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S. HRG. 109–50, Pt. 2

GAMING

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING ON THE REGULATION OF INDIAN GAMING

JUNE 28, 2005

WASHINGTON, DC

PART 2

(
COMMITTEE ON INDIAN AFFAIRS

JOHN McCAIN, Arizona, Chairman

BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

MICHAEL D. CRAPO, Idaho

RICHARD BURR, North Carolina

TOM COBURN, M.D., Oklahoma

DANIEL K. INOUYE, Hawaii

KENT CONRAD, North Dakota

DANIEL K. AKAKA, Hawaii

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

JEANNE BUMPUS, Majority Staff Director

SARA G. GARLAND, Minority Staff Director

(II)
(III)

C O N T E N T S

Page

Statements:

Crawford, James, chairman, Sisseton-Wahpeton Oyate of the Lake Traverse Reservation .......................................................................................... 22

Dorgan, Byron L., U.S. Senator from North Dakota, vice chairman, Committee on Indian Affairs ............................................................................... 1

Hagen, Doreen, president, Prairie Island Indian Community ...................... 25

Juan-Saunders, Vivian, chairwoman, Tohono O’odham Nation ................... 5

Marquez, Deron, chairman, San Manuel Band of Mission Indians ............. 9

Massey, Sr., Dallas, chairman, White Mountain Apache Tribal Council .... 8

McCain, Hon. John, U.S. Senator from Arizona, chairman, Committee

on Indian Affairs ........................................................................................... 3

Pakootas, Joseph A., chairman, Colville Confederated Tribe ....................... 12

Ransom, Jim, chief, St. Regis Band of Mohawk Indians .............................. 24

APPENDIX

Prepared statements:

Hagen, Doreen .................................................................................................. 33

Inouye, Hon. Daniel K., U.S. Senator from Hawaii ....................................... 35

Juan-Saunders, Vivian ..................................................................................... 35

Marquez, Deron (with attachment) ................................................................. 42

Massey, Sr., Dallas ........................................................................................... 39

Pakootas, Joseph A. .......................................................................................... 67

Ransom, Jim (with attachment) ...................................................................... 71

(1)

GAMING

TUESDAY, JUNE 28, 2005

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

The committee met, pursuant to notice, at 10:16 a.m. in room

106 Senate Dirksen Building, Hon. John McCain (chairman of the

committee) presiding.

Present: Senators McCain, Burr, Coburn, and Dorgan.

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM

NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN

AFFAIRS

Senator DORGAN. I am going to call the hearing to order. I am

Senator Dorgan, the vice chairman of the committee. Senator

McCain, the chairman of the Committee on Indian Affairs will be

with us momentarily. We just started a vote on the energy bill on

the floor of the Senate moments ago, and as soon as the chairman

votes, he will be here.

I am managing the Interior bill on the floor of the Senate, which

is coming to the floor immediately following the energy vote, so I

will have to depart for the floor. Senator McCain suggested that I

begin as soon as I arrived at the hearing room. So I will do that

and make an opening statement, and as I said, my colleague Senator McCain will be along shortly. I then will have to leave to go

manage the Interior bill on the floor for the remainder of the day.

We have a hearing today in the Committee on Indian Affairs on

the regulation of Indian gaming. We have previously discussed this

issue in this committee, and we wanted to invite specifically today

a number of representatives of Indian tribes to discuss with us the

general subject of Indian gaming; what it means to tribes; what the

opportunities are that it offers to tribes; what some of the challenges that they have experienced are; how they see and view the

regulatory mechanisms that exist.

We felt it would be a useful opportunity and I believe the tribes

feel the same say, to have this kind of an open discussion from the

viewpoint of those elected governments of the tribes who are involved in gaming to discuss with us their view of it.

I want to make a couple of brief comments about the subject generally of Indian gaming. I come from a State that has four Indian

reservations. Not unlike in many other areas of the country, the locations for the Indian reservations are areas of the State that are

in remote areas, in many cases, without substantial industry or job
2

opportunities, or in some cases without substantial natural resources.

The tribes that have been located there over these many years

have found it very, very difficult to exist. In many cases, they face

full-blown crises in health care, education, and housing. I have spoken at great length about those challenges in many other hearings.

We have all struggled to find ways to bring new industry, new jobs,

new opportunities to the reservations, to provide new educational

opportunities and to improve the educational facilities that exist on

the reservations.

We have all worked in all of these areas to try to see if we can

change things, and yet not very much has changed over a long period of time. Some years ago, there was a decision, the Cabazon decision, that determined that the sovereignty of Indian tribes allowed them to engage in gaming operations. That brought about an

industry that has now grown to become a rather significant industry, somewhere we believe between $16 billion and $19 billion a

year in Indian gaming.

Indian tribes as a result of that court decision have decided in

many circumstances, I believe over nearly 250 of them, have decided to engage in gaming activities. Those activities have in some

circles been controversial and in other circles have been a Godsend

and a real boon to tribes that have been struggling for the kind of

revenue stream that would give them an opportunity to make an

investment in the people of their tribes. So we have stories, for example, cover stories or feature stories in Time magazine that describe certain elements of gaming in one way, and then we have

others that describe it in another way.

From my point, Indian gaming has brought significant opportunities to certain tribes that found that they have a way to generate

revenue that they previously had not had the opportunity to take

advantage of. That revenue then goes into an income stream that

allows the tribes to invest in the general welfare of the citizens of

that tribe and to make investments to improve health care, to improve education, to improve housing on the reservations.

There are some other circumstances where the tribes through the

recognition process are very small tribes with just a few members.

I believe in one case there is a tribe with one recognized member,

with a gaming facility; another with four, five, or six members,

where a substantial amount of resources are developed.

Still, again there are the issues of the compacts with State Governments because in order to engage in gaming, the tribes must negotiate with the States, the Governors and the State authorities,

for a compact. The question then has become what portion of that

revenue shall the States be involved in, what kinds of compacts

shall exist.

So all of these things have been worked through and worked out

over now well over a decade. This gaming activity has grown and

grown very substantially. As I indicated, it certainly includes with

it challenges. Some of the challenges were discussed at a previous

hearing we held. It brings with it also enormous opportunity for resources to be made available to people who previously did not have

those resources.
3

So our committee recognizes both sides of this issue. We believe

it is a very important issue. We believe decisions about this need

to be made with the full consultation and a full discussion with the

members of the Indian tribes. They are a sovereignty. No one gave

them that sovereignty. That sovereignty is theirs. I know from time

to time people say Indians were given sovereignty. That was not

the case. The sovereignty is theirs.

We believe it is helpful and fruitful for us to have this kind of

discussion today in order to hear from the members of the tribes

with respect to their view of gaming. How has it worked? What

benefit does it provide? What challenges has it posed? How do they

view the regulatory mechanisms? That is the purpose of the hearing.

You have noticed that two of my colleagues have just joined us.

Senator McCain, at your instruction I did proceed with an opening

statement, and that is the point we are at now. I also indicated

that I am managing our side of the Interior appropriations bill on

the floor of the Senate as soon as this vote is over and will have

to leave.

The CHAIRMAN. Thank you very much, Senator Dorgan. I am

pleased to note you always carry out my instructions. I thank you

for that. [Laughter.]

Senator DORGAN. There will come a time. [Laughter.]

The CHAIRMAN. Thank you very much, Senator Dorgan. I appreciate your involvement in this issue, your continued involvement,

and I understand the requirement of your presence on the floor as

we take up the Interior appropriations bill. I thank you for your

continued involvement in this very important issue.

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

ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. This morning the committee is holding the third

in a series of hearings on the Indian Gaming Regulatory Act. This

hearing is devoted to those most impacted by the successes and

challenges of Indian gaming: Indian tribes. That success has not

been achieved, however, without Indian tribes facing a number of

challenges, some of which still confront them.

It is important to remember that when Congress enacted IGRA

in 1988, it was not creating another Federal program for Indians.

Rather, IGRA was an acknowledgment of the ingenuity of the Indian tribes in finding a legal economic activity that could provide

jobs on the reservations and supplement the meager Federal support for necessary tribal government services; 17 years later, that

ingenuity has proven to be a greater success than anyone could

have imagined.

I also want to emphasize that IGRA was a direct result of the

Cabazon decision. If it had not been for the Cabazon decision, there

would not have been IGRA. Once that decision was made, then we

had to do our best to find a workable relationship between States

and tribes.

This success has not been shared solely by Indian tribes. According to a recent economic study, States received over $900 million

in ‘‘revenue sharing’’ funds last year, in addition to $200 million for

reimbursement of regulatory costs, despite the fact that IGRA spe-
4

cifically preserved Indian tribes’ immunity from taxation by States.

As this committee continues its oversight of IGRA, we will review

those payments to ensure that Indian tribes are obtaining value in

return for sharing gaming revenues with State Governments.

IGRA reflects careful balancing of tribal, State, and Federal interests. In keeping with our trust responsibility, this committee is

committed to reviewing the implementation of the act over 17 years

and ensuring that Indian tribes remain the primary beneficiaries

of the gaming activities under IGRA and that there is transparency

and that there is integrity and that there is sufficient oversight.

This enterprise has gone from a $500-million a year business to a

$18.5-billion to $19 billion a year business.

Anyone who does not believe that it does not need to be reviewed

after 17 years, then we have an honest difference of opinion. I have

been a member of this committee for 19 years. I believe we have

an obligation to review any enterprise that is a $19-billion a year

business. If any of the witnesses today believe that we do not have

that responsibility, then we have a respectful disagreement.

So I look forward to this hearing and others as we review this

very important aspect, and now has become a very important aspect of America’s economy.

Senator Coburn.

Senator COBURN. Mr. Chairman, I have no opening statement.

The CHAIRMAN. Thank you very much.

Senator DORGAN. Mr. Chairman.

The CHAIRMAN. Senator Dorgan.

Senator DORGAN. Before I leave to go to the floor, I wanted to

mention that Chairman JC Crawford from the Sisseton-Wahpeton

Tribe, is here. I had visited that tribe some months ago, and wanted to just mention to you I went to the gaming facility. Senator

Conrad and I were actually down near the southern end of our

State.

It was dinner time and we stopped into the gaming facility

owned by the Sisseton-Wahpeton Tribe. It was the first time I had

been there. We went to the buffet, which is always a well-advertised portion of any gaming facility. As we stood in the buffet line,

when we got to the cashier, she looked at Senator Conrad and myself and said, ‘‘Would you want the senior citizen discount?’’

[Laughter.]

I confess to you that did your tribe no good. [Laughter.]

To be asking the two of us that question. We actually demurred.

We deferred, I guess, for another trip, our senior citizen discount.

The CHAIRMAN. I could have taken it.

Senator DORGAN. I was not too happy. She took a close look at

us and then asked the question.

But I did want to say to Chairman Crawford, we are very

pleased you are here, and I am sorry I am not able to stay for your

testimony, but I have read it.

Thank you.

The CHAIRMAN. Welcome. Our first panel is Vivian Juan-Saunders, chairwoman of the Tohono O’odham Nation in Sells, AZ; Dallas Massey, Sr., chairman of the White Mountain Apache Tribal

Council; Deron Marquez, chairman of the San Manuel Band of Mis-
5

sion Indians; and Joseph A. Pakootas, chairperson of the Colville

Confederated Tribe.

Please come forward.

Welcome, Chairwoman Saunders. It is good to see you again.

Please begin. All four of you, your written statements will be made

part of the record. Please proceed.

STATEMENT OF VIVIAN JUAN-SAUNDERS, CHAIRWOMAN,

TOHONO O’ODHAM NATION

Ms. JUAN-SAUNDERS. Thank you.

Good morning, Chairman McCain and Vice Chairman Dorgan

and members of the committee. I am Vivian Juan-Saunders, chairwoman of the Tohono O’odham Nation. I am also here on behalf of

the Arizona Indian Gaming Association. In Arizona, we have 22

federally recognized tribes; 18 are members of our association.

Thank you for the opportunity to discuss Indian gaming regulation in the State of Arizona. I would also like to extend a special

appreciation and greetings to our honorable Senator from our great

State of Arizona. It is always a pleasure to be in the same room

with you. I appreciate your interest and your concern for our industry.

Arizona’s regulatory system meets the intent and directives of

the Indian Gaming Regulatory Act. My written comments provide

in detail the success of Indian gaming on the Tohono O’odham Nation. Indeed, sound regulation and prudent management of our

gaming operations has generated revenues that fund more than

one-half of our budget. Without casino revenue, the nation clearly

could not provide the amount of available governmental services.

For the Tohono O’odham Nation, we have used gaming revenue

to build our own Tohono O’odham Community College, a tribal college which this past year was accredited by the higher learning institution, the same accrediting agency that accredits other 2-year

colleges. We built three Head Start centers, a nursing home, five

recreation centers for our youth, offered business grants for tribal

members, and a westside health clinic. If we waited for the Federal

Government to build our health clinic, we would be in line for 20

years. In the meantime, our people are dying and are in need of

health care.

My remarks this morning will address the successful Indian

gaming regulatory system in our State. Under Arizona’s gaming

compacts, tribes are the primary regulators, but the State also has

an important role. The State regulatory agency has concurrent licensing authority and significant oversight functions. The tribes

and the State cooperatively work together to ensure that Indian

gaming is well regulated and achieves what Congress intended in

passing IGRA.

Today, Arizona has 567 people employed in Indian gaming regulation, including 105 State employees and 462 tribal employees.

Collectively, the tribal and State regulatory agencies spent more

than $35 million per year funded with Arizona Indian gaming revenues. State regulators share a variety of concurrent licensing, inspection and compliance functions, which are detailed in my written remarks.
6

The State’s role has been evaluated as highly effective. In 1999,

Arizona’s Auditor General determined that the State’s extensive

oversight activities are well designed for ensuring the integrity of

class III gaming operations. The report noted the following key

State regulatory functions. Pre-operation inspections are conducted

at every casino. Random inspections of at least 50 devices at each

casino are conducted every 4 weeks. Compact compliance reviews

are conducted at each casino every 18 months. State regulatory

agencies maintain an ongoing presence through weekly visits to casinos to inspect operations and investigate possible compact violations.

