SEMINOLE TRIBE OF FLORIDA

February 12, 2011 

 IV. Regulations Which May Require Amendment or Revision 

Part 502-Definitions of this Chapter

(1) Net revenues ( Sec. 502.16 ) 

The Indian Gaming Regulatory Act, Sec. 2703 defines “net revenues” as gross 

revenues of an Indian gaming operation less amount paid out as, or paid for, prizes and 

total operating expenses, excluding management fees. 

This definition doesn’t state any requirement for net revenues to be calculated in 

accordance with generally accepted accounting principles (GAAP) and the accounting 

basis to be used is not identified. Net revenues can be presented on a cash or accrual 

basis of accounting: either one may yield a different amount. Tribes that prepare 

audited financial statements are required to use the accrual basis of accounting and 

therefore it would be appropriate for the definition to be changed to include the wording 

“accrual basis of accounting” and that all calculations follow GAAP. 

 Once the definition of net revenues has been changed as stated above, then the 

definition of “net revenue – management fee” would not need to be changed. 

 (b) Net revenues – allowable uses 

There is no need to further define by regulation allowable uses for net gaming revenues 

under IGRA. As noted above, IGRA clearly defines net revenues. Both IGRA and 25 

CFR Part 290- Tribal Revenue Allocation Plans- define how net gaming revenues may 

be used. How tribal parties consider cash flow in the context of calculating or distributing 

net gaming revenue should be left up to each tribe given its individual financial 

requirements. For example, the financial integrity of a tribe’s gaming operations could 

well fall within the tribe’s approved RAP in the category of economic development ( e.g. 

capital expansion of a casino ) or it may be included in total operating expenses prior to 

the calculation of net gaming revenues. It is submitted that those are tribal decisions to 

be made outside the regulatory jurisdiction of the NIGC. 

However, if the NIGC decides to further define “total operating expenses” through 

1. 
SEMINOLE TRIBE OF FLORIDA 

February 12, 2011 

regulation, consideration should be given to each gaming tribe’s accounting needs in 

this matter. This is of low priority. 

As to the allowable uses of net gaming revenue, it is more important that the NIGC 

consider rescinding or completely rewriting its Bulletin No. 05-1. 

First of all, the basic premise for issuance of the Bulletin appears flawed. On the first 

page, the NIGC recognizes that “tribal governments are well aware of the requirements 

for the uses of net revenues” but then drifts into a justification of the Bulletin on the 

grounds that the NIGC “attempt(s) to assist in the resolution of misunderstandings and 

disputes that can, and do, develop between tribal members and tribal entities regarding 

Indian gaming issues such as expenditures of gaming revenues.” For gaming tribes, 

allocation of net gaming revenues is at the heart of the government functions of 

budgeting, human service delivery systems development and strategic planning 

typically within a political and cultural tribal context. In any event, 25 CFR Sec. 290.23 

requires that tribes have mechanisms for dispute resolution regarding the allocation of 

net gaming revenue and per capita distributions. It is within those forums that intra-tribal 

“misunderstandings or disputes” be resolved without federal interference in the form of 

NIGC assistance. 

Most of the Bulletin is simply a restatement of existing law and regulations with a few 

examples of typical tribal programs thrown in for apparent good measure. But more 

importantly, some of the Bulletin’s statements are so imprecise as to be misleading or at 

best confusing. For example, the second full paragraph on page 2 states “Direct 

distribution of payments to individual tribal members, outside of a government program, 

are not allowed.” Under a gaming tribe’s fiscal year budget , this blanket prohibition 

might not be applicable if the tribe also utilizes non-gaming funds to make such 

payments over which IGRA does not apply and the NIGC lacks jurisdiction. The Bulletin 

then points out the exception to this rule: per capita payments - which in fact form the 

entire legal basis for Revenue Allocation Plans. The NIGC should assume that all 

gaming tribes know that they cannot make per capita distributions of net gaming 

revenues without an approved RAP. 

