2018 NATIONAL GAMING COMMISSION MEETING

TRIBAL CONSULTATION SESSION

THURSDAY, JANUARY 25, 2018

1:30 P.M.

DOUBLETREE HOTEL

3 SISTERS/BACHELOR ROOM

1000 NORTHEAST MULTNOMAH STREET

PORTLAND, OREGON 97232
1 APPEARANCES

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3 CHAIRMAN JONODEV CHAUDHURI

4 VICE CHAIR KATHRYN ISOM-CLAUSE

5 COMMISSIONER E. SEQUOYAH SIMERMEYER

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1 NIGC CONSULTATION MEETING

2 JANUARY 25, 2018

3 CHAIRMAN CHAUDHURI: Thank you,

4 Councilwoman.

5 My name is Jonodev Chaudhuri. I'm

6 Muscogee Creek Bear Clan and also Bengali, from

7 India, on my father's side. I'm joined by fellow

8 commissioners who will introduce themselves in a

9 moment but as Chairman, I am very, very grateful for

10 everyone's presence here today. And it's been a

11 long productive week at ATNI. Unfortunately, we

12 weren't able to be here for much of the conference.

13 We were at another consultation in Pine Ridge or,

14 I'm sorry, Olalla, the day before yesterday, but we

15 are, ourselves, very honored to be here, very

16 thankful for that blessing, thankful to Cowlitz

17 Spokane, all tribes of this region, this area. Many

18 thanks for allowing us into your homelands for

19 today's consultation.

20 So just -- we have a number of

21 housekeeping matters, but before we begin, I want to

22 say that the room is set up by design to get to as

23 close of a circle as possible given square tables

24 and chairs. And so we really look at our

25 consultations as conversations and true government-
1 to-government dialogue. And so I really want to

2 encourage anybody to feel free to sit at the table.

3 I'm going or turn it over to my fellow

4 commissioners here in a moment and then we'll get

5 into introductions, but again, we're very grateful

6 for both tribal leadership that is represented here

7 today, as well as our regulatory partners being in

8 the room. In order to strengthen the health of the

9 Indian game industry, day-to-day work with our

10 partners is vital and so we appreciate you taking

11 the time to be with us to discuss the consultation

12 topics we're here to discuss.

13 So with that, I'm going to turn it over to

14 Vice Chair Kathryn Isom-Clause.

15 VICE CHAIR ISOM-CLAUSE: Thank you. Good

16 afternoon. As Chairman said, I'm Kathryn Isom17 Clause, Vice Chair of the Commission. I'm from Taos

18 Pueblo, and I also want to echo the thanks to

19 everyone for having us here. We love being up in

20 the Pacific Northwest and we're happy that you all

21 made time at the very end of the conference. I know

22 folks have to stay a little bit for this so we

23 really do appreciate your time and energy being

24 here.

25 As you mentioned, tribal consultation is
1 really a means for us to listen to you in

2 recognition of the government-to-government

3 relationship, but also because tribes are the

4 primary regulators. And so it's really important

5 for us to have any policy decisions or any other

6 kind of changes that we make be very much informed

7 by the tribal perspective, as well as our own

8 subject-matter experts in the agency.

9 So this round of consultation sessions

10 follows through on some topics that we've been

11 discussing with this current commission makeup. So

12 we've kind of targeted these topics to be a little

13 bit more achievable in the time that we have left

14 just due to the three-year terms that we serve as

15 this current commission. So we hope that these are

16 topics that we can really focus in on and not just

17 big broad topics, but really specific, targeted

18 ideas.

19 I'd also like to note, though, that while

20 our commission may be changing in the coming months,

21 we plan on continuing stability. We have the same

22 policy positions going forward in our strategic plan

23 that will be coming out next month. That's going to

24 be for fiscal year 2018 through 2022. So we do look

25 forward at just keeping our continuing trajectory,
1 continuing to work with tribes productively as we

2 hope that we are doing now. I think that we can say

3 with confidence that we are.

4 And so just to sum up, we really look

5 forward to hearing all of your ideas today, whether

6 on the specific topics or even more broad topics

7 being as well. Thank you.

8 COMMISSIONER SIMERMEYER: Good afternoon.

9 I want to join my colleagues in saying thank you to

10 the tribal leadership and the experts who are taking

11 their time to be here with us today and be part of

12 this consultation.

