29–010 

Calendar No. 739 

108TH CONGRESS REPORT " ! SENATE 2d Session 108–380 

A BILL TO AMEND THE INDIAN GAMING REGULATORY ACT TO INCLUDE 

PROVISIONS RELATING TO THE PAYMENT AND ADMINISTRATION OF 

GAMING FEES, AND FOR OTHER PURPOSES 

SEPTEMBER 28, 2004.—Ordered to be printed 

Mr. CAMPBELL, from the Committee on Indian Affairs; 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany S. 1529] 

The Committee on Indian Affairs, to which was referred the bill 

(S. 1529) to amend the Indian Gaming Regulatory Act to include 

provisions relating to the payment and administration of gaming 

fees, and for other purposes, having considered the same, reports 

favorably thereon with an amendment in the nature of a substitute 

and recommends that the bill (as amended) do pass. 

PURPOSE

The primary purpose of S. 1529, the Indian Gaming Regulatory 

Act Amendments of 2004, is to clarify and amend the provisions of 

the Indian Gaming Regulatory Act of 1988, Pub. L. 100–497, 25 

U.S.C. § 2501 et seq. (‘‘IGRA’’), applicable to the Department of Interior (‘‘DoI’’), the National Indian Gaming Commission, and the 

Indian tribes. This legislation is necessary to make amendments to 

the IGRA so that Indian tribes may continue to be the primary 

beneficiaries of gaming operations conducted on Indian lands, and 

to reaffirm and further the original goals of the IGRA. 

2 

1Pub. L. 100–497, 102 Stat. 2467, § 3 (1988). 

BACKGROUND

1. Indian Gaming Pre-IGRA 

Indian gaming began in earnest in the late 1970s with several 

tribes, from New York to Florida conducting ‘‘high-stakes’’ bingo 

operations. Other tribes quickly followed suit, and by the mid1980s over 100 tribes were conducting bingo operations, which generated more than $100 million in annual revenues. Some states, 

particularly Florida and California, attempted to assert jurisdiction 

over these tribes. The tribes resisted strenuously, citing long-standing Federal law and policy which provided for Federal and tribal 

jurisdiction over Indian lands, instead of state jurisdiction. 

2. Supreme Court Cabazon Decision 

These legal disputes culminated in a ruling by the Supreme 

Court in California v. Cabazon Band of Mission Indians, 480 U.S. 

202 (1987) (‘‘Cabazon’’). In that decision, the Supreme Court, using 

a balancing test between Federal, state, and tribal interests, found 

that tribes, in states that otherwise allow gaming, had a right to 

conduct gaming activities on Indian lands largely unhindered by 

state regulation. Specifically, the Cabazon Court held that Pub. L. 

83–280 states that laws that regulated, but did not criminally prohibit all forms of gaming within their borders, could not regulate 

gaming conducted by Indian tribes on Indian lands in those states. 

In reaching this decision, the Court also emphasized the Federal 

government’s policy of Indian tribal self-governance, including the 

policy of encouraging tribal self-sufficiency and economic development. 

3. IGRA 

The Cabazon decision engendered a great deal of discussion regarding the need for Federal legislation to address Indian gaming 

and its regulation. Tribes, satisfied with the Cabazon decision, saw 

no need for Federal legislation. States sought Federal legislation 

overruling Cabazon and providing an extension of state jurisdiction 

over Indian lands for gaming regulation. Some in Congress, including current and past members of this Committee, saw wisdom in 

creating a comprehensive regulatory framework under Federal law, 

that would bring some order to the complex relationship between 

the Federal government, tribes and states as it related to the conduct and regulation of Indian gaming. 

The result of those discussions was the IGRA, enacted a year 

after the Cabazon decision, which established a comprehensive 

framework for the operation of Indian tribal gaming across the 

United States. The primary purpose of the IGRA, as stated by Congress was ‘‘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.’’ 1 The secondary purpose was ‘‘to provide a statutory basis for the regulation 

of gaming by an Indian tribe adequate to shield it from organized 

crime and other corrupting influences, to ensure that the Indian 

tribe is the primary beneficiary of the gaming operation, and to asVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR380.XXX SR380
3 

2See id. 

3See id., § 6(a)(4). 

4See id., § 11(b)(2)(F). 

5See id., § 6(a)(3). 

6See id., § 7(b) (4) and § 11(b)(2)(C). 

7See id., § 14. 

sure that gaming is conducted fairly and honestly by both the operator and players.’’ 2

In enacting the IGRA, Congress expressly rejected arguments by 

states for abrogating tribal sovereignty and imposing state regulation of tribal gaming. Instead, the IGRA established three different 

categories of gaming and a regulatory system applicable to each. 

The IGRA also established a Federal regulatory commission, the 

National Indian Gaming Commission (‘‘NIGC’’), to provide Federal 

oversight over certain forms of tribal gaming. 

The three categories of gaming established by the IGRA, and the 

regulatory system for each, are: • Class I, which refers to traditional and ceremonial games 

conducted by tribes, and for which the IGRA provides exclusive 

regulatory jurisdiction by the tribes; • Class II, which refers primarily to bingo, games like bingo, 

pulltabs, and some non-banked card games, and for which the 

IGRA provides primary regulatory jurisdiction by the tribes 

and secondary regulatory jurisdiction by the NIGC; and • Class III, which refers to all other types of gaming, and for 

which the IGRA provides a unique method of shared jurisdiction between tribes and states through mutually agreed upon 

compacts, and over which the NIGC exercises oversight. 

The IGRA created the NIGC, a 3-member independent Federal 

regulatory agency charged with secondary regulation of Class II 

gaming and oversight of Class III gaming. Under its mandate, the 

NIGC is charged with approving management contracts; 3 conducting background investigations; 4 approving tribal gaming ordinances; 5 reviewing and conducting audits of the books and records 

of Indian gaming operations; 6 and enforcing violations of the 

IGRA, its own regulations, and approved tribal gaming ordinances.7

With regard to Class III gaming, it should be noted that many 

Indian tribes, working in tandem with the states where they are 

located, have developed sophisticated regulatory frameworks for 

their operations. Pursuant to joint tribal-state compacts, these 

tribes have put in place effective standards for the conduct of their 

games, as well as financial and accounting standards for their operations. The need for intrusive oversight in these instances is lessened because tribal regulatory bodies and those of their respective 

states have created effective oversight for tribal gaming operations. 

4. The Seminole Decision 

Unfortunately, the compacting process, originally envisioned as 

an opportunity for tribes and states to enter into mutually beneficial agreements addressing legitimate issues of concern to each, 

became an area of significant discord. Several states, including 

Florida, refused to enter into negotiations with tribes, choosing instead to assert legal challenges to the IGRA. These challenges culminated in a decision by the U.S. Supreme Court in Seminole Tribe 

v. Florida, 517 U.S. 44 (1996) (‘‘Seminole’’). In that decision, the 

4 

8See National Indian Gaming Commission, July 13, 2004. 

9Prior to the 1997 amendment, the NIGC budget was limited to Federal appropriations which 

could match fees collected from the tribes based on their ‘‘class II’’ gaming revenues. The cap 

on those class II fees was set at $3,000,000. 10See e.g. Hearing to Provide Information on the Activities of the National Indian Gaming 

Commission, Before the Senate Committee on Indian Affairs, S. Hrg. 106–730, 106th Cong., at 

p. 3 (2000) (Testimony of Montie Deer, Chairman, National Indian Gaming Commission). See 

also Hearing on Indian Gaming Regulatory Act: Role and Funding of the National Indian Gaming Commission, Before the Senate Committee on Indian Affairs, S. Hrg. 108–67, Pt. 1, 108th 

Cong., at p. 3–4 (2003) (Testimony of Phil Hogen, Chairman, National Indian Gaming Commission). 

Court held that provisions in the IGRA which authorized tribes to 

bring suit in Federal court for ‘‘bad faith refusal to negotiate’’ were 

unconstitutional infringements on the State of Florida’s 11th 

Amendment immunity to suit. 

Following the Seminole decision, the Secretary of the Interior, 

using authority provided by IGRA, promulgated regulations pursuant to which a tribe can request ‘‘procedures’’ for regulation of 

Class III gaming. Despite requests from several tribes, to date the 

Secretary has not issued such ‘‘procedures’’ for any tribe. 

5. The Indian Gaming Industry in 2004: A Snapshot 

At the time the IGRA was enacted, Indian gaming was a relatively modest industry consisting mainly of what are now known 

as ‘‘class II’’ high-stakes bingo operations. At that time, virtually no 

one contemplated that gaming would become the $16.7 billion 8 industry that exists today. Indian gaming is providing tribes with 

much-needed capital for development and employment opportunities where few previously existed. 

Though gaming revenues have grown exponentially in the last 

sixteen years, the IGRA has been amended only one time. In 1997, 

Committee on Indian Affairs Chairman Campbell introduced an 

amendment that authorized the NIGC to collect increased fees 

which would fund the Commission’s regulatory efforts in Indian 

Country.9 Before the change in the fees structure, the NIGC was 

funded almost exclusively with Federal appropriations, and was 

barely able to keep up with the ever-growing number of tribal gaming operations and its statutorily mandated duties under the IGRA. 

Since 1997, the NIGC has made significant strides in its role as 

the Federal regulatory body charged with oversight in the field of 

Indian gaming, having opened five field offices and employing additional necessary staff to oversee tribal gaming operations across 

the country and fulfill the NIGC’s monitoring responsibilities.10

STATEMENT OF POLICY

The regulation of gaming activities has been the subject of much 

controversy since the formation of the United States. Policies at the 

Federal and state level have swung widely between outright bans, 

to encouragement and expansion of gaming by individual states. 

Many states now participate in gaming through lotteries, which 

provide significant revenues for state coffers. A number of states 

have legalized commercial gaming, from full-scale ‘‘Las Vegas’’-style 

casinos, to slot machines at horse racing tracks, called ‘‘racinos’’. 

When enacting the IGRA, Congress acknowledged the ‘‘long- and 

well-established principle of Federal-Indian law as expressed in the 

United States Constitution, reflected in Federal statutes, and articulated in decisions of the Supreme Court, that unless authorized 

5 

11S. Rep. 100–446, at p. 5 (1988). 12 Id. 13 Id., at p. 6. 14See supra note 1, § 3. 15 Id. 

by an act of Congress, the jurisdiction of State [sic] governments 

and the application of state laws do not extend to Indian lands.’’ 11

Indeed, this Committee expressly ‘‘recognize[d] and affirm[ed] the 

principle that by virtue of their original tribal sovereignty, tribes 

reserved certain rights when entering into treaties with the United 

States, and that today, tribal governments retain all rights that 

were not expressly relinquished.’’ 12 For over half-a-century, this 

principle has only been modified in those instances where the limited application of state law on Indian lands was conditioned upon 

the consent of tribal governments. 

