to thank the National Indian Gaming Commissioners for taking the

first step toward bringing some common sense to the issue. I also

want to thank the members of the committee, who have been supportive of our efforts to clarify the standards of class II gaming.

To bring greater clarity to this issue, we believe that the National Indian Gaming Commission should take the additional step

of revisiting its definition of a technical aid, and engage in a negotiated rulemaking with the appropriate parties, to develop a criteria for classifying games.

Mr. CHAIRMAN AND MR. Vice Chairman, you know from your

good work the value Indian people place upon the sovereignty of

their tribes. In Oklahoma, the spirit and the sanctity of tribal sovereignty remains very strong. It is with this principle that we find

it difficult to accept the National Indian Gaming Commission’s

classification of games regulations.

These regulations require the National Indian Gaming Commission to prove each game before tribes could offer the game for play.

Under current law, the NIGC has an oversight role, but the Tribal Gaming Commissions, whose authority comes only from the inherent sovereignty of the tribes, are the first line of regulation, and

have the primary jurisdiction over these issues.

While we understand the need for the National Indian Gaming

Commission to develop a formal process for classifying games, one

that takes away the sovereign authority of the Tribal Gaming Commissions is unacceptable.

Another example of a Tribal Gaming Commission at work is that

of the Cherokee Nation of Oklahoma. It spent thousands of dollars

on two independent testing laboratories, to test the technical components of a magical Irish bingo pull tab machine.

Both the independent laboratories and the Tribal Gaming Commission concluded that the machine met the definition of a class

II device. The Tribal Gaming Commission then gave its approval

to play the game at their facilities.

Soon after, the National Indian Gaming Commission determined

that the machine was a class III game. A Federal Court in Oklahoma did rule that the Cherokee National Gaming Commission

was correct.

Classification of regulations can only be successful if the Tribal

Gaming Commissions have a meaningful role in their implementation.

I hope this committee would encourage the National Indian

Gaming Commission to work with Tribal Gaming Commission, before it initiates a rule on this issue.

Mr. Chairman and members of the committee, we want to work

with the committee and the NIGC to bring greater clarity to the

class II definition, and to make the classification on regulations

workable in Indian country.

Again, on behalf of the Oklahoma Indian Gaming Association, I

want to thank you for the opportunity to appear before you. I
51

would like to take this time to answer any question that you may

have.

[Prepared statement of Ms. Burris appears in appendix.]

The CHAIRMAN. Thank you very much, Mr. Burris.

Before I proceed, I would like to just make one observation. I

have participated in dozens of hearings relating to gaming. As I recall, in the early days, the panel would almost consistently and

uniformly be very critical of the activities of the Gaming Commission, and it was a hearing of complaints.

But today, I think the tone has changed a little. I note that the

Commission has received much praise for its activities, its steadfastness, its integrity, and I am very pleased with that.

Because of the complexity involved, and because of the nature of

the issue, I will be, on behalf of the committee, submitting several

questions to all of you. These are questions on things such as criminal activities.

I am certain you have noted that whenever the press speaks on

Indian gaming, 9 times out of 10, they are speaking of syndicates

of crime, skimming, laundering, and such.

So I will be asking you specifically, have you experienced any infiltration by organized crime into your gaming operations, or have

you experienced any attempt for such infiltration, and if so, how

did you address this problem? What is your experience with skimming? What is your experience with money laundering? What is

your experience with crimes within the operation?

Then I will be asking questions on what are the benefits? All of

you have touched upon these benefits. But what the committee will

try to do is to maintain sufficient resource material, so that if questions arise on criminal activity or benefits from gaming, we would

have these things ready.

I would hope that all of you will help us in responding to these

questions. We will have a whole series of questions. Obviously, we

will have questions on your relationship with your community,

your relationship with non-gaming Indian nations, your relationship with the Commission, your relationship with the Interior Department, and your assessment of such relationships.

So it will be a very comprehensive questionnaire, and I hope that

you will respond to them.

Mr. Vice Chairman.

Senator CAMPBELL. Thank you, Mr. Chairman.

I am sorry that I got back a little late, too. I do not know which

door you use to get over there and vote and get back here so quickly, but I need to follow you more often. Indians are never supposed

to be lost. [Laughter.]

I appreciate your testimony. For those of you who I did not hear,

I will read your testimony carefully. But let me just say, first, to

my friend, Ernie Stevens, I think one of the reasons that I always

enjoy hearing you talk is because you know the context of what

happened, in the olden times before now.