While citing limited examples of “permissible” tribal programs and capital expenditures, 

the Bulletin then extends beyond the scope of the statutory five categories of allowable 

uses of net gaming revenue to take the position that tribes must justify their programs 

“to serve one or more needs or requirements of the tribal community “ and 

2. 
SEMINOLE TRIBE OF FLORIDA 

February 12, 2011 

 must “establish eligibility criteria tied to financial needs or requirements of tribal 

membership” or “consider or determine whether the benefits received my members will 

be subject to federal withholding and taxation”. These attempts to add to the RAP 

requirements simply exceed the purpose of IGRA and the proper role of the NIGC. Even 

if well intentioned, the Bulletin unnecessarily intrudes into the essence of tribal 

government functioning and seeks to substitute federal government standards and 

values for tribal judgments and self-determination. 

Finally, any NIGC Bulletin on uses of net gaming revenues need not substantively 

address issues of taxability. Tribes are not subject to state or federal taxes. RAP 

requirements include notification by tribes to their tribal members of federal taxes due 

and paid for per capita distributions. The entire last page of the Bulletin is dedicated to 

issues that the IRS’s Office of Indian Tribal Governments can address with tribes. 

While the Bulletin may have been generated out of a spirit of being helpful, it could be 

interpreted as being paternalistic. If tribes need guidance on the operations of their 

governments, let them ask for help during audit discussions. 

B. Part 514—Fees 

The Commission should consider a late payment system in lieu of a Notice of Violation. 

This is of high priority. 

As noted in the Notice of Inquiry, a NOV could lead to closure of a gaming facility. The 

issuance of a NOV is a very serious matter and can have extremely negative 

ramifications to a tribe contrary to the stated purpose of IGRA: As a means of promoting 

tribal economic development, self-sufficiency, and strong tribal governments. 

And once an NOV is issued, the ancillary economic damage sustained by a tribe may 

be immediate and difficult to reverse. See comments under K. Part 573 Enforcement, 

below. 

C. Part 518—Self-Regulation of Class II 

See Seminole Tribe of Florida submission of February 10, 2011. 

D. Part 523—Review and Approval of Existing Ordinances and Resolutions 

Eliminate as obsolete. This is low priority. 

3. 
SEMINOLE TRIBE OF FLORIDA 

February 12, 2011 

F. Proceedings Before the Commission 

The Commission should consider issuing through rule-making Appellate Rules that 

might generally consolidate and/or coordinate existing Parts 519, 524, 539, and 577. 

Any additional procedural rules should be clear and not create undue financial burden 

for appeals by tribes. 

Whether existing regulations regarding procedural rules are changed or not, the 

Commission’s adherence to whatever is stated in the statute and regulations is most 

important. For example, the NIGC has taken the position that after the issuance of a 

NOV, but before an appeal is filed by a tribe, the tribe must be represented by an 

attorney pursuant to ABA Model Rules of Professional Conduct on the grounds that the 

Chairman who issued the NOV is represented by the NIGC General Counsel or Acting 

General Counsel. Yet NIGC regulation 25 CFR 577- Appeals Before the Commission - 

states that in the appeal of a NOV “ [w]henever a representative (including an attorney) 

has entered an appearance...service shall be made upon the representative “. Part 

577.6. This regulation clearly indicates that a tribe need not be represented by an 

attorney in an appeal yet in practice must be represented by an attorney upon the 

issuance of a NOV and prior to an appeal. Either further clarification of NIGC practice or 

NIGC practice consistent with its regulations would assist tribes. 

G. MICS & Technical Standards Part 542 Class III; Part 543 Class II; Part 547 

See Seminole Tribe of Florida submission of February 10, 2011. 

I. Part 599- Facility Licenses 

See Seminole Tribe of Florida submission of February 10, 2011. 

K. Part 573 – Enforcement 

Pursuant to Part 573.3 Notice of Violation, the Chairperson has the discretion to issue a 

Notice of Violation and, prior to a tribe’s appeal, should have the discretion to withdraw 

it. 

The issuance of a Notice of Violation may have serious economic impacts on a tribe. 

There is nothing in Part 573 regarding the NIGC issuing a press release announcing a 

4. 
SEMINOLE TRIBE OF FLORIDA 

February 12, 2011 

NOV on the same day of its issuance but this does occur. The immediate impact of a 

NOV issuance could be that a tribe’s investment rating could be downgraded leading to 

increased costs in the issuance of bonds for gaming expansion or other economic 

development. If a NOV is withdrawn then the damage to a tribe’s investment grade 

rating could be ameliorated. 

V. Potential New Regulations 

C. Communication Policy or Regulation Identifying When and How the NIGC 

Communicates with Tribes. 