The IGRA, is one such instance. Only through the mutual negotiation of a ‘‘tribal-state compact’’ for Class III gaming, can the 

tribe and state agree upon a division of regulatory jurisdiction between their governments. The division of jurisdiction authorized by 

the IGRA was strictly limited to the regulation of gaming activities, 

and did not open the door to a broad invasion of tribal jurisdiction. 

This Committee noted the unusual nature of the tripartite division 

of gaming regulation between tribes, states and the Federal government, and expressed its intent that the IGRA ‘‘provide a means 

by which tribal and State governments can realize their unique 

and individual governmental objectives, while at the same time, 

work together to develop a regulatory and jurisdictional pattern 

that will foster a consistency and uniformity in the manner in 

which laws regulating the conduct of gaming activities are applied.’’ 13

Through the IGRA, it was also the express intent of Congress 

that Indian tribes be the primary beneficiaries of gaming activities 

on Indian lands.14 First and foremost, Indian gaming was intended 

to benefit Indian tribes by promoting economic development, selfsufficiency, and strong tribal governments.15

The Committee views these original purposes of the IGRA to continue to be the guiding principles of Federal policy dealing with Indian gaming. It is the intent of this Committee that these original 

purposes guide the reading and interpretation of the amendments 

to the IGRA embodied in S. 1529. 

AN OVERVIEW OF THE PROVISIONS OF S. 1529 

On May 14, 2003, and July 9, 2003, the Committee held oversight hearings on the IGRA, receiving testimony from the DoI, 

NIGC, and Indian tribes engaged in gaming. S. 1529 was introduced on July 31, 2003, by Senator Campbell, for himself and Senator Inouye. On March 24, 2004, the Committee held a legislative 

hearing on S. 1529. 

The hearings held in 2003 provided the Committee with significant information on much-needed updates and necessary improvements to the IGRA. S. 1529 was drafted based upon that information, and additional information received from other parties. The 

legislative hearing held on S. 1529, provided critical feedback on 

the bill language. 

6 

16See National Indian Gaming Commission, Press Release, August 17, 2004. 17 ‘‘See Hearing on the Indian Gaming Regulatory Act, Before the Senate Committee on Indian 

Affairs, 106th Cong., S. HrG. 106–730 at p. 49 (2000) (Testimony of Richard G. Hill, Chairman, 

National Indian Gaming Association). 

As approved by the Committee, 5.1529 provides several amendments to the IGRA, including additional resources and accountability for the NIGC, parameters and guidance for revenue sharing 

discussions, and several technical clarifications. 

1. AMENDMENTS IMPACTING THE NATIONAL INDIAN GAMING

COMMISSION

Funding and the Role of the NIGC 

Since Fiscal Year 1998, no Federal funds have been appropriated 

for the operation of the NIGC. Rather, the agency has been funded 

solely with fees assessed against tribal gaming operations. The 

IGRA currently caps those fees at $8 million annually. According 

to the NIGC, the growth of the Indian gaming industry is such that 

fees paid will be reduced over time, and will continue to be reduced 

if growth continues at the current rate.16

The Fiscal Year 2003 Omnibus Appropriation Act, Pub. L. 108– 

7, provided no Federal funds for the NIGC, but did provide a 50% 

increase in assessable fees—from $8 million to $12 million—and 

authorized the NIGC to levy $12 million in fees on tribal gaming 

operations. The fee hike is effective in Fiscal Year 2004. Similarly, 

the Fiscal Year 2004 Interior Appropriations Act, Pub. L. 108–108, 

authorized the NIGC to levy $12 million in fees effective in Fiscal 

Year 2005. 

S. 1529 makes permanent increases in fees assessable by the NIGC, and raises the statutory fee cap from the current $8 million 

to $13 million over five years. The Committee takes this action 

with some trepidation, however. Since the fee structure was 

changed in 1997, the Committee has held a number of legislative 

and oversight hearings on the issue of regulation, fees for the 

NIGC, and related matters. During the last several years, several 

themes have emerged. 

Tribes have expressed increasing alarm with what they perceive 

as the explosive growth and activity of the Commission since the 

fee increase was enacted in late 1997. In hearings before this Committee during the 106th Congress, the National Indian Gaming Association (‘‘NIGA’’) testified that— 

NIGA remains supportive of a respected, independent, 

objective and efficient NIGC, yet no communications have 

been shared with us regarding how the NIGC plans to 

meet those goals. Instead we face a number of new regulatory initiatives that infringe upon Indian nations’ governmental authority and are duplicative of existing regulatory structures.17

Tribes have also raised concerns regarding new regulatory initiatives pursued by the NIGC since the 1997 fee increase. The Committee notes that no new regulatory powers are granted to the 

NIGC by S. 1529. While it encourages the NIGC to fulfill its statutory duties and regulatory responsibilities, the Committee also 

strongly encourages the NIGC to respect the primary regulatory 

role of tribes and states through tribal-state compacts. 

7 

18See Pub. L. 103–62, 107 Stat. 285 (1993). 19See Letter from General Accounting Office to Rep. Dick Armey, Rep. Dan Burton, and Sen. 

Fred Thompson, p. 10 (July 20, 1999) (‘‘While this may not be a major activity within Interior, 

the sensitivities of Indian gaming issues and the potential for criminal activities related to Indian gaming, would seem to indicate that Indian gaming is an important area in which to develop performance goals and measures to explain what it [NIGC] plans to accomplish with these 

funds.’’). 

In response to these concerns, S. 1529 places a formal consultation responsibility on the NIGC with new IGRA § 19. The Committee is encouraged by the NIGC’s recent action to promulgate a 

formal government-to-government consultation policy. The Committee strongly believes that justification for the activities of the 

NIGC should be more transparent to the tribes to whom they are 

charged with providing services and regulation and to the public. 

It is the considered opinion of the Committee that public trust is 

best achieved through the development of strategic and performance plans by the NIGC, consistent with § 19, reported to Congress 

and made available to the regulated industry and the public, even 

when prepared no less often than biennially. 

S. 1529 requires that the fees assessed by the NIGC be related 

to the statutory authorities and duties delegated to the NIGC 

under the IGRA.This limitation is designed to address tribal concerns that fees paid to the NIGC be used only for the purposes of 

the IGRA, and not for other Federal purposes. 

In establishing this fee structure, and in conjunction with the 

consultation requirements in S. 1529, adding a new § 19 to the 

IGRA, it is the Committee’s intent that the Commission consult 

with tribes on a government-to-government basis in setting fees 

each year. 

Expanding the Reporting Requirements of the NIGC 

S. 1529 makes the NIGC responsible for the submission of additional information not currently required by the IGRA. Specifically, 

§ 2(c) of the bill requires the NIGC to submit strategic and performance plans to Congress biennially. It is the Committee’s belief and 

intent that this provision will provide the transparency and accountability needed between the regulator, the NIGC, and the regulated, the tribal gaming operations. 

This Committee has previously proposed that the NIGC be subject to the requirements of the Government Performance and Results Act of 1993 (‘‘GPRA’’),18 a position supported by 

the General Accounting Office.19 Further consultation with the 

NIGC, however, has led the Committee to believe that the detailed 

annual reporting required by GPRA may be too onerous for the 

NIGC, a relative small Federal agency. The Committee believes 

strongly, however, that the planning and operations of the NIGC 

should be more accessible to the Congress and the regulated community. 

In striking a delicate balance on this score, the language in S. 

1529 has been changed to require the Commission to prepare and 

submit biennial reports to Congress and incorporate its strategic 

and performance plans into each report. The language of GPRA has 

been used as a model for the requirements of the strategic plan, 

which is to include a performance plan similar to performance 

plans under GPRA. 

8 

20See Letter from National Indian Gaming Commission Chairman Montie Deer to Sen. Ben 

Nighthorse Campbell, p. 4 (Sept. 14, 2000) (‘‘The resources of a small agency that would be directed to development of performance plans outweigh the benefits to be achieved.’’). 

21See 15 U.S.C. §§ 1171–1178 (2004). 22See supra note 10 at p. 9. 23See supra note 10 at p. 12 (emphasis added). 24See e.g. United States of America v. 103 Electronic Gambling Devices, 223 F.3d. 1091 (9th 

Cir. 2000), and United States v. 162 Megamania Gambling Devices, 231 F.3d 713 (10th Cir. 

2000) (Where the game at issue was a bingo game played at an electronic terminal that connected the player with other players at other terminals, all playing against one another for the 

first ‘‘bingo’’, both circuit courts unequivocally found that the terminal was not a Johnson Act 

device or a Class III game.). See also Diamond Game Enterprises, Inc. v. Reno, 230 F.3d 365 

(D.C. Cir. 2000). 25See Ashcroft, et al. v. Seneca-Cayuga Tribe of Oklahoma, et al., 72 U.S.L.W. 3550, 72 

U.S.L.W. 3551, 72 U.S.L.W. 3372, 124 S.Ct. 1505, 158 L. Ed. 2d. 153 (U.S. Mar. 1, 2004), cert. 

The Committee is strongly encouraged by the support of the Administration for strategic planning by the NIGC, as evidenced by 

S. 2232, a bill introduced on behalf of the Administration by Chairman Campbell on March 25, 2004. This position is a welcome 

change from prior opposition to such reporting requirements by the 

NIGC.20

2. THE USE OF TECHNOLOGICAL AIDS IN ‘‘CLASS II’’ GAMING

A major concern, especially to tribes that do not offer Class III, 

‘‘casino-style’’ gaming, is the continued conflict between the Gambling Devices Act, also known as the Johnson Act,21 and the use 

of technological aids in the operation of Class II gaming. The language of the IGRA is unambiguous in that technological aids may 

be used by a tribe to conduct Class II gaming and not run afoul 

of the Johnson Act. Similarly, report language accompanying the 

IGRA provides clear Congressional intent to authorize Indian 

tribes to maximize Class II operations through the use of technological advances. The report states in pertinent part that, 

[t]he Committee intends that tribes should be given the 

opportunity to take advantage of modern methods of conducting class II games and the language regarding technology is designed to provide maximum flexibility.22

Additionally, the Committee specifically stated its intent with regard to the application of the Johnson Act 

The phrase ‘‘not otherwise prohibited by Federal Law’’ 

refers to gaming that utilizes mechanical devices as defined in 15 U.S.C. 1175 [the Johnson Act]. That section 

prohibits gambling devices on Indian lands but does not 

apply to devices used in connection with bingo and lotto. 