13 I'm Sequoyah Simermeyer. I'm Coharie. My

14 tribe is from North Carolina and I'm the third

15 member on the National Indian Gaming Commission.

16 For me, some of the considerations that are

17 important in kind of approaching the work that I do

18 on the Commission are first, to be cognizant of IGRA

19 and what its requirements are. It's the overarching

20 law that set our agency in place. And so some of

21 the topics that we'll discuss today I think can help

22 provide some background in that and purpose for

23 having it.

24 Second, it's important to -- in the work

25 that I think that the Commission does is to rely to
1 look at the expertise from our colleagues in the

2 regulatory industry and with the institutional

3 knowledge within our organization at NIGC. So

4 again, I want to reiterate our thanks for regulators

5 being here from other jurisdictions, and I

6 appreciate your feedback, both in this process and

7 on a day-to-day basis.

8 And lastly it's important for me -- I

9 think another consideration is to be diplomatic in

10 the way that the NIGC does its work. And so an

11 important part of being diplomatic is looking at the

12 decisions that tribal governments make in order to

13 achieve the vision that they have for their

14 communities. And so as federal partners in that,

15 it's important that we're conscious of decisions

16 that each tribe might be making with other

17 jurisdictions whether it's states or tribes or

18 federal government.

19 So those are all the things that I think

20 are important in the work that I do and are, I

21 think, helpful and achieve through some of the

22 consultation that we're doing. I think consultation

23 not only helps and gives us the opportunity to

24 involve other federal players, it meets our

25 obligations to the federal partner. It helps to
1 make more informed decision making at the federal

2 level, but I think a very important part of

3 consultation is that it helps to define, give

4 meaning to our government-to-government

5 relationships. So I do want to reiterate my thanks

6 to my colleagues that you all are here and engaged

7 in the process on that, so thank you.

8 CHAIRMAN CHAUDHURI: So as I mentioned

9 before, the tables are structured to be as close to

10 a circle as possible. An additional benefit of

11 sitting up front is that while we would never ask

12 anybody to sit somewhere that they don't want to

13 sit, we have microphones up front. We do have a

14 transcriptionist and at the end of this

15 consultation, our transcriptionist will send the

16 recording of this and the transcript for processing,

17 and ultimately to be posted on our website as

18 quickly as possible. The reason for that is we want

19 this dialogue to be as helpful to our partners as

20 possible and we want as many people to have the

21 benefit of reviewing this conversation who want that

22 benefit, and to extend to folks who may not be able

23 to be in the room today. So if you happen to make

24 comments and you don't want to speak in the

25 microphone, our transcriptionist should be able to
1 hear you, but please state your name, your tribal

2 affiliation and, you know, the community that you're

3 representing, as clearly as possible.

4 So with that, keeping in mind it's

5 important for us to know who we're sharing with.

6 We'll move forward with some introductions so you

7 know who our team is. It's very important for us to

8 know our partners on a first-name basis whenever

9 possible. Fortunately, before the consultation, we

10 had some good conversation and some good

11 introductions and we were able to get to know each

12 other in person. So we'll go around and introduce

13 ourselves in terms of what we do, but also in

14 keeping with the way we operate at NIGC, we also

15 want to give leadership an opportunity to weigh in

16 with any opening remarks. So I do see leadership in

17 the room today and if their -- let's see. I see

18 the chairman from Cowlitz. I saw the chairwoman

19 from Spokane step in. Chairman, if you have any

20 comments you want to open us up with, we'll defer to

21 you.

22 MR. IYALL: Yes, good afternoon. Bill

23 Iyall, I'm the Chair of the Cowlitz tribe -- that's

24 I-Y-A-L-L, which happens to be the scottish ship

25 steward's spelling or our original name, the Cowlitz
1 name. So I really appreciate the opportunity to be

2 here. And joining me today is three of our

3 commissioners, two on counsel and our senior staff

4 from the TGA. So we look forward to a very

5 productive day. And again, I thank you for the

6 federal partnership. It's critical in protecting

7 the economic self-sufficiency for the Cowlitz

8 people.

9 CHAIRMAN CHAUDHURI: Thank you, Chairman.

10 And if and when the chairwoman from Spokane returns,

11 we'll, of course, provide her an opportunity as we

12 would with any leadership.

