571.12 (b), but without the requirement that they have complied with § 571.13 for the previous
three years.

However, the STANDING ROCK SIOUX TRIBE GAMING COMMISSION is concerned with
the level of authority the NIGC Chair has in determining that this less-onerous standard is no
longer available to an otherwise compliant charitable gaming operation. Under Option 1’s
proposed § 571.12 (£)(4), it states that “[t]he Chair of the NIGC may, at his or her discretion,
require any gaming operation subject to this paragraph (f) to comply with the annual audit
requirement of paragraph (b).” The STANDING ROCK SIOUX TRIBE GAMING
COMMISSION is concerned that this proposed revision gives unilateral authority to the NIGC
Chair to revoke the status of a charitable gaming operation that otherwise meets the requirements
for this third tier of financial reporting without any standards to base his or her decision on.
Without any such standards written into the regulatory provision for when subsection (f) would
not be available, charitable gaming operations would be at the total mercy of how an NIGC Chair
feels about a charitable operation at any given time. Without any standards to base its decision on,
this would also place the NIGC at risk of assertions of arbitrary and capricious decision-making.
In fact, the proposed subsection (f) in Option 1 could essentially be written out of the NIGC’s
regulations for all prospective and otherwise qualified charitable gaming operations by a future
NIGC Chair if he or she so chooses. Therefore, while the STANDING ROCK SIOUX TRIBE
GAMING COMMISSION prefers Option 1 (if we must pick between 1 and 2), this proposed
regulatory change seemingly contains an on/off switch provision that we simply cannot support.

B. Option 2

The STANDING ROCK SIOUX TRIBE GAMING COMMISSION appreciates how the NIGC
has drafted its proposed Option 2 due to it being concise and relatively straightforward, admittedly
an extremely difficult thing to do when drafting regulations. However, we read this provision as
being an impossible threshold to meet unless a charitable gaming operation has been operating for
at least three years. We are also concerned that the language in Option 2 — section (f)(2) may lead
to inadvertent noncompliance with this section due to the vagueness of the requirement that “the
tribe or TGRA informs the NIGC of such permission [to submit review of financial statements].”

We could be more supportive of this Option if it operated with the use of a double-negative (i.c.,
no non-compliance), such as the gaming operation has received no notice of violation from the
NIGC concerning non-compliance with § 571.13 for the previous three years. Accordingly, we
believe that Option 2 works best if it is an alternative available concurrently with Option 1, so that
the establishment or continuation of charitable gaming operations are encouraged no matter how
recently those operations have commenced gaming activities.

b. Audits — Parts 571.12 and 571.13

1. Adverse and Disclaimed Opinions

The STANDING ROCK SIOUX TRIBE GAMING COMMISSION is deeply concerned with the
proposed amendments to 25 C.F.R. §§ 571.12 (b)(3), (d)(5), and (e)(5) that specify that either a
disclaimed opinion or adverse opinion does not satisfy the audit submission requirements. This is



The STANDING ROCK SIOUX TRIBE GAMING COMMISSION is generally supportive of
the NIGC in its efforts to create a third tier of financial reporting for charitable gaming operations
under its regulations. Promulgating standards for charitable gaming operations that are less
burdensome than those for tribal gaming (generally), or those for qualifying small gaming
operations could facilitate an increase of charitable gaming in Indian country. We believe that
encouraging charitable gaming as a way of raising money for certain tribal or community-based
causes is aligned with the central purposes of IGRA. However, we are concerned that the NIGC’s
proposals here may not go far enough to promote widespread utilization of this third tier of
financial reporting.

First, the STANDING ROCK SIOUX TRIBE GAMING COMMISSION believes that the
$50,000 gross revenues threshold may be unnecessarily low. In the NIGC’s October 21, 2021,
virtual consultation, Chairman Simmermeyer and NIGC attorney Steve Iverson stated that this
number was reached after reviewing financial reporting waiver requests, and finding that many
fell below this $50,000 amount. It was also stated that in the formulation of this threshold, that
the size of a gaming operation was an important factor in assessing the risks present with that
operation’s gaming activity. While this certainly helps provide context for why the proposed
$50,000 gross revenues threshold was chosen, we still believe that increasing this number, even to
just $100,000, will have positive effects for tribal governments, tribal members, and communities
and causes outside of Indian country. In short, if the NIGC can better promote charitable gaming
through its regulatory scheme, then the STANDING ROCK SIOUX TRIBE GAMING
COMMISSION considers it a win for all involved, and we believe that increasing the proposed
$50,000 threshold does just that.

