investigation should be able to occur without a closure.

Third, another situation may occur where NIGC may accuse a tribal government of misusing
gaming revenue meaning the tribe used the revenue wrongly or improperly, or general
misspending of revenue, Again, it is unclear what NIGC is intending. If a tribe has a Revenue
Allocation Plan and during the COVID pandemic determines that it needs to eliminate charitable
giving and local government funding, and reallocates the funding without Bureau of Indian
Affairs approval, is this a misuse of gaming revenue? Or what if the Bureau of Indian Affairs
fails or delays action on a tribal request to reallocate but the tribe using its revenue totally for
government services, is that a misuse of gaming revenue? And, what roles does the Bureau of
Indian Affairs play in this process other than approval? Does the NIGC intend to play arole in
overseeing use of gaming revenue under the BIA approved Revenue Allocation Plans? It is
unclear.

The NIGC must define what “misuse of gaming revenue” means for enforcement purposes
particularly since it seeks to close a tribal gaming operation based on this phrase. Fair due
process notice of what the NIGC intends is crucial. We would like the Opportunity to provide
additional comments once NIGC clarifies its proposal to initiate a temporary Closure process for
misuse of gaming revenue.

25 C.F.R. Part 537 — Background investigations for person or entities with a financial
interest in, or having management responsibility for, a management contract: Since the
NIGC first issued regulations related to contract review, the practices and procedures the
agency uses in conducting those reviews has continued to evolve. The Commission seeks to
engage in a discussion as to how the NIGC may modify its regulations to provide more
transparency, accountability, and efficiency in its contract reviews.

1. What regulatory updates would provide additional transparency, accountability, and
efficiency in the NIGC Chair’s contract review and background investigation process?

2. How might technology provide more efficiency and lower cost in this process?

3. Should the NIGC consider adopting other jurisdictions’ best practices in the area of
background investigation processes?

In response to item #1, currently, our Gaming Operation does not have a Management Contract
with any outside agency, group or entity. We would Oppose any entity with a financial interest in
a management contract (in the case of any tribe, a wholly owned tribal entity, national bank, or
institutional investor that is federally regulated or is required to undergo a background
investigation and licensure by a state or tribe pursuant to a tribal-state compact, in our opinion,
would be the last resort). Otherwise, in order to control and ensure regulatory requirements are
met, a good manager must adhere to proper administrative management practices, human
resources, fiscal management control and day-to- day operational practices with honest
intentions, high integrity and considerable amount of knowledge in Indian gaming on tribal
reservations.


We are certainly aware of instances where some tribal leaders have embezzled or
misappropriated tribal gaming revenue and the federal prosecutions that have occurred. We
wonder if these events have also led NIGC to consider closure of gaming operations as a remedy
to a few leaders committing offenses. We have been provided no background for the proposed
regulation and are concerned about its far-reaching impact on tribal gaming communities. The
failure to define the word “misuse of gaming revenue” raises several questions about what areas
the NIGC is seeking to address, and whether the NIGC has authority to control such conduct
through a blanket closure of a gaming facility. We set out three scenarios below.

First, given that the Tribes have a well-established fiscal accounting system in place, it greatly
concerns us that the NIGC may intend to undertake some review of annual tribal audits or tribat
accounting systems, over which it has no authority, and then in its discretion, determine that the
Tribes have misused revenue funding. The tribal governing body has sole authority to determine
whether a mismanagement of funds is occurring and will take corrective measures. The annual
audits should detect any unintentional mismanagement and enable the tribe to address the
integrity of the system and employees operating the accounting. NIGC’s proposal does not
address the system’s mismanagement situation.

If the NIGC is concerned about this unintentional mismanagement of gaming revenue occurring
in a tribal accounting system it should perhaps hold a training for tribal accounting departments
to learn about the importance in securing tribal gaming revenues; provide a due diligence
assessment or checklist; and risk management standards to effectively manage the gaming
revenue. An identification of risk areas for a tribal finance department directly covering fraud,
corruption, or theft of revenue as well as other risks to further inform the risk of misuse,
particularly those covering inadequate recipient governance and oversight, poor financial
reporting, and treatment disruptions would be very helpful.