It is the Committee’s intent that with the passage of this 

act, no other Federal statute, such as those listed below, 

will preclude the use of otherwise legal devices used solely 

in aid or conjunction with bingo or lotto or other such gaming on or off Indian lands.23

Despite clear Congressional intent, the United States Department of Justice (‘‘DoJ’’) has taken a different view and has embarked on a series of actions in the Federal courts against tribes 

who use technological aids in the conduct of Class II gaming.24

These lawsuits allege that tribes operating Class II games which 

use technological aids are violating the Johnson Act. All of these 

actions have been unsuccessful at the Federal District Courts, 

Courts of Appeal, and recently at the Supreme Court.25

9 

denied 327 F.3d 1019 (10th Cir. 2003) (In its opinion, the 10th Circuit held ‘‘that if a piece of 

equipment is a technologic aid to an IGRA Class II game, its use, sale possession or transportation within Indian country is then necessarily not proscribed as a gambling device’ under the 

Johnson Act . . . [and] a court need not assess whether, independently of IGRA, that piece of 

equipment is a ‘gambling device, proscribed by the Johnson Act.’’ Id. at 1035). See also related 

case U.S. v. Santee Sioux Tribe, 324 F.3d 607 (8th Cir. 2003) (In its opinion, the 8th Circuit 

found ‘‘that nothing in the statute proscribes the use of technological aids for any games, so long 

as the resulting exercise falls short of being a fascimile.’’ Id at 613). 26See 15 U.S.C. § 1173. 

The Committee, a number of whose members either actively 

sponsored or were involved in the consideration of the original legislation that was enacted as the IGRA, intends to clarify what it 

already believes to be the law—that the Johnson Act does not 

apply to technological aids used in connection with Class II games. 

It is the intent of the Committee to affirm its position with regard to Class II games and express its agreement with the Federal 

courts’ interpretation of the IGRA in the cases cited above. Indeed, 

it is the considered opinion of this Committee that further litigation of the applicability of the Johnson Act to Class II games and 

technologic aids is not an efficient use of tribal and Federal resources. 

The Committee does acknowledge, however, legitimate concerns 

raised by the NIGC and the DoJ regarding gaming devices that are 

not legally considered Class II technologic aids. To assist the NIGC 

in its enforcement efforts 2(d)(2) of S. 1529 adds a new subsection 

(d) to § 7 of the IGRA which provides for registration and tracking 

of Class II technologic aids manufacturers and transporters similar 

to the regime provided by the Johnson Act.26

Under this new subsection, manufacturers and dealers of 

technologic aids must annually register with the NIGC. The scope 

of persons and entities subject to this provision is intentionally 

broad, excluding only Indian tribes. It is the Committee’s belief 

that every person or entity making, repairing, or dealing with 

tribes in Class II gaming aids should be able and required to register and keep records of such technologic aids. The new subsection 

also requires that every Class II technologic aid handled by a registrant will be required to have a serial number attached to it. 

S. 1529 places on the NIGC the responsibility to regulate and enforce these new requirements. It is the considered opinion of the 

Committee that the NIGC, not the DoJ, has developed the necessary regulatory expertise to most effectively implement this provision, and has informally acknowledged its capacity to assume 

these new responsibilities. 

To better implement these provisions, the Committee encourages 

the NIGC, consistent with new § 19, to develop effective guidelines 

to aid tribal regulatory agencies in regulating the manufacture and 

use of Class II technologic aids. Ideally, such regulations will provide a consensus on industry guidelines that will provide for uniform and consistent application by tribal regulatory agencies. In so 

doing, the Committee reaffirms its intent that tribal governments 

have the primary regulatory responsibility for Class II gaming. 

3. LICENSING OF TRIBAL GAMING COMMISSIONERS

S. 1529 requires that tribes must address, in addition to key employees and primary management officials, the background checks 

10 

27See supra note 10, § 3(1). 

of tribal gaming commissioners and tribal gaming commission employees. 

The specific language of § 2(f) of S. 1529 requires tribes to address the background checks of tribal gaming commissioners and 

their employees on a regular basis. This language does not require 

a tribe to have a tribal gaming commission, nor does it prohibit a 

tribe from determining the makeup of those commissions. It merely 

requires that, where tribal gaming commissions have been established, that those commission members and commission employees 

meet the standards applicable to the employees they are responsible for licensing so that the appearance of impropriety is avoided. 

A number of comments have been received from tribes disputing 

the necessity of background checks for these individuals and the 

possible negative effects of this new requirement on tribal sovereignty. 

Indian tribal gaming has come under increasingly virulent attacks in recent years, and it has become a prime target for accusations that it is not sufficiently regulated. This section is designed 

to address a key concern regarding the operation of tribal gaming 

commissions—that the regulators themselves meet the criteria imposed on the individuals they regulate. 

The Committee believes that this section provides an appropriate 

balance between respect for tribal sovereignty and the Congress’ 

trust responsibility to tribes. This provision does not mandate the 

use of tribal gaming commissions, nor does it allow the NIGC to 

mandate the makeup of those commissions, but provides a guideline for tribal gaming commissions, much the same as the background check language currently provides for primary management 

and key employees. 

Since IGRA has been enacted, the Committee has not received 

any testimony from tribes showing that the required background 

checks for primary management and key officials have hindered 

tribal sovereignty by dictating who a tribe may hire. The section 

simply provides guidance where a tribe has determined to operate 

Class II or Class III gaming and to operate a tribal gaming commission. It is the Committee’s belief that a similar provision related to tribal gaming commissions will be similarly useful. 

The Committee does note that this provision of S. 1529 does not 

delegate to either the NIGC or the Secretary of the Interior any authority to set standards regarding tribal gaming commissioners. 

The specific amendment to the IGRA made by § 2(f) requires that 

a tribe address the issue of background checks for tribal gaming 

commissioners and employees in its gaming ordinance. The standard a tribe adopts for the tribal gaming commission is within the 

sovereign jurisdiction of the tribe. 

4. REVENUE SHARING

Revenue sharing does not have a statutory basis in the IGRA. Indeed, one of the primary purposes of the IGRA 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.’’ 27 Additionally, the IGRA expressly 

prohibits any attempts by the states to impose ‘‘any tax, fee, 

11 

28See supra note 10, § 11(d)(4). 29See supra note 10, § 11(d)(1). 30See supra note 10, § 11(d)(8)(A). 31See supra note 10, § 11(d)(8)(C). 32See Letter from Ada E. Deer, Assistant Secretary, Indian Affairs, Dept. of Interior, to Ralph 

Sturges, Chief Mohegan Tribe of Indians of Connecticut (Dec. 5, 1994). 33See Hearing on the Indian Gaming Regulatory Act, Before the Senate Committee on Indian 

Affairs, S. Hrg. 108–67, 108th Cong. at p. 3 (2003) (Testimony of Aurene M. Martin, Acting Assistant Secretary, Indian Affairs, Department of the Interior). 

charge, or other assessment’’ on the revenues generated by tribal 

governments from their gaming operations.28

However, pursuant to the IGRA, in order to conduct Class III 

gaming, tribes must enter into compacts with states within which 

their gaming operations are located.29 The Secretary of Interior is 

required to review the compacts for compliance with Federal law, 

including the IGRA.30 The Secretary has 45 days within which to 

approve or disapprove the compacts or the compacts are deemed 

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

the IGRA.31

Despite the lack of a statutory basis for revenue sharing, the DoI 

has repeatedly found justification for revenue sharing in the notion 

of a ‘‘bargained-for-exchange’’ between the respective state and 

tribe. Essentially, if a state had something of value to offer in the 

compact negotiations, the tribe could ‘‘purchase’’ that value without 

the exchange violating the IGRA’s prohibition on state taxation of 

tribal gaming revenues.32

Following the Supreme Court decision in Seminole, some states 

began refusing to negotiate tribal-state compacts, unless the tribe 

agreed to pay substantial amounts—some would say usurious 

amounts—of their gaming revenues to their state negotiating counterparts. Most tribes, uncertain of their legal remedies in light of 

the 11th Amendment bar imposed after Seminole, have reluctantly 

agreed to these demands. 

July 9, 2003, Hearing: On July 9, 2003, the Committee held an 

oversight hearing on the IGRA, focusing on tribal-state gaming 

compacts and ‘‘revenue sharing’’. 

The DoI testified regarding the difficulties encountered by tribes 

seeking compacts in the wake of the Seminole decision, which held 

as unconstitutional certain provisions in the IGRA that authorized 

tribes to bring lawsuits against states in Federal court. One of the 

most significant impacts in the wake of Seminole noted by the DoI 

was the sharp spike in demands by states for revenue sharing and 

the dollar amounts sought in their compact negotiations with 

tribes.33

The DoI’s testimony made clear that many states now view revenue sharing as the most important topic when negotiating compacts. Conversely, most tribes are loathe to share more than minimal amounts, as every dollar shared with the state is one less dollar available to dedicate to the provision of tribal government services. 

S. 1529 was drafted, in part, to amend § 11 of the IGRA and address the impacts of the Seminole decision on state demands for 

revenue sharing. These amendments to the IGRA are consistent 

with and meant to further the original intent of the IGRA to provide strong tribal governments and improve reservation economies. 

S. 1529 accomplishes this goal by providing a statutory framework 

12 

34See Legislative Hearing on S. 1529, the Indian Gaming Regulatory Act Amendments of 

2003, Before the Senate Committee on Indian Affairs, S. Hrg. 108–67, 108th Cong. at p. 33 

(2004) (Testimony of George Skibine, Acting Deputy Assistant Secretary for Policy and Economic 

Development, Indian Affairs, Department of the Interior). 

for revenue sharing, and placing limitations on unreasonable demands by states for a sharing of tribal revenues. 

March 24, 2004 Hearing: On March 24, 2004, the Committee 

held a legislative hearing on S. 1529. At that hearing the DoI testified regarding § 2(f) of S. 1529, which amends § 11 of the IGRA, to 

deal with revenue sharing. 

In its testimony, the DoI again expressed its concern about the 

lack of statutory guidance for revenue sharing, and support for the 

proposal in S. 1529 to provide a statutory framework. The DoI restated its view that state demands for revenue sharing have significantly increased in dollar amount since the Seminole decision.34

To deal with the unfair pressure placed on tribes to agree to substantial revenue sharing, the DoI strongly expressed its agreement 

with the principles espoused in S. 1529: 

• That gaming revenues should primarily benefit Indian 

tribes; and 

• That substantial economic benefits should be conferred 

from states to tribes before revenue sharing is allowed. 

The DoI did state its preference for a ‘‘hard cap’’ on the percentage of revenue that a state could negotiate in return for substantial 

economic benefits. It also expressed its preference for a statutory 

list of ‘‘substantial economic benefits’’ that would be acceptable. In 

expressing these preferences the DoI stated that it anticipated 

some difficulties in measuring tribal needs and determining which 

economic benefits would be acceptable. 

The DoI also restated its concerns regarding attempts by tribes 

to be approved for ‘‘far-flung off-reservation’’ gaming lands, meaning lands not on or near current tribal reservation lands. The DoI 

also noted increased attempts by tribes to carve out anti-competitive geographic zones, preventing other tribes from gaming in such 

zone. Although both of these recent developments raise policy concerns, and appear to be inconsistent with the original intent of the 

IGRA, the DoI indicated that it does not believe either of these 

issues are prohibited by the statutory language of the IGRA. 