The report concluded that Arizona’s regulatory system was

among the most extensive nationally, with more staff monitoring

Indian gaming than any other State with comparable gaming demographics. In addition, the report noted that our regulatory budget is larger than States with comparable numbers of casinos and

that gaming inspections and reviews are more frequently conducted

in our facilities than in most other States.

In Arizona, Indian gaming is both limited and well regulated.

Our compact limits the number of facilities, as well as the type of

devices and games, including table games. The scope of gaming is

based on the size of the tribe, with those having more enrolled

members eligible for devices and so on.

While the State has an active regulatory role, these activities are

secondary to those of the tribes who are the primary gaming regulators in the State. The tribal regulatory offices have primary responsibilities for licensing all casino employees, licensing all gaming vendors, licensing all large non-gaming vendors, inspecting

gaming devices, approving the rules for poker and blackjack games,

setting detailed internal control standards governing casino operations, monitoring compliance with IGRA and the compact and

meeting internal control standards.

Arizona’s gaming compacts also require that a tribal gaming inspector be physically present in each gaming facility at all times

during operating hours. Moreover, the tribes and State have been

working on other initiatives to further strengthen our system, including the creation of a special U.S. attorney position to exclusively address crimes committed in tribal gaming facilities, and we

have an ongoing effort to update and improve gaming regulatory

requirements in the areas of new security and surveillance. We anticipate continued cooperative work in the areas I mentioned.

We believe there is a misperception that serious crime exists at

Indian casinos that go unpunished. Typically, most offenses occurring at tribal facilities are in fact minor property crimes. Nevertheless, we are diligently working in Arizona to protect the integrity

of our facilities and to ensure that appropriate measures are taken

to prevent and prosecute any criminal or other wrongful action

committed in our facilities.

Arizona’s gaming tribes take our role as regulators seriously, and

so does the State. Our system is both stringent and demanding,

and requires a significant amount of communication and cooperation. Because our system is both comprehensive and highly effective, we believe that additional regulation at the Federal level will

only duplicate current tribal and State efforts. Instead, it makes
7

sense for the National Indian Gaming Commission to continue providing technical assistance to help strengthen our existing system.

It is not necessary or functional, however, to add a third regulatory

layer.

Finally in light of the significant resources we spend on regulation, as well as the NIGC’s current role in our system, we do not

believe that Arizona tribes should be required to shoulder the cost

of any additional NIGC regulatory functions in our State.

Let me just conclude by sharing with you that in Arizona, we

have what we refer to as metro tribes and urban tribes. The

Tohono O’odham Nation is not only metro and rural, we are also

international in that we have 75 miles of the international border

that is adjacent to the United States, Mexico, and Tohono O’odham

Nation.

We continue to catch up for the last 200 years. Today, we spend $3 million annually addressing homeland security. We have spent

$10 million of our own tribal resources on border issues, when

these funds ought to be spent on housing, economic development,

infrastructure, roads and so forth.

Another major unique difference with our tribes in Arizona is

some are small in population and land-based, and other like

Tohono O’odham Nation are large in land-base and population. We

have 2.8 million acres of land and 28,000 enrolled members, onehalf of which live on the reservation. Much of our land is still virgin territory, with lack of infrastructure, which is very costly. So

you can see that an increased revenue to oversee the regulation of

gaming will seriously impact our efforts and the efforts of tribes in

Arizona to catch up to the 21st century.

I also want to express that for tribes in Arizona, the metro tribes

continue to deal with encroachment; continue to deal with encroachment not only on land, but also with the water sources surrounding the reservation lands. Revenue-sharing in the State of Arizona, we also negotiated with the State of Arizona to provide significant revenue-sharing, although there were internal discussion

with tribes in our State, including Tohono O’odham Nation, and

the political realities sank in. In 2004, $37 million went to the Arizona Benefits Fund to fund problem gambling, instructional improvement. Also, $8 million went to the Arizona Department of

Gaming to regulate gaming in our State, Arizona wildlife and tourism. In addition, 12 percent of revenue-sharing goes to local municipalities to help support their government services.

So each time we agree to take from gaming revenue, we continue

to take from the intent of Indian gaming, which was to develop

sound and stable economies for Indian country. I want to conclude

my remarks and thank you for the opportunity to provide testimony this morning.

[Prepared statement of Ms. Juan-Saunders appears in appendix.]

The CHAIRMAN. Thank you very much.

I note Senator Burr is here. Would you care to make any opening

comments, Senator Burr?

Senator BURR. Senator McCain, thank you. I would much prefer

to hear the testimony. Thank you.

The CHAIRMAN. Thank you.

Chairman Massey, it is good to see you again, sir.
8

STATEMENT OF DALLAS MASSEY, SR., CHAIRMAN, WHITE

MOUNTAIN APACHE TRIBAL COUNCIL

Mr. MASSEY. Good morning, John, chairman of the committee

and committee members. Thank you for inviting me to be part of

these proceedings. I will make brief comments and ask to submit

my written testimony entered into the record.

The CHAIRMAN. Without objection.

Mr. MASSEY. I am Dallas Massey, tribal chairman of the White

Mountain Apache Tribe. The White Mountain Apache Tribe is located in East-Central Arizona on the Fort Apache Indian Reservation. We are a rural tribe, a small market. Our land covers more

than 1.6 million acres. We have about 12,000 members within our

land-base. Our members experience serious poverty and unemployment. Our median family income is just over $9,200 a year. Our

casino provides not only an important source of revenue for us, but

it also provides a major source of employment for our people.

We have many natural resources on our land, including timber.

In the summer of the year 2002, the White Mountain Apache Tribe

suffered a horrible loss when the Rodeo-Chedeski fire swept

through our timber stand on the west side of the reservation. Because of the fire, the land cannot he logged for 100 to 150 years.

Even when the mill was operating, unemployment on our reservation was over 60 percent. Our casino is critical for jobs and governmental revenues.

Yet despite our daily struggle with severe revenue shortfalls, our

tribe, like other Arizona tribes, is sharing a portion of our gaming

revenues with the people of Arizona. In the year 2004, Arizona

gaming tribes contributed nearly $38 million in revenue-sharing

payments to the State to support education, emergency health care,

wildlife conservation and tourism throughout Arizona. We also provide support for helping problem gamblers.

Arizona regulations, I want to point this out, in the year 2004,

21 tribes have compacts and 15 have gaming facilities. Arizona has

11,831 slot machines, 424 table games. To regulate the industry,

Arizona tribes and the State of Arizona spent more than $35 million in oversight. In total, the State has 567 regulatory employees,

a number that is exclusive of NIGC staff. This equates to one regulatory employee for every 21 games.

In comparison, Atlantic City, which has 34,225 machines in play,

one regulatory employee for every 95 games. In Nevada, which has

211,760 games in play, has one regulatory employee for every 492

games. Arizona spends roughly $3,000 per year program per game

for regulations, while Atlantic City, with an industry three times

the size, spends $672 per game per year. In Nevada, nearly 20

times the games, spent $118 per game per year.

How did Arizona develop such a system? Although we have different backgrounds, cultures, and competing interests, we unite to

agree upon common policy for Indian gaming in Arizona. Tribal

governments are dedicated to building and maintaining strong regulatory systems because our sovereign immunity authority and

government operation resources are at stake.

Proposition 202 passed by Arizona voters in the year 2002 provided additional regulation for Indian gaming by the Arizona Department of Gaming. Indian gaming is a highly regulated industry.
9

In Arizona, nothing is left to chance. In the year 2004, Arizona

gaming tribes contributed $8 million to the Arizona Department of

Gaming. This nearly fully funds the agency, since ADOG’s total

budget is almost $10 million. This increase in funding has enabled

the agency to grow from 75 full-time employees in the year 2003

to 105 full-time employees in 2004.

In 2004, Arizona tribes spent more than $25 million for tribal

regulation. In addition to being licensed by tribes, gaming vendors

and gaming employees must be certified by ADOG. This process includes background checks on and licensing and certification of

management, officials and key tribal employees. ADOG also inspects Indian gaming facilities to review cash and credit transactions, the integrity of games and vendor payments.

Arizona tribes believe revenue-sharing should be capped to ensure that more money is generated for tribal needs and regulations,

rather than using revenues from tribal government gaming to offset State deficits. Senator McCain, when you drafted IGRA, you

said no authority could tax Indian gaming agreements. Tribal government gaming was instituted to help tribes supply essential government services to its members, not to provide State Government

with ways to meet budget shortfalls.

Arizona tribes have already fully funded adequate State tribal

regulatory systems. Tribes should not be forced to pay for increases

in NIGC fees. Furthermore, increases in NIGC funding should be

based on specific budget justifications submitted to appropriation

committees and not based on automatic funding increases.

Our system is limited, regulated. It works. From our experience,

our model interprets the letter and intent of IGRA. It generates

revenues for tribes to encourage self-sufficiency and recognizes that

tribal land presents tribes with different opportunities. Therefore,

we would like to be on the record to remind the committee that

there are financial impacts and hardships to tribes when fees are

increased.

Thank you for giving me an opportunity today to represent the

White Mountain Apache Tribe and the State of Arizona. On behalf

of Arizona tribes, we invite this committee to come to Arizona and

see our system working.

Thank you.

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

The CHAIRMAN. Thank you very much.

Chairman Marquez.

STATEMENT OF DERON MARQUEZ, CHAIRMAN, SAN MANUEL

BAND OF MISSION INDIANS

Mr. MARQUEZ. Good morning, Chairman McCain, Vice Chairman

Dorgan and members of the committee.

I am Deron Marquez, chairman of the San Manuel Band of Mission Indians. I would like to begin by thanking you for this opportunity to testify before this committee.

First, I would like to provide some background on our tribe. Our

reservation was established in 1891. It is located roughly 70 miles

east of Los Angeles. We occupy roughly 800 acres in the mountainous region of San Bernardino County. Our reservation was like
10

many before gaming: No infrastructure, poor housing, poor health,

conditions still found on many reservations today.

Tribal government gaming has empowered our tribe to dramatically improve these conditions for our people and to assist other

tribes. My understanding is Congress intended this empowerment

to occur when enacting IGRA. IGRA’s purpose is to provide tribes

with economic activity, self-sufficiency and strong tribal governments. It was also intended to provide a framework for gaming regulation to ensure that gaming was fair and honest; and finally, to

ensure that tribes are the primary recipients of gaming revenues.

Today, I would like to discuss two of our concerns: First, reservation shopping or off-reservation land acquisitions; and second, revenue-sharing.

Before we talk about specific concerns, let me tell you about our tribal gaming regulation. Last year, we spent $47 million on regulation.

The CHAIRMAN. Based on what revenues?

Mr. MARQUEZ. Based off of our tribal gaming operations.

The CHAIRMAN. And what were the revenues? You spent $47 million on regulation. How much were your gaming revenues?

Mr. MARQUEZ. Last year?

The CHAIRMAN. Yes.

Mr. MARQUEZ. Those are numbers we really do not disclose. I

would probably get in a lot of trouble if I disclosed.

The CHAIRMAN. I see. But you want to disclose how much you

spent on regulation, but you do not want to disclose your revenues.

It is not helpful. Go ahead.

Mr. MARQUEZ. On average, we allocate $20 million on regulation

per year. Our independent gaming commission has around-theclock oversight responsibility. As a result, we experienced zero embezzlements or other systemic criminal activity. All of this pursuant to our tribal gaming ordinance, and working in concert with

Federal and State regulatory bodies.

As Chairman Hogan recently stated, ‘‘Indian gaming is a healthy

and transparent industry due to solid tribal regulation.’’ We believe

this to be true and San Manuel is one example of upholding the

strictest and most comprehensive regulation.

Another strong example of our commitment is a $17 million investment in a state-of-the-art security and surveillance system we

installed last year. Our system is an all-digital platform. It provides quick turnaround for prosecutors and has over 2,500 cameras. For these reasons, we encourage cooperation among all agencies that oversee tribal gaming and that these agencies acknowledge and work with tribal gaming commissions since they are the

primary regulatory body.

For San Manuel, we have remained steadfast in our commitment

to the strictest regulation. No other form of gaming is as highly

regulated as tribal gaming. We hold a deep belief in separation between the elected body of the tribe and the gaming commission.

While we believe IGRA is working for the most part, we do have

two concerns where we believe IGRA’s intent is not being followed.

First is reservation shopping. We support tribes acquiring land to

rebuild their homelands. However, we strongly oppose encroachment on our ancestral lands by tribes or developers. As the Interior
11

Inspector General stated, ‘‘Expansion of gaming off-reservation is

being pushed by wealthy developers who want a piece of the action.’’ This conflicts with the stated purpose of IGRA and places

tribal nations against each other.

What needs to be understood is that tribal government gaming

is a tool. Sovereignty should be exercised responsibly. Accessing of

land far from existing reservations will lead to the end of gaming

as we know it today. If this activity occurs, tribal governments will

lose rights and critical revenue, taking us backwards. Clearly, that

was not the intent of IGRA.

Let me tell you about our second concern, which is current revenue-sharing practices. IGRA restricts revenue-sharing and prohibits taxation. But today, States are using tribal government

funds to pay down State deficits, and neither tribal governments or

tribal gaming caused these debts. Governor Schwarzenegger has

literally demonized tribes in his campaign slogan, ‘‘Fair Share,’’

convincing the public that tribes are responsible for paying taxes

to the State with large sums of money.