Second, the NIGC proposal (it is unclear) may be seeking to address a tribal situation where
there is ongoing intentional misuse of gaming revenue occurring by individual(s), either tribal
leaders or employees, resulting in an effect on the tribal government. For example,
misappropriation is an intentional misuse of funds where an individual(s) knowingly and
intentionally takes the money or intended to take the money. Similarly, embezzlement occurs
when: (1) the property must belong to a person other than the accused, such as an employer or
principal; (2) the property must be converted subsequent to the defendant's original and lawful
possession of it; (3) the defendant must be in a position of trust, so that the property is held by
him or her pursuant to some fiduciary duty; and (4) the defendant must have an intent to defraud
the owner at the time of the conversion. It is unclear if these are the types of “misuse of gaming
tevenue” the NIGC is targeting or some other federal offense.

The NIGC should clarify in its proposal what types of federal offenses amount misuse of gaming
revenue rather than giving the NIGC a broad undefined discretion to take drastic action of
closing a gaming operation which is often the sole and primary source of revenue for tribal
governments. If there is widespread federal offenses occurring by tribal leaders or employees it
seems harsh to close the gaming operations to stop the offenses. It seems any federal

4


In item #2, NIGC should provide recommended favorable technology to consider and to lower
cost rather having Tribes re-inventing the wheel. There are enough regulatory requirements in
existence as it is. Side stepping all these land mines makes it unreasonable. If there are favorable
technology, we would welcome a chance to review the technology and may very well
considerate it uses.

Thank you for the opportunity to comment on the proposed NIGC regulations.


FORT HALL INDIAN RESERVATION
PHONE: (208) 237-8778 Ext. 3025
FAX: (208) 637-6623

GAMING COMMISSION
P.O. BOX 306
FORT HALL, IDAHO 83203

February 10, 2022

Samuel Wetzler, NIGC Regional Director
Salomon Building, Suite 212

620 South Main Street

Portland, Oregon 97205-3037

Subject: NIGC Tribal Consultation Series “C”

Dear Mr. Wetzler,

The Shoshone-Bannock Gaming Commission submits the following comments in response to the
National Indian Gaming Commission’s Tribal Consultation Series “C” topics provided in the
December 10, 2021 letter.

We recognize the risks associated with tribal gaming and the need to protect our computer
systems and to prevent any cyberattacks to the gaming systems. An important NIGC proposal to
the regulations, which concerns us, is the “Temporary Closure of Gaming for misuse of net
gaming revenue” as provided in the series C discussion. The proposal fails to define what
“misuse of net gaming revenue” means, and what tribal actions or conduct would amount toa
violation and closure of a gaming facility.

If you have any questions regarding our comments, please contact Marvin D. Osborne, Executive
Director, of our office at (208) 238-4800, ext. 3025 e-mail address MOsborne @sbtge.com.

Sincerely, a) _
one QEDK a Tear

Lawrence Bagley, Chairman
Shoshone-Bannock Gaming Commission’

Ce: file
Attachment:


Comments of the Shoshone-Bannock Tribes Gaming Commission

25 C.F.R. §§ 543 and 547 - Minimum internal control standards and minimum technical
standards: Gaming technology and risks have changed significantly since the NIGC
implemented its current minimum internal control standards and technical standards. The
Commission is seeking your input on matters related to technological enhancements and
technology threats.

1. In addition to or instead of regulatory requirements, should the NIGC consider other
tools such as additional guidance or additional training efforts in order to promote
awareness and strengthen cyber security practices?

Tn response to item #1, we believe it is important for the Indian gaming industry to full recognize
the ongoing cyberacttacks and the necessity to protect the integrity of gaming. Online training
and other means for employees to gain updates, new technologies, and learn about potential
cyber threats is imperative. For example, we have had experience with an employee failing to
follow protocols by opening up computer programs on the internet which allowed a cyberattack
and required a shutdown of our operations for at least two weeks. Updates and training are
crucial to remind employees of the risks and threats to gaming technology systems.