Second, we do not believe that there should just an Option 1 or an Option 2. We believe that, as
discussed below, charitable gaming operations that have been in operation for less than three years
will automatically benefit more from Option 1, while those that have been in operation, and
compliant with § 571.13, for three years would benefit more from Option 2. Accordingly, we
believe that in order to encourage new charitable gaming operations and their continued existence,
and to encourage already established charitable gaming operations, that both options should be
available to tribal governments. The NIGC seemingly has some level of comfort with both options,
and while some form of communication between a tribal government or TGRA and NIGC would
be required so the NIGC would be aware of which option a charitable gaming operation is taking,
we believe that having both tools available would create more positive outcomes for a wider
variety of tribal governments.

A. Option 1 —

The first option proposed by the NIGC provides that the annual audit requirement in § 571.12 (b)
will be satisfied if a charitable gaming operation delivers detailed information regarding its
activities to its TGRA monthly. Subsequently, the TGRA would be required to provide the NIGC
with a yearly certification that the financial information from the charitable gaming operation has
been reviewed, gaming has been conducted in an appropriate manner, and net gaming revenues
have been appropriately expended. The STANDING ROCK SIOUX TRIBE GAMING
COMMISSION is particularly supportive of this Option, as it permits new charitable gaming
operations to be subjected to less rigorous requirements than submitting audited financials per §



especially so when considering how this proposed revision, coupled with the clarification that an
audit report and opinion would be required in proposed §§ 571.12 (b) and 571.13 (a)-(c), would
change the NIGC’s current practices. It appears to us that these proposed revisions are really just
creating another potential avenue of non-compliance, as we do not believe that this is simply a
clarifying edit to reflect the NIGC’s current practices. In other words, before we can get behind
this proposed revision, we request additional clarification regarding how the NIGC currently
handles the submission of adverse and/or disclaimed opinions, and what the consequences would
be — especially for consolidated audits — under the NIGC’s proposed revisions to these provisions.

2. Clarification that Audit Report and Opinion Are Required Submissions

As stated above, the STANDING ROCK SIOUX TRIBE GAMING COMMISSION is concerned
with the proposed amendments to 25 C.F.R. §§ 571.12 (b) and 571.13 (a)-(c), as it seems to
increase a tribal government’s exposure to an enforcement action in an area in which a tribal
government does not exert total control. Accordingly, the STANDING ROCK SIOUX TRIBE
GAMING COMMISSION requests that the Commission provide information regarding how it
currently handles these regulatory sections, and whether an enforcement action would currently be
initiated against a tribal government if an auditor does not express an opinion on a tribal
government’s financial statements.

3. Prerequisites for Consolidated Audits

A. Only Operations with the Same Owner May Be Consolidated

The STANDING ROCK SIOUX TRIBE GAMING COMMISSION does not object to the
proposed revision here clarifying that consolidated audits under 25 C.F.R. § 571.12 (d) and (e)
may only occur if the gaming operations share a common owner.

B. Clarifying “Facilities” and “Operations” Are Synonymous

While the STANDING ROCK SIOUX TRIBE GAMING COMMISSION agrees with the
Commission’ intent in clarifying that gaming facilities and gaming operations are synonymous in
the proposed 25 C.F.R. § 571.12 (d), we disagree with how the Commission is communicating
this. The proposed 25 C.F.R. § 571.12 (d) seems to indicate that the terms are not synonymous,
but instead have two distinct meanings. This is inferred from the Commission’s proposed language
because both terms are still included in the proposed revision.*

We believe that the intention of the Commission would be better served by amending the
definitions section of the Commission’s regulations to flatly state that gaming operations and
facilities are synonymous with each other. This would provide greater clarity throughout the
Commission’s regulations, and the Commission would not have to include both terms in § 571.12
(d) as currently proposed. On the other hand, it is not apparent that the terms are, in fact,
synonymous. In our view, a gaming facility is the location where gaming activities take place

4 Proposed 25 C.F.R. § 571.12 states, “If a tribe has multiple gaming facilities, or operations on the tribe’s Indian


0.02.0. 0040.020200002020202010 016010201010, 020101 01000 Ott tae

MEMORANDUM

TO: Chairman Sequoyah Simmermeyer; NIGC.Outreach@nigc.gov.