13 So before we move forward with

14 introductions around the room, again, in keeping

15 with that idea that we're here to serve our

16 partners. We'll move forward with NIGC

17 introductions and then we'll move forward with

18 introductions around the room. So we'll start off

19 with our chief of staff.

20 MS. THOMAS: Good afternoon. My name is

21 Christina Thomas. I'm the Acting Chief of Staff for

22 the National Indian Gaming Commission. I'm also a

23 member of the Mille Lacs Band of Ojibwe out of

24 Minnesota.

25 MS. LEE: Good afternoon. My name is
1 Yvonne Lee, I'm the Director of Finance for the

2 NIGC.

3 MS. DITTLER: Good afternoon. My name is

4 Esther Dittler. I'm Mohawk from Six Nations. I'm

5 the regional attorney for the Portland region and --

6 actually, I should have said I'm Senior Attorney

7 with the Commission. I've been with the Commission

8 now for 12 years.

9 MS. GRUBB: Hello, my name is Mariah Grubb

10 with the National Indian Gaming Commission. I work

11 in our headquarter office as a management program

12 analyst.

13 MR. CATCHPOLE: My name is Daniel

14 Catchpole. I'm with the audit group here for the

15 Portland region. And welcome to this great

16 afternoon.

17 CHAIRMAN CHAUDHURI: And our regional team

18 is here too, if you could introduce yourselves.

19 MR. PHILLIPS: I'm Mark Phillips. I'm

20 Portland Regional Director with the National Indian

21 Gaming Commission, located right here in Portland.

22 MS. TAVERA: Hello, I'm Vida Tavera. I'm

23 out of the Portland NIGC office as well, compliance

24 officer, and I'm a Cow Creek Tribal member from

25 Southern Oregon.
1 CHAIRMAN CHAUDHURI: Thank you. So

2 whether it's headquarters or at the region, we're

3 always open, our phone lines are always open. We're

4 here to answer any day-to-day questions that may

5 come up.

6 So at this time if we could go around the

7 room, introduce ourselves to each other. The

8 comments that we hear today, hopefully, will be a

9 benefit to all attendees and not just -- and be part

10 of a larger conversation. So it's always helpful to

11 know who our partners are in the room. So maybe if

12 we could start at the table and move from there.

13 Oh, I'm sorry. Go ahead.

14 MR. BAKER: This is Ralph Baker, Chair of

15 the Grand Ronde Gaming Commission.

16 MR. FISH: Tanner Fish, I'm the Assistant

17 Director for the Grand Ronde Gaming Commission.

18 MS. GRAY: Shawna Gray, Executive Director

19 from the Siletz Tribe Gaming Commission.

20 MS. GOUDY-SMITH: Dora Goudy-Smith,

21 Chairman of the Yakama Nation Gaming Commission.

22 MR. IYALL: I'm Jerry Iyall, Chairman of

23 the Cowlitz Gaming Commission.

24 MS. CLOQUET: Good afternoon, Celine

25 Cloquet, Councilwoman for the Cowlitz Indian Tribe
1 and Vice Chair of the Gaming Commission.

2 MR. AITKEN: (Speaks Kootenai.) Good

3 afternoon, I'm Gary Aitken, Jr., Chairman of the

4 Kootenai Tribe of Idaho.

5 MS. COOPER: Vice-chairwoman of Kootenai

6 Tribe of Idaho, Tribal Council. Angela Cooper.

7 MR. WHEAT: Good afternoon. My name is

8 Scott Wheat. I'm an attorney with Wheat Law

9 Offices. Today I'm here on behalf of Confederated

10 Tribes of Coos, Lower Umpqua and Suislaw Indians, as

11 well as the Spokane Tribe.

12 MR. BARQUIN: Billy Barquin, Attorney

13 General Kootenai Tribe of Idaho.

14 MS. RENTZ: Pamela Rentz, legal

15 department, Kootenai Tribe of Idaho.

16 MR. KELLOGG: Hi, good afternoon. My name

17 is Dick Kellogg. I'm honored to be the TGA Director

18 for the Cowlitz Indian Tribe and the Ilani Casino,

19 which is brand new and you're all welcome to come

20 and have a look.