I would tell you that sometimes when you speak, if you have

tears in your heart, I would worry if you did not, very frankly,

knowing what Indian people have gone through.

In that context, when we talk about crime and talk about gaming

now, and where this whole thing is going with modern Indian
52

America, I think it is really important to remember where you

came from and where we have been.

I would say to Mr. George, that if the Indians of New York had known better when they sold Long Island for $26 bucks of beads,

they probably would not have done it.

But thinking in terms of crime, I will bet there is more crime in

that same piece of land now than all of Indian country combined,

in any 24-hour period.

It kind of amazes me, I guess as it does the Chairman, that so

much focus has been put on the potential crime, when the Department of Justice says there is not a big problem, and tribes themselves say there is not a big problem. But we keep focusing on that.

I guess that is because it is an easy target. They ought to focus

more on Long Island, if they want to talk about crime.

But I did want to ask maybe just one question of all of you because, as the Chairman has indicated, a lot of the statements that

we were getting and letters we were getting, were pretty upset

about the Indian Gaming Commission, and that seems to have

moderated a little bit now.

I do not know if that is because they are doing a better job, or

you are communicating better with them, or what. But the

bottomline still remains that they want to be able to assess $16

million in assessments, up from the $8 million that they have now.

I would like to just know your opinion on that.

Mr. STEVENS. I am just going to make sure I review my testimony here. The IGRA intends that Indian tribes and States are to

establish the regulatory framework for class III gaming and the

compacting process. The NIGC is intended to play a support role

by reviewing audits and management contracts, and approving

tribal ordinances.

Tribes will invest $150 million this year in tribal regulatory sys- tems, and over $30 million for the State regulatory systems. Given

that background, we believe the current level of resources of NIGC

is about right.

NIGC, the Federal regulator, needs to respect the tribal and

State regulators, and avoid a duplication of services. NIGC is the

third level of jurisdiction, and it should stay close to IGRA terms.

From my perspective, again, you know, I have the utmost respect

for those regulators, and I have made that clear to them. I have

interacted early on in my term as the Chairman of NIGA with

Commissioner Liz Homer.

So we respect them, but at the same time, as I stated in my oral

testimony, we think we have an outstanding lineup of checks and

balances in the tribal systems, and I used my tribe as an example.

But those systems are throughout Indian country, and we

strengthen those systems by working together through our associations and through our groups, through the National Indian Gaming

Association. We worked together to strengthen those associations.

That is what I think you will see, and we appreciate that line

up of questions that we will answer. But, you know, we will continue to assert that we have a strong, strong body of regulators,

and checks and balances in Indian country.

Senator CAMPBELL. I assume that is a no?

Mr. STEVENS. Yes, sir.
53

Senator CAMPBELL. All right, how about Mr. LaSarte, when we

talk about increasing their ability to assess?

Mr. LASARTE. As I described, I think that the tribes in Arizona

are happy and content with the current regulatory structure. The

subject of NIGC increasing their funding is something that we have

not discussed as a group, and I could not really comment on what

our 17 members would want us to pay.

Senator CAMPBELL. Okay, Mr. Tucker, we need your thinking.

Mr. TUCKER. Well, we need to know what the work plan is. We

do not know what that is. It could be $8 million; it could be $10

million. We do not know that. It could be $6 million.

Senator CAMPBELL. Yes.

Mr. TUCKER. But until we find out what their work plan is, we

really cannot say what it should actually be. But, you know, we are

highly regulated. There are tribes out there in California right

now, who spend almost $4 million a year, just on their own regulations.

So with more regulations, personally, I think it could be pretty

close to what it is. But, like I said, until we find out their work

plan, I going to have to say that I could not tell you right now.

Senator CAMPBELL. Okay, thanks; Mr. George.

Mr. GEORGE. My vote would be a resounding no.

Senator CAMPBELL. That is pretty clear. Other than that, do you

have strong feelings about it? [Laughter.]

Mr. GEORGE. We do, because you may know that a few years ago,

we sued the NIGC over the fee structure, because of the language

at that particular time, that said self-regulated tribes, like the Mississippi Band of Choctaws, and according to our compact, we feel

that if any tribe is a self-regulating tribe, the Oneida Nation of

New York certainly is.

What we would like to see is more of that self-regulation for the

tribes in class III gaming, as well as those in class II. As you will

note, in 1988, it said that the NIGC would issue self-regulatory certificates for tribes in class II. Well, they did not even have those

regulations until just recently.