FR: Standing Rock Sioux Tribe Gaming Commissigg,

RE: Standing Rock Sioux Tribe Gaming Commission Comments on NIGC Series B.
DA: November 1, 2021

On behalf of the Standing Rock Sioux Tribe Gaming Commission, I share this
Memorandum to set forth our Comments on the NIGC’s Request on Series B.

Class I Gaming: Traditional Games, Social Games and Sports Contests

IGRA defines "class I gaming" to mean "social games solely for prizes of minimal value or
traditional forms of Indian gaming engaged in by individuals as a part of, or in connection with,
tribal ceremonies or celebrations." Class I gaming is regulated exclusively by the tribes and is
not subject to the provisions of IGRA.

At the Standing Rock Sioux Tribe, our Lakota and Dakota People have traditions of athletic
sports contests, including horse racing, foot racing, contests of athletic skill such as hand

games, ball games, stick games, archery, target shooting, fishing, hunting, wrestling, competitive
dancing, and in the past 150 years, rodeo, basketball, football, and baseball, and similar

games. To promote funding for students to attend games, other education related and civic
purposes that raise funds for our veterans to conduct services at our social events,

these promotional clubs often conduct raffles for traditional prizes, such as quilts, hand-made
goods, traditional items, such as fishing rods and reels, hunting equipment, etc., and cash prizes
of minimal value. Annually, monthly or weekly we host traditional celebrations and ceremonies
at our tribal government headquarters, districts, and communities, which include pow-wows,
masquerades, rodeos, dances and school sports contests. Today, Class I games are also essential
“social games” engaged in by our people in connection with socializing to educate the young,
provide spiritual and community support, pass down oral cultural, traditional knowledge and
values: examples are story-telling by elders to children, gatherings of elders for support and

1
PO Box D * Fort Yates, ND 58538 + Ph: 701.854.3830 + Fax: 701.854.7653


while a gaming operation encompasses the overall management structure that operates the gaming
facility. A gaming operation may operate one gaming facility or it may operate multiple gaming
facilities. It is nonetheless a single operation.

4. Delegation of Waiver Granting Authority

While the STANDING ROCK SIOUX TRIBE GAMING COMMISSION is in favor of
streamlining waiver requests under 25 C.F.R. § 571.12 (d)(4) and (€)(3) by permitting the
Commission to delegate waiver authority to another department, the STANDING ROCK SIOUX
TRIBE GAMING COMMISSION feels it necessary to clarify which entity or entities may serve
as the Commission’s designee(s). Without knowing the realm of possibilities regarding who this
designee may be, we are uncomfortable supporting this proposed revision. Will there be any
possibility of appealing the designee’s decision in denying a waiver request? Will there be any
specific standards the designee must follow in deciding whether to grant a waiver? At the very
least, there is quite a lot of communication between tribal governments and the NIGC through
consultations, etc., so how will we be sure that the designated entity can be held accountable for
its decisions, or at least be receptive to tribal input where appropriate? These are only some of the
questions that immediately arise when an agency is granting itself Standing Rock Sioux Tribe
Gaming commissioner authority to delegate important functions to an infinite number of potential
designees.

Accordingly, the STANDING ROCK SIOUX TRIBE GAMING COMMISSION believes that
greater specificity is needed to clarify which entities may be delegated the authority to approve or
deny waiver requests under § 571.12 (d)(4) and (e)(3). It is presumed that the designee would be
“designated Commission staff,” but we believe it is critical that the NIGC identify the potential
designee in these regulations so that tribal governments may understand who may exert waiver
granting authority over its gaming operations.

Respectfully,

Charles Bailey, Chairmai
Standing Rock Gaming Commission


community, and adult and youth discussion and debate of community activities that may find
expression at school, church, community centers and homes. Tribal games such as these are
Class | and subject to the regulation of the Tribe, pursuant to the plain language of the statute.
This is an essential aspect of Indian Self-Determination and the NIGC must not interfere with
our Class I Gaming.

Small and Charitable Gaming and Self-Regulation.

The IGRA identifies small and charitable gaming and self-regulation. In our view, the NIGC
should establish a program for self-regulation of small and charitable gaming:

© The Tribal Gaming Regulatory Agency Should Have the Primary Authority to Self-
Regulate Small and Charitable Gaming;

e TGRA Should Issue License per Tribal Ordinance and/or Regulations; and

e TGRA Should Develop A Reasonable System for Small and Charitable Gaming
Oversight, including Financial Accountability Pursuant to Tribal Law and Regulations.