21 MR. FORD: Greg Ford, Cowlitz Tribe,

22 Tribal Gaming Commissioner.

23 MS. VANCLEAVE: Kim VanCleave, I'm the

24 Assistant Director for the Cowlitz Tribal Gaming

25 Agency.
1 MR. DASARO: Paul Dasaro, I'm Assistant

2 Director for Cowlitz Tribal Gaming Agency.

3 MS. STACONA: Good afternoon. Michele

4 Stacona, Secretary/Treasurer, CEO for the

5 Confederated Tribes of Warms Springs.

6 MS. MACY: Good afternoon. I'm Alyssa

7 Macy. I'm the Chief Operating Officer for the

8 Confederated Tribes of Warm Springs.

9 MS. EAGLECLAW: Good afternoon. Annie

10 Eagleclaw, Yakama Nation Gaming Commission and

11 Secretary.

12 MS. SMARTLOWIT: Hello, my name is Leah

13 Smartlowit. I'm Yakama Nation Gaming Commissioner.

14 MS. METCALF: Hello, I'm Ronda Metcalf

15 with the Sauk Suiattle Indian Tribe. I'm a

16 councilwoman.

17 MR. WADZINSKI: Hello, Kevin Wadzinski of

18 the Law Firm of Powers Pyles. I'm here on behalf of

19 a number of clients including management contractors

20 that obviously are interested in some of the subject

21 matter here today.

22 CHAIRMAN CHAUDHURI: Okay. So we will

23 move forward with the nuts and bolts part of our

24 discussion. I'll turn it over to our chief of staff

25 for some housekeeping comments. But again, I want
1 to thank everybody for taking the time to be here

2 today. Even though we have some specific comments,

3 since this is a government-to-government dialogue

4 and discussion, I don't want us to be refrained by

5 process. And so we will have some time at the end

6 of the consultation today to discuss open-ended

7 comments, questions concerns that folks may want to

8 raise. And furthermore, I don't want anybody to

9 feel purely constrained in the course of discussing

10 one topic. If there are related matters that need

11 to be raised, we will always defer to our tribal

12 partners in discussing those matters.

13 That said, since this is a government-to14 government consultation, I understand that there

15 were representatives of tribes in the room. If --

16 our first priority is making sure that tribal

17 leadership, tribal regulators have every opportunity

18 to voice their concerns, ask questions, and there

19 will be ample time to -- I want to make sure there's

20 ample time to have those questions and comments

21 raised. We do have -- I mean, this conversation is

22 open to representatives to weigh in, but please wait

23 until we've ensured that tribal leadership has had

24 an opportunity to share their comments.

25 So with that, I'm going or turn it over to
1 our chief staff for some housekeeping matters.

2 MS. THOMAS: Thank you, Chairman. So as

3 he had stated earlier, we do have a transcriptionist

4 here so the consultation will be transcribed. So if

5 you do have comments, make sure that you say your

6 name and your affiliation clearly so that she's able

7 to catch that. We're scheduled to go to 3:30 today,

8 but if it needs to take longer, we will definitely

9 take longer.

10 Our format for the consultation, we have

11 three topics. The first topic is Management

12 Contracts. The second one being Audit Submissions

13 and our last being the Management and Sole

14 Proprietary Interest Definition Drafts. We will be

15 stopping in between each -- each topic will have a

16 presentation and in between each presentation, we'll

17 stop for comments and questions before moving

18 forward to the next topic.

19 We do have a comment period ending for the

20 drafts that we already have posted online. That

21 comment period ending is going to be February 28

22 2018, so at the end of next month. Additionally,

23 any updates that we make to the information on the

24 consultation page on our website, we will be

25 updating that stuff every week, Wednesday, by 5:00
1 p.m. Eastern time. So as things may change as we

2 move through the consultation schedule, those

3 changes will be posted to the website. With that,

4 I'll turn it back over to you.

5 CHAIRMAN CHAUDHURI: Before we move

6 forward to the subject matter presentations, I want

7 to make sure -- especially since this is the end of

8 ATNI, a lot of people have flights home and may need

9 to get on the road. If anybody needs to get a

10 statement on the record now before we get into the

11 specific subject matter discussions, please feel

12 free to let us know and we'll be sure to get you on

13 the record. Otherwise, we'll turn it over to our

14 first presenter, Ms. Yvonne Lee. But does anybody

15 need to get a statement on the record before we move

16 forward?