Yet our gaming operation provides millions of dollars and thousands of jobs outside of the tribal community. In California, tribal

governments are the second-largest employer in the State, only second to the State itself in job creation. Gaming is not a Federal or

a State program. Tribes are responsible for paying for services received and improper revenue-sharing only bleeds tribes. This is

why we believe protecting our sovereignty and our rights is paramount.

In closing, San Manuel supports the intent of IGRA. The spirit

and soul of IGRA always contemplated a tribal primacy regulatory

role; that gaming is to be conducted on lands not many miles away

from existing reservations; and that tribes are the primary recipients of revenues generated on tribal lands. These concepts are

nothing new to this committee, for it was this committee that crafted this critical piece of legislation that has lifted many tribes from

utter poverty and despair. We simply ask that Congress enforce the

true intent of this act.

Finally, tribal gaming works. It works because of strong regulation, a strong tribal government, fair revenue-sharing practices,

and strong relationships with the local communities. Housing,

health care, education and infrastructure are now possible. That is

why IGRA must be upheld to what this committee created.

Mr. Chairman, I would invite you or anybody from the committee

to visit our reservation to see our operation for yourselves. Thank

you for asking me to testify today. I am pleased to answer any

questions when it allows.

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

The CHAIRMAN. Thank you very much.

Can you help me with the pronunciation of your name?

Mr. PAKOOTAS. Certainly. Joe Pakootas.

The CHAIRMAN. Pakootas.

Mr. PAKOOTAS. Pakootas, yes.

The CHAIRMAN. Thank you very much. Welcome.
12

STATEMENT OF JOSEPH A. PAKOOTAS, CHAIRPERSON,

COLVILLE CONFEDERATED TRIBE

Mr. PAKOOTAS. Thank you very much.

Good morning, Mr. Chairman and members of the committee. As

I said, my name is Joe Pakootas and I am chairman of the Colville

Business Council. I represent the Confederated Tribes of the

Colville Indian Reservation and over 9,000 enrolled members of the

tribe.

Today, I would like to present the views of the Colville Tribe on

the Indian gaming regulations, specifically regulation of the afteracquired trust lands for gaming purposes under the IGRA.

I would like to give a little brief history of the Colville tribes. We

are located in North-Central Washington. Our reservation comprises about 1.4 million acres of trust and allotted lands. Our tribe,

like many other tribes in the United States, has been the victim

of the Allotment Act, Dawes Act, and many different acts of the

Federal Government in the past. Indian gaming has helped us to

reacquire many of those lands that we lost through the years, and

also helped us to improve the health and welfare of our tribal

members, tribal people on the reservation, and those who live off

the reservation also that are going to college for higher education.

The Colville Tribes is a confederation of 12 different tribes in

North-Central and Eastern Washington. These tribes were located

on the reservation after it was established by Executive order in

1872 by President Grant. Some of the tribes were moved to our reservation at gunpoint in the late 1800’s. Also, a majority of our enrolled members live on the reservation. Our reservation is divided

up into four different districts, and those districts are metropolitan,

or where the smaller cities are located within our reservation.

Also, our reservation is quite remote. We are a little ways off the

beaten path, so to speak. The nearest Interstate to our reservation

is about 100 miles from our headquarters which is in Nespelem.

Our reservation encompasses lands within Okanogan and Ferry

County in the State of Washington. These are two of the poorest

counties in the State of Washington. These counties were primarily

dependent upon agriculture, mineral, and timber industries.

Since some Federal regulations have come into place also, these

two counties are struggling economically. The Colville Tribe is the

major contributor to these local economies at this point in time.

Our tribe, along with our Colville Tribal Enterprise Corporation,

employs over 2,500 people in this area. That makes the Colville

Tribes the largest employer in North-Central Washington.

Many of these employees are non-members that live on the reservation or off the reservation. Many of our employees, tribal members that do work in our enterprises and within our tribal government spend all of their dollars off the reservation. We do not have

any real economy on the reservation so these two counties where

we are located receive quite a bit of those dollars, and the State

of Washington also ultimately receives all of our dollars.

As one of the largest employers in North-Central Washington, we

are quite concerned with what is going on within our reservation.

As I said, we have no economy. Our dollars leave the reservation

immediately. Yet, we are so off the beaten path that not too many

people come to our facilities, our gaming facilities in particular.
13

Our gaming revenues, we have three casinos. One casino is located off the reservation on trust land. The other two casinos are

located within the boundaries of the reservation. Our gaming revenues are about $25 million annually. So we are quite different than

many tribes that are close to the huge metropolitan areas, the huge

areas over on the west side of the mountains on the west coast, Seattle area. So we are not one of those rich tribes, so to speak, yet

we do consider ourselves wealthy because of our land-base and because of our people.

Eighty percent of our casinos’ net revenues fund essential tribal

governmental functions. These functions include our elders, many

of our youth, fire safety, police protection, gaming regulation, landuse planning, social and health services, housing and also education. We do not utilize our gaming revenues for per capitas as

some tribes do.

Our tribe, as I said, we are located quite a ways from the metropolitan areas. Because of that, we are looking to off-reservation

lands. These lands that we are looking to are aboriginal territories

of one of the 12 different bands, tribes that make up our confederation. One of the areas that we are looking at is the Moses Lake

area. That is why I want to speak to the after-acquired lands after

1988. It is because of our economy on the reservation and the remoteness.

We are looking at the Moses Lake area right now. That is aboriginal territory of the Moses-Columbia Band-Tribe of our Confederation. We still own trust land down in that area. We have trust

land allotments still located outside the exterior boundaries of the

reservation that is considered Indian land. So we looked at Moses

Lake area. Some of the concerns that we have is putting that fee

property into trust status. Many tribes that are in this situation

have to put up millions of their own dollars, tribal dollars that are

required to provide services to our tribal membership, and in this

case for the Colville Tribe to improve the economy not only for the

Colville Tribe, but also for the Moses Lake area.

We are required to put up the millions of dollars up front to either purchase the land, and we want it to be a casino and destination resort area. We are required to put these millions of dollars

to purchase the property, not knowing if it can ever be put into

trust status.

To a lot of people, this is bad business.

The CHAIRMAN. You are going to have to summarize here pretty

quick.

Mr. PAKOOTAS. Okay. For a lot of people, this is bad business,

but for Indian tribes, we are required to do this to improve our

economies. So that is a concern that we have, is the many hurdles

that we have to jump through in section 20 of IGRA.

So Mr. Chairman, that short part that I said, I do appreciate the

opportunity to testify today. Our written testimony is submitted.

We will answer any questions that you may have of the Colville

Tribes.

Thank you very much.

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

The CHAIRMAN. Thank you very much, Mr. Chairman.
14

Chairwoman Saunders, the Arizona compact in some ways is

unique in that remotely located tribes are able to share revenues

in that urban tribes can lease the rights to slot machines. Right?

And since you mentioned that you are both, since your tribe is

both, how do you feel about that, and how is it working?

Ms. JUAN-SAUNDERS. In our State, we have five tribes who currently are engaged in agreements for machine transfers. These are

tribes who for many reasons have decided not to build facilities on

their reservations so they enter into agreements.

The CHAIRMAN. Like the Wallapais?.

Ms. JUAN-SAUNDERS. Wallapai, Havasupais, San Juan, Southern

Paiute, Zuni, and Kaibab Paiute, for example.

The CHAIRMAN. Has that worked out well?

Ms. JUAN-SAUNDERS. Yes; it has. It allows the protection of their

sovereignty and the sovereignty of the tribe. They are entering into

agreements to be protected. It also provides a revenue source for

those very remotely located tribes to also share in the economics

of Indian gaming.

The CHAIRMAN. I understand the new Arizona compacts provide

for some revenue-sharing with the State on a sliding scale. As a

large urban tribe, do you find these revenue-sharing provisions to

be acceptable?

Ms. JUAN-SAUNDERS. In our State, we take pride in the fact that

tribes are united on these issues. It was very difficult negotiations

even among ourselves. But in the spirit of unity, we agreed to compromise and the scale ranges from 1 percent to 8 percent, with everyone starting at 1 percent and it goes up to 8 percent as their

year-to-date revenues reaches the change points. So for Tohono

O’odham Nation, despite our ever-pressing needs, and in that spirit

of cooperation and unity with the tribes in our State, we have

agreed to the sliding scale.

The CHAIRMAN. Off-reservation casino proposals do not seem to

have the same popularity in Arizona as in other areas. Why do you

think that is?

Ms. JUAN-SAUNDERS. Again, the tribes in our State, we have

come together to discuss these very important issues. Through our

monthly meetings and respect for our basic needs and respect for

our sovereignty, we compromise with each other. We have 18 of the

22 tribes in our State who are members of our association, the Arizona Indian Gaming Association. We have very frank discussions

among ourselves. Next month, we will be having that very discussion on off-reservation shopping.

The CHAIRMAN. Chairman Massey, do you have a view on that,

on the issue of off-reservation casinos?

Mr. MASSEY. Every tribe is different. Ours, what White Mountain Apache Tribe, I, like the leaders sitting here, we do not agree

with that also, off-reservation gaming.

The CHAIRMAN. You mentioned very eloquently, Chairman

Massey, that this was an issue of tribal sovereignty, and I agree.

I think that some of my fellow citizens would also point out that

about 99 percent of the patrons of Indian gaming operations are

non-Indian. So we have an obligation to protect the interests of

those who engage in these gaming operations who are the source

of the revenue. That aspect of this has to be injected in any discus-
15

sion that we make. I happen to very proud that we engage in it.

I happen to very proud of the compact that was agreed to by the

majority of citizens of our State. I think that it is working well. But

implicit in that agreement and the fact that the majority of off-reservation citizens of Arizona approve that compact, implicit in that

is that we have to respect and safeguard their ability to engage in

a gaming operation that is honest, straightforward and not one

that lacks transparency. I hope that you appreciate that aspect of

my representation of the people of the State of Arizona.

Which brings me to my next question. Do you have concerns regarding the level and effectiveness of State regulatory involvement?

Mr. MASSEY. State regulatory involvement?

The CHAIRMAN. Yes.

Mr. MASSEY. Yes; I think like I mentioned here that we are one

of the most regulated gaming industries. The dollars that I have

mentioned between different States and the State of Arizona, I

think we have one of the strongest regulatory gaming in Arizona.

I think that that says enough with the numbers that I gave out a

while ago.

The CHAIRMAN. Has your tribe had difficulties in making referrals to Federal law enforcement and prosecution agencies?

Mr. MASSEY. Not on Fort Apache Indian Reservation.

The CHAIRMAN. Chairman Marquez, you make a very important

point in your statement about developers exploiting Native Americans for the purposes of developing casinos. One of the more outrageous practices that we have seen is specifically in IGRA we prohibited, we put a ceiling on the percentage that they could get in

a management contract, so they changed the name to consulting.

A number of ‘‘consultants’’ have exacted exorbitant amounts of

money from tribes who are desperate to begin gaming operations.

First of all, do you agree with that? I draw the conclusion from

your testimony that you do. Second of all, if that is the case, what

do you think we ought to do about it?

Mr. MARQUEZ. I do agree with the fact that there are unscrupulous developers masquerading themselves as consultants. They are

what they are. I think that one of the elements, I do not know how

you would get there, but there are obviously very fair and honest

developers out there who do want to do good things out there and

help tribal nations move forward, and how we could basically shift

them around so we understand who is good and who is bad.

I think the NIGC, along with our own gaming commissions, as

well as the State’s gaming operations, especially back in California,

if they all have to go through a background check before they are

engaged in this process. I can only speak to the fact that I know

in California, at least for our gaming operations, it works. In California at the State level, it works. I do believe, some of the findings

I have read from the NIGC about some of these corrupted people

involved in developing or trying to develop, it works.

I just think that there has to be a step up in the area by which

if it is more funding to the NIGC, then it is more funding to the

NIGC. If it is more funding to the State regulators, then it is more

funding there, as well as the tribal level. But I think at each level,

the tribal gaming commission having the primacy on this to find

out first if this group is what they say they are.
16

The CHAIRMAN. Let me talk to you about, very briefly since you

raised it in your opening statement. We had a situation here. We

had a hearing on the Lytton situation. As you know, a provision

was inserted in another bill, an omnibus bill, that allowed this

tribe to establish a casino, as I understand it, down in downtown

Oakland. There was a significant backlash against that. As you

know, Senator Feinstein from the State introduced legislation repealing that provision. I understand it has been rendered a little

bit moot because the legislature is apparently not going to approve.

Another example, there is a tribe that wants to give up their

claim to one-half the State of Colorado in return for one acre in

downtown Denver. We see example after example of this. There is

another one lately that I do not recall the details of.

First of all, it seems to me that that harms the whole ideal of

Indian gaming, and that was allow Indian tribes to conduct gaming

operations on their own sovereign territory. Now, we are seeking

casinos in downtown Oakland and downtown Denver, which they

may have a legitimate claim to, but that is a separate process.

What is your view on that situation?

Mr. MARQUEZ. Mr. Chairman, let me speak to you about the particular situation in my own backyard, where I have three tribes

seeking land into trust for the same exact purpose, to do gaming

on our ancestral lands. These tribes have no historical ties to this

area whatsoever. Big Lagoon is located on the California-Oregon

border. Los Coyotes is located in San Diego. The Timbi-Sha Shoshone through an act of Congress already in place, are trying to

seek lands in that area as well.

If these are allowed to go through, as I said in my testimony, this

will be the end of which we know tribal government gaming today.

It will only do things that we cannot even fathom. If we think the

compacts are bad today, when these types of deals are struck, they

are going to be worse, thus setting the bar higher than any other

compact across this country for submitting tribal sovereignty under

State law.

The CHAIRMAN. And there will be a predictable reaction in the

Congress and among the people of California who do not think that

that is the appropriate way. For example, polls in my State show

the majority of the citizens agree and support gaming on Indian

reservations, I think obviously because of concern we have about

conditions on Indian reservations.