So we feel like with the amount of money that we spend on regulation, because the legislation, the statute, is very clear on the nation/State compact, whatever is negotiated is what regulates a

gaming operation. In our State, as I stated before, we are very

strict. We are spending a lot of money.

Senator CAMPBELL. What do you pay in fees now to NIGC?

Mr. GEORGE. Approximately $80,000 a year.

Senator CAMPBELL. I notice your total regulatory budget is $8.8

million, which is roughly the same, but just a little more than

NIGC’s budget. But you employ 206 people, which is about three

times as many as NIGC. What is the average salary for them, if

I might ask?

Mr. GEORGE. Oh, it probably is in the neighborhood of $50,000

to $60,000, except for the few professionals that we have on the

Gaming Commission and executive directors.

Senator CAMPBELL. I have maybe one last question. I noticed

with interest, and I read the sports pages all the time, that the

Oneida Nation is hosting boxing matches. One of the reasons that
54

it was big time news was because Joe Frazier’s daughter and Mohammed Ali’s daughter were two of the boxers.

Many tribes are doing that now. There are a number of them in

California and other places that are hosting boxing. Have you had

to deal with State or Federal boxing authorities? That is a little bit

away from the question of gaming, but there is a component in boxing, obviously.

Mr. GEORGE. Yes; the ABC, the Association of Boxing Commissioners, with Greg Serb from the New Jersey Boxing Commission

as the chairman of that organization, this is an organization of all

of the State Boxing Commissioners.

There are five tribes, so far, that are members of the ABC. We

have created our own Boxing Commissions to regulate the fights on

Indian land.

I am a former member of our Boxing Commission. I was one of

the first Commissioners. We have promulgated the regulations that

are as stringent as New York State’s Boxing Commission.

The CHAIRMAN. Does each tribe have its own Boxing Commission?

Mr. GEORGE. Not every tribe has, but a lot of them are going into

it now. In fact, there is a meeting of the Association of Boxing

Commissioners, beginning today in New Orleans, Louisiana, that

we are sending delegates to, that will go over some of the things.

There are five tribes that are members of the ABC. One is Pablo

from Arizona. I am not so sure of the name, but Miccasookie are

members of that organization, Pequot, Mohegan, and also the Oneida Indian Nation. I believe Cherokee is getting ready to submit an

application. You have to be voted in by a panel.

Senator CAMPBELL. The question that I was going to ask is that

in Las Vegas, of course, there are books made on boxing matches.

Is there any connection with the boxing?

Mr. GEORGE. No; there is no gaming on the outcome of a boxing

match.

Senator CAMPBELL. I see, good, thank you.

I might also commend you on passing up the TPA. That is not

done too often.

That has been one of the things that we have wrestled with for

a number of years here, on how to make TPA more equitable to the

tribes that really need it, without trying to take away from any

rights that other tribes have. But I think that is a great gesture,

and something that other tribes ought to look at.

Mr. GEORGE. Well, this goes back to our people. If it was up to

me, I probably would not have agreed with it. [Laughter.]

I would have probably tried to point out the fact that it was one

of the things that in payment of our land, it was something that

we had due and coming to us.

But the people of the Oneida Nation said, when we entered into

gaming, that as soon as we were able to, we want to be self-sufficient. At a general council meeting, we were questioned about our

ability, if we were to give up those TPA dollars, could we do it. Our

answer had to be yes.

Senator CAMPBELL. But that goes to other Indian people in need.
55

Mr. GEORGE. It goes to the other people, the other tribes within

the Eastern Region to use, depending on what level they are at,

and the amount that they received.

We have a tier methodology that was introduced by Tim Martin

to the budget committee, that we used to re-distribute those funds

that were turned back. I should point out that the Mohegan Tribe

has also followed suit in doing that.

Senator CAMPBELL. That is very good.

I have just one last question, Mr. Chairman, if I might, to Mr.

LaSarte. As I understood your testimony, and I was jotting some

notes here, the Indian Gaming Commission of Arizona gives small

business loans to who, to tribal members that are trying to open

a small business?

Mr. LASARTE. I believe you are referring to the Tohono O’odham

Nation, which I was discussing at the time.

Senator CAMPBELL. Oh, maybe it was.

Mr. LASARTE. The Tohono O’odham Nation’s Tribal Department

of Economic Development has given out over $15 million in small

business grants to over 150 recipients.

Senator CAMPBELL. Okay, well, I was going to ask you how they

determine the recipients. You probably would not know that if it

is a tribal decision; but thank you.