The Substitute Amendment: § 2(f)(2)(A) of S. 1529, as amended by 

the substitute, strengthens § 11 of the IGRA by essentially requiring that gaming revenues first meet the most pressing needs of the 

tribe which has generated that revenue by investing in and operating a gaming facility. Over the past several years, testimony before this Committee by tribes has shown that the most pressing 

needs usually relate to the provision of tribal government programs 

and services, and funding for new economic ventures, particularly 

non-gaming ventures. If revenue sharing provisions in a compact 

do not meet the parameters provided in S. 1529, those revenue 

sharing provisions may not be approved by the Secretary. 

The Committee acknowledges that local communities are often 

the governments most significantly impacted by a tribal gaming operation. Therefore, S. 1529 provides that, after the need for tribal 

government programs and services are adequately addressed with 

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13 

ments to local governments to offset actual costs incurred by local 

governments impacted by tribal gaming activities. 

The Committee also recognizes that some tribal reservations are 

in geographic locations near large urban centers that can provide 

significant potential consumer markets. For those tribes, it may be 

appropriate to provide a state with whom its compacts a share of 

revenue in return for ‘‘substantial economic benefits’’. Thus, S. 

81529 provides that, after any payments to local governments, and 

provided that tribal governments needs are met, including the provision of programs and services and other non-gaming economic development, a tribal-state compact may provide for revenue sharing 

in return for ‘‘substantial economic benefits’’. 

With regard to ‘‘substantial economic benefits’’, the Committee 

declines to define that term, but rather it is the Committee’s intent 

that this requirement be the subject of negotiations between tribes 

and states, so long as the Secretary determines that the economic 

benefit is real and measurable. Certainly, substantial exclusivity 

from competition by non-Indian gaming, long term tribal-state compacts, and expanded gaming opportunities are but three examples 

that would likely meet this requirement. 

The Committee also declined to establish a maximum percentage 

cap on revenue sharing, a preference expressed by the DoI. The 

Committee’s primary concern is that such a cap does not prevent 

a state from seeking revenue sharing that is small in terms of percentage of revenue, but may still prevent the tribal government 

from adequately funding its programs and services. It is the unwavering intent of this Committee that tribal gaming revenues 

must primarily benefit Indian tribes. 

Concerns have been raised by some tribes regarding the limitations placed on revenue sharing, anticipating a refusal by states to 

negotiate compacts. It is the Committee’s intent that the amendment made by § 2(f)(2)(B) of S. 1529 address this concern. This 

amendment provides a reasonable timeframe for the Secretary to 

act. The Committee strongly encourages the Secretary to exercise 

the authority granted by § 11(d)(7)(B)(vii) of the IGRA in those instances in which a state refuses to negotiate a compact unless it 

contains revenue sharing that exceeds the parameters prescribed in 

§ (2)(f)(2)(A) of S. 1529. 

It is also the Committee’s belief that § 2(f)(2)(C) will provide additional flexibility to tribes and states that are in the process of renegotiating compacts. The substitute amendment changed the 

original language of this provision to address constitutional concerns raised by the DoI. 

LEGISLATIVE HISTORY

S. 1529 was introduced on July 31, 2003, by Senator Campbell 

for himself and for Senator Inouye, and was referred to the Committee on Indian Affairs. 

On March 24, 2004, the Committee held a legislative hearing on 

S. 1529. Witnesses at the hearing included the Deputy Assistant 

Secretary-Indian Affairs, on behalf of the DoI, the Chairman of the 

NIGC, and the Chairman of the National Indian Gaming Association, on behalf of its various Indian tribes and tribal organizations. 

While each of the witnesses expressed either suggestions for different legislative language or concerns over particular provisions in 

14 

the bill, all of the witnesses were supportive of the overall purposes 

and intent of S. 1529. Many of those suggestions and concerns were 

addressed in the substitute amendment to the bill. 

On July 14, 2004, at a business meeting duly noticed, the Committee adopted a substitute amendment to S. 1529 and, as amended, favorably reported the bill for consideration by the full Senate, 

with a recommendation that the Senate pass the bill. 

SECTION-BY-SECTION ANALYSIS OF THE SUBSTITUTE AMENDMENT TO

S. 1529 

Section 1. Short Title. The act may be cited as the ‘‘Indian Gaming Regulatory Act Amendments of 2004’’. 

Section 2. Payment and Administration of Gaming Fees. 

(a) Definitions. The bill amends § 4(7) of the Indian Gaming Regulatory Act (‘‘IGRA’’) clarifying the definition of ‘‘Technological 

Aids’’ to correspond with the original intent of Congress in the 

IGRA, making the Johnson Act inapplicable to technological aids 

used to operate class II games. This interpretation has been universally supported by Federal court decisions, and the bill contains 

very clear language that guarantees this clarification cannot be 

used or construed to apply to any game that is categorized as class 

III. 

(b) National Indian Gaming Commission. The bill makes technical amendments to § 5 of the IGRA to clarify how National Indian 

Gaming Commission (‘‘NIGC’’) vacancies and successors are filled. 

(c) Powers of Chairman. The bill makes technical amendments to 

§ 6 of the IGRA to clarify how the NIGC Chairman may delegate 

authorities to individual Commissioners. 

(d) Powers of Commission. The bill makes amendments to § 7 of 

the IGRA to expand the reporting requirements for the NIGC by 

requiring it to provide a biennial report to Congress similar to the 

Executive Agency reporting mandated by the Federal Government 

Performance and Results Act. The bill also requires manufacturers 

and dealers of class II technologic aids to register with the NIGC 

and maintain records of the technologic aids. 

(e) Commission Staffing. The bill makes technical amendments to 

§ 8 of the IGRA and updates the statutory rates of pay for NIGC 

Commissioners, staff and temporary services to comport with the 

current Federal Executive and General Schedule pay rates. 

(f) Tribal Gaming Ordinances. The bill makes technical amendments to § 11, subsection (b)(2)(F) of the IGRA to clarify that background investigations must be conducted for tribal gaming commissioners and commission employees, as well as key management 

and employees of the gaming enterprise. 

The bill amends § 11, subsection (d)(4) to clarify that states may 

not tax tribal gaming operations, and to codify ‘‘revenue sharing’’ 

and the limited conditions under which it may be appropriate. The 

amendment also requires the Secretary of Interior to promulgate 

regulations within 18 months providing guidance to tribes and 

states in implementing this provision. 

The bill further amends § 11, subsection (d) (dealing with gaming 

procedures issued by the Secretary in lieu of a compact), by amending (d)(7)(B)(vii) to add a requirement that the Secretary act within 

180 days. Subsection (d) is further amended by deleting paragraph 

(9) at the end of the subsection, and replacing it with a new paraVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR380.XXX SR380
15 

graph. The replacement paragraph provides for an additional 180 

day extension of negotiating time, if a new tribal-state compact 

cannot be negotiated prior to the official expiration date of the current compact, during which time tribal gaming activities may legally continue. 

(g) Management Contracts. The bill makes technical amendments 

to § 12 of the IGRA by clarifying that the oversight responsibilities 

of the NIGC include conducting background information reviews on 

outside ‘‘managers’’ of class III facilities. 

(h) Commission Funding. The bill makes technical amendments 

to § 18 of the IGRA by raising the cap on aggregate fees imposed 

on class II and III gaming operations from the current $8 million 

to $11.5 million in FY2005, to $12,000,000 in FY2006–7, and to $13 

million in FY2008–9. The amendments further provide for the 

NIGC to promulgate regulations to carry out the new provisions. 

(i) Additional Amendments. The bill amends the IGRA by deleting current § 19. A new ‘‘Section 19. Tribal Consultation’’ requires 

the Secretary of Interior, the Secretary of Treasury and the Chairman of the NIGC to consult with Indian tribes, to the maximum 

extent practicable, and in a manner consistent with the government to government relationship that exists between Indian tribes 

and the Federal government. 

Section 23 is amended by combining that section with the language of the current Section 24. 

Section 24 is then amended by inserting a new ‘‘Section 24. Authorization of Appropriations’’, which provides for appropriations to 

be authorized in an amount equal to the amount of funds derived 

from fees collected. It also provides for additional amounts to be appropriated as necessary to fund the operations of the NIGC. Currently, the NIGC is not funded by any federal appropriations and 

the enactment of this section is not expected to have an effect on 

the federal budget. 

COMMITTEE RECOMMENDATION AND TABULATION OF VOTE

On July 14, 2004, the Committee, in an open business session, 

considered S. 1529 and approved a substitute amendment to the 

bill, and ordered S. 1529, as amended, favorably reported to the 

full Senate with a recommendation that the bill do pass. Senator 

Reid was recorded as a nay vote.

COST AND BUDGETARY CONSIDERATIONS

The cost estimate for S. 1529 as calculated by the Congressional 

Budget Office, is set forth below: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, September 10, 2004. 

Hon. BEN NIGHTHORSE CAMPBELL, Chairman, Committee on Indian Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1529, the Indian Gaming 

Regulatory Act Amendments of 2004. 

16 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

ELIZABETH ROBINSON

(For Douglas Holtz-Eakin, Director). 

Enclosure. 

S. 1529—Indian Gaming Regulatory Act Amendments of 2004 

S. 1529 would amend the Indian Gaming Regulatory Act (IGRA) 

to change the operations of the National Indian Gaming Commission (NIGC) and the regulation of gambling on Indian reservations. 

The legislation would increase the fees paid to the commission by 

tribal gambling operators; require the commission to prepare a 

strategic planning report; revise the salary schedules, procedures, 

and authorities of the commission; expand the use of background 

checks for personnel involved in tribal gambling; and require manufacturers and dealers of electronic gambling aids to register with 

the NIGC. The legislation also would impose new requirements on 

certain tribal and state compacts. 

CBO estimates that implementing S. 1529 would cost $10 million 

over the 2005–2009 period, assuming appropriation of the amounts 

authorized by the bill. In addition, S. 1529 would increase the current limitation ($8 million) on the NIGC’s annual assessment on 

Indian gambling operations. Because the NIGC has authority to 

spend such assessments without further appropriation, however, 

any increase in fee collections would not have a significant net impact on the federal budget. 

S. 1529 contains intergovernmental mandates as defined in the 

Unfunded Mandates Reform Act (UMRA), but CBO cannot determine whether the total cost of these mandates would exceed the 

annual threshold established in that act ($60 million in 2004, adjusted annually for inflation). The bill would impose new requirements for compacts between tribes and states, which must be approved by the Department of the Interior (DOI) before tribes can 

open casinos. CBO has no basis for estimating the impact of this 

mandate on state, local, and tribal governments. The bill also 

would place some additional administrative duties on tribes with 

gaming operations and would increase the fees they must pay to 

the NIGC, and CBO estimates that the cost of those mandates 

would be about $5 million per year. 

S. 1529 also contains private-sector mandates as defined in 

UMRA. The bill would impose private-sector mandates on individuals selling or leasing certain gambling devices to Indian casinos 

and on private-sector entities that operate those gambling devices 

under tribal management contracts. CBO estimates that the direct 

cost of mandates in the bill would fall well below the annual 

threshold established by UMRA for private-sector mandates ($120 

million in 2004, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of S. 1529 is shown in the following table. The costs 

of this legislation fall within budget function 800 (general government). 