17 Okay. With that, for our first

18 consultation topic, we have our Finance Director

19 Yvonne Lee here to talk to us about that topic, so

20 go ahead, Yvonne.

21 MS. LEE: Under IGRA and current NIGC

22 regulations, Tribes wanting to engage a third party

23 to manage their operations are required to enter

24 into a management agreement with the third party

25 that must be approved by the Chairman of the
1 National Indian Gaming Commission. Following the

2 NIGC's 2017 consultation sessions, the Commission

3 carefully reviewed its regulations and the Agency's

4 internal procedures for reviewing and approving

5 management contracts. As a result of that review,

6 and based on comments received during the

7 consultations, the Commission believes that changes

8 to our management contract regulations will improve

9 the efficiency of the contract review process and

10 ensure consistency with IGRA's requirements

11 regarding term limits.

12 I will provide some background on this

13 topic, including current regulations, Agency

14 concerns, and the Commission's proposed amendments

15 to the regulations. After this, we will open the

16 floor for questions and discussion.

17 The Chair of the NIGC may only approve a

18 management contract if it does not exceed a term of

19 five years, or in rare circumstances, seven years.

20 NIGC regulations reflect that stipulation and

21 management contracts are not approved unless they

22 comply with all requirements of IGRA, including term

23 limits.

24 After management contracts have been

25 approved, tribes and their management contractors
1 may amend their contracts by following the

2 streamlined procedures for review and approval of

3 contract amendments found in NIGC regulations 25

4 C.F.R. Part 535. Part 535 provides an expedited

5 process within which background investigations are

6 only required if the third party individuals and/or

7 entities responsible for the management contract

8 have changed and no new business plan or updated

9 financial information is required. The expedited

10 process is designed to allow the parties to sustain

11 their relationship in a dynamic business environment

12 while maintaining the integrity of the Chair's

13 initial management contract review and approval.

14 The safeguards found in NIGC's management

15 contract review process serve to assure IGRA's

16 primary policy goals are met, including protecting

17 Indian gaming and ensuring a tribe is the primary

18 beneficiary of its gaming operation.

19 A thorough review of past practice

20 revealed that parties using Part 535's expedited

21 process have submitted amendments to the initially22 approved contracts that have extended the term of

23 the approved contract by an additional one to five

24 years, resulting in a contract that extends beyond

25 the explicit term limits of IGRA. Thus, the
1 Commission believes it is important to update

2 regulations to maintain IGRA's mandate.

3 The proposed amendments clarify the

4 regulations by explicitly noting that amendments

5 that extend the approved management agreement beyond

6 the term limits permitted by IGRA, which is five or

7 seven years, will be reviewed under the full

8 requirements of a new management contract under Part

9 531.

10 So, for example, if an approved contract

11 with a five-year term is nearing the end of its

12 terms, and the parties are happy with the

13 relationship and simply wish to extend it for an

14 additional five years, they may do so, but it may

15 not be reviewed as an amendment. Because IGRA limits

16 contract terms to five or seven years, the chairman

17 will review the agreement under Part 531, and the

18 entire requisite information that 531 requires must

19 be submitted.

20 For an example, though, if a management

21 contract had a one-year term, and the parties wanted

22 to amend the agreement to extend it for an

23 additional year, for a total term of two years, the

24 Chair would review the amendment under part 535

25 because the term limit would still be within the
1 statutory limit of five or seven years.

2 The Commission understands this change may

3 affect the timing and expense of updating background

4 investigations for making suitability determination

5 of management contractors. And independent of the

6 changes discussed above, the Commission received

7 comments during the last round of consultation that

8 the background investigation process was time9 consuming and expensive. As a result, the Commission

10 has done a thorough review of its background

11 investigation process and is proposing changes to

12 our internal procedures to make the process more

13 efficient, thereby reducing the cost of the

14 investigations.