Mr. Chairman, thank you for giving me the time to ask these

questions.

The CHAIRMAN. Thank you very much.

Senator CAMPBELL. I will also have a few in writing, too.

The CHAIRMAN. I would like to make an observation before we

bring this hearing to a close. In the years that I have served on

this committee, two elements have been extremely important.

No. 1, is sovereignty. Very little has been said about sovereignty

today, but I am certain we understand that without sovereignty,

you will not be sitting here. No. 2, is the government-to-government relationship. Very little has been said about that today.

I would just like to remind all of us here, that when we entered

into this chapter, the Federal Government, the Government of the

United States, adamantly refused to involve itself in gaming operations. They wanted no part of it.

We had to, on our own initiative, set up this Commission. One

of the fundamental reasons for establishing this Commission was

a very simple one: To maintain the sovereign relationship between

the Government of the United States and the governments in Indian country.

Now we could have said, okay, you leave it up to yourselves. You

set up your own regulatory Commission and do it on your own; or

let the States do it, as they are doing under the compact.

By doing that, I was afraid that you may be slowly whittling

away this government-to-government relationship with the Federal

Government. Remember, your treaties are not with the State government. They are with the Federal Government. So I would think

that it would be in your best interests to make certain that this

relationship remains strong.

The last observation is the one that President George addressed.

You know, I think he is correct. We laughed at him, and we chuckled when he said he would have been against it.
56

Keep in mind, that whatever the Federal Government is providing, we are not giving anything. We owe you that, by treaty provisions.

I am not an Indian chief. But if I were a leader of one of the Indian nations, a nation that has done well and is successful in gaming, I would not give that TPA money back to the Government. I

would, on my own initiative, decide who to give it to. You are the

sovereign. I would not return it to them. I would insist that whether I am wealthy or poor, a contract is a contract.

When we make a treaty agreement with another country to provide them with certain assistance, if that is the contract, we follow

that, even if that country gets wealthy.

So if you want to maintain your sovereign status, and maintain

a strong government-to-government relationship, little things like

that should be taken into consideration. That is my view.

Senator CAMPBELL. Mr. Chairman, I would just like to ask one

thing to clarify, because I am a little bit lost here. On the TPA, I

agree with the Chairman, that that is something that the Federal

Government owes and needs to keep up.

But do you turn that back into the Federal Government, and

then it is redistributed, or do you have a formula where you get

it, and then redistribute it among tribes that need it more?

Mr. GEORGE. No; it has been allocated to us, and we have notified by letter where we wanted that money to go and the type of

methodology that was used. That is because it actually has not gotten to us, yet, for fiscal year 2002.

But when we first approach this, and we approach our attorneys,

it is, could we do it? Well, we probably could not do it by just accepting the money, because they had a certain criteria that we had

to use that money for. We could not just give it to another tribe

that maybe was in need of it. That is what our attorneys told us.

So when we went to the BIA and talked about returning those

dollars, they said, well, we do not know if that is legal or not. They

did not know either, because it never had happened before.

But since that time, we have worked with them, and come up

with a criteria or a methodology to use in redistributing that

money.

So, for example, in the Eastern Region, we tell them how much

money we think should go to each tribe, and they do that, according to the methodology that we determine, and so they include it.

It is not a reoccurring thing. This happens every year. That is

the way that we see it, to make sure that the tribes that need it.

Senator CAMPBELL. So each year, you determine for that year,

where you want it to go?

Mr. GEORGE. Well, if something happens to gaming, we may

have to say, okay, we will have to accept those TPA funds. It is not

that we just said, we do not want it anymore. It is allocated every

year, but then it is used to help those tribes that may not be as

fortunate as we are.

Senator CAMPBELL. I understand, thank you.

Thank you, Mr. Chairman.

The CHAIRMAN. Well, with that, once again, thank you very

much. This committee will stand in recess until the next hearing.
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[Whereupon, at 2 p.m., the committee was adjourned, to reconvene at the call of the Chair.]

(59)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM ARIZONA

Mr. Chairman, I thank you and Vice Chairman Campbell, for scheduling this committee hearing today. This committee has an important oversight responsibility with

regard to the implementation of the Indian Gaming Regulatory Act of 1988 and related tribal gaming issues.

As I understand it, this hearing is the first in a series of hearings that the Chairman intends to hold on Indian gaming issues in the 107th Congress. It has been

my pleasure to work with the Chairman on this issue for over 15 years herein the

Senate and with our dear friend and former colleague from Arizona, Mo Udall, before that. There are few issues that are of more significance for Indian communities.