The majority of my citizens do not support non–Indian gaming.

So if you start blurring those distinctions, then I think you have

a rather serious challenge here to Indian gaming as it exists today.

Mr. MARQUEZ. If I may, Mr. Chairman, especially in California,

when we moved the process to get our compacts put in place, we

took a stance by saying this would not happen. In fact, we created

the revenue-sharing trust fund by which all the tribes who are in

gaming pay into to provide funds to those tribes who cannot participate in gaming, just to make sure that this activity did not transpire. Unfortunately, we are a the stage today and we have been

very vocal about saying how wrong this is and how it needs to be

addressed.

The CHAIRMAN. Do you think that requires congressional action?

Mr. MARQUEZ. Yes, sir.
17

The CHAIRMAN. Would you provide this committee with specific

recommendations?

Mr. MARQUEZ. Yes, sir.

The CHAIRMAN. Thank you.

Chairman Pakootas, do you have any views on this particular aspect of the issue, particularly since you have a casino far removed

from your actual tribal lands, as I understand it?

Mr. PAKOOTAS. We do have a casino. It is located outside the exterior boundaries of our reservation, but it is considered Indian

lands, trust property. This is trust property that has been held in

trust for the tribe and members of our tribe since the Allotment

Act has been in place.

So especially for our reservation, we do look outside the reservation to develop our different businesses, gaming, whatever it is

going to be, to go toward to those larger populations to generate

more revenues because we are a ways out in the country and people are not going to come to sometimes visit our reservation.

We do have a couple of huge, one of them is Grand Coulee Dam,

which is located one-half on our reservation and 1.5 million people

come and visit that annually, but they are more tourist-type people. They stop at Coulee Dam for one night and visit the huge concrete thing there that is stopping the water, then go on someplace

else, so there are no real draws to come to our reservation. In a

lot of cases, we have to go outside to our aboriginal territories of

one of those 12 different tribes. We do still own trust property outside, even down in the Moses Lake area, that is considered Indian

land. That is outside.

So for us, we do have to go outside the reservation boundaries

to generate more revenues.

The CHAIRMAN. Senator Coburn.

Senator COBURN. Thank you, Mr. Chairman.

I would like for each of you to describe for me the economic diversification that you have put in place from the revenues that you

have received from gaming.

Ms. JUAN-SAUNDERS. Mr. Coburn, right now the Tohono O’odham

Nation is moving forward to address the diversification of our economy. As I stated earlier, our land-based is 2.8 million acres and enrolled population of 28,000. We do have an economic development

plan in place. We are moving toward looking at a hotel, looking at

economic development on the reservation.

However, one of our key barriers is the lack of infrastructure. In

order to bring business to the reservation, we need water, power

lines, roads in place. As you know, those are very costly. We also

need sound business codes in place. We also need stable government. We are working very hard right now to put those in place.

Infrastructure on the main reservation is a concern.

In the surrounding Tucson area where we do have land, we look

at those potential market areas as our source. We have convenience stores, gas stations on the reservation.

The CHAIRMAN. May I interrupt, Chairwoman Saunders? It

might help Senator Coburn if you told him how much the tribe is

spending fighting the issue of illegal immigration, including how

many abandoned cars a week that you have to remove and the

enormous burden you have on law enforcement.
18

Senator COBURN. I heard her testimony, Mr. Chairman. I under- stand the $10 million that they spent on illegal immigration. But

the key I want to get through is the funds generated in gaming to

create a further future for your tribe. How many dollars are going

into economic development? Is there an example of where you have

put in a business or invested in an industry or invested in things

that will generate other revenues outside of gaming that will give

you a long term?

My fear is, in Oklahoma we have 39 recognized tribes and 83

gaming operations. In another couple of years, it will be saturated

in Oklahoma. There is only so much money that is going to go into

gaming. So the time to make the investments for economic development, for sustainable economic development I believe is now. I was

just wondering what are the specifics.

Ms. JUAN-SAUNDERS. We agree with you. The whole intent of

IGRA was to develop sound economies so that we do not rely on

Indian gaming. I believe that firmly. However, we still have these

barriers that we deal with every day, and so we are working right

now to look at other sources of revenue to assist us with infrastructure development and move in that direction.

Senator COBURN. Chairman Massey.

Mr. MASSEY. Yes; like I have mentioned, White Mountain Apache

Tribe is isolated from cities. We are in a rural area. So right now,

our revenues are basically governmental and trying to get some

money into the Education Department and also probably going into

some other businesses that will be off set in our sawmill and ski

area also. Right now, we are just re-strengthening our enterprises

on the reservation with the revenues that we have from gaming.

Senator COBURN. So is there an economic development program?

Have you built a business? Have you invested in an economic

model other than gaming, with the gaming revenues?

Mr. MASSEY. Not right now.

Senator COBURN. Chairman Marquez?

Mr. MARQUEZ. First let me explain to you a brief synopsis of our

philosophy as we move forward for economic development. One of

the things we look at is it has to stand on its own. We do not believe in coupling businesses with each other to make it sound good.

In other words, we do not believe a casino and a golf course. A golf

course is not diversification, or a hotel with a casino.

Second, the project must make economic sense. Third, it has to

fit within our parameters set forth for our plan. And then also it

has to fit within our moral and ethical standards that the tribe has

set forward.

We have a complete department called Economic Development/

Project Development that reviews thousands of these things a year.

We get countless proposals to get involved in various programs. To

date, we have gotten ourselves involved in some pretty interesting

programs. Obviously, the casino that you heard about which is on

the reservation.

We are partners in the Four Fires development and residents

here in Washington, DC. We are building another hotel in Sacramento under the same paradigm by which the Four Fires was

created, now called Three Fires. On the reservation, we have the

San Manuel water bottling plant by which we buy our own water
19

and sell it to the valley down below. We own a restaurant in Pasadena called Twin Palms. We own an office building here in town,

the Congressional Building. We are in the middle of developing

what was Norton Air Force Base. We are looking to do

warehousing and light manufacturing in that area. We have 90

acres down there.

We have a site for a warehouse building in the city of San

Bernardino on Sterling and Fifth. We have a Colton warehouse

building by which we moved some of our water bottling plant facility into there and lease out the other one-half. We have built in the

city of Irvine what is called the Big Orchard property project, by

which we built three buildings and bought back two, so we own two

buildings down there and leased those out to some of the most

qualified companies across this country.

Back on the reservation, we have a wireless tower that provides

Internet services to the reservation, as well as to the tribal offices

down below in the valley, soon to open that to other businesses to

tie in and use that service as well.

Currently, we are in the process with the city of Highland to do

what is called the San Manuel Village, where we will have our

third hotel, which is two miles east of the reservation. There will

be a hotel, two restaurants, retail shopping center-type of a mixeduse facility. Last, we have what we call simple property management. We have a building now called the San Manuel Warehouse

that we use for our own purposes, as well as office buildings located in the city of San Bernardino.

So we have a pretty aggressive economic program. Our philosophy, from my tribe, and I came into office back in 1999, was in the

year 2020, I want this Council to have a sound decision to make,

to stay in gaming or get out of gaming, and that is where I want

to put my people.

Senator COBURN. And Chairman Pakootas?

Mr. PAKOOTAS. Yes; there is 80 percent of our gaming revenues

goes towards our tribal government. We have our tribal government. Also, we have an enterprise corporation that is incorporated

under the Governmental Incorporations Act of Colville Tribes. They

manage 14 different businesses on behalf of the Colville tribal government. That 20 percent remains with the corporation and they

take a look at economic development and diversifying our economy.

We are mainly a timber tribe. We have been in the past.

Since gaming has come about, we have purchased a new mill, or

an old mill that was closed down and going into bankruptcy. The

tribe purchased that and taken some of our gaming dollars and remodeled that facility. We are now employing almost double what

it was in the past, nearly 300 people right now. It was employing

about 160 when it was owned by non-Indians.

So there is some diversification there, and taking a look at our

dollars. We are also looking at industrial parks to improve the

economy in the local areas in our counties.

Senator COBURN. Let me ask each of you again, for the record,

the answer is obvious, but I would like for you to state for the

record why you do not publish your gaming revenues?
20

Ms. JUAN-SAUNDERS. Because we are a sovereign entity and we

have the right to. The law right now does not authorize us or mandates that we do, and that is our position.

Senator COBURN. What is the reason behind the position?

Ms. JUAN-SAUNDERS. The law does not require us to.

Senator COBURN. But you could just as well say we will publish

it, because sunshine is good for people to know how much revenue

we are making; how much we are doing. Why would you not want

to do that? What is wrong with publishing your revenue?

Mr. MASSEY. I think for information for Arizona tribes, we submit together as tribes submitted to the State of Arizona.

Senator COBURN. I understand that, but again, what is the reason for not publishing your revenue? I want you to state that for

the record. Why would you not want the people in Arizona to know

and the people in this country to know your revenue from gaming?

Mr. MASSEY. I believe ADOG has that record. I believe they publish that.

Senator COBURN. Again, specifically, why would you not want to

publish your specific tribal organization’s revenue from gaming?

Not in combination, but individually? What is wrong with people

knowing what your revenue is?

Ms. JUAN-SAUNDERS. I guess my concern is why are we singled

out as tribes?

Senator COBURN. Every other organization in this country,

whether it is a 501(c)(3), whether it is a corporation, whether it is

a business, whether it is an individual income taxpayer, recognizes

and publishes through either individually through the IRS so that

the government knows that. That is not public knowledge, but

every business that is public and publicly traded or publicly interacting with the Congress or with the Nation as a whole, publishes

their record. You can go to every 501(c)(3), you can go and get their

990’s.

I am just asking, I know you do not have to. I am asking why

you won’t.

Ms. JUAN-SAUNDERS. We as sovereign governments, we want to

abide by the law and the compact and the National Indian Gaming

Commission prohibits it.

Senator COBURN. It prohibits you from publishing it, or does not

allow you to publish it, or you can publish the revenue if you want

to?

Ms. JUAN-SAUNDERS. It is prohibited.

Senator COBURN. Chairman Marquez?

Mr. MARQUEZ. This topic is one that has been debated many

times in our council by why we do not move forward in such a display of financial information. One of the things, I believe within

our own council, there is a trend that is going to be shifting, I believe, to being more, wanting to disclose various elements.

As it stands now, for our council, the main reason is simply

trust. History shows that ever time we did share information with

the outside world, if you will, it has always come back to hurt us.

It has always been something that has been detrimental to us, so

there is a large reluctance.

Senator COBURN. Let me take a little exception with that. The

number of people who are getting Indian Health Service in Okla-
21

homa is in excess of 60,000 or 70,000. That is published information from the tribes which allows us to get more dollars for health

care. As a matter of fact, I am going to be offering an amendment

on the Interior bill to move money to Indian Health Service.

I cannot take that statement as a blind fact. It is not a blind fact.

The information gives us knowledge. In fact, one of the ways we

protect your sovereignty is with open and clear sunshine and transparency. So either you have the right to have sovereign gaming or

you do not. If you have that right, then what is wrong with publishing the numbers?

Mr. MARQUEZ. As I was saying, I think that that tide is turning.

I can only speak for San Manuel. I cannot speak for Oklahoma or

any other tribe. I only know what is going on in my council. And

that is, one of the chief reasons why, mostly flowing from the elder

side, is that we just simply are reluctant to release that information.

I think one of the things, if you know or do not know this, that

our council, our general membership has full access to all this information, so they are getting the information. I do not want anybody to think that we are hoarding that information from our own

people. It is simply not the case. We simply at this juncture in time

are not comfortable releasing information to the outside. Like I

said, it has always come back to hurt us.

Senator COBURN. Thank you. I think Chairman Pakootas has already given us their revenue.

Mr. PAKOOTAS. Yes; that is just on our gaming side of it.

Senator COBURN. That is all I asked about.

Mr. PAKOOTAS. We do not publish all the numbers, but we are

audited every year by the Federal Government. There are audits

performed annually. We audit ourselves. We have State compacts.

The State requires a lot of reporting. As Chairman Marquez said,

there is a lot of history behind a lot of our secrecy in some cases,

so to speak. It is not necessarily secrecy, but we are not public companies. We are actually like different countries, so to speak. We are

a country within the United States. That is the stance that we look

at.

We publish a lot of our numbers in our economies in our local

areas. We have no secrets. Our secrets are cultural areas and those

types of places.

Senator COBURN. I would just say, every other form of government in this country, county, State, municipal, and Federal Government publishes their numbers. Transparency and sunshine is

great for you in the long run. It may not be great for you in the

short run, but in the long run will build trust and build support

for the Native Americans in this country.

Mr. Chairman, thank you.

The CHAIRMAN. Thank you very much.

I thank the witnesses. Thank you.

Our next panel is James ‘‘JC’’ Crawford, chairman of the

Sisseton-Wahpeton Oyate of the Lake Traverse Reservation, Agency Village, SD; Jim Ransom, chief of the St. Regis Band of Mohawk

Indians; Doreen Hagen, president of the Prairie Island Indian

Community.
22

Chairman Crawford, we will begin with you. Next time, you

should offer Senator Conrad and Senator Dorgan the children’s discount. [Laughter.]

Mr. CRAWFORD. I do not think that is something we are going to

live down very easily.

The CHAIRMAN. Thank you. Please proceed. You are welcome

here.

STATEMENT OF JAMES CRAWFORD, CHAIRMAN, SISSETONWAHPETON OYATE OF THE LAKE TRAVERSE RESERVATION

Mr. CRAWFORD. Good morning, chairman and members of the

committee. I am very honored to present to you some testimony in

oral form, but I also have to apologize today that my written summary is driving around in a taxicab someplace, so I have to wing

it from my vision and from the heart.

Today, Mr. Chairman, I want to bring to you some of the issues

that we have at Sisseton-Wahpeton Oyate at the Lake Traverse

Reservation. We reside in the northeast corner of South Dakota.