25 C.F.R. § 522.4(b)(7); 25 C.F.R. § 573.4(a)12 — Approval requirements for class I
ordinances; 25 C.F.R. § 573.4(a)12 — When may the Chair issue an order of temporary
closure; The Commission seeks your input on whether the requirement that a tribe
construct and operate its gaming operation in a manner that adequately protects the
environment, public health, and safety extends to issues related to cybersecurity.

We do not agree that cybersecurity should be added to the approval requirements when a tribe is
seeking approval of a class II ordinance. Class II gaming relating to bingo, pull tabs, tip jars do

not require the complex systems as class III gaming entails and should not have this included in

the NIGC approval.

Part 543 & 547: Cybersecurity continues to be at the forefront of everyone’s minds. We believe
that the guidance, training efforts, and suggestion of best practices would serve as a valuable
asset to gaming operations, rather than forced regulatory requirements. NIGC should take a
stance of encouraging and guiding TGRAs and gaming operations to bolster their cybersecurity
while still respecting the unique approach and sovereignty of each tribe. Some tribes who have
the financial resources are way ahead of tribes who have small gaming operations or barely
beginning their operations. The NIGC must recognize the uniqueness of tribes and not seek a
one size fits all approach.

25 C.F.R § 573.4(a) —- When may the Chair issue an order of temporary closure: The
Commission is seeking your input on adding misuse of net gaming revenues to the list of
substantial violations for which the NIGC Chair may issue a temporary closure order.


NIGC proposes that the NIGC Chairman may issue an order of temporary closure based upon
misuse of net gaming revenues. In our opinion, in order for this to happen, we first must look to
the term “misuse of net revenue”. The term “net revenues” is defined in IGRA as “gross
revenues of an Indian gaming activity less amounts paid out as, or paid for, prizes and total
operating expenses, excluding management fees.” 25 U.S.C. § 2703(9); 25 CFR. §

502.16, “Misuse of” is not defined in IGRA and thus the parameters of NIGC’s authority is
undefined. It is unclear whether “misuse’ will include intentional and unintentional uses, and
whether occurring by a tribal government unintentionally mismanaging funds or an individual
who intentionally commits fraud, misappropriates or embezzles gaming revenue. The proposal
fails to define what role the Bureau of Indian A ffairs plays in this situation.

IGRA requires that net gaming revenues from Indian gaming be used for public purposes that are
consistent with those typically provided by governments. The five public purposes specified by
IGRA for a tribe’s use of net revenues from its tribal gaming operations are:

To fund tribal government operations or programs;

To provide for the general welfare of the Indian tribe and its members;
To promote tribal economic development;

To donate to charitable organizations; and

To help fund operations of local government agencies.

yReNe

Tribes may distribute gaming proceeds to individual tribal members if the tribe has a Revenue
Allocation Plan, or “RAP,” that authorizes per capita payments and has been formally approved
by the Secretary of the Interior (“Secretary”), 25 U.S.C.

“Per capita payment,” within this context, is defined as “the distribution of money or other thing
of value to all members of the tribe, or to identified groups of members, which is paid directly
from the net revenues of any tribal gaming activity.” 25 C.F.R. § 290.2. The responsibility for
reviewing and approving RAPs is delegated by federal regulations to the Bureau of Indian
Affairs (“BIA”) and the Secretary of the Interior, and not the NIGC, 25 C.F.R. Part 290. The
Shoshone-Bannock Tribes have an approved Revenue Allocation Plan with a tribal government
resolution establishing the percentages of revenue devoted to each governmental services and per
capita Tribal members.

The Tribes are committed to the highest standards of accountability and responsibility. The
Tribal Government’s accounting office has an accounting system designed to implement the
authorizing resolution with approved allocation percentage plans. The Tribal Finance Office is
responsible for providing monthly reports to the Tribal Business Council, the local BIA
Superintendent, and the department manager(s) in charge of appropriate allocated percentage. In
our opinion, this is the most credible outline use of allocated funds. The importance of this
accounting process is the protection and safe guarding of Tribal assets and gaming revenue used
according to the approved allocation plan. Each member of the governing body of the Shoshone-
Bannock Tribes has taken an oath of Office to uphold the Tribal Constitution and By-Laws that
all funds are accounted for and not misused outside the scope of authority approved in the
Business Council Resolution, and approved by the Secretary of the Interior.