Let me start by emphasizing the congressional declaration of policy from the act

which states that a key purpose of the Indian gaming law is to:

‘‘Provide, a statutory basis for the operation of gaming by Indian tribes as a

means of promoting tribal economic development, self-sufficiency, and strong tribal

governments.’’

This fundamental principle is the focal point of this hearing today, and that is

the need to ensure that the framework of the act to regulate Indian gaming is sound

and keeps pace with the growth of the industry. Because Indian gaming is also part

of a high-profile financial and patron oriented industry, the committee is also compelled to ensure the general public that Indian gaming remains generally free from

criminal activity or other regulatory problems.

Since the passage of the Indian Gaming Regulatory Act more than 12 years ago,

the Indian gaming industry has grown beyond most expectations:

• At the time the Indian gaming law was enacted, an estimated 100 tribes operated some form of gaming, with estimated revenues ranging around $100 million.

• Today, approximately 196 tribes are operating 309 gaming facilities with revenues exceeding $10 billion. Approximately 212 tribal/State compacts have been

federally approved in 24 States for class III gaming.

As Chairman Montie Deer of the National Indian Gaming Commission points out

in his testimony, this is a 2,000-percent growth over the 12-year period.

And, the industry is still growing. Currently, other tribes are seeking to expand

their existing gaming operations while still more tribes are seeking new or modified

compacts.

In my home State of Arizona, 17 tribes currently manage tribal casinos. Income

from Arizona Indian gaming has been reported to support more than $250 million,

in purchases of goods and services in the Arizona.

Today’s hearing will no doubt highlight the economic benefits of Indian gaming,

both to tribal and neighboring communities. Tribal gaming revenues provide an economic boost where it did not exist before, particularly in areas where the Federal

Government itself failed to uphold its responsibilities to foster economic develop-
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ment for tribes. Social services, hospitals, community centers, schools, and successful diversified economic activities are all an outcome of tribal gaming revenues.

From time to time, we also hear about controversies in, Indian gaming, alleged

misconduct of gaming officials or managers, or other problems with the implementation of the. Act that potentially interfere with a responsible and sound regulatory

structure.

These are important issues that should be raised and discussed before this committee.

It’s also important to recall that the Indian Gaming Regulatory Act is in place

due to years of extraordinary efforts in the Congress to establish a regulatory and

statutory structure where none had previously existed. Before the. Indian gaming

law, the 1987 Cabazon decision made clear that tribes could operate gaming unfettered from State regulation.

There may be areas which require improvement, but we should clarify for the

record the status of regulation among the three regulatory entities under IGRA—

tribal, State and Federal. In this hearing today and those to come in the months

ahead, I hope, to hear about the following:

• The adequacy of the Federal regulatory structure and whether the existing

structure is adequate to deal with the existing gaming industry and its potential growth;

• Areas where the law might need improvement; and,

• Investment by the tribes in their regulatory structures.

Many assumptions were made about how Indian gaming would be regulated when

the 1988 law passed. We are in a much different position now. I believe that Senator Inouye and I would agree that we should do everything necessary to protect

the integrity of the Indian gaming industry. and that is why we are here today.

While we could not invite every gaming tribe to testify today, or all those who

may be concerned about Indian gaming, I want the committee to be aware that I

wrote to every Indian gaming tribe to seek their comments and ask for their views

about the effectiveness of their own tribal gaming regulatory structure and that of

the Federal Government. Tribes are often not credited for the amount of investments they make to improve their own regulatory structures. I think we will learn

a great deal about the current status of gaming regulation from these comments.

I know that tribal leaders will agree that an appropriate regulatory structure is

an important component of self-sufficiency—whether it is for their government operations, general business enterprises, or Indian gaming.

Indian gaming also has its share of critics. Despite readily visible benefits, the

force of economic competition and growth concerns neighboring communities and

States. I hope that the critics will remember that it is the tribes, that have the most

to lose if the Indian gaming law is found to be inadequate in any way, and the most

to gain from ensuring that the act keeps pace with the ever changing Indian gaming

industry.

Again, I thank the committee for accommodating my request to schedule this

hearing and I look forward to the testimony from today’s witnesses and further comments from the tribes.