15 Under the new process, NIGC staff will

16 review the background investigation applications and

17 divide them into different investigative groups

18 based on the level of risk. This process will allow

19 the agency staff to focus their investigative

20 resources on the most vital individuals and

21 entities. This replaces a one-size-fits-all model

22 that scrutinizes all applicants the same. For

23 example, under the current process, the top direct

24 financial interest goes through the same background

25 investigation as the smallest indirect financial
1 interest. But under the new process, entities and

2 individuals with a direct financial interest,

3 holding the highest level of risk to the tribe will

4 have a more in-depth background investigation

5 completed versus those entities or individuals who

6 have an indirect financial interest.

7 In addition, the Commission has proposed

8 changing the individuals and entities that are

9 required to submit background applications under the

10 regulations to those that have 10 percent or greater

11 financial interest. This proposed change should

12 significantly reduce the costs to the management

13 contractors in submitting full applications on small

14 investors. Further, this proposed change will also

15 better align the agency's requirements with other

16 regulatory agencies.

17 This change should not increase the risk

18 to tribal gaming as the Commission will retain

19 discretionary authority to conduct background

20 investigations on the owners with even the smallest

21 interests, who may pose a threat to the industry.

22 In addition, the Commission is proposing a

23 regulatory change to clarify the reduced scope of

24 investigation provision to reduce the burden of

25 background investigations for those who qualify. To
1 further reduce the time and cost of background

2 investigations, the agency will no longer use the

3 Office of Personnel Management or OPM to conduct

4 part of the background investigations. Instead, we

5 will process fingerprint checks through FBI and

6 perform credit checks through other more efficient

7 alternatives.

8 Lastly, to reduce the up-front financial

9 burden and timing concerns, the proposed amendments

10 to the regulation removes the requirement of a

11 deposit before the background investigations begin.

12 Instead, the agency will bill the management

13 contractors regularly as the investigation proceeds.

14 I would now like to turn this back over to

15 the Commission to lead the discussion. Thank you.

16 CHAIRMAN CHAUDHURI: Thank you, Yvonne.

17 And for additional background context, I'll turn it

18 over to my colleagues.

19 COMMISSIONER SIMERMEYER: Thanks, Ms. Lee.

20 I'll just briefly say that the -- what would be

21 really helpful in this conversation on this topic is

22 some of the experiences that individuals might have

23 in terms of how tribes are making their

24 relationships with outside partners and on the

25 ground. How practical the requirements that our
1 agency is putting forward for inquiries and

2 suitability or other issues, how those are, you

3 know, to ensure that our requirements aren't going

4 to be a burden to that process. It's also

5 important, I think, as Ms. Lee pointed out that part

6 of looking at this issue is to look at what IGRA

7 itself requires and to make sure the agency is

8 complying with that. And to, again, make sure that

9 we're not creating an undo burden that goes beyond

10 what our inquiries should be looking at. So those

11 types of comments would be helpful to me today and

12 throughout the rest of the coming weeks in this

13 consultation.

14 VICE CHAIR ISOM-CLAUSE: I'd just like to

15 briefly thank our team, too, for coming up with

16 these really great ideas on how to make the process

17 more efficient, not using OPM and changing the

18 structure for our background investigations saves

19 just many, many hours. It's going to be --

20 potentially be a very significant savings in time

21 and money so we're always looking to make things

22 more efficient and really appreciate the team's

23 ideas on that.

24 CHAIRMAN CHAUDHURI: Yeah. I definitely

25 want to echo that gratitude to the team for the
1 discussion topics. Also many thanks to the team for

2 putting together today's consultation. A couple

3 guiding principals that I think support this topic

4 of discussion, one is efficiency, and we've already

5 heard quite a bit about how especially the

6 background changes will save a lot of time. The

7 other is one of our initiatives at NIGC is

8 protecting against gamesmanship on the backs of

9 tribes, and that's essentially doing whatever it can

10 to protect the primary beneficiary status of tribes.

11 And the approval of management contracts is an

12 important piece of that, ensuring that tribes'

13 interests are protected. It is a major part of what

14 we do. The backgrounding and the suitability

15 determinations that go into management agreement

16 approvals are critical.

17 As we -- you know, in my short time at the

18 Commission, I noted that there's an inherent balance

19 between trying to streamline things and get things

20 done as quickly as possible, but also making sure

21 you're upholding your fiduciary duty to tribal

22 nations when you're approving these amendments. In

23 order to do that, you can't rely on stale

24 backgrounding materials. You can't rely on old

25 background information. And as -- you know, in
1 trying to meet that balance between moving forward

2 with efficiency while upholding a fiduciary

3 responsibility, this idea of, well, what does IGRA

4 have to say about it kept coming up. And IGRA, in

5 its text itself, has a five-to-seven-year period for

6 management agreement, the lives of management

7 agreement.

