NIGC staff must determine whether the submission is complete in accordance with 25 C.F.R.
Part 533. Since the Chairman’s 180-day timeframe for taking action on a management contract
cannot begin until this determination has been made, this initial review period is a critical step of
the process that can dictate how long the approval process will ultimately take. Establishing a
timeframe within which the NIGC must respond to the initial and any subsequent submissions
would bring greater certainty and predictability to the overall process.

We understand that some of the delays in the review process may be caused by a lack of
adequate staff and/or resources to handle the volume and complexity of management contract
reviews. Many of the management contracts submitted for review involve complex financing
arrangements that require specialized knowledge of financial products and their liability and risk
implications. Hiring additional staff with the expertise necessary to review and analyze complex
financial transactional documents could help expedite the review process and alleviate the delays
associated with the review process. In fact, we believe this may well be a better use of the
resources that Indian Country provides to the NIGC than the above-referenced proposal to
establish and staff a new regional office.

V. Technical Standards for Mobile Gaming Devices.

On January 26, 2017, the NIGC issued draft language to amend 25 C.F.R. Part 547 by adding
new technical standards for wireless gaming systems and communications between mobile
communication devices and mobile gaming systems. We understand that the proposed new
standards will not authorize internet gaming and are solely intended to regulate handheld mobile
devices used on tribal lands.

While we understand the NIGC’s interest in ensuring the security of mobile gaming, we have
serious concerns with this proposal to open up and amend Part 547 to include this particular type
of gaming technology, especially given that 25 C.F.R. § 547.15 already addresses the requisite
standards for wireless security and communication. The NIGC has previously indicated that this
new regulation will enable the NIGC to “stay ahead of the technology curve.” However, if that
is in fact the desired outcome driving this proposal, we believe the more viable and sustainable
approach would be to issue these technical standards as guidance instead of a regulation.

As the NIGC is aware, gaming and network security technologies are constantly evolving and
adapting to the changing conditions of the gaming environment. Our concern is that by locking
in these proposed technical standards as a regulation, the NIGC may inadvertently impede a
tribe’s ability to take advantage of new technologies and innovations. Regulations, by nature,
are inflexible in that they cannot respond to changes in technology and the gaming environment,
and can quickly become outdated as a result. Given the rapid rate of innovations in this arena, it
is virtually impossible to draft regulations governing electronic technologies that will remain
current and keep pace with changes in the gaming environment.

If the NIGC wishes to stay ahead of the technology curve, we strongly urge the NIGC to revise
its approach by withdrawing the proposed draft and issuing the new technical standards through
guidance documents that are readily changeable and can easily be adapted to respond to an ever-


Finally, training needs to be decentralized. One size does not fit all. The issues we face in the
Southwest based upon our compacts are sometime unique or substantially different than issues
faced in the other regions. Regional training should be tailored to each region.

IV. Management Contract Regulations and Procedures.

The NIGC is seeking recommendations on how the management contract and background
investigation regulations at 25 C.F.R. Parts 531, 533, 535, and 537 can be improved.
Specifically, the NIGC is seeking input from tribes on how it can improve its efficiency in
processing management contracts and background investigations.

As an initial matter, we note that it is somewhat difficult to provide meaningful
recommendations given our limited understanding of the NIGC’s internal processes for
reviewing and approving management contracts. It is our understanding that each management
contract undergoes review by both the finance and general counsel’s offices, and that the content
review and background investigation processes typically happen simultaneously. Beyond that
and the basic criteria specified in the NIGC regulations, however, it is not clear exactly what
considerations are involved in determining whether to approve a management contract.

This lack of transparency has led to frustration over the approval process, which can take
anywhere from six months to several years to complete. In fact, an argument could be made that
the recent rise of gamesmanship issues are attributable, at least in part, to parties seeking to avoid
the uncertainties and delays associated with the management contract approval process.

In our view, a major part of the problem is the lack of guidance on the factors considered by the
NIGC in determining whether a contract submission is complete in accordance with 25 C.F.R.
Part 533. For example, we understand that the financial terms in particular are subject to
heightened scrutiny to ensure that the contract does not violate the tribe’s sole proprietary
interest in its gaming activities. However, there is no guidance to help tribes understand the type
of contract terms and conditions that will be viewed as constituting an impermissible financial
arrangement.

One way of addressing this problem would be to provide clear examples of contract language
and provisions that will likely be viewed as non-compliant with the NIGC’s standards for
management contracts. This could be accomplished through the publication of Bulletins or other
guidance documents. To the extent possible, the NIGC should draw clear lines and provide
examples that make clear the type of relationships and financial arrangements that will be
deemed impermissible under federal standards. This would help prevent future submitters from
including similarly fatal provisions in their contracts and avoid any delays that would have
otherwise occurred.