PREPARED STATEMENT OF M. SHARON BLACKWELL, DEPUTY COMMISSIONER OF

INDIAN AFFAIRS, BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR

Good Morning Mr. Chairman and members of the committee. My name is Sharon

Blackwell, deputy commissioner of Indian Affairs. I am pleased to be here today to

present an overview on the role of the Secretary of the Interior [Secretary] in the

implementation of the Indian Gaming Regulatory Act of 1988 [IGRA].

At the outset, let me state that the Department strongly supports the underlying

purpose of the IGRA to provide a statutory basis for the operation of gaining by Indian tribes as a means of promoting tribal economic development, self-sufficiency,

and strong tribal governments. Since the enactment of IGRA in 1988, many Indian

tribes have come to consider gaming as an effective means of generating revenue

to fund tribal programs and to stimulate economic development on economically

stagnant or depressed Indian reservations. Although precise financial data may not

be readily available, there is no question that Indian gaming is working as a tool

for tribal economic development, and as a matter of Federal policy, the Department

supports tribally owned gaming under IGRA.

As you know, Congress has placed regulatory and enforcement functions under

IGRA with the National Indian Gaming Commission [NIGC], and the role of the

Secretary is to implement specific residual statutory functions under the act. These
61

functions are as follows: (1) Approval of class III gaming compacts between Indian

tribes and States; (2) Approval of revenue allocation plans for per capita payments

of gaming net revenues to tribal members; (3) two-part determinations under section

20(b)(1)(A) of IGRA; (4) Promulgation of class III gaming procedures in circumstances where a tribe and a State cannot agree on the terms of a compact, and

(5) the appointment of the two associate members of the National Indian Gaming

Commission. In addition, and although IGRA does not refer to these functions specifically, the. Department is also involved in reviewing applications to place land

into trust for gaming, reviewing gaming-related land leases, reviewing certain gaming-related agreements for services relative to Indian lands under 25 U.S.C. section

81, and making legal determinations regarding whether parcels of land qualify as

‘‘Indian lands’’ under IGRA.

I will now turn to an overview of how the Department has implemented some of

these functions.

IGRA provides that class III gaming activities shall be lawfull on Indian lands

only if such activities are, among other things, conducted in conformance with a

tribal State compact entered into by an Indian tribe and a State and approved by

the Secretary. The Secretary may only disapprove a compact if the compact violates

(i) any provisions of IGRA; (ii) any other provision of Federal law that does not relate to jurisdiction over gaming on Indian lands; or (iii) the trust obligations of the

United States to Indians. The Secretary must approve or disapprove a compact

within 45 days of its submission, or the compact is considered to have been approved, but only to the extent the compact is consistent with the provisions of IGRA.

A compact takes effect when the Secretary publishes notice of its approval in the

Federal Register. As of today, the Department has approved 212 compacts in 24

States for class III gaming between Indian tribes and States. The Department takes

the position that amendments to compacts are subject to the review and approval

of the Secretary under IGRA.

If an Indian tribe and a State are unable to reach agreement on the negotiation

of a compact, IGRA provides a statutory scheme that can result with the issuance

of class III gaming procedures by the Secretary. To date, the Secretary has issued

class III procedures for only one tribe: The Mashantucket Pequot Tribe of Connecticut on May 31, 1991.

The statutory framework for the issuance of class III procedures under IGRA was

destabilized when the Supreme Court, in 1996, ruled, in Seminole Tribe v. State of

Florida, that the State may assert an 11th amendment immunity defense to avoid

a lawsuit brought by a tribe alleging that the State did not negotiate in good faith.

After the Seminole decision, States were left with the power to veto IGRA’s dispute

resolution scheme, and hence with the ability to stalemate the compacting process.

To provide a remedy to the problem created by the Seminole decision, the Department published a rule on April 12, 1999, at 25 CFR part 291, authorizing the Secretary to promulgate class III procedures in limited circumstances when a State and

a tribe are unable to voluntarily agree to a compact, and the State has asserted its

immunity from suit brought by an Indian tribe under IGRA. To date, seven tribes

have filed an application with the Bureau of Indian Affairs [BIA]. The BIA rejected

three of these applications, and is still considering the applications of the other four

tribes [Seminole Tribe of Florida, Miccosukee Tribe of Florida, Santee Sioux Tribe

of Nebraska, and the Confederated Tribes of the Colville Reservation of Washington]. The Secretary, of course, will abide by the commitment of her predecessor not

to issue class III procedures for any tribe until a final decision is rendered on any

lawsuit brought by a State challenging the authority of the Secretary to promulgate

the regulations in 25 CFR part 291. Currently, the State of Florida and the State

of Alabama have jointly filed a lawsuit against the Secretary regarding this matter.