8 Well, in practice, we've worked with that

9 five-to-seven-year window, by hook or by crook,

10 trying to work with management agreements to -- to

11 in some cases extend them, in some cases amend them,

12 but bring -- bring clarity to the process is what

13 drove this topic for discussion. You know, as with

14 all of our topics, no decision has been made.

15 That's the purpose of consultation, but we see a

16 benefit in bringing clarity as to the true life

17 terms of management agreements on one side, as well

18 as clarity on the other side of trying to streamline

19 the process so that things aren't slowed down

20 unnecessarily as we're trying to continually

21 reinvent the wheel.

22 So that's kind of some of the background

23 that led to this discussion topic. Hopefully that's

24 helpful in spurring additional dialogue. But at

25 this point, we'll turn it over to everybody in the
1 room for comments, questions, concerns at this time.

2 Yes, sir.

3 MR. IYALL: Yeah, I'm Jerry Iyall,

4 Chairman of the Cowlitz Gaming Commission. Last

5 name is spelled I-Y-A-L-L. Our tribe has had a

6 management agreement with Mohicans Tribe and we're

7 happy with that agreement. It's been a very good

8 relationship for a long time so my comments are not

9 in relation to that agreement but it's more from the

10 sense of, you know, I support the increased scrutiny

11 and it just makes good business sense to me. The

12 things that you're asking for they just make good

13 business sense to me and I think they go a ways in

14 protecting the tribes' interests. And the

15 streamlined process that you talked about, we

16 appreciate the work that you've done on that because

17 it will allow us to, you know, maintain the

18 integrity of the system and operations and still not

19 overwhelm us with time and costs, so thank you for

20 that.

21 CHAIRMAN CHAUDHURI: Thank you so much for

22 that comment, sir.

23 Yes, sir, Chairman.

24 MR. IYALL: Bill Iyall, Chairman of the

25 Cowlitz Tribe. I want to thank you for this -- this
1 is definitely a giant leap forward, having gone

2 through some of this in practice recently, and I do

3 support the improvement of the process. I think it

4 would be worthy to note somewhere in the process

5 earlier or advance notice from the management

6 company to make sure that it's timely. Maybe

7 something in the public notice or -- but I could see

8 that as a tremendous improvement and asset for both

9 you and the management company and the tribe.

10 CHAIRMAN CHAUDHURI: And thank you,

11 Chairman. I just -- it got me thinking. So we do

12 have a window for comment period. That's an

13 excellent, excellent suggestion, and, you know, I

14 welcome further dialogue. If after today's

15 consultation there are additional comments that

16 folks want to send in or just -- if anybody wants to

17 just pick up the phone and kind of share thoughts,

18 we want to be open to that. But for the record, we

19 really welcome those comments so thank you,

20 Chairman.

21 MR. WHEAT: For the record, Scott Wheat on

22 behalf of the Spokane Confederated Tribes of Coos,

23 Lower Umpqua and Suislaw. On behalf of Spokane, in

24 particular, who's kind of got a history of, you

25 know, partnering with managers, and we have one
1 current management agreement in place -- well, we

2 have one that's under review, actually.

3 So I think -- you know, similar to

4 Cowlitz, you know, I've got recent experience in

5 this area, and so I just want to, you know, get it

6 on the record that these proposals make sense to us.

7 They make good business sense, and they seem to us

8 to be entirely consistent with NIGC statutory

9 mandate. And just, you know, on behalf of my

10 clients who depend on you all to review these

11 agreements, you know, thank you for the work that

12 you do, and thank you to your staff for the hard

13 work that you do.