Our tribe overlaps in two State’s jurisdictions, that of North Dakota and South Dakota. We are composed of 11,600 tribal members. We do enjoy the benefit of Indian gaming by having three facilities, one in North Dakota and two in South Dakota.

Mr. Chairman, we also want to express the gratitude toward

your hearing today of going in to the benefits of Indian gaming. Indian gaming is not something that was invested into by private

stockholders for shares and profits. It is really a benefit for us to

go forward and to invest in our number one resource, in our tribe.

Mr. Chairman and members of the committee, our number one

resource at Sisseton-Wahpeton is our people itself, as we understand that the people is the government and the government is for

the people. So the things that we have done for the future for our

tribe is that we have been able to start communicating and talk

about the issues of tribal master plans. We started to look at the

issues of integrated resource management plans, and how do we

build a future for our tribe, and how do we build a future and give

a statement to lasting generations for our young people that have

yet to be heard or seen.

Those are the things that we need to concentrate on to the benefit of our people. It is not so much that JC is going to get something at the end of the day. It is what are my children and grandchildren are going to receive at the end of their time, when it

comes to there’s, to rely upon a resource to get a quality of life in

Northeast South Dakota.

We are very honored to be able to enjoy the benefits of Indian

gaming. It has started all the things that previous witnesses and

previous tribes are doing out there, doing for education, health and

benefits and economic diversification plans. Those are all things

that are on our plate and our agenda for the Sisseton-Wahpeton

Oyate.

I want to come to you today, Mr. Chairman, and acknowledge

that Indian gaming has been a springboard, not just from the gaming industry itself and for its people that work there. We have 55

percent of our tribal members are employed through our three facilities. They have attained a quality of life that they could help
23

and give direction not only for themselves, but for their children

that they leave behind.

I am just a small portion as a tribal leader on the reservation.

I believe that as a vision, we need to contribute our resources together for a common goal to a total vision of our global total vision

for our people at Sisseton-Wahpeton Oyate.

We also want to become good neighbors. We also want to participate in the benefits of those in the communities around us that

surround us, that we understand that we dip into their socioeconomic dollars by coming to be entertained and to play the gaming devices that we offer at our casinos. We also understand that

those are detrimental to them in a social means. So there is a concern that we monitor and evaluate through economic plans and assessments to see the social disparities that it has, not only on the

tribal reservation members, but members in the communities

around it as well.

As we look forward for Indian gaming, we understand that there

is no certainty when the end of gaming is going to come, or it is

going to continue to prosper. But we do know that as we take this

very at this point stable industry and resource, and to plan for the

future for our grandchildren, we need to know that we are taking

those steps. We need to know that we are asking for partnerships

with our local communities and brothers and sisters to work together. We are going to be successful because we all believe that

this resource is beneficial for all of us.

In the benefits of Indian gaming, we are able to diversify on

issues such as with doing the plastic bag manufacturing that employs 45-plus employees, to have something diversified other than

gaming. We looked into the retail management opportunities that

the tribe could have. We looked at our own internal resources that

we have to do that, where we buy retail issues in daily activities,

things that we need such as heating resources or petroleum to put

in our cars to move forward to work and to our recreations.

Those are things that we are asking, that are taking our gaming

dollars, to go in and expand those and provide those services to us.

Our main goal, as I started out, is we need to have our number

one resource be able to have those opportunities, and that is our

people.

We look at those business opportunities as being profitable, but

we also look them, or in one of our major objectives is to maintain

that the people have jobs in whatever it may be. If we can manipulate somewhat the bottom line of profitability that we can share

that, that it is more affordable for those members that live on fixed

incomes, that they enjoy all those things, that means such as propane or gasoline, fuel oil. Those things may be the bare necessities,

but they would make that contribution to them so that they have

enjoyable lifestyles.

In closing, Mr. Chairman, I guess I would like to apologize for

not being more professionally prepared today because my notes are

in the taxicab. But I speak to you from my vision that I see as a

tribal member and as a tribal leader, and I speak to you in this

committee in this testimony from the heart, knowing that I am a

part of the gaming process, that I work through the system and
24

now somehow, some way they decided I should be a tribal leader

and be their tribal chairman.

I come with those things and with a good way. I present this to

you in our oral testimony knowing that as we go with our challenges in life, we will use every resource available to us to sustain

the stability of our government to our tribal people.

In closing, not to enlighten you, not to be detrimental to anything, but I, don’t give me a check; give me a resource, and let me

make that resource work for me and determine the amount of the

check that I will receive from those benefits.

Thank you.

The CHAIRMAN. Thank you very much.

Chief Ransom.

STATEMENT OF JIM RANSOM, CHIEF, ST. REGIS BAND OF

MOHAWK INDIANS

Mr. RANSOM. Good morning. I extend my appreciation to Chairman McCain and the committee for the opportunity to speak today.

The St. Regis Mohawk Tribe has been diligently observing the

discussion that has occurred surrounding the issue of off-reservation gaming and out-of-State tribes, as we have a vested interest

in its outcome. Clearly, Indian gaming is under increased scrutiny.

There is a national debate going on primarily over off-reservation

gaming and out-of-State tribes. In Indian country, NCAI and NIGA

have taken leadership roles in responding to concerns raised over

these issues. I would like to commend them for the good work they

have been doing.

What has emerged from the discussion are two important trends.

First, Indian gaming is a success story and much of the success can

be attributed to IGRA. It works. Second, Congress should not reopen IGRA. There are other regulatory solutions that will work.

I think it is timely that you are holding this hearing. It is good

to hear from other tribes, especially the Arizona tribes. What has

been missing from this national discussion has been the success

stories. What if it is to a tribe’s and State’s mutual interest to pursue off-reservation gaming? What if the off-reservation gaming can

help local governments in an economically depressed part of a

State? And what if off-reservation gaming is pursued in a transparent and open manner?

In New York, the experience is unique. We believe that what is

happening in New York can serve as a model for conducting off-reservation gaming. It addresses many of the issues that have been

identified in the various meetings that have taken place. One of the

issues has been whether the State and/or Governor supports offreservation gaming. What has happened in New York is that in

2001, the New York State legislature authorized three off-reservation casinos in the Catskills. In March of this year, the BIA issued

an expanded checklist to give clearer guidance for off-reservation

gaming.

Recently, New York Governor George Pataki introduced legislation providing additional criteria for off-reservation casinos. These

enhanced regulations will ensure that off-reservation gaming in

New York is conducted in a responsible manner.
25

Another issue is the issue of local support. Local impact agreements are now one of the criteria BIA looks for in reviewing offreservation gaming projects. In New York, Governor Pataki’s recent legislation requires that before a gaming compact is ratified

there must be a local service and impact agreement. These additional steps ensure local interests are protected.

On the issue of full environmental reviews, the BIA’s checklist

now calls for a full environmental review of off-reservation gaming.

Again in New York, Governor Pataki’s legislation requires that

each gaming compact for an off-reservation casino provide prior to

construction a full environmental review. These increased requirements create a positive atmosphere for off-reservation gaming to

occur.

In regards to the issue of out-of-State tribes, current regulations

and the atmosphere within both States and Congress are addressing this issue. New York illustrates this point. Recently, just last

week, two out-of-State tribes interfered in our Mohawk land claims

settlement. They were attempting to piggyback their effort to get

an off-reservation casino on our effort to settle our land claim.

Last Thursday, Governor Pataki sent them an e-mail:

Please be advised that if your clients or their representatives succeed in their current efforts to prevent passage of the Mohawk settlement legislation, the State will

engage in no further settlement negotiations with out-of–State tribes.

We commend Governor Pataki for recognizing the desperate attempt by out-of-State tribes and for his strong response to their actions. We believe that in the future, it will continue to become more

difficult, not less, for out-of-State tribes.

In conclusion, the St. Regis Mohawk Tribe is the lead tribe in

siting an off-reservation casino in the Catskills. Our project has the

support of the Governor and the State. We have a local impact and

service agreement. We have undertaken a comprehensive environmental review at both the State and Federal level. We are the only

tribe with site-plan approval, and the lands are within our ancestral lands. All of this is being done within the context of IGRA.

Mr. Chairman and members of the committee, thank you for listening to me. I would be pleased to answer any questions you may

have.

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

The CHAIRMAN. Thank you very much.

President Hagen.

STATEMENT OF DOREEN HAGEN, PRESIDENT, PRAIRIE

ISLAND INDIAN COMMUNITY

Ms. HAGEN. Good morning, Chairman McCain and honorable

committee members. Thank you for the opportunity to testify today

on the regulation of Indian gaming.

My name is Doreen Hagen. I am a member of the Prairie Island

Community, a veteran of the U.S. Army, and president of the Prairie Island Indian Community Tribal Council.

Prior to being elected to tribal council, I worked for the Prairie

Island Indian Community Gaming Commission. During my tenure,

I served as a commissioner of vendor licensing and later I became

the assistant executive director.
26

For centuries, my tribe has been a careful steward of resources.

In the past, the tribe cared for the bounty of the land because it

provided for our sustenance. Today, the tribe carefully attends to

its economic enterprise, Treasure Island. That stewardship is implemented by aggressive and thorough regulation. Our tribe works

closely with the Minnesota Department of Public Safety and its alcohol, gambling enforcement division. We have a good relationship

with the division’s Deputy Director Frank Ball, Special Agent

Norm Pint, and the agent assigned to our property, Jill Ahart, and

the late Ralph Shingledecker. The State officials have and will always have an open door at Treasure Island. In addition, we work

with the NIGC to ensure we meet all standards as described by the

Federal MICS.

First and foremost, however, our tribe takes full responsibility

for the regulation of our tribal government gaming operations

through the Prairie Island Indian Community Gaming Commission. We are very proud of their work and their regulatory reputation. That commission is an autonomous regulatory arm of tribal

government. It is the principal regulator of gaming at Prairie Island. The commission is responsible for the day-to-day oversight of

gaming activities and ensures the business adheres to all guidelines set forth in IGRA, the Federal MICS, our compact with the

State of Minnesota, and the Prairie Island Gaming Ordinance.

The commission provides a weekly regulatory report to the tribal

council, but it does not take requests or receive regulatory direction

from the tribal council. The commission is comprised of five members, an executive director and the commissioners of employee licensing, vendor licensing, compliance and surveillance. Commissioners are appointed officials and have no fixed terms. Each commissioner oversees his or her respective department and reports

any concerns to the full commission for action.

The commission has a staff of 12 employees. Prior to employment, all gaming commissioners and gaming commission employees

are subject to a full background check. In addition, employees receive vigorous training and testing before assuming the responsibility of their job. Moreover, employees attend continuing education

courses, conferences and seminars as appropriate.

The commission’s obligation to protect the gaming facility and its

integrity is realized in two principal ways: First, by controlling access to the facility by third parties through its employee and vendor licensing departments; and second, by internal policing through

the compliance and surveillance departments.

The commission’s employee licensing department has a staff of

five employees. These employees conduct full background checks on

all applicants for employment at Treasure Island, which includes

at a minimum a full FBI background check, State and local criminal checks, driver’s license and credit checks, and checks on past

residences and employment. Once a full background check is completed, it is forwarded along with a recommendation regarding the

applicant’s licensing to the Commissioner of Employee Licensing. If

an applicant or license is determined by the commission to pose a

potential threat to the integrity of gaming at Treasure Island, his

or her license is denied or suspended.
27

Recently, the employee licensing department converted to electronic fingerprinting, which has reduced the time for receiving

background check results from days or months to minutes. The

commission also conducts full background investigations and licenses casino vendors via its vendor license department. Although

not required by IGRA or its implementing regulations, the commission has fulfilled this function for many years. Vendor licensing applications are available and can be completed online on the casino’s

website. Only licensed and approved vendors can do business with

the casino.

Internal monitoring of gaming activities at Treasure Island is accomplished by the Commissioner of Surveillance, who works closely

with the casino’s Surveillance Department. In 2002, the department installed a state-of-the-art all-digital surveillance system valued at over $5 million, the first such system in the entire gaming

industry. The system provides clarity of images that far exceeds

any analog technology and allows the operators to instantly review

recorded images, while simultaneously viewing ongoing activity.

The new system has proved to be an invaluable tool in monitoring

the integrity of the business, tracking potentially illegal activity,

and assisting in prosecution and conviction of individuals engaged

in such activity. This technology is so advanced that the NIGC is

reviewing its MICS for surveillance requirements which are still

based on outdated analog technology.

The commission’s internal oversight is also fulfilled by the compliance department whose purpose is to ensure the business follows

all Federal, State, and tribal regulatory guidelines. The department

includes compliance inspectors who are on-property 24 hours a day.

These inspectors observe day-to-day activities for complete regulatory compliance. If the inspectors discover any deviation, the incident is documented and forwarded to the Commissioner of Compliance. In turn, the commissioners meet with the department responsible to resolve the deviation. If necessary, a citation is issued to

the responsible department. Failure to comply with recommendations from the compliance department results in disciplinary action

up to and including fines, gaming license revocation, and even employment termination.

The Prairie Island Indian Community Gaming Commission provides a complete regulatory structure for the tribe’s government

and gaming operation. The commission prevents potential threats

to the business’s integrity from third parties, and it internally monitors the business for compliance with all Federal, State, and tribal

regulations.

In closing, the Prairie Island Indian Community takes its stewardship responsibilities very seriously. Our tribal government gaming operation is the lifeblood of our community. We now have sanitary water, sewers, good housing, paved roads, excellent health

care, a tribal court system, our own police department, and education opportunities that never existed before tribal gaming. Moreover, we have the resources and time to revitalize our culture and

tradition.