Under IGRA, the Secretary is charged with the review and approval of tribal revenue allocation plans relating to the distribution of net gaming revenues. Net gaming

revenues from class II and class III gaming may be distributed in the form of per

capita payments to members of an Indian tribe provided the Indian tribe has prepared a tribal revenue allocation plan which is approved by the Secretary. Absent

an approved revenue allocation plan, IGRA constrains the use of net revenues to

the following purposes: (i) to fund tribal government operations and programs; (ii)

to provide for the general welfare of the Indian tribes and its members; (iii) to promote tribal economic development; (iv) to donate to charitable organizations; or (v)

to help fund operations of local government agencies. On November 10, 1999, the

BIA moved the authority to approve revenue allocation plans from the 12 regional

directors to the deputy commissioner of Indian Affairs to provide more uniformity

in the review process, and on March 17, 2000, the BIA published a rule at 25 CFR

part 290 establishing procedures for the submission, review, and approval of tribal

revenue allocation plans. To date, the BIA has approved 55 revenue allocation
62

plans. The Department takes the position that amendments and modifications to an

approved plan must be submitted for approval to the Secretary under IGRA.

The decision to place land into trust for the benefit of an Indian tribe is usually

at the discretion of the Secretary after consideration of the criteria for land acquisitions in 25 CFR part 151. When an acquisition is intended for gaming, consideration

of the requirements in section 20 of IGRA also apply. Section 20 prohibits Indian

tribes from conducting class II or class III gaming activities on lands acquired in

trust after October 17, 1988, unless one of several exceptions applies. To date the

Department has approved 20 applications that have qualified under an exception to

the gaming prohibition contained in section 20. However, if none of the specific exceptions in section 20 applies, an Indian tribe may still conduct gaming activities

on after-acquired trust lands if it meets the requirements of section 20 (b)(1)(A) of

IGRA which provides that gaming can occur on the land if the Secretary, after consultation with appropriate State and local officials, and officials of nearby Indian

tribes, determines that a gaming establishment on newly acquired land will (1) be

in the best interest of the tribe and its members, and (2) not, be detrimental to the

surrounding community, but only if the Governor of the State in which the gaming

activities are to occur concurs in the Secretary’s two-part determination. Since October 17, 1988, State Governors have concurred in only three positive two-part Secretarial determinations for off-reservation gaming on trust lands [Forest County

Potawatomi gaming establishment in Milwaukee, WI, Kalispel Tribe gaming establishment in Airway Heights, WA, and Keweenaw Bay Indian Community gaming

establishment near Marquette, MI]. The BIA has followed a ‘‘Checklist’’ for gaining

acquisitions issued on February 21, 1997, to inform its review of two-part determinations under section 20(b)(1)(A) of IGRA, and published a proposed rule in the

Federal Register on September 14, 2000 (25 CFR part 292). The proposed rule established procedures that an Indian tribe must follow in seeking a two-part Secretarial determination under section 20(b)(1)(A). The Secretary is in the process of

evaluating the merits of the proposed rule issued by her predecessor.

Finally, I will touch briefly on the role of the Secretary in approving gaming-related agreements under 25 U.S.C. section 81. The NIGC is, of course, charged under

IGRA with the review and approval of management contracts. As a matter of practice, all gaming-related agreements are submitted to the NIGC for their review. If

the NIGC makes a determination that a gaining-related agreement is not a management contract or otherwise subject to its review and approval under IGRA, it will

forward the agreement to the BIA for a determination of whether the agreement is

subject to the residual approval authority of the Secretary under 25 U.S.C. section

81. The Department will then determine whether the agreement is subject to approval under section 81, and, if a determination is made that it is subject to review

and approval, will determine, as trustee for the tribe, whether it should be approved. Congress substantially amended section 81 last year, and the Department

recently published regulations at 25 CFR part 84 to implement these amendments

to section 81.

This concludes my prepared statement. I will be happy to answer any questions

the committee may have.

PREPARED STATEMENT OF BRUCE G. OHR, CHIEF, ORGANIZED CRIME AND

RACKETEERING SECTION, CRIMINAL DIVISION, DEPARTMENT OF JUSTICE

Thank you, Mr. Chairman, Mr. Vice Chairman, and members of the Senate Committee on Indian Affairs for the opportunity to provide a written statement on Indian gaming and the Indian Gaming Regulatory Act [IGRA]. Specifically, I will address the issues of the infiltration of tribal gaming by members of organized crime

and the Department of Justice’s role in the contracting process under IGRA. My

name is Bruce G. Ohr and I am the chief of the Organized Crime and Racketeering

Section in the Criminal Division of the Department of Justice [the Department].