17 

By fiscal year, in millions of dollars— 

2005 2006 2007 2008 2009 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 1

Authorization Level ........................................................................................ 2 2 2 2 2 

Estimated Outlays ......................................................................................... 2 2 2 2 2 

1 Enacting this bill also would increase revenues and direct spending, however, CBO expects the net budgetary impact of these increases 

would be negligible in each year. 

Basis of estimate: For this estimate, CBO assumes that the bill 

will be enacted near the start of fiscal year 2005, that the authorized amounts will be provided for each year, and that spending will 

follow historical patterns for the NIGC and its programs. The bill would authorize the appropriation of $2 million annually 

for the operations of the NIGC. There was no appropriation for the 

NIGC in fiscal year 2004. Appropriation of the authorized amounts 

would cost a total of $10 million over the 2005–2009 period. 

Estimated impact on state, local, and tribal governments: S. 1529 

contains several intergovernmental mandates as defined in UMRA. 

Because of uncertainty about the cost of one mandate affecting 

state and tribal gaming compacts, CBO cannot determine whether 

the total cost of these mandates exceeds the annual threshold established in that act ($60 million in 2004, adjusted annually for inflation). We estimate that the total cost of other mandates in the 

bill would be about $5 million per year. 

STATE-TRIBAL COMPACTS

S. 1529 would add new requirements for compacts between 

states and tribes that govern gaming activities on tribal land. Such 

compacts must be approved by DOI before tribes can operate casinos. The new requirements would limit the extent to which tribal 

gaming revenues could be shared with affected state and local governments. This change would not affect existing compacts. Under 

current law, tribes and states are under a mandate to negotiate 

these compacts before tribes may operate casinos, and a change in 

the standards governing those compacts could alter the cost of that 

mandate. However, because of great uncertainty about how those 

changes would be interpreted and implemented by DOI and because of the complex nature of negotiations between states and 

tribes, CBO cannot estimate how the new requirements would affect either total revenues from tribal gaming or the distribution of 

those revenues between tribes and other governments. 

NIGC FEES

IGRA currently imposes a mandate on tribes with gaming operations to pay fees to the NIGC. This bill would require NIGC to 

establish a new rate structure and would increase the annual cap 

on total fees. By increasing the cap, the bill would increase the cost 

of the mandate by about $5 million a year over the next five years. 

The new fee schedule would result in a reallocation of the burden 

of this mandate among gaming tribes. 

OTHER ADMINISTRATIVE MANDATES

S. 1529 would require tribes to conduct background investigations of tribal gaming commissioners and employees of tribal gaming commissions and to register with the NIGC if they use certain 

18 

types of electronic gambling machines—both are mandates as defined by UMRA. Under current law, tribes must conduct background investigations of a large number of gaming officials and employees. Based on information provided from the NIGC, CBO estimates that the additional number of investigations required as a 

result of this bill would be small. The cost of each investigation 

would be no more than $50, so the cost of complying with the first 

mandate would not be significant. The registration requirement 

would primarily apply to electronic bingo machines. Based on information from the NIGC and the National Indian Gaming Association, CBO estimates that this mandate also would impose no significant costs on the tribes. 

Estimated impact on the private sector: S. 1529 contains privatesector mandates as defined in UMRA. The bill would require sellers, dealers, buyers, and lessors to register class II gambling devices with the National Indian Gaming Commission. Class II gambling devices include devices used to play games such as electronic 

bingo. The bill would impose mandates on individuals selling or 

leasing class II gambling devices to Indian casinos and on privatesector entities that enter into contracts with tribes to manage those 

casinos. CBO estimates that the direct cost of mandates in the bill 

would fall well below the annual threshold established by UMRA 

for private-sector mandates ($120 million in 2004, adjusted annually for inflation). 

S. 1529 would require sellers, dealers, buyers, and lessors of 

class II gambling devices to number and label the devices and 

maintain monthly records for the devices. The monthly records 

must include the number of the device, the manufacturer’s legal 

and trade name, the date of manufacture, and, in the case of transfer, the name of the person to whom the device is transferred and 

the date of transfer. According to the NIGC, the gaming companies 

that currently provide class II gambling devices to Indian casinos 

already have the infrastructure necessary for this. Under current 

law, those companies are subject to similar registration requirements for class III gambling devices, and thus, the costs for registering the class II gambling devices are estimated to be minimal. 

Some gaming companies already may be registering class II devices. 

Private-sector entities managing Indian casinos that operate 

class II devices also would be subject to the registration requirements of S. 1529. The cost for registration and recordkeeping for 

class II gambling devices is expected to be minimal for tribes that 

operate casinos. Since a smaller number of Indian casinos are run 

by private contractors, CBO expects that the cost of this mandate 

would be minimal for those entities, as well. 

Estimate prepared by: Federal Costs: Matthew Pickford; Impact 

on State, Local, and Tribal Governments: Marjorie Miller; and Impact on the Private Sector: Selena Caledera. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

REGULATORY AND PAPERWORK IMPACT STATEMENT

Paragraph 11(b) of rule XXVI of the Standing Rules of the Senate requires that each report accompanying a bill to evaluate the 

regulatory and paperwork impact that would be incurred in carVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00018 Fmt 6659 Sfmt 6602 E:\HR\OC\SR380.XXX SR380
19 

rying out the bill. The Committee has concluded that S. 1529 will 

reduce regulatory or paperwork requirements and impacts. 

EXECUTIVE COMMUNICATIONS

The Committee has received no communications from the Executive Branch regarding S. 1529. 

COMMITTEE CORRESPONDENCE

DEPARTMENT OF JUSTICE, OFFICE OF LEGISLATIVE AFFAIRS, Washington, DC, June 15, 2004. 

Hon. BEN NIGHTHORSE CAMPBELL, 

Chairman, Committee on Indian Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: This presents the views of the Department 

of Justice on S. 1529, the ‘‘Indian Gaming Regulatory Act Amendments of 2003.’’ We generally defer to other, more directly concerned parties regarding the need for, or desirability of, enactment 

of this legislation. We do, however, oppose enactment of section 

2(a) of S. 1529. 

Section 2(a) of S. 1529 would amend section 4(7) of the Indian 

Gambling Regulatory Act (IGRA) (25 U.S.C. § 2703(7)) to provide 

that no provision of the Gambling Devices Act, 15 U.S.C. §§ 1171– 

1177, shall apply to ‘‘any gambling described in subparagraph (A)(i) 

[Class gaming] for which an electronic aid, computer, or other technological aid is used in connection with gaming.’’ The Department 

of Justice enforces the Gambling Devices Act. 

The issue of the application of the Gambling Devices Act to Class 

II gaming under IGRA was the subject of two recent appellate 

court decisions, United States v. Santee Sioux Tribe of Nebraska 

and Ashcroft v. Seneca-Cayuga Tribe of Oklahoma, that reached 

differing conclusions. In both of these cases, the United States argued that under existing law the Gambling Devices Act does apply 

to Class II gaming with technological aids. The Supreme Court recently denied certiorari in these cases. The denial of certiorari, 

however, does not clarify the issue, and a conflict still exists between the Circuit Courts of Appeal. The Department of Justice believes that clarification of this issue is needed, but would favor an 

amendment clarifying that the Gambling Devices Act does apply to 

Class II gambling, rather than the approach taken in S. 1529. 

The approach to clarifying this issue taken by S. 1529 provides 

that the Gambling Devices Act does not apply to Class II gambling. 

Section 2(a) of S. 1529 thus authorizes the use of gambling devices, 

as that term is defined in 15 U.S.C. § 1171 of the Gambling Devices 

Act, for Class II gaming. The Department believes that this amendment may well result in more lucrative Class II gaming with the 

use of high speed machines that are virtually indistinguishable to 

a player from machines used in Class III gaming. When IGRA was 

first enacted, Class III gaming was viewed as including more lucrative forms of gambling, including high-speed machine gaming. In 

order to avoid criminal influences and corruption, Congress required increased regulation over Class III gaming. Included in the 

enhanced regulatory scheme was the necessity of a tribal-state 

compact that balanced the interests of the affected tribe and state 

20 

and required the approval of the Secretary of the Interior. Since 

IGRA’s enactment, the technology has changed substantially, so 

that machines used in Class II gaming can be as fast and as lucrative as Class III machines and, from a player’s perspective, may be 

virtually indistinguishable. Because the machines used in Class II 

and Class III gaming are becoming increasingly indistinguishable 

in their play, they should be subject to the same or similar levels 

of regulation and approval. 

The Department of Justice cannot support this amendment to 

IGRA, as it removes the current restrictions on the use of gambling 

devices in Class II gambling without substituting an increased 

level of regulation and approval that at least approximates that 

surrounding the use of similar machines in the Class III context. 

As noted above, in examining the alternative ways in which the 

issue of the application of the Gambling Devices Act to Class II 

gaming can be clarified, the Department of Justice favors amending IGRA to clarify that the Gambling Devices Act does apply, and 

that, therefore, gambling devices could only be used in conjunction 

with gaming authorized pursuant to a valid tribal-state compact. 

That being said, the Department of Justice might support an 

amendment that removes the Gambling Devices Act’s prohibition 

on the use of gambling devices in Class II gaming, if that prohibition were replaced with adequate approval and regulation that recognizes the concerns raised by the high speed and lucrative nature 

of the gambling. The Department of Justice would be happy to 

work with the Committee in order to devise appropriate regulation. 

In addition, S. 1529 would create a blanket repeal of the Gambling Devices Act’s prohibitions pertaining to Class II gaming. We 

oppose the blanket repeal of all of the provisions of the Gambling 

Devices Act for ‘‘technological aids’’ for Class II gaming. As drafted, 

Section 2(a) would go further in its repeal of the Gambling Devices 

Act than what IGRA currently provides for Class III gaming. IGRA 

currently provides repeal of Section 1172’s transportation prohibition and Section 1175’s prohibition on possession and use of gambling devices for Class III gaming. The other provisions of the 

Gambling Devices Act, such as Section 1173’s requirement to register annually with the Attorney General and Section 1174’s shipping requirements, remain in effect for Class III gaming under 

IGRA. S. 1529 should not provide a broader repeal of the Gambling 

Devices Act for Class II gaming with technological aids than what 

IGRA currently provides for Class III gaming. 

Finally, S. 1529 creates additional confusion as to which machines should be considered Class II gaming and which should not 

be. Section 2703(7) of IGRA states that Class II gaming does not 

include ‘‘a slot machine of any kind’’ while another provision will 

state that the prohibition against the use of gambling devices, including slot machines, does not apply to Class II gaming ‘‘for which 

an electronic aid, computer, or other technological aid is used with 

the gaming.’’ Class II gaming with technological aids, in some 

cases, falls within the term ‘‘a slot machine of any kind.’’ Enacting 

S. 1529 with this provision will not help clarify what Congress intends to constitute Class II gaming. Instead, it will add to the confusion by creating conflicting provisions within the same statute. 