In addition, the NIGC should consider establishing timeframes for the extensive vetting process
that each management contract must undergo before it reaches the Chairman for decision.
Experience has shown that delays typically occur during the initial review period in which the


changing technology curve. This would provide tribes the flexibility needed to integrate and
adapt to new technologies without significant delay.

VI. Fees.

The NIGC is considering amending the time period stated in 25 C.F.R. Part 514 for setting and
announcing the annual fee rate. Under the current regulation, a preliminary fee rate is adopted by
March 1* and a final fee rate is announced by June 1“ of every year. The NIGC is proposing to
adopt a new schedule in which the fee rate will be announced just once a year on November 1TM,
One of the stated benefits of adopting a later fee rate announcement date of November 1“ is that
it will coincide with the completion of the NIGC’s budget for the next fiscal year.

If the NIGC decides to move forward with this proposed change, it should bear in mind that
some gaming operations operate on a calendar year while others may operate on a fiscal year
ending September 30 or possibly June 30. The regulatory text should provide for a smooth
transition in the first year the rule goes into effect to avoid confusion. It may help to clarify that
in the first year, the previous year’s fee rate will carry over until November 1". Finally, we urge
that the regulation should make clear that in the event of an underpayment, the gaming operation
may adjust prior payments in the next quarter to comply with fee rate established for that year.

VII. Conclusion
In closing, we would like to reiterate our appreciation for this opportunity to provide the above
comments on the consultation topics under consideration by the NIGC. We look forward to

working with the NIGC as these proposals are developed further. Please do not hesitate to
contact us if we can provide any additional information.

Sincerely,
a COMMUNITY
4 — Az 7

Robert Miguel, Chairman

cc (via email only): | Charles McCarty, Executive Director, Ak-Chin Tribal Gaming Authority
William E. Strickland, Jr., Esq.


AK-CHIN INDIAN COMMUNITY

Community Government
42507 W. Peters & Nall Road * Maricopa, Arizona 85138 * Telephone: (520) 568-1000 * Fax: (520) 568-1001

July 5, 2017

Via Electronic Mail: Vannice Doulou@nige.gov

Mr. Jonodev Chaudhuri, Chairman
National Indian Gaming Commission
1849 C Street NW

Mailstop #1621

Washington, DC 20240

Re: Comments on 2017 Consultation Topics
Dear Chairman Chaudhuri:

On behalf of the Ak-Chin Indian Community, we offer the comments below in response to the
National Indian Gaming Commission’s (“NIGC”) request for comments on the following six
consultation topics: (1) draft Class II Minimum Internal Control Standards (“MICS”) guidance;
(2) rural outreach; (3) development of a strong tribal workforce through training; (4)
management contract regulations and procedures; (5) technical standards for mobile gaming
devices; and (6) fees provided in Part 514. We appreciate the NIGC’s efforts to reach out early
and consult with tribal governments before initiating any formal rulemaking procedures and hope
our comments prove helpful in both the consultative process and the deliberations that follow.

L Draft Class II] MICS Guidance.

The NIGC is seeking feedback on its proposal to suspend the Class III MICS at 25 C.F.R. Part
542, which would preserve the text of the regulation in the Code of Federal Regulations, but
clarify that the regulation is not enforceable by the NIGC. The NIGC is also seeking comments
on the draft voluntary, non-binding guidance for Class III MICS dated January 26, 2017.

We understand and do not object to the NIGC’s proposal to suspend enforcement of Part 542 and
issue an updated version of the Class III MICS as non-binding guidance. Such an approach is
not only consistent with the ruling in CRIT v. NIGC in which the D.C. Circuit Court of Appeals
held that the NIGC lacks the authority to enforce or promulgate Class III gaming regulations, but
also accords appropriate deference to tribal regulators in developing their own Class III internal
controls and/or applying specific compact provisions. We have some concerns, however, that
the draft guidance could introduce a degree of confusion for those mixed-use gaming facilities
offering both Class II and Class III gaming, particularly with respect to any additional standards
that may be required under their respective compacts.


For instance, it is unclear whether and how the draft guidance will be applied to NIGC audits
moving forward. Most of the changes in the draft guidance are intended to harmonize the
control standards in Parts 542 and 543 by creating a uniform set of standards for mixed-use
facilities to follow. These changes beg the question as to whether the NIGC will similarly adopt
uniform audit checklists for both Class II and Class III gaming and, if so, whether a mixed-use
facility could be subject to an audit finding for an exception that only touches a Class III gaming
activity. Since audits are typically conducted for the whole gaming facility, there may be some
confusion when parsing out any compliance issues and findings based on binding vs. non-
binding control standards for Class II and Class II gaming, respectively.