I want to echo Chairman Massey’s remark that tribal government gaming is intended to provide essential services to our members, not to provide State government with a way to meet budget
28

deficits. The regulation and the integrity of our business are vital

to our very survival. On every occasion, we have met and in many

instances exceeded all Federal and State regulatory guidelines because of their importance to our business, as well as their importance to the Prairie Island Indian Community.

We do not believe that the Indian Gaming Regulatory Act needs

to be amended. As a proud leader of Indian country, tribes are selfgoverning in the manner intended by the committee and the U.S.

Government. I assure you that the privilege and responsibility of

governing and providing for one’s people is something no tribe

would place in jeopardy.

Thank you. I will answer any questions you may have.

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

The CHAIRMAN. Thank you very much.

Chairman Crawford, do the tribe and State share the regulation

of the tribe’s casino?

Mr. CRAWFORD. Under the compact under the State of North Dakota and South Dakota, there is some dual reporting requirements

that we need to submit to the State’s regulatory body, as well as

audit reports.

The CHAIRMAN. It works out okay?

Mr. CRAWFORD. It works out okay, yes. There needs to be some

little tuning up to be done, but nothing is always perfect. You have

to work it out.

The CHAIRMAN. Does the NIGC come around regularly?

Mr. CRAWFORD. Yes; they do.

The CHAIRMAN. Has gaming affected your tribe’s relationships

with local communities?

Mr. CRAWFORD. Greatly. In reading the testimony, about 10

years ago, I could not sit in a coffee shop in Watertown, SD and

talk shop. Today, seeing our resources, they kind of recognize who

I am now today, and they try to say, hey, how are you guys doing

out there; how is the tribe doing; how are you guys moving to Dakota Western Corporation; what are your plans; how do we work

with housing development and those things. Those are all things

that are kind of positive now that it sets you into that opportunity

to make that small talk.

The CHAIRMAN. And they want you to pick up the check? [Laughter.]

Mr. CRAWFORD. Sometimes they do. [Laughter.]

The CHAIRMAN. Chief Ransom, the way I understand your testimony, you think off-reservation gaming is okay as long as it is

within the State that the tribe resides. Is that your position?

Mr. RANSOM. I think that it is okay in certain circumstances

when some of the criteria I identified are in place when you have

the local support.

The CHAIRMAN. But not out of State?

Mr. RANSOM. I think that the current regulations and the current atmosphere prevents out-of-State tribes from crossing the border.

The CHAIRMAN. Yes; but what is your position?

Mr. RANSOM. Officially as a tribe, we have not taken a position.

The CHAIRMAN. What I find interesting is that you are very involved with Governor Pataki and the Assembly and approvals and
29

disapprovals and site locations and all that with the State. And yet

I have spent my 19 years on this committee trying to protect tribal

sovereignty and excluding the States from exercising any influence

over the tribes because of their sovereignty. And yet you seem to

be hand-in-glove with the Governor of the State and with the legislature and agreements with the State. Aren’t you worried about an

erosion of tribal sovereignty here?

Mr. RANSOM. We think it is probably just the opposite. It is an

example of tribal sovereignty at work.

The CHAIRMAN. That the Governor should have the right to decide whether you should have an off-reservation casino or not?

Mr. RANSOM. That the tribe should have the ability to negotiate

with the State an off-reservation casino, and that it be done on

terms that we find acceptable and that do not compromise our sovereignty. I think that where there are problems is when out-ofState tribes in particular attempt to accept less when they cross

borders.

The CHAIRMAN. Well, I think that, it is just my opinion, if we

have enough off-reservation casinos set up in America, you are

going to see a backlash against Indian gaming, because that was

not the intent of the law; that was not the intent of IGRA; none

of us ever anticipated that there would be casinos in the Catskills

as associated with your ability to conduct Indian gaming within

your tribal reservation boundaries. You are already beginning to

see that backlash. So we will be examining this issue very carefully.

It seems to me now you are in a position where the State of New

York has basically the ability to decide whether you can locate a

casino or not anywhere in the State of New York. I am not sure

that that is in keeping with the tribal sovereignty issue, which I

think is paramount and should remain paramount.

President Hagen, how are your relations with the State as far as

the regulatory role is concerned?

Ms. HAGEN. As I testified, we have a very good relationship with

the Department of Public Safety. They come down quite often and

we meet with them, and are in constant communication with them.

The CHAIRMAN. What about with the NIGC?

Ms. HAGEN. We also have the same type of relationship. However, our surveillance department has not been approved because

of the new digital, what I testified in here. But we have been meeting with them and we are working with them and we also have our

doors open to them at all times.

The CHAIRMAN. How do you handle criminal jurisdiction matters

with State law enforcement agencies?

Ms. HAGEN. We have an agreement with the county of Goodhue,

and we send whatever prosecutions or arrests that we have to the

county of Goodhue.

The CHAIRMAN. What is your tribe’s position on off-reservation

casinos?

Ms. HAGEN. Do you have plenty of time? Because right now, we

are in a disagreement with the Governor of Minnesota on off-reservation gaming.

The CHAIRMAN. Here is my point. We have reservations that are

located near metropolitan areas and some not near metropolitan
30

areas. Okay? Now, they are engaged in gaming operations after

compacts that are concluded. Suppose that tribes were allowed to

locate off-reservation casinos in downtown metropolitan areas.

What would that do to the gaming operations that are being conducted on reservations which happen to be geographically further

away from the areas, like downtown Denver, downtown Oakland,

et cetera. Haven’t we thought that through? I would like your opinion, too, Chief Crawford.

Go ahead.

Ms. HAGEN. I understand what you are talking about because we

are going through that right now. In Minnesota, we have 11 tribes.

Right now, there are tribes that operate away from the metro area

and we have tribes that are in remote areas that are doing good

for the rural economy where they are located. We have actually

three tribes that are close to the metro area.

However, any type of off-reservation casinos will affect even

those, because we have as far as Treasure Island, Prairie Island is

concerned, we are a destination resort. We are off the beaten track.

We do not have a major highway or a major roadway. You have to

literally drive a long way to get to our casino. We have to market

the metro area. We have buses.

The CHAIRMAN. What would happen to you if there was a casino

located in downtown Minneapolis?

Ms. HAGEN. We just had a new study done that 30 percent of our

income would be affected, and 300 jobs would be affected. We employ 1,500 employees, and 300 would lose their jobs. That means

a tax-paying job, excellent health benefits, and 401(k) benefits.

Those would be affected by the rural community. We have resolutions from the city of Red Wing and the commission of Goodhue

County backing us on this, that we do not want a casino to be

opened in the metro area.

The CHAIRMAN. Chairman Crawford.

Mr. CRAWFORD. Yes; South Dakota is a very rural area, obviously, and we have a struggle. Governor Rounds of South Dakota

has come out with a 2010-initiative on how to increase the State

gross product. He gave a hand in friendship to the tribes as they

come to speak with him on how do we improve the quality of life,

the Midwest lifestyle in South Dakota.

We are hampered by our resources, our people leaving the State

of South Dakota and our reservation to find the quality jobs that

they need to sustain a quality of life. But putting these resources

like that into a metropolitan area only handicaps us further, to be

able to be bringing in people to our region for economic benefits.

We cannot get 3M; we cannot get the big corporations to come out

to rural South Dakota.

So if we can tie this benefit of Indian gaming to tourism, to integrate our resources together to make a plan that we can help each

other, not only the tribes, but the State as well, I think those are

some of the things that we need to offer.

I think, to be honest with you, Mr. Chairman, I think that the

IGRA Act does not completely maximize its responsibility to rural

development. I think that was an intent.

The CHAIRMAN. Chief Ransom, I would like to give you an opportunity to respond.
31

Mr. RANSOM. I think that, again, New York is unique in that

there are only seven federally recognized tribes. There are only

three out of the seven that are doing gaming. The Senecas are in

the Buffalo-Niagara Falls corridor. The Oneidas are in the Central

New York corridor. The Mohawks, we are in the northernmost remote part of the State. We do not have a large urban population

near us.

So in terms of the Catskills, we see it as a project that would

benefit not only the Catskills, but our current reservation as well,

so it benefits two parts of the State. I think that that is why we

see it as a win-win for the State and us.

The CHAIRMAN. Well, I would agree there are different situations

throughout the country.

I thank the witnesses. You have been very helpful being here

today.

This hearing is adjourned.

[Whereupon, at 12:04 p.m., the committee was adjourned, to reconvene at the call of the Chair.]

(33)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF DOREEN HAGEN, PRESIDENT, PRAIRIE ISLAND INDIAN

COMMUNITY TRIBAL COUNCIL

Good morning Chairman McCain, Vice Chairman Dorgan and honorable members

of the committee. Thank you for the opportunity to testify today on the regulation

of Indian gaming. My name is Doreen Hagen. I am a member of the Prairie Island

Indian Community, a U.S. veteran, and president of the Prairie Island Indian Community Tribal Council. Prior to being elected to tribal council, I was one of the first

commissioners on the Prairie Island Indian Community Gaming Commission.

During my tenure, I served as the Commissioner of Vendor Licensing and later

I became the Assistant Executive Director.

The Prairie Island Indian Community is a federally recognized, sovereign, selfgoverning Indian tribe located in the State of Minnesota along the banks of the Mississippi River north of the city of Red Wing. My tribe is a Mdewakanton Dakota

Community; the literal translation of Mdewakanton is ‘‘dwellers of Spirit Lake’’ and

Dakota means ‘‘ally.’’ Tinta Wita or Prairie Island has provided for the needs of my

people for centuries; it is a spiritual place. Over the years, this land has provided

food, medicine and housing for my tribe, especially following the Dakota Conflict

when times were especially challenging.

More recently, Prairie Island has provided my tribe with economic opportunities,

namely casino gambling. In 1984, we opened a bingo parlor known as Island Bingo.

Tribal members worked hard to make certain that the enterprise was ran well and

provided for good jobs for the membership. Many tribal members can tell you stories

of late nights and hard work, lean times but happy times, making the bingo enterprise a success.

Following the Cabazon decision, and subsequent passage of the Indian Gaming

Regulatory Act [IGRA] in 1988, my tribe successfully negotiated compacts with the

State of Minnesota and our modest bingo operation was transformed into a casino,

known as Treasure Island. Resort & Casino. Throughout our business’ existence, we

have been proud of our record of regulatory compliance and our positive and productive relationships with state and Federal regulatory and legislative bodies.

As a result of hard work, responsible management, and aggressive regulation,

Treasure Island has become a great economic success, both for my tribe and the

State of Minnesota. Our casino employs over 1,500 people, 95 percent of whom.are

non-Indians, residing near our reservation. As such, the Prairie Island Indian Community is the largest employer in Goodhue County, providing good paying jobs with

great benefits in rural Minnesota without any assistance from the State of Minnesota. Prairie Island, and other Indian Gaming Operations in Minnesota are great

examples of successful rural economic development in Minnesota. We are economic

enterprise zones that cost the residents of Minnesota nothing.

For centuries, my tribe has been a careful steward of its resources. In the past,

the tribe cared for the bounty of Prairie Island, which provided for our sustenance.

Similarly today, the tribe carefully attends to its economic enterprise, Treasure Island, and that stewardship is implemented by aggressive and thorough regulation.
34

Our tribe works closely with the Minnesota Department of Public Safety and its

Alcohol Gambling Enforcement Division. We have a good relationship with the division’s Deputy Director, Frank Ball; the late Ralph Shingledecker; Special Agent,

Norm Pint and the agent assigned to our property, Jill Ahart. The State officials

have and will always have an open door at Treasure Island. In addition, we work

with the National Indian Gaming Commission [NIGC] to ensure we meet all standards as described by the Minimum Internal Control Standards [MICS].

First and foremost, however, our tribe takes full responsibility for the regulation

of our tribal government gaming operation through the Prairie Island Indian Community Gaming Commission. We are very proud of their work and their regulatory

reputation.

The Prairie Island Indian Community Gaming Commission is an autonomous regulatory arm of our tribal government. It is the principal regulator of all gaming activities at Prairie Island. The commission is responsible for the day-to-day oversight

of gaming activities and ensures the business adheres to all regulatory requirements

set forth in IGRA, the Federal MICS, our compact with the State of Minnesota and

the Prairie Island Gaming Ordinance.

The commission is comprised of 5 members, an executive director and commissioners of employee licensing, vendor licensing, compliance and surveillance. Commissioners are appointed officials and have no term limits. Commissioners are rigorously trained in every aspect of the gaming operation before assuming their role as

commissioner and each commissioner is, therefore, cross-trained in the department

of the other commissioners. Each commissioner oversees his or her respective department and reports concerns to the full commission for action. The commission

has a staff of 12 employees. All Gaming Commission employees receive weeks of

training and testing before assuming the responsibility of their job. Moreover, employees attend continuing education courses, conference and seminars as appropriate.

The commission’s obligation to protect the Gaming facility and its integrity is realized in two principal ways: first by controlling access to the facility by third parties through its employee and vendor licensing departments; and second by internal

policing through its compliance and surveillance departments.

The Commission’s Employee Licensing Department has a staff of 5 employees.

These employees conduct full background checks on all applicants for employment

at Treasure Island, which includes at a minimum, a full FBI background check,

State and local criminal checks, driver’s license and credit checks, and checks on

past residences and employment. Once a full background check is completed, it is

forwarded along with a recommendation regarding the applicant’s licensing to the

Commissioner of Employee Licensing. If an applicant or licensee is determined by

the Commission to pose a potential threat to the integrity of gaining at Treasure

Island, his or her license is denied or suspended. Applicants are entitled to a full

post-deprivation due process hearing, including the opportunity to request reconsideration by the Commission en banc.

Recently, the Employee Licensing Department converted to electronic

fingerprinting, which has reduced the time for background checks from days or

months to minutes. As is true with all other Departments of the Commission, the

Employee Licensing Department is always looking to improve its efficiency and performance through improved technology.