More specifically:
a. Audit Standards for Small and Charitable Gaming Operations — Part 571

1. Elimination of NIGC Waiver Requirement for Reviewed Financial Statements in
25 C.F.R. § 571.12

While initially presented as doing away with the “waiver requirement” in the information provided
by the NIGC for this consultation series, we have a difficult time reading the NIGC’s proposed
revision to 25 C.F.R. § 571.12 (c) as alleviating a bureaucratic burden to the benefit of tribal
governments. Instead, it appears that this provision is actually making it more difficult for small
gaming operations to qualify under § 571.12 (c) by decreasing regulatory flexibility. Accordingly,
the STANDING ROCK SIOUX TRIBE GAMING COMMISSION believes that the elimination
of the NIGC’s authority to waive the requirement that financial statements must have been
properly submitted for the previous three years by smaller gaming operations in § 571.12 (c)
actually amounts to the elimination of a potential lifeline for smaller gaming operations rather than
the elimination of a regulatory “requirement.” Therefore, the STANDING ROCK SIOUX TRIBE
GAMING COMMISSION cannot support this proposed revision.

In the currently un-revised 25 C.F.R. § 571.12 (c), a gaming operation that has gross gaming
revenues of less than $2 million during the prior fiscal year will satisfy the annual audit
requirement of § 571.12 (b) if two conditions are met. The first condition is not at issue here, but
the second condition states, “[uJnless waived in writing by the Commission, the gaming operation’s
financial statements for the three previous years were sent to the Commission in accordance with
§ 571.13.” (Emphasis added).


As currently written, it appears that the regulation contemplates circumstances where the NIGC
may waive the requirement that a gaming operation’s financial statements must be sent to the
NIGC for the three previous years in accordance with § 571.13. The proposed regulatory changes
here do not eliminate a “Commission waiver requirement” because there is no requirement that
the NIGC waive anything before small gaming operations are authorized to submit reviewed
(rather than audited) financial statements. Instead, the NIGC is proposing to do away with a tool
that could be used by smaller gaming operations that have just commenced business operations
within the past three years or have otherwise been impacted by some disaster outside of their
control that rendered them unable to meet all necessary regulatory requirements within the past
three years (i.e., a global pandemic). In other words, we do not view this proposed regulatory
change as necessarily beneficial to smaller tribal gaming operations and prefer to keep the current
language which maintains some semblance of flexibility in the financial reporting process. We
have the same opinion to the proposed revision to § 571.12 (e)(4).

Moreover, before § 571.12 (c) was promulgated and was still in the rulemaking phase, the NIGC
proposed an additional requirement to this section mandating that a tribal government “submit a
statement to the Commission supporting the decision to use reviewed financial statements in place
of audited financial statements.”! However, this requirement was removed from the final rule after
the NIGC agreed with several commenters’ objections to this requirement as being “unnecessary”
and “vaguely worded.”? Further, the commenters stated, and the NIGC agreed, that “the
requirement could cause further non-compliance as tribal governments attempt to understand the
scope of what is required[.]”> We believe that any new requirement that a TGRA inform the NIGC
of “permission” to submit a review of the financial statements may encounter similar issues.

Lastly, the STANDING ROCK SIOUX TRIBE GAMING COMMISSION is concerned with how
the proposed § 571.12 (c) would interact with § 571.12 (d) and (e). Subsections (d) and (e) deal
with the submission of consolidated financial statements of multiple gaming locations if particular
conditions are met. We are trying to understand how these sections can be navigated if a tribal
government has multiple gaming operations, some generating more than $2 million per year, while
some are small and/or charitable gaming operations. We would appreciate clarification how the
NIGC proposes to mesh these sections if the proposed revision to § 571 (c) is adopted. Would
tribal governments be able to put their gaming operations into different baskets, so to speak, or if
a tribal government chooses to consolidate small gaming operations under 571.12 (e), will they
still be able utilize the proposed § 571 (c) or (f) for any other applicable small/charitable gaming
operation? Essentially, does the NIGC envision a scenario where a tribal government can pick
and choose how it submits financial information to the NIGC from any combination of § 571 (b)

-()?

2. Options For Financial Reporting by Charitable Gaming Operations

1 See Amendments to Various National Indian Gaming Commission Regulations, Proposed Rule, 73 Fed Reg. 75242,
78251 (Dec. 22, 2008).

2 Amendments to Various National Indian Gaming Commission Regulations, Final Rule, 74 Fed. Reg. 36926, 36932
(July 27, 2009).