Issue of Infiltration of Indian Gaming by Organized Crime

We understand that the committee is chiefly interested in whether the Department has any evidence that supports the perception that organized crime has successfully infiltrated Indian gaming. The committee’s interest is based, in part, upon

a July 18, 2001, commentary in the Wall Street Journal which referred to a letter

from Representatives Shays and Wolf to President Clinton in which the Congressmen noted that ‘‘the influence of organized crime on Indian gambling is alarming.

Tribal leaders often find themselves forced into affiliations with members of organized crime rings. This stems directly from the lack of Federal oversight for Indian

gambling operations.’’ The Department also is aware that a pending bill, H.R. 2244,

the Tribal and Local Communities Relationship Improvement Act, would establish
63

a Commission on Native American Policy, which would study, among other topics,

the influence of organized 2 crime on Indian gaming. The Department is reviewing

this legislation but has not yet developed a position.

The Department has found no evidence of a systematic infiltration of Indian gaming by elements of organized crime. There have been isolated incidents of organized

crime attempting to infiltrate Indian gaming. For example, members of a Chicago

organized crime family attempted to gain control over, and skim profits from, a casino operated by a California tribe called the Rincon Indian Band. A 1993 criminal

prosecution arising from this incident resulted in numerous convictions. When the

Rincon casino reopened, members and associates of Pittsburgh and Ohio organized

crime attempted to infiltrate the same casino. In 1997, the Department successfully

prosecuted 17 defendants, which resulted in numerous criminal convictions.

When information about possible organized crime involvement in tribal gaming is

received, the Department investigates these allegations. I cannot comment on or

provide you with any information concerning any pending or planned investigations.

Further, if any tribal gaming operations believe that organized crime elements have

tried to infiltrate their operations, the Department strongly encourages the tribal

gaming operation to report such activity to Federal law enforcement.

The Department routinely monitors activities of organized crime. For example, the

U.S. Attorneys’ Offices annually submit organized crime assessments, which outline

organized crime problems in each district, to the Criminal Division. Further, the

Criminal Division coordinates with the Department of Labor to gather intelligence

on whether organized crime has infiltrated the Indian gaming industry via the services industries, such as construction or food and beverage services. Additionally, the

Federal Bureau of Investigation routinely assists the National Indian Gaming Commission with conducting background checks of primary management officials and

other key employees of Indian casinos.

In March 2001, Congressman Wolf requested that the Department’s Office of the

Inspector General provide a report on prosecutions of Indian gambling operations,

including the infiltration of organized crime. The Office of the Inspector General recently sent its letter report to Congressman Wolf. The Office of Inspector General

reported that the Criminal Division, the Federal Bureau of Investigation, and the

Office of Tribal Justice said that while there is an increasing potential for organized

crime involvement due to growth of Indian gaming revenues, there is a lack of evidence that such involvement has occurred.

The Department’s Role in the Process for Approval of Contracts

Finally, the committee has inquired about the role of the Department of Justice

with respect to Indian gaming management contracts. I am happy to explain the

Department’s very circumscribed role in this area. The National Indian Gaming

Commission [NIGC] decisions to approve management contracts, to impose civil administrative penalties, as well as its review of tribal ordinances and management

contracts for compliance with IGRA are subject to judicial review in Federal district

court. The Department represents the NIGC, when named as a defendant, in these

lawsuits. The Department also represents the NIGC when its administrative actions

require a judicial order to enforce.

Conclusion

Indian tribal gaming has proven to be a useful economic development tool for a

number of tribes, who utilize gaming income to support a variety of essential services. While tribal gaming has become a lucrative industry and a potential target for

organized crime, the Department has found no systematic attempts by organized

crime groups to become involved in tribal gaming. We are unaware of any comprehensive studies or investigations into infiltration of Indian gaming by organized

crime. However, there are several Federal and State agencies nationwide which are

charged with the responsibility of monitoring Indian gaming operations.

Mr. Chairman, I would like to thank you and the committee for asking for the

Department’s views on this issue. If we may be of additional assistance, we trust

that you will not hesitate to call upon us.
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792
793
794
795
796
797
798
799
800
801
802
803
804
805
806
807
808
809
810
811
812
813
814
815
816
817
818
819
820
821

Æ