The Commission also conducts full background investigations and licenses casino

vendors via its Vendor Licensing Department. Although not required. by the IGRA

or its implementing regulations, the Commission has fulfilled this function for many

years. Background checks for vendors are tiered based on the level of economic activity the vendor has with the casino. Only licensed and approved vendors can do

business with the casino, regardless of whether a contract has been executed or

agreed to, and a list of approved vendors is available on-line for casino management.

The Commission’s regulation and oversight of vendors extends from enormous

gaming vendors down to charter bus providers, who must demonstrate their licensure and good standing with the Minnesota Department of Transportation and the

United States Department of Transportation. Vendor licensing applications are

available and can be completed on-line on the casino’s website.

Internal monitoring of gaming activities at Treasure Island is accomplished by the

Commissioner of Surveillance who works closely with the casino’s Surveillance Department. In 2002, the department installed a state-of-the-art, all digital surveillance system valued at over $5 million dollars, the first such system in the entire

gaining industry. The system provides clarity of images that far exceeds any analog

technology and allows the operators to instantly review recorded images while simultaneously watching on-going activity. The new system has proven to be an invaluable tool in monitoring the integrity of the business, tracking potentially illegal
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activity and in assisting in the prosecution and conviction of individuals engaged in

such activity. The technology is so advanced that the NIGC is reviewing its MICS

for surveillance requirements, which are still based on out-dated analog technology.

The Commission’s internal oversight is also fulfilled by the Compliance Department whose purpose is ensure that the business follows all Federal, state and tribal

regulatory guidelines. The Department includes Compliance Inspectors who, are on

property 24 hours a day. The inspectors observe day-to-day activities for complete

regulatory compliance. If the inspectors discover any deviation, the incident is documented and forwarded to the Commissioner of Compliance. In turn, the Commissioner meets with the Department responsible to resolve the deviation and if necessary a citation is issued to the responsible department. Failure to comply with the

recommendations from the Compliance Department will result in disciplinary action

up to and including fines, gaming license suspension, gaming license revocation and

even employment termination.

The Prairie island Indian Community Gaming Commission provides a complete

regulatory structure for the tribe’s government gaming operation. The Commission

prevents potential threats to the business’ integrity from third parties and it internally monitors the business for compliance with all Federal, State, and tribal regulations.

As has been the case for centuries before Europeans arrive here, the Prairie Island Indian Community takes its stewardship responsibilities very seriously and its

current gaming regulatory responsibility is no exception. Our tribal government

gaming operation is the lifeblood of our Tribal Community and helps support the

economies of our neighbors and friends. Prairie Island’s members now have sanitary

water and sewer, good housing, paved roads, good health care and educational opportunities that never existed before tribal gaming. Moreover, we have the resources

and time to revitalize our culture and traditions.

The regulation and the integrity of our business are vital to our very survival.

On every occasion we have met, and in many instances exceeded, all Federal and

State regulatory guidelines because of their importance to our business as well as

their importance to the Prairie Island Indian Community.

We do not believe that the Indian Gaming Regulatory Act needs to be amended.

The regulatory guidelines it includes allow tribes to self-govern in the manner intended by this committee and the U.S. Government. As a proud leader in Indian

country, I can assure you that the privilege and responsibility of governing and providing for one’s people is something no tribe would place in jeopardy.

Pidamaya. Thank you. I will answer any questions you may have.

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

Thank you, Mr. Chairman.

I commend the committee for holding this hearing on the regulation of Indian

gaming specifically to hear the views of tribes.

Indian gaming has grown to a multi-billion dollar industry. there are over 200 Indian tribes that have taken advantage of this thriving economic opportunity.

Unfortunately, when most people think of Indian gaming, they think of the

wealthier tribes, which often have the benefit of an ideal location.

So I welcome the opportunity today to hear from those tribes that rely on Indian

gaming the most—those that are located in rural areas or face other challenges.

Indian tribes, including the less wealthy tribes, have accepted the call for regulation and have developed state of the art surveillance systems and other mechanisms

to ensure the integrity of Indian gaming.

They have established systems to identify criminal activities undertaken by visitors who seek to take advantage of them and reported those activities to the proper

authorities.

This has resulted in much benefit to Indian tribes—both socially and economically.

I look forward to listening to the testimonies of today’s witnesses.

Thank you Mr. Chairman for scheduling this hearing today.

PREPARED STATEMENT OF VIVIAN JUAN-SAUNDERS, CHAIRWOMAN, TOHONO O’ODHAM

NATION

Good morning Chairman McCain, Vice Chairman Dorgan and members of the

committee and staff. My name is Vivian Juan-Saunders and I am chairwoman of

the Tohono O’odham Nation. The Tohono O’odham Nation is a member of the Arizona Indian Gaming Association, an organization comprised of the gaming tribes in
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the State of Arizona. Thank you for the opportunity to address the committee. It

is my great pleasure to provide you with an overview of tribal gaming regulation

in the State of Arizona, and to share the gaming success on the Tohono O’odham.

Nation.

The Arizona gaming compacts work both for tribes and for the State. Tribes in

Arizona have a long track record of working with each other, and with the State.

Because of our new gaming compacts, our commitment and our process, Arizona has

a system that is meeting the intent and directives of the Indian Gaming Regulatory

Act [IGRA].

To understand the Arizona regulatory climate, it is important to first understand

the Arizona gaming environment. For most of the past century, Indians on reservations in Arizona lived in extreme poverty, welfare dependency, and economic despair. The situation began to improve after Federal legislation recognized and affirmed the right of Indian tribes to conduct gaming on our lands and established

a regulatory framework for the purposes of, among other things, providing jobs and

funding services for tribal members.

Since 1992, Arizona law has authorized the Governor of the State to negotiate

tribal-State compacts on the State’s behalf. Since then, 21 Indian tribes in Arizona

have entered into compacts with the State. Sixteen have made major investments

in gaming facilities on their tribal lands.

The first compacts authorizing class III gaming by tribal governments were signed

in Arizona in 1993. Since the first casino opened in Arizona, gaming revenues

earned by Arizona tribes have been directed to providing for the health, welfare,

education and well-being of tribal members. Just as the IGRA intended, Indian casinos on Arizona tribal lands generate vital revenues used to provide decent housing,

clean water, better education, health care, public safety and other services to tens

of thousands of Indians living on Arizona reservations. Indian casinos also provide

jobs removing thousands of Indians off welfare and unemployment, and producing

many economic benefits both for nearby communities and for the State as a whole.

Regulation is a major component of this successful system. In Arizona, the gaming

conducted by tribal governments is both limited and well-regulated. Arizona’s gaming compacts limit the types of games that may be played on tribal lands, the number of gaming facilities, and the number of gaming devices and table games that

can be installed in these facilities. The scope, of gaming permitted under Arizona’s

gaming compacts is based upon the size of the tribe. Tribes with more enrolled

members are eligible to have more gaming devices. Conversely, smaller tribes are

able to have fewer gaming devices. This regulatory structure enjoys the broad support of both Arizona’s tribes and by Arizona’s citizens.

Revenues earned by Arizona Indian casinos also fund the comprehensive regulatory oversight system of Arizona Indian casinos. Not only do Arizona’s tribes fund

our tribal gaming regulatory offices, they also fund the Arizona Department of Gaming [ADOG]—the State agency that oversees gaming conducted by tribal governments on Indian lands.

Today, 567 people are engaged statewide in regulating gaming, including 105 employees with the Arizona Department of Gaming employees and 462 employees in

tribal, regulatory offices. Collectively, these regulatory offices spend more than $35

million per year regulating Indian gaming in Arizona.

In November 2002, Arizona voters passed an initiative sponsored by 17 of Arizona’s Indian tribes—proposition 202. Proposition 202 allows tribes that are unable

to profitably operate gaming on their lands or that have chosen not to game to secure benefits of gaming by transferring their rights to operate gaming devices to

other tribes. Intra-tribal transfers are enabling tribes on remote reservations like

the Hualapai, Havasupai, San Juan Southern Paiute, Zuni, and Kaibab-Paiute for

the first time to benefit from gaming.

Proposition 202 also provides for a portion of gaming revenues to be shared with

the State of Arizona and local governments calculated on a sliding scale of 1 percent

to 8 percent. Eighty-eight percent of these shared revenues are deposited into the

Arizona Benefits Fund to pay regulatory expenses incurred by the Arizona Department of Gaming, to combat problem gambling, reduce classroom sizes, increase

teacher salaries, support dropout prevention programs and instructional improvement programs, reimburse hospitals for unrecovered costs for trauma and emergency services, and fund wildlife conservation and statewide tourism promotion. The

remaining twelve percent of these revenues are directed to city, town, and county

governments, either through direct grants by tribes or through the Local Communities Fund of the State’s Commerce and Economic Development Commission.

A statewide study of Indian Gaming in Arizona released by the Udall Center for

Studies in Public Policy [Stephen Cornell: An Analysis of the Economic Impacts of

Indian Gaming in the State of Arizona] estimated the economic impact of tribal gov-
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ernmental gaming in the State of Arizona. The report concluded that Indian gaming

in Arizona indirectly generated $468 million in economic activity during 2000.

The Udall report noted that many Indian employees formerly were welfare recipients. Although statistical data is not available on the actual number of former welfare workers now employed in Indian gaining, the study concluded that, in counties

where casinos operate, the presence of casinos reduced welfare rolls.

Tribal gaming operations in Arizona currently employ approximately 10,000 people—a figure comparable in size to the number employed in Arizona’s mining sector.

Approximately 4,300 Indians are employed in tribal gaining operations, and several

hundred more are employed as tribal gaming regulators. On remote reservations,

Indian casinos are often the largest employer in the region, significantly reducing

the economic burden for Indian and non-Indian residents by providing much needed

jobs. There, where few other options for employment exist, the number of tribal employees working in Indian gaming can run as high as 84 percent. In addition to the

direct benefits from employment, it is important to remember that these employees

pay Federal income and payroll taxes, most pay state income taxes, and all spend

their earnings in the State, creating a positive economic impact for the State.

The IGRA confirmed the right of tribal governments to game on their lands, but

it also established a regulatory structure for class III gaming, one that is shared

by the State and tribes with oversight by the National Indian Gaming Commission

[NIGC]. Arizona’s gaming compacts provide for tribes to be the primary regulators

of Indian gaming in the State, but the compacts also provide for a State regulatory

agency with concurrent licensing authority and substantial oversight rights. The

system has worked because sovereign tribal governments and the State government

worked together to ensure that Indian gaming is well-regulated and achieves what

Congress intended in passing the IGRA.

The Arizona Legislature established the Arizona Department of Gaining in 1995

to monitor Indian gaming operations on behalf of the State of Arizona. Today, the

Arizona Department of Gaming has more than 105 full-time employees who perform

a variety of functions to meet the State’s responsibilities under the gaming compacts. These employees carryout regulatory activities such as licensing many casino

employees and making licensing recommendations on others, licensing all gaming

vendors and large non-gaming vendors, inspecting gaming devices, reviewing the

rules for poker and blackjack games, and monitoring tribal compliance with compact

requirements, including detailed internal control standards.

In 1999, the State of Arizona’s Auditor General evaluated the, State’s effectiveness in overseeing gaming operations run by tribal governments in Arizona. The

Auditor General’s report concluded: ‘‘the [Arizona] Department’s [of Gaming] extensive oversight activities are well designed for ensuring the integrity of class III gaming operations.’’ The Auditor General noted that the Department performs pre-operation inspections at every casino, randomly inspects 50 gaming devices at each casino every 4 weeks, conducts compact compliance reviews of each casino every 18

months, and maintains an ongoing presence through its investigators who visit casinos on a weekly basis to inspect operations and investigate possible compact violations. The Auditor General also concluded that the Department’s ‘‘extensive and intensive activities are generally well designed and are accepted practices among gaming regulators.’’ The Auditor General concluded that Arizona’s regulatory approach

was ‘‘among the most extensive nationally,’’ noting that the Arizona Department of

Gaming has more staff monitoring Indian gaming than any other State, maintains

a larger budget than States with comparable numbers of casinos, and conducts its

activities more frequently than most other States.

The Tohono O’odham Nation in Southern Arizona encompasses more than 2.8 million acres of vast desert land, and is home to more than 28,000 enrolled members.

Our lands also extend into Sonora, Mexico, and we have the unique distinction and

challenges created by the 75 miles of international border shared with Mexico, the

largest of any tribe. The Tohono O’odham Nation, is the second largest Indian Nation in land base, next to the Navajo Nation, and is roughly equal in size to the

State of Connecticut.

The Tohono O’odham Nation’s gaming operations generate revenues that fund

more than one-half of our budget, providing vital and essential services to all our

members. Our tribal gaming revenues directly fund essential governmental services

such as education, public safety, housing, health care, community, and economic development, as well as many basic operations of the Nation and our 11 political subdivisions [which are known as Districts].

The Nation is the first line of defense for the United States, protecting 75 miles

of International border between the United States and Mexico. Since October 2003,

the Nation has seized more than 180,000 pounds of illegal narcotics and, when combining Federal and tribal law enforcement efforts, more than 300,000 pounds of ille-
38

gal narcotics were seized on the Nation’s lands in 2004. In addition, 27,130 undocumented immigrants were detained and arrested crossing the border on the Nation’s

reservation last year. Every single one of our officers spends 60 percent of his or

her day on border-related law enforcement. This benefit for the United States came

at a great cost to the Nation, as the Nation spends in excess of $3 million annually

on border law enforcement alone. To date, the Nation has spent more than $10 million dollars in tribal resources on Homeland Security issues, which is clearly a Federal responsibility. Over $2 million of the Nation’s Indian health care funding allocation is lost to emergency health care treatment of undocumented immigrants

taken to our health clinic.

Revenues from the Nation’s gaming operations fund 66 percent of the Nation’s

budget for police protection, supporting over 70 officers, 30 rangers, 109 support

staff, 40 vehicles, and 4 substations. However, the police protection provided cannot

address the vast border related issues faced by the Nation.