We are also concerned that the draft guidance leaves open the potential for conflict with any
internal control standards required under a tribe’s compact. Since the draft guidance will not be
binding or enforceable, the conflict provisions in the current 25 C.F.R. § 542.4 would no longer
be applicable, thereby making it unclear which standard is to prevail in the event of a conflict.
This could result in some confusion for those mixed-use gaming facilities that will have to
navigate between non-binding guidance and compact standards in operating, regulating, and
auditing their Class III gaming activities.

To address these and related concerns, we recommend establishing a tribal advisory committee
to identify the impacts of any unintended consequences that may result from the NIGC’s
proposal for the Class III MICS. The committee would help bring to light any unidentified
issues with the NIGC’s proposal and propose solutions for ensuring a positive and smooth
transition.

We also recommend instituting a more formal rulemaking process before finalizing the draft
guidance on the Class III MICS. This could happen concurrently with the publication of the
NIGC’s proposal to suspend 25 C.F.R. Part 542 and draw on the findings and recommendations
from the tribal advisory committee. Given the far-reaching implications of this proposal, it is
critical that the NIGC seize every opportunity — whether informal or formal — for tribal
participation and input.

Il. Rural Outreach.

The NIGC is seeking comments on its initiative to increase its communications and enhance its
regulatory partnerships with smaller, rural gaming operations. As part of this initiative, the
NIGC is seeking to create a new regional office in Rapid City, South Dakota, to cover the four
states (Montana, Wyoming, North Dakota, and South Dakota) that are currently part of the St.
Paul region. The new regional office would replace the satellite office in Rapid City, which was
opened in 2003 to assist the St. Paul regional office in reaching the tribes in these four states.

While we support the NIGC’s efforts to provide better assistance and training to smaller, rural
gaming tribes, we do not believe that the creation of a new regional office is necessary to achieve
this objective. During its consultation, the NIGC noted that the current St. Paul region is
relatively large and that a new regional office may be necessary to ensure sufficient coverage of
the facilities in the plains region. It was further noted that a new regional office would be helpful


for a number of administrative reasons, including enhanced coordination between the region and
the Office of General Counsel at NIGC headquarters.

In our view, the costs of this proposal would far outweigh any potential benefits to the affected
tribes. The benefits noted by the NIGC seem to be more administrative in nature and aimed at
increasing efficiencies and coordination between the regional and headquarters staff. We
question whether this is a sufficient justification to support the significant costs involved in
elevating the Rapid City satellite office, which would require hiring a new regional director as
well as additional administrative staff to support the new office. We also question whether a
compelling need for greater coverage may even exist given that many of the affected tribes,
including those in South Dakota, operate under a compact and have limited Class II gaming.

We urge the NIGC to carefully weigh the expected benefits to affected tribes against the costs
and determine whether establishing and staffing a new regional office would be the best use of
tribal gaming fees.

Ill. Developing a Strong Tribal Workforce Through Training.

The NIGC is seeking to develop its external training program for tribal gaming regulators and is
requesting feedback on ways to provide more targeted training to meet tribal needs.

We welcome and strongly support the NIGC’s increased efforts to provide greater training and
technical assistance opportunities to tribes, particularly in topics concerning information
technology. As technology and gaming products evolve, so do vulnerabilities and the impact of
security risks. The NIGC has responded accordingly by taking steps to expand training on
information technology issues and develop new assessment tools for identifying potential
security threats. We are encouraged by the NIGC’s efforts to adapt its training programs to meet
the evolving needs of tribal regulators.

As the NIGC continues this important work, we ask that it bear in mind the varying levels of
skill and resources across Indian Country and tailor its training offerings to accommodate this
wide range of circumstances. This is especially important for trainings on network security and
other information technology issues, the impact of which can vary widely depending on the size,
scale, and staffing levels of the gaming operation.

In addition, we encourage the NIGC to develop a cross-training program that promotes the
exchange of information, insights, and perspectives between tribal regulators and the NIGC.
Tribal regulators are on the front line of regulation and are responsible for the day-to-day
implementation and enforcement of the policies and regulations developed by the NIGC. Often
times, there can be a disconnect between what is perceived by policymakers to be a regulatory
concern and the reality of what is actually taking place. A cross-training program that includes
site visits by NIGC staff from various departments and regions would give participants a
firsthand look at the unique challenges and dynamics of on-site regulation. This would, in turn,
enable NIGC staff to make better and more informed decisions regarding the actual needs and
demands of tribal gaming regulation.