Thank you for the opportunity to comment on this legislation. 

Please do not hesitate to call on us to answer any questions you 

21 

might have regarding the suggestions discussed in this letter, or if 

you would like the Department of Justice to provide any additional 

assistance. We look forward to discussing this matter with you further. The Office of Management and Budget has advised us that 

there is no objection from the standpoint of the Administration’s 

program to the presentation of this report. 

Sincerely, 

WILLIAM E. MOSCHELLA, Assistant Attorney General. 

(22) 

MINORITY VIEWS OF SENATOR REID 

As one of the original authors of the Indian Gaming Regulatory 

Act of 1988 (IGRA), Pub. L. 100–497, 25 U.S.C. § 2501 et seq., I 

was proud of the balance we achieved among the different interests 

in Indian gaming. Tribes, local, State and the federal governments 

all have legitimate interest in this subject, and the concerns of each 

were accounted for in that original legislation. The Indian Gaming 

Regulatory Act Amendments of 2004 (S. 1529), however, fundamentally upsets that balance and fails to account for the significant 

State and local concerns that have arisen as Indian gaming has 

grown dramatically in the years since IGRA’s passage. For the reasons explained below, I oppose S. 1529. I hope to work with my colleagues to address the concerns I raise in this report before further 

action. 

It should be noted at the outset that while the Committee report 

characterizes the changes to IGRA’s Class II and Class III regulatory structure as ‘‘technical’’ and portrays federal court cases on 

the subject as settled, that is not the case. In fact, there is a split 

in federal circuit court cases on the Class II/Class III issue addressed by S. 1529, and no Supreme Court disposition has been 

rendered on that subject. In addition, while the report notes that 

no Executive Branch communications were received on S. 1529, I 

have included a letter from the U.S. Department of Justice to the 

Chairman expressing the Department’s opposition to this legislation. Finally, the Committee’s characterization of Congressional intent regarding the Johnson Act is not accurate. A plain reading of 

IGRA confirms that Congress did not waive the Johnson Act for 

Class II games. 

CONCERNS WITH S. 1529

There are three main problems with S. 1529 and each are explained in turn below. First, S. 1529 makes it easier to conduct 

Class II gaming that is effectively the same as Class III. This enables the evasion of Class III compacting and thereby the prime vehicle for the consideration and satisfaction of State and local concerns. Second, S. 1529 would make it difficult, if not impossible, for 

State and local governments to recover costs associated with Class 

III gaming as provided for under current law. Third, S. 1529 does 

nothing to deal with the increasing propensity of some Tribes to 

seek far-flung, non-reservation lands on which to conduct gaming 

free of regulation to the detriment of State and local governments 

and established Tribes in those areas. 

I. Class II and Class III Gaming 

As the Committee report notes, IGRA created a fundamental 

legal distinction between Class II and Class III games. Under the 

law, Tribes were permitted to engage in Class II gaming, defined 

23 

1 A ‘‘gambling device’’ under Johnson Act is ‘‘any so-called ‘slot machine’ or any other machine 

or mechanical device an essential part of which is a drum or reel with an insignia thereon and 

. . . which when operated may deliver, as the result of the application of an element of chance, 

any money or property, or . . . by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property. . . .’’ 2 ‘‘The Committee recognizes that tribes may wish to join with other tribes to coordinate their 

class II operations and thereby enhance the potential of increasing revenues. For example, linking participant players at various reservations whether in the same or different States, by 

means of telephone, cable, televison or satellite may be a reasonable approach for tribes to take. 

Continued 

as bingo and like games, with modest oversight. Class III gaming, 

defined as fast-paced games like slots and other casino games, 

would be more heavily regulated by permitting their use only when 

the subject of a Tribal-State compact. This process was intended to 

provide the State with the opportunity to regulate Tribal enterprises that were functionally equivalent to casinos. It was also intended to provide an even playing field, prevent organized crime, 

ensure consumer protection, and guarantee the consideration of 

State and local impacts of full-fledged gaming operations. 

The greater rigor of Class III regulation, however, provided a 

strong incentive to design and characterize bingo and similar machines which fundamentally played like slot machines as Class II 

machines so as to avoid such regulation. The financial incentive to 

do so is great. Slot machines and games made to play like them 

represent roughly 70% of an average casino’s profit. 

One disincentive to blurring the lines between Class II and Class 

III is the Johnson Act. Enacted in the 1950s, the Johnson Act prohibits the use of ‘‘gambling devices’’ on Tribal lands.1 While IGRA 

lifted this Johnson Act limitation for Class III games, it did not do 

so for Class II games. The statute itself, the Senate Report accompanying IGRA, and my colloquy with Senator Inouye at the time 

IGRA was debated all confirm that IGRA only repealed the Johnson Act prohibition for Class III games. For example, the Senate 

Report confirms that IGRA only permitted the use of Class II 

games on reservations if those games were ‘‘not otherwise prohibited by federal law’’ and specifically cited ‘‘15 U.S.C. 1175’’ (the 

Johnson Act) as such a restriction. S. Rept. No. 100–446. 

In the colloquy on the topic, Senator Inouye responds to my question asking the Senator to confirm the understanding that the 

Johnson Act would still apply to limit Class II gaming by saying: 

‘‘The bill as reported by the Committee would not alter the effect 

of the Johnson Act except to provide for a waiver of its application 

in the case of gambling devices operated pursuant to a compact 

with the state in which the tribe is located [i.e., class III]. The bill 

is not intended to amend or otherwise alter the Johnson Act in any 

way.’’ Cong. Rec. 24024 (September 15, 1988). 

Accordingly, the Committee’s assertion that Congress intended to 

waive the Johnson Act for Class II games is both inconsistent with 

the statute and its legislative history. 

As interpreted by the Department of Justice, the Johnson Act 

interacts and may be harmonized with IGRA’s authorization of 

Class II games by prohibiting the use of electronic slot-machine 

equivalents, but enabling Tribes to use technological aids like telecommunications technology to enable bingo players to play bingo 

against one and other at different locations. The Committee Report 

on IGRA lends credence to this view.2

24 

Simultaneous games participation between and among reservations can be made practical by 

use of computers and telecommunications technology as long as the use of such technology does 

not change the fundamental characteristics of the bingo or lotto games. . . . S. Rept. No. 100– 

446 at 9. 3The U.S. Federal Court of Appeals for the Eighth Circuit—after a review of the express text 

of IGRA and the legislative history—determined that the Johnson Act prohibition on gambling 

devices and IGRA’s sanctioning of Class II devices could be read together. In this court’s view, 

IGRA did not impliedly repeal the Johnson Act. The court determined that you could have a 

bingo-type class II device that did not fall within the gambling device definition (and prohibition) of the Johnson Act. U.S. v. Santee Sioux Tribe of Nebraska, 324 F. 3d 607 (8th Cir. 2003). 

See also Cabazon Band of Mission Indians, 14 F.3d 633, 635, n. 3 (D.C. Cir. 1994) (IGRA did 

not repeal the Johnson Act for class II games). For example, the use of telecommunications 

equipment to connect electronic bingo players could be both a permissible Class II game and 

not fall within the Johnson Act. 

Despite this clarity, the Committee is correct that federal courts 

have found that Congress must have meant to waive the Johnson 

Act for Class II games. What the report fails to note is that another 

federal circuit court has decided the issue the other way, finding 

that the Johnson Act does indeed apply.3 The Supreme Court has 

not stepped in to resolve the conflict between circuits. 

S. 1529’s repeal of the Johnson Act’s limitation on Class II games 

is the source of the Department of Justice’s opposition to the bill. 

In the Department’s June 15, 2004 letter to the Chairman, they 

put it this way: ‘‘[Justice] cannot support this amendment to IGRA, 

as it removes the current restrictions on the use of gambling devices in class II gambling without substituting an increased level 

of regulation an approval that at least approximates that surrounding the use of similar machines in the class III context.’’ 

That is, the bill removes regulation of Class II machines and 

doesn’t replace it with anything. It breaks down the fundamental 

policy trade off in IGRA between Class II and Class III to the detriment of State and local governments. 

II. State and local impacts in Class III Compacting 

After liberalizing the definition of Class II gaming, S. 1529 weakens the requirements for Class III compacting. IGRA provides that 

compacts may provide for revenue sharing agreements between the 

Tribe and the compacting State. Such agreements allow for the 

consideration and resolution of State and local cost and other impacts. As Tribal gaming has dramatically increased over the last 

twenty years, the need for these agreements is greater, not smaller. 

Accordingly, S. 1529 goes in the wrong direction by placing new 

restrictions on revenue sharing agreements, making it more difficult for State and local governments to form these agreements. 

More specifically, S. 1529 provides that the Secretary ‘‘shall not’’ 

approve a compact providing for such assessments unless a number 

of Tribal fiscal considerations are met first, including a catchall 

that the ‘‘general welfare’’ of the tribe is first satisfied. 

III. Reservation Shopping 

While S. 1529’s repeal of the Johnson Act and weakening of 

Class III compacting would greatly ease the requirements on Indian gaming to the detriment of State and local governments, the 

bill is silent on one of their most significant concerns: reservation 

shopping. Over the last decade, the propensity for reservation shopping has grown in tandem with the profitability of certain Indian 

gaming enterprises. 

25 

Tribes seeking lands with speculative connection in areas where 

a casino might be profitably run have increased dramatically. One 

of the most notable current disputes involves and Oklahoma Tribe 

seeking land in Denver for the operation of a casino. That effort is 

strongly opposed by State and local officials. In addition, many 

Tribes oppose these efforts, as reservation shopping threatens to 

bring gaming enterprises near well-established Tribes and their 

reservations. 

Any amendment to IGRA must deal with this new phenomena to 

address significant Tribal, State, Federal and local concerns. 

IV. Conclusion 

Since the passage of IGRA almost twenty years ago, the explosion of Indian gaming has benefitted Tribes throughout the nation, 

providing a critical avenue for economic development which should 

be supported. With this great growth, however, have come concerns 

with how and where such gaming is conducted. I look forward to 

working with the Committee to ensure that S. 1529 is amended to 

follow in the example of its predecessor by carefully balancing the 

important Tribal, local, State and federal concerns at issue here. 

HARRY REID. 

CHANGES IN EXISTING LAW

In compliance with subsection 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill S. 

1529, as ordered reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is 

printed in italic, existing law in which no change is proposed is 

shown in roman): 

Public Law 100–497 

AN ACT To regulate gaming on Indian lands 

Be it enacted by the Senate and House of Representatives of the 

United States of America in Congress assembled, 

* * * * * * * 

DEFINITIONS

SEC. 4. For purposes of this Act—* * * 

(7) * * * 

(E) Notwithstanding any other provision of this paragraph, the term ‘‘class II gaming’’ includes, during the 1- 

year period beginning on the date of enactment of this subparagraph [enacted Dec. 17, 1991], any gaming described 

in subparagraph (B)(ii) that was legally operated on Indian 

lands in the State of Wisconsin on or before May 1, 1988, 

if the Indian tribe having jurisdiction over the lands on 

which such gaming was operated requested the State, by 

no later than November 16, 1988, to negotiate a TribalState compact under section 11(d)(3) øof the Indian Gaming Regulatory Act (25 U.S.C. 2710(d)(3))¿. 