Our gaming revenues have had a marked impact on improving higher education

opportunities for our tribal members to obtain college educations. A college education formerly was beyond the reach of most of our students. Our gaming revenues

have allowed the Nation to fund over $30 million in scholarships, enabling more

than 2,000 Tohono O’odham students to attend college. Our gaming revenues also

have made it possible for the Nation to start our own community college, the Tohono

O’odham Community College, which now is accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools. In addition to supporting higher education, our gaming revenues also have entirely funded the Nation’s budget for Early Childhood and Head Start facilities, as well as the costs of

starting a radio station, KOHN, which broadcasts in O’odham in an effort to preserve our native language.

Our gaming revenues have also allowed the Nation to fund initiatives to improve

the health of our people, who are plagued with diabetes and related medical conditions. Although portions of the Nation’s lands are close to metropolitan areas with

numerous health care options, the vast majority of our members live in remote,

rural areas far from health care providers. Our gaming revenues fund the entire

$11.2 million budget for a health care clinic on the rural West side of the Nation,

and were used to construct a $2.5 million kidney dialysis center in a location far

more convenient for those who suffer from kidney failure. Our gaming revenues also

have funded the entire $14 million budget for the construction of the first nursing

home on the Nation’s lands, providing health care services to our elderly without

them having to move to Tucson, far from their families. Additionally, our gaming

revenues are funding 11 youth recreation centers to encourage our youth to engage

in healthy lifestyles.

In an effort to diversify our economy, the Nation also has used gaming revenues

to foster economic development on the Nation. The Nation has established a substantial fund to provide grants to small business ventures. To date, more than 150

of our tribal members have received grants to help them establish and run private

businesses.

This is just what the Nation has accomplished so far. In the future, the Nation

plans to expand our police, fire, and EMT services, build a solid waste disposal way

station, and continue work on addressing the sizable problem of substandard housing and poor or inadequate infrastructure on the Nation’s lands.

With the State taking an active role in the oversight of Indian gaming, it is important to recognize that the State’s activities are secondary to those of the primary

gaming regulators in the State—the tribes. Arizona’s gaming compacts allocate the

primary responsibility for the regulation of gaming to the tribes. The tribal gaming

regulatory offices in Arizona license all casino employees, license all gaming vendors

and large non-gaming vendors, inspect gaming devices, approve the rules for poker

and blackjack games, set the detailed internal control standards that govern casino

operations, and monitor compliance with the IGRA, compact requirements, and internal control standards. In addition, Arizona’s gaming compacts require that a tribal gaming inspector be physically present in each gaming facility at all times during

operating hours.

Arizona’s Indian tribes also have embraced technology as a tool for regulating

gaming. Since 1993, Arizona’s gaming compacts have required all gaming devices

to be hooked up to and monitored by a computerized accounting system, which provides much greater control than a manual system. Soon, Arizona’s larger gaining

facilities will provide limited access to those computerized accounting systems to

tribal and State regulators, which will allow for easier access to information, which

today is available only on paper.

The Arizona Department of Gaming, in consultation with many of Arizona’s gaming tribes, has recently completed negotiations over the terms of a memorandum of
39

understanding that contemplates the Department of Gaming funding a position at

the U.S. Attorney’s office. The Special U.S. Attorney position funded under this

agreement will solely address crimes committed in tribal gaming facilities. This

agreement assures that the U.S. Attorneys’ office has adequate resources to prosecute crimes committed in these facilities.

There is a misperception that serious crime exists at Indian casinos that is going

unpunished. What has been found is that typically most crimes occurring at tribal

casinos are minor property crimes against casinos. Regardless of the nature of the

crime, Arizona is working to find unique solutions to address all challenges and ensure appropriate action is taken for any criminal action found. Clearly, in Arizona,

crimes in gaming country are not being ignored.

The Arizona Department of Gaming and many of Arizona’s gaming tribes also

have been engaged for several years in an on-going effort to update and improve

the regulatory requirements for Indian gaming in Arizona. We have just completed

several years of negotiations that will result in new security and surveillance regulations for Arizona casinos. Similar discussions will continue in the future as we address new topics of concern for tribes and the State.

A few short years of gaming revenues cannot reverse the effects of more than a

century of poverty, despair, and inadequate education, but gaming conducted by

tribal governments is contributing to significant improvements on many of Arizona’s

Indian reservations. If the challenges remain severe, the successes are sweet.

As this committee considers potential changes to the IGRA, please remember that

the regulatory framework in Arizona is working well. Arizona’s gaming tribes take

our role as gaming regulators seriously, as does the State in its oversight role. Stringent and often demanding, this system, which has required substantial on-going cooperation by tribal governments and the State of Arizona, has provided comprehensive and highly effective regulation of Indian gaming operations. Additional regulation at the Federal level will only duplicate current tribal and State efforts in Arizona. We invite the members of this committee to visit Arizona and see how Indian

gaming is working.

Considering that class III Indian gaming largely hinges on the agreements negotiated with the States, it makes the most sense that the majority of the regulation

be left to the States and tribes. The appropriate role for the NIGC would be providing technical assistance to the States to strengthen the tribal State regulatory relations. It is not appropriate or functional to add a third layer of regulators if the

basic tribal State regulation is soundly established and effective.

Finally, in light of the significant tribal resources already devoted to the regulation of Indian gaming in Arizona, and the limited role the NIGC plays in the regulation of Indian gaining in Arizona, Arizona’s Indian tribes do not believe that we

should be forced to shoulder the cost of any additional funding that the National

Indian Gaming Commission needs to carry out its regulatory responsibilities in

other States.

Mr. Chairman, members of the committee and staff, thank you for the opportunity

to share my perspective on this very important issue. I would be happy to answer

any questions you may have.

PREPARED STATEMENT OF DALLAS MASSEY SR., CHAIRMAN, WHITE MOUNTAIN

APACHE TRIBE

Thank you for inviting me to be part of these proceedings. My name is Dallas

Massey Sr., chairman, White Mountain Apache Tribe.

I am pleased to be able to add my remarks to those of Chairwoman Juan-Sanders

and help you learn more about our system in Arizona. As the chairwoman explained, gaming in Arizona is limited and regulated and is working for all of us.

The White Mountain Apache Tribe is located in east central Arizona on the Fort

Apache Indian Reservation. Our land covers more than 1.6 million acres. The tribe

has over 12,000 members located on nine major reservation communities. Within

our land base, our members experience serious poverty and unemployment. Our median family income is just $9,200 a year. Our casino provides not only an important

source of revenue, but it also is a major source of employment for our people.

For years, before gaming, my tribe struggled to move forward without adequate

schools or housing, health care, roads, telephone systems, water, and police and fire

protection. While gaming revenues are helping us make strides, our needs are so

overwhelming that my people often go without food, electricity, employment and

shelter. Our average income is far below the Federal poverty level and our unemployment rate is 60 percent.
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We have many natural resources on our land—including timber. But we do not

see our land as a resource to exploit. We manage our land with traditional techniques out of respect for the Creator and creation. At the same time, we understand

the need to develop extensive infrastructure so we can attract ecologically compatible industry to selected areas of our reservation. These competing needs and commitments make it difficult for us to finance the most basic services for our people.

In the summer of 2002, the White Mountain Apache Tribe suffered a horrible loss

when the Rodeo-Chedeski fire swept through our reservation. This was not only a

physical but also an emotional loss because we feel such strong cultural ties to our

land. To fight the blaze, we mobilized nearly 400 men and women. Still, the fire

charred 276,000 acres of the Fort Apache Reservation. Our tribe has been working

hard to salvage the forest and our economy, but because of the fire, the land scarred

by the fire cannot be logged for 100 to 150 years. For the next 30 years, we will

be cutting one-half of what the tribe planned to harvest. Loss of income is exacerbated by job losses. Even with the mill fully operating, unemployment on our reservation hovered at 60 percent. Without the mill operating, the casino becomes an

even more critical source for employment.

With revenues from gaming, the White Mountain tribal government is funding necessities like a daycare facility. We are making improvements to our schools, health

care and housing. But building projects are costly and the needs, like our land base,

are enormous. Yet despite our daily struggle with severe revenue shortfalls, our tribe, like other

Arizona tribes, is sharing a portion of our gaming revenues with the people of Arizona. In 2004, Arizona gaming tribes contributed nearly $38 million in revenues

sharing payments to the State. Revenues supported education, emergency health

care, wildlife conservation and tourism throughout Arizona. Shared revenues also

provided treatment and support to help problem gamblers. In addition, and as described in more detail below, part of this $38 million funded the Arizona Department of Gaming’s regulation of Indian gaming in the State. As Chairwoman Saunders explained, our revenue sharing system is unique. Because our compact ensures

that tribes with casinos near urban locations pay the lion’s share of revenue sharing, smaller, more rural tribes, like mine, are not unfairly burdened.

In 2004, 21 tribes have compacts and 15 have gaming facilities, with 11,831 slot

machines and 424 table games. To regulate the industry, Arizona tribes and the

State of Arizona spend more than $35 million annually in oversight. In total, the

State has 567 regulatory employees, a number that is exclusive of NIGC staff. This

equates to one regulatory employee for every 21 games. In comparison, Atlantic

City, which has 34,225 games in play, has one regulatory employee for every 95

games; and Nevada, which has 211,760 games in play, has one regulatory employee

for every 492 games. Arizona spends roughly $3,000 per year per game for regulation, while Atlantic City, with an industry three times the size, spends $672 per

game per year and Nevada, with nearly twenty .times the games, spends $118 per

game per year.

How did Arizona develop such a system?

Although tribes in Arizona have different backgrounds, cultures and competing interests, they united to agree upon a common policy for Indian gaming in Arizona.

They gave up their parochial interests, which was not an easy decision or an easy

process. Today tribes continue to be committed and dedicate tremendous resources

to the regulation of Indian gaming. Tribal governments are dedicated to building

and maintaining strong regulatory systems because our sovereign authority, government operations and resources are at stake.

When proposition 202 was passed by Arizona voters in 2002, it contained several

innovations that, at the time, represented some of the best practices from around

the country. For example, it details a progressive approach to revenue sharing. In

the Arizona model, the more you make, the more you pay. Agreement on revenuesharing was not an easy decision for tribal leaders to reach. Establishing a sliding

scale from 1 percent to 8 percent made this easier to accept. Arizona tribes provide

12 percent of the State-shared revenue to local cities and towns, or through them,

to qualified non-profits. In Arizona, more than 90 percent of the revenue sharing

is paid by the large urban tribes who make the most revenues.

Another innovation is that the tribal-State gaming compacts only allow Arizona

tribes to increase the number of slot machines they operate by leasing machine

rights from other tribes that are not using their gaming rights. These arrangements

are done on a tribal government-to-tribal government basis. For example, the Salt

River Pima-Maricopa Indian Community contracted with the Havasupai Tribe

which is located at the bottom of the Grand Canyon and the Hualapai Tribe in

northeast Arizona in Peach Springs to lease their machine rights. For the

Havasupai, these revenues more than doubled the tribe’s annual budget.
41

And the Arizona model protects our exclusivity. Two so-called ‘‘poison pills’’ keep

slot machine gaming and other potential gaming limited to the compacts.

Proposition 202 provided for additional regulation over Indian gaming by the Arizona Department of Gaming. Arizona gaming tribes contributed $8 million to the

Arizona Department of Gaming [ADOG] in 2004. The tribal contribution nearly fully

funds ADOG, since its total budget is almost $10 million, ADOG receives no State

general funding. This increase in funding has enabled ADOG to grow from 75 fulltime employees in 2003, to 105 full-time employees in 2004. ADOG receives additional funding from fees paid by gaming vendors and gaming employees for their

State certification.

In addition to being licensed by the tribes, gaming vendors and gaming employees

must be licensed by ADOG. That process includes background checks for suitability.

ADOG also inspects Indian gaming facilities to review gaming transactions, the integrity of games, and vendor payments. Clearly, Indian gaming in Arizona is a highly regulated industry. In our industry, nothing is left to chance.

Our system is limited and regulated and it works. From our experience our model

interprets the letter and the intent of IGRA. It generates revenues for tribes to encourage self-sufficiency and recognizes that tribal lands present tribes with different

opportunities.

Therefore, we would like to be on record to remind the committee that there are

financial impacts and hardships to tribes when fees are raised. Arizona tribes are

opposed to a fee system for NIGC that would create unfair burdens for those tribes

least able, to pay.

Arizona tribes also believe that revenue sharing should be capped to ensure that

more money is generated for tribal needs and regulation rather than using revenues

from tribal governmental gaming to offset State deficits. Senator McCain, when you

drafted IGRA, you said no authority could tax Indian gaming revenues. Tribal governmental gaming was instituted to help tribes deliver essential government services to their members, not to provide—State governments with a way to meet budget shortfalls.

Arizona tribes believe that tribal governments must retain the primary responsibility for regulating tribally owned and operated gaming operations. Fifteen years

of Federal policy under the Indian Gaming Regulatory Act have created a highly

developed, well funded, and extensive State-tribal regulatory system that should be

supported by the U.S. Congress and not supplanted with wasteful or duplicative

Federal regulations. The National Indian Gaming Commission’s authority over class

III gaming should be supplemental and deferential to class III regulation under negotiated tribal-State gaming compacts.

Arizona tribes already fully fund an adequate State-tribal regulatory system and

should not be forced to pay for increases in National Indian Gaming Commission

fees. Furthermore, any increase in the National Indian Gaming Commission’s funding should be based on specific budget justifications submitted to the Appropriations

Committee and not based on automatic funding increases.

Thank you for giving me the opportunity today to represent the White Mountain

Apache Tribe. On behalf of Arizona tribes, we invite this committee to come to Arizona and see our system working.
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