In communicating with gaming tribes on a general government to government basis, the 

approach for the NIGC’s Notice of Inquiry seemed very effective. When communicating 

about particular regulatory matters with individual tribes, the NIGC should determine the 

official leadership structure of the tribe and address written communications to the 

Chairperson, Governor, President or other leader. Those leaders then may, or may not, 

delegate communication to staff. As well, the NIGC would need to determine whether a 

tribe has a regulatory gaming entity and then direct communication to the head of that 

entity as well. Any written approach to communications must be broad enough to 

respect the individuality of hundreds of gaming tribes which may argue against further 

regulation. 

VI. Other Regulations 

A major issue that is not addressed in regulation but is extremely important to the 

sovereignty of tribes and the integrity of the NIGC is whether the NIGC has the 

legal authority to enforce tribal compliance with individual Revenue Allocation 

Plans and the expenditure of net gaming revenue for tribes who do not make per 

capita distributions. 

In other words, if the NIGC takes the position that it has the authority under IGRA to tell 

 

5. 
SEMINOLE TRIBE OF FLORIDA 

February 12, 2011 

gaming tribes what specific government operations or programs, general welfare 

payments, programs or distributions, economic development, charitable gifts, or local 

government operations tribes may fund with net gaming revenue, then it should so state 

with specificity and transparency in its regulations. To date, it has not. 

If IGRA does not specifically and clearly grant the NIGC the powers to police tribal 

compliance with Revenue Allocation Plans or with general budgetary funding under the 

five broad categories of allowable uses of net gaming revenues, then the NIGC must 

not use its usual standard refrain that is has broad authority over matters necessary to 

carry out the duties of the Commission to expand its regulatory jurisdiction inconsistent 

with its statutory jurisdiction. 

IGRA is crystal clear in granting the authority to approve Revenue Allocation Plans to 

the Secretary of the Interior. Nowhere in IGRA does it state that the NIGC shall police 

tribal compliance with those plans. On the issue of NIGC authority over RAP 

compliance and the general use of net gaming revenue without a RAP within IGRA’s 

five categories, Interior’s regulations are most instructive. As pertains to violations of 

IGRA, Sec. 290.10 provides that if tribes make per capita payments ( also defined ) 

without approved revenue allocation plans then either the DOJ or NIGC may enforce 

the per capita requirements of IGRA. Just as the NIGC regulations do not provide for 

NIGC authority to enforce net gaming revenue expenditures with or without a RAP, nor 

do Interior regulations except for per capita payments made without a RAP. It would 

appear that the NIGC does not have the authority to police RAP compliance under 

IGRA’s five broad categories of allowable uses. 

In the past, the NIGC has sought to expand its statutory and regulatory authority by 

some verbal slights of hand. For example, the NIGC has taken the position that certain 

payments made within a tribal program may be considered by it as per capita payments 

and therefore in violation of IGRA. This is because the NIGC chose to ignore the legal 

definition of per capita payments : “the distribution of money or other thing of value to all 

members of the tribe, or to identified groups of members”...which “does not apply to

payments made for social welfare, medical assistance, education, housing ...”. 

6. 
SEMINOLE TRIBE OF FLORIDA 

February 12, 2011 

The NIGC therefore has attempted to worm itself into the internal workings of tribal 

programs based upon Interior’s regulation allowing NIGC enforcement of per capita 

distributions thereupon requiring tribal programs to have everything from eligibility 

criteria to policies and procedures to specific wording ( “shall” rather than “should” ). Will 

NICG review of tribal government operations for RAP compliance be next ? Would 

NIGC approve a charitable gift to the Native American Rights Foundation but deem a 

charitable gift to a reservation church in violation of IGRA ? 

In the CRIT case, the Court noted “a clear distinction between the power to approve the 

terms of an ordinance or contract and the power to police compliance with the terms of 

the ordinance or contract”. 383 F.Supp.2d 123,134. Likewise, if Interior has the authority 

over revenue allocation plans on what basis would the NIGC have authority to police 

RAP compliance ? These issues should be addressed by the NIGC. 

The Chairwoman’s testimony before the U.S. Senate and the Commission’s Notice of 

Inquiry both address the need to take a fresh look. Tribal comments to date support that 

view and effort. 

7.