(F) If, during the 1-year period described in subparagraph (E), there is a final judicial determination that the 

26 

gaming described in subparagraph (E) is not legal as a 

matter of State law, then such gaming on such Indian land 

shall cease to operate on the date next following the date 

of such judicial decision. 

(G) TECHNOLOGICAL AIDS.—Notwithstanding any other 

provision of law, sections 1 through 7 of the Act of January 

2, 1951 (commonly known as the ‘‘Gambling Devices Transportation Act’’) (15 U.S.C. 1171 et seq.), shall not apply to 

any gaming described in subparagraph (A)(i) for which an 

electronic aid, computer, or other technological aid is used 

in connection with the gaming. 

* * * * * * * 

NATIONAL INDIAN GAMING COMMISSION

SEC. 5. * * * 

ø(c) Vacancies occurring on the Commission shall be filled in the 

same manner as the original appointment. A member may serve 

after the expiration of his term of office until his successor has 

been appointed, unless the member has been removed for cause 

under subsection (b)(6).¿ 

(C) VACANCIES.— 

(1) IN GENERAL.—A vacancy on the Commission shall be 

filled in the same manner as the original appointment. 

(2) SUCCESSORS.—Unless a member of the Commission is removed for cause under subsection (b)(6), the member may— 

(A) be reappointed; and 

(B) serve after the expiration of the term of the member 

until a successor is appointed. * * * 

(e) The Commission shall select, by majority vote, one of the 

members of the Commission to serve as Vice Chairman. The Vice 

Chairman shall serve as Chairman during meetings of the Commission in the absence or disability of the Chairman. 

* * * * * * * 

POWERS OF THE CHAIRMAN

SEC. 6. * * * 

(c) DELEGATION.—The Chairman may delegate to an individual 

Commissioner any of the authorities described in subsection (a). 

(d) APPLICABLE AUTHORITY.—In carrying out any function under 

this section, a Commissioner serving in the capacity of the Chairman shall be governed by— 

(1) such general policies as are formally adopted by the Commission; and 

(2) such regulatory decisions, findings, and determinations as 

are made by the Commission. 

POWERS OF THE COMMISSION

SEC. 7. * * * 

(c) STRATEGIC PLAN.— 

(1) IN GENERAL.—The Commission shall develop a strategic 

plan for use in carrying out activities of the Commission. 

(2) REQUIREMENTS.—The strategic plan shall include— 

27 

(A) a comprehensive mission statement describing the 

major functions and operations of the Commission; 

(B) a description of the goals and objectives of the Commission; 

(C) a description of the general means by which those 

goals and objectives are to be achieved, including a description of the operational processes, skills, and technology, and 

the human resources, capital, information, and other resources required to achieve those goals and objectives; 

(D) a performance plan for achievement of those goals 

and objectives that is consistent with— 

(i) other components of the strategic plan; and 

(ii) section 1115 of title 31, United States Code; 

(E) an identification of the key factors that are external 

to, or beyond the control of, the Commission that could significantly affect the achievement of those goals and objectives; and 

(F) a description of the program evaluations used in establishing or revising those goals and objectives, including 

a schedule for future program evaluations. 

(3) BIENNIAL PLAN.— 

(A) PERIOD COVERED.—The strategic plan shall cover a 

period of not less than 5 fiscal years beginning with the fiscal year in which the plan is submitted. 

(B) UPDATES AND REVISIONS.—The strategic plan shall be 

updated and revised biennially. 

(d) REGISTRATION OF TECHNOLOGICAL AIDS.— 

(1) IN GENERAL.—The Commission shall require the registration of— 

(A) any electronic aid, computer, or other technological 

aid described in section 4(7)(G) that is intended for use on 

Indian land, and 

(B) any manufacturer, seller, dealer, buyer, lessor, or any 

other person that is engaged in the business of repairing, 

reconditioning, or reprogramming such technological aids. 

(2) REGISTRATION OF MANUFACTURERS AND DEALERS.—A 

manufacturer, seller, dealer, buyer, lessor, or any other person 

that intends to be engaged in the business of repairing, reconditioning, or reprogramming any electronic aid, computer, or 

other technological aid described in section 4(7)(G) that is intended for use on Indian land in a calendar year shall register 

with the Commission not later than November 30 of the preceding calendar year. 

(3) NUMBERING AND RECORDS FOR TECHNOLOGICAL AIDS.— 

(A) MANUFACTURERS.—A manufacturer of an electronic, 

computer, or other technological aid described in section 

4(7)(G) shall— 

(i) sequentially number each technological aid; and 

(ii) permanently affix to the technological aid, so as 

to be clearly visible, the serial number, legal and trade 

name of the manufacturer, and date of manufacture of 

the technological aid. 

(B) PERSONS REQUIRED TO REGISTER.— 

28 

(i) NUMBERING.—A person required to register under 

paragraph (2) shall— 

(I) sequentially number each electronic aid, computer, or other technological aid within the physical possession of the person, if a manufacturer’s 

serial number has not been previously affixed pursuant to paragraph (A); and 

(II) permanently affix to the technological aid, so 

as to be clearly visible, the serial number, legal 

name and trade name of the registrant, and the 

date on which the serial number is affixed. 

(ii) RECORDS.—A person required to register under 

paragraph (2) for any calendar year shall, on and after 

the date of registration or the first day of that year 

(whichever occurs later), maintain a record by calendar 

month, for all periods thereafter in the year, of each 

electronic aid, computer, or other technological aid 

within the possession of the registrant that discloses— 

(I) the information required by subparagraph (A) 

and clause (i); and 

(II) on transfer of possession of the technological 

aid, the legal and trade name of the person to 

which possession is transferred and the date of the 

transfer. 

(4) CIVIL PENALTIES.—A person that fails to comply with this 

subsection shall be subject to the penalties prescribed in section 

14 as if the person were a management contractor engaged in 

gaming. 

ø(c)¿ (e) The Commission shall submit a report with minority 

views, if any, to the Congress on December 31, 1989, and every two 

years thereafter. The report shall include information on— 

(1) whether the associate commissioners should continue as 

full or part-time officials; 

(2) funding, including income and expenses, of the Commission; 

(3) recommendations for amendments to øthe Act; and¿ this 

Act; 

(4) the strategic plan for activities of the Commission described in subsection (c); and 

ø(4)¿ (5) any other matter considered appropriate by the 

Commission. 

COMMISSION STAFFING

SEC. 8.(a) The Chairman shall appoint a General Counsel to the 

Commission who shall be paid at the annual rate of basic pay payable for øGS–18 of the General Schedule under section 5332¿ level 

IV of the Executive Schedule under section 5318 of title 5, United 

States Code. 

ø(b) THE CHAIRMAN¿ (b) STAFF.— 

(1) IN GENERAL.—The Chairman shall appoint and supervise 

other staff of the Commission without regard to the provisions 

of title 5, United States Code, governing appointments in the 

competitive service. øSuch staff shall be paid without regard to 

the provisions of chapter 51 and subchapter III of chapter 53 

29 

of such title relating to classification and General Schedule pay 

rates, except that no individual so appointed may receive pay 

in excess of the annual rate of basic pay payable for GS–17 of 

the General Schedule under section 5332 of that title.¿ 

(2) COMPENSATION.— 

(A) IN GENERAL.—Staff appointed under paragraph (1) 

shall be paid without regard to the provisions of chapter 51 

and subchapter III of chapter 53, of title 5, United States 

Code, relating to General Schedule pay rates. 

(B) MAXIMUM RATE OF PAY.—The rate of pay for an individual appointed under the paragraph (1) shall not exceed 

the rate payable for level IV of the Executive Schedule 

under section 5315 of title 5, United States Code. 

ø(c) The Chairman may procure temporary and intermittent 

services under section 3109(b) of title 5, United States Code, but 

at rates for individuals not to exceed the daily equivalent of the 

maximum annual rate of basic pay payable for GS–18 of the General Schedule.¿ 

(c) TEMPORARY SERVICES.— 

(1) IN GENERAL.—The Chairman may procure temporary and 

intermittent services under section 3109 of title 5, United States 

Code. 

(2) MAXIMUM RATE OF PAY.—The rate of pay for an individual for service described in paragraph (1) shall not exceed 

the daily equivalent of the maximum rate payable for level IV 

of the Executive Schedule under section 5318 of title 5, United 

States Code. 

* * * * * * * 

TRIBAL GAMING ORDINANCES

SEC. 11. * * * 

(b) * * * 

(2) The Chairman shall approve any tribal ordinance or resolution concerning the conduct, or regulation of class II gaming 

on the Indian lands within the tribe’s jurisdiction if such ordinance or resolution provides that— * * * 

(F) there is an adequate system which— 

ø(i) ensures that background investigations are conducted on the primary management officials and key 

employees of the gaming enterprise and that oversight 

of such officials and their management is conducted on 

an ongoing basis; and¿ 

(i) ensures that— 

(I) background investigations are conducted on 

the tribal gaming commissioners, key tribal gaming commission employees, and primary management officials and key employees of the gaming enterprise; and 

(II) oversight of primary management officials 

and key employees is conducted on an ongoing 

basis; and * * * 

(d) * * * 

30 

ø(4) Except for any assessments that may be agreed to under 

paragraph (3)(C)(iii) of this subsection, nothing in this section 

shall be interpreted as conferring upon a State or any of its political subdivisions authority to impose any tax, fee, charge, or 

other assessment upon an Indian tribe or upon any other person or entity authorized by an Indian tribe to engage in a class 

III activity. No State may refuse to enter into the negotiations 

described in paragraph (3)(A) based upon the lack of authority 

in such State, or its political subdivisions, to impose such a 

tax, fee, charge, or other assessment.¿ 

(4) REVENUE APPORTIONMENT.— (A) IN GENERAL.—Except for any assessments that may 

be agreed to under paragraph (3)(C)(iii) , nothing in this 

section confers on a State or any political subdivision of a 

State authority to impose any tax, fee, charge, or other assessment on an Indian tribe or on any other person or entity authorized by an Indian tribe to engage in a class III activity. 

(B) NEGOTIATIONS.—No State may refuse to enter into the 

negotiations described in paragraph (3)(A) based on the 

lack of authority in a State, or political subdivision of a 

State, to impose such a tax, fee, charge, or other assessment. 

(C) APPORTIONMENT OF REVENUES.—The Secretary may 

not approve any Tribal-State compact or other agreement 

that includes an apportionment of revenues with a State or 

local government unless— 

(i) in the case of apportionment with local governments, the total amount of net revenues exceeds the 

amounts necessary to meet the requirements of subsection (b)(2)(B)(i), but only to the extent that the excess 

revenues reflect the actual costs incurred by affected 

local governments as a result of the operation of gaming activities; or 

(ii) in the case of apportionment with a State— 

(I) the total amount of net revenues— 

(aa) exceeds the amounts necessary to meet 

the requirements of clauses (i) and (iii) of subsection (b)(2)(B) and clause (i) of this subparagraph, if applicable; and 

(bb) is in accordance with regulations promulgated by the Secretary under subparagraph (D); and 

(II) a substantial economic benefit is rendered by 

the State to the Indian tribe. 

(D) REGULATIONS.—Not later than 18 months after the 

date of enactment of this subparagraph, the Secretary shall 

promulgate regulations to provide guidance to Indian tribes 

and States on the scope of allowable assessments negotiated 

under paragraph (3)(C)(iii) and the apportionment of revenues negotiated in accordance with subparagraph (C). 

(E) NO EFFECT ON EXISTING AGREEMENTS.—Nothing in 

this paragraph affects any existing Tribal-State compact or 

other agreement providing for an apportionment of reveVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00030 Fmt 6604 Sfmt 6603 E:\HR\OC\SR380.XXX SR380
31 

nues with a State, local government, or other Indian tribe. 

* * * 

(7) * * * 

(B) * * * 

(vii) If the State does not consent during the 60-day 

period described in clause (vi) to a proposed compact 

submitted by a mediator under clause (v), the mediator shall notify the Secretary and the Secretary shall 

prescribe not later than 180 days after notification is 

made, in consultation with the Indian tribe, procedures— 

(I) which are consistent with the proposed compact selected by the mediator under clause (iv), 

the provisions of this Act, and the relevant provisions of the laws of the State, and 

(II) under which class III gaming may be conducted on the Indian lands over which the Indian 

tribe has jurisdiction. * * * 

ø(9) An Indian tribe may enter into a management contract 

for the operation of a class III gaming activity if such contract 

has been submitted to, and approved by, the Chairman. The 

Chairman’s review and approval of such contract shall be governed by the provisions of subsections (b), (c), (d), (f), (g), and 

(h) of section 12.¿ 

(9) EXTENSION OF NEGOTIATING TIMEFRAME.—Class III gaming activities conducted by an Indian tribe on Indian land shall 

be lawful under this Act for up to 180 days after expiration of 

a Tribal-State compact if the Indian tribe signatory to the compact certifies to the Secretary that— 

(A) the Indian tribe requested a new compact not later 

than 90 days before expiration of the compact; and 

(B) a new compact has not been agreed on. 

øMANAGEMENT CONTRACTS

øSEC. 12. (a)(1) Subject¿ 

SEC. 12. MANAGEMENT CONTRACTS. 

(a) CLASS II GAMING AND CLASS III GAMING ACTIVITIES; INFORMATION ON OPERATORS.— 

(1) GAMING ACTIVITIES.—Subject to the approval of the 

Chairman, an Indian tribe may enter into a management contract for the operation and management of a øclass II gaming 

activity that the Indian tribe may engage in under section 

11(b)(1)¿ class II gaming activity in which the Indian tribe may 

engage under section 11(b)(1), or a class III gaming activity in 

which the Indian tribe may engage under section 11(d), but, before approving such contract, the Chairman shall require and 

obtain the following information— 

(A) the name, address, and other additional pertinent 

background information on each person or entity (including individuals comprising such entity) having a direct financial interest in, or management responsibility for, such 

contract, and, in the case of a corporation, those individuals who serve on the board of directors of such corporaVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00031 Fmt 6604 Sfmt 6602 E:\HR\OC\SR380.XXX SR380
32 

tion and each of its stockholders who hold (directly or indirectly) 10 percent or more of its issued and outstanding 

stock; 

(B) a description of any previous experience that each 

person listed pursuant to subparagraph (A) has had with 

other gaming contracts with Indian tribes or with the gaming industry generally, including specifically the name and 

address of any licensing or regulatory agency with which 

such person has had a contract relating to gaming; and 

(C) a complete financial statement of each person listed 

pursuant to subparagraph (A). 

ø(2) Any person¿ (2) REQUIREMENT TO RESPOND.—Any person listed pursuant to paragraph (1)(A) shall be required to respond to such written or oral questions that the Chairman may 

propound in accordance with his responsibilities under this 

section. 

ø(3) For purposes¿ (3) REFERENCES TO MANAGEMENT CONTRACTS.—For purposes of this Act, any reference to the management contract described in paragraph (1) shall be considered to include all collateral agreements to such contract that 

relate to the gaming activity. 

* * * * * * * 

øCOMMISSION FUNDING

øSEC. 18. (a)(1) The Commission shall establish a schedule of 

fees to be paid to the Commission annually by each gaming operation that conducts a class II or class III gaming activity that is 

regulated by this Act. 

ø(2)(A) The rate of the fees imposed under the schedule established under paragraph (1) shall be— 

ø(i) no more than 2.5 percent of the first $1,500,000, and 

ø(ii) no more than 5 percent of amounts in excess of the first 

$1,500,000, of the gross revenues from each activity regulated 

by this Act. 

ø(B) The total amount of all fees imposed during any fiscal year 

under the schedule established under paragraph (1) shall not exceed $8,000,000. 

ø(3) The Commission, by a vote of not less than two of its members, shall annually adopt the rate of the fees authorized by this 

section which shall be payable to the Commission on a quarterly 

basis.¿ 

SEC. 18. COMMISSION FUNDING. 

(a) FEES.— 

(1) FEE SCHEDULE.— 

(A) IN GENERAL.—Except as provided in this section, the 

Commission shall establish a schedule of fees to be paid 

annually to the Commission, on a quarterly basis, by each 

gaming operation that conducts a class II gaming or class 

III gaming activity that is regulated, in whole or in part, 

by this Act. 

(B) RATES.—The rate of fees under the schedule established under subparagraph (A) that are imposed on the 

gross revenues from each operation that conducts a class II 

33 

gaming or class III gaming activity described in that paragraph shall be (as determined by the Commission)— 

(i) a progressive rate structure levied on the gross revenues in excess of $1,500,000 from each operation 

that conducts a class II gaming or class III gaming activity; or 

(ii) a flat fee levied on the gross revenues from each 

operation that conducts a class II gaming or class III 

gaming activity. 

(C) TOTAL AMOUNT.—Notwithstanding any other provision 

of law, the total amount of all fees imposed during any fiscal year under the schedule established under subparagraph (A) shall not exceed— (i) $11,500,000 for fiscal year 2005; 

(ii) $12,000,000 for each of fiscal years 2006 and 

2007; and 

(iii) $13,000,000 for each of fiscal years 2008 and 

2009. 

ø(4)¿ (2) Failure to pay the fees imposed under the schedule 

established under paragraph (1) shall, subject to the regulations of the Commission, be grounds for revocation of the approval of the Chairman of any license, ordinance, or resolution 

required under this Act for the operation of gaming. 

ø(5)¿ (3) To the extent that revenue derived from fees imposed under the schedule established under paragraph (1) are 

not expended or committed at the close of any fiscal year, such 

surplus funds shall be credited to each gaming activity on a 

pro rata basis against such fees imposed for the succeeding 

year. 

ø(6)¿ (4) For purposes of this section, gross revenues shall 

constitute the annual total amount of money wagered, less any 

amounts paid out as prizes or paid for prizes awarded and less 

allowance for amortization of capital expenditures for structures. 

(b) FEE PROCEDURES.— (1) IN GENERAL.—By a vote of not less than 2 members of the 

Commission, the Commission shall adopt the schedule of fees 

provided for under this section. 

(2) FEES ASSESSED.—In assessing and collecting fees under 

this section, the Commission shall take into account the duties 

of, and services provided by, the Commission under this Act. 

(3) REGULATIONS.—The Commission shall promulgate such 

regulations as are necessary to carry out this subsection. 

ø(b)¿ (c)(1) The Commission, in coordination with the Secretary 

and in conjunction with the fiscal year of the United States, shall 

adopt an annual budget for the expenses and operation of the Commission. 

(2) The budget of the Commission may include a request for appropriations, as authorized by øsection 19¿ section 24, in an 

amount equal the amount of funds derived from assessments authorized by subsection (a) for the fiscal year preceding the fiscal 

year for which the appropriation request is made. 

(3) The request for appropriations pursuant to paragraph (2) 

shall be subject to the approval of the Secretary and shall be inVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00033 Fmt 6604 Sfmt 6602 E:\HR\OC\SR380.XXX SR380
34 

cluded as a part of the budget request of the Department of the Interior. 

øAUTHORIZATION OF APPROPRIATIONS

øSEC. 19(a) Subject to section 18, there are authorized to be appropriated, for fiscal year 1998, and for each fiscal year thereafter, 

an amount equal to the amount of funds derived from the assessments authorized by section 18(a). 

ø(b) Notwithstanding section 18, there are authorized to be appropriated to fund the operation of the Commission, $2,000,000 for 

fiscal year 1998, and $2,000,000 for each fiscal year thereafter. The 

amounts authorized to be appropriated in the preceding sentence 

shall be in addition to the amounts authorized to be appropriated 

under subsection (a).¿ 

SEC. 19. TRIBAL CONSULTATION. 

In carrying out this Act (including the use of negotiated rulemaking with tribal governments and the use of tribal advisory committees in developing regulatory policies, standards, and definitions), the Secretary, Secretary of the Treasury, and Chairman of 

the Commission shall involve and consult with Indian tribes to the 

maximum extent practicable, as appropriate, in a manner that is 

consistent with the Federal trust and the government-to-government 

relationship that exists between Indian tribes and the Federal Government. 

* * * * * * * 

øCRIMINAL PENALTIES

øSEC. 23. Chapter 53¿ 

SEC. 23. CRIMINAL PENALTIES. 

(a) IN GENERAL.—Chapter 53 of title 18, United States Code, is 

amended by adding at the end thereof the following new sections: 

* * * * * * * 

øCONFORMING AMENDMENT

øSEC. 24. The table¿ 

(b) CONFORMING AMENDMENT.—The table of contents for chapter 

53 of title 18, United States Code, is amended by adding at the end 

thereof the following: 

* * * * * * * 

SEC. 24. AUTHORIZATION OF APPROPRIATIONS. 

(a) IN GENERAL.—Subject to section 18, there is authorized to be 

appropriated to carry out this Act, for fiscal year 1998 and each fiscal year thereafter, an amount equal to the amount of funds derived 

from the assessments authorized by section 18(a). 

(b) ADDITIONAL AMOUNTS.—Notwithstanding section 18, in addition to amounts authorized to be appropriated by subsection (a), 

there are authorized to be appropriated $2,000,000 to fund the operVerDate Aug 04 2004 14:07 Oct 05, 2004 Jkt 039010 PO 00000 Frm 00034 Fmt 6604 Sfmt 6603 E:\HR\OC\SR380.XXX SR380
35 

ation of the Commission for fiscal year 1998 and each fiscal year 

thereafter. 

* * * * * * * 

Æ