14 And one of the things just very briefly I

15 want to touch on, you know, the ever-growing

16 workload of the NIGC is partly these management

17 agreements. But from where I sit, you know,

18 representing tribes, it also has a lot to do with

19 the underlying financing and requests by lenders for

20 declinations. And now we're getting these kind of

21 newfangled lender-driven requests, you know, for no

22 impairment determinations in the sense that, you

23 know, the financing agreements, you know, aren't

24 impaired by the management's agreement. And so for

25 tribes, what we see is this kind of ballooning of
1 transactional costs associated with financing and so

2 we -- which is often part and parcel of these

3 management agreements. That's why I'm bringing it

4 up in this discussion. But really appreciate NIGC's

5 leadership and trying to temper those ever-growing

6 lender demands for additional NIGC findings and

7 determinations. It takes up more of your time and

8 it takes up more lawyer time on the lender side and

9 borrower side, which practically speaking, means the

10 tribe pays for all the lawyers as borrowers.

11 So the more the NIGC can help Indian

12 Country kind of hold that line and keep these ever13 ballooning requests, you know, within a proper

14 context -- I just -- I do general counsel work in

15 Indian Country. I do a lot litigation, do a lot of,

16 you know, commercial transactions. And litigators,

17 we try to simplify in the finance world, you know,

18 it's hypothecating additional potential cul-de-sacs

19 that you need to draft around. And before too long,

20 the 100-page loan documents balloon into 500-page

21 loan documents.

22 And so just appreciate the NIGC's help in

23 trying to keep these transaction costs a little bit

24 more reasonable. And also, I just want to thank

25 NIGC staff. It seems to me they're willing to go
1 above and beyond the call of duty to get the quick

2 turns on these declinations and kind of issues that

3 are collateral to management agreements. But I

4 think over time -- I mean, I haven't talked to NIGC

5 staff directly about this, but I would imagine that

6 over the years that the amount of additional

7 workload related to collateral determinations is

8 starting to over-shadow the staff hours spent on

9 management agreement approvals and background.

10 So I just wanted to thank the NIGC for the

11 good work you do, including your help in trying to

12 keep transaction costs down for Indian Country

13 borrowers.

14 CHAIRMAN CHAUDHURI: Well, thank you, Mr.

15 Wheat. I think I'm joined by my colleagues on the

16 Commission in finding ourselves extremely fortunate

17 to be part of such a great team. I think the staff

18 at NIGC is one of the best staffs in all of -- all

19 of the federal government. And I'm very thankful

20 for the work that our general counsel's office does

21 on these declination letters, but also very thankful

22 for the work of our finance department, supported by

23 our chief of staff's office on all the management

24 agreement reviews. So your comments are very

25 appreciated. Thank you, sir.
1 Yes, sir.

2 MR. AITKEN: Good afternoon. Gary Aitken,

3 Jr., Kootenai Tribe of Idaho. Chairman Kootenai.

4 With all due respect to our sister

5 nations, you know, I think we have a different

6 perspective from things right now, regarding this

7 consultation, regarding these proposals. I think

8 the intended -- the intent of IGRA is to promote

9 tribal economic development, self-sufficiency,

10 strong tribal governments. And I think the agency

11 proposal is contrary to all those. I think that

12 there's paternalism that's being exhibited that I

13 could somewhat understand because of the

14 responsibility, a fiduciary responsibility, why it's

15 come in place. But as I stated previously, there's

16 a fine line between paternalism and protection, and

17 I think these regulations are over-stepping that

18 line.

19 I think it's well into the paternalism and

20 with self-governance, self-sufficiency, I think

21 that's a step backwards. I think a lot of these are

22 far overreaching and it's taking us back to, like,

23 the '50's, you know. It's a step backwards in self24 sufficiency.

25 I think the Kootenai Tribe through our
1 council, through our gaming commission, we're the

2 best suited to determine -- we're the best suited to

3 determine the suitability of the management team.

4 We find the right people, and as a sovereign nation,

5 we find the right people we want to work with.

6 Our current management agreement -- we've

7 been working with them for 30-plus years, over 30

8 years. We have some of our council members that are

9 younger than our friendship with the management team

10 we have. And so, you know, to have our great white

11 grandfather tell us what we need to do is actually

12 condescending. It's found to be, you know, a bit

13 insulting. You know, it's taken us back to the old

14 days of that paternalism. And with self-governance,

15 we're trying to move forward, we're trying to move

16 forward. And we've exhibited success, you know, in

17 many realms. Many realms what we do, ecosystems to

18 gaming to being community partners.

19 You know, we're one of the number one

20 leaders of economic growth and drivers of jobs in

21 our community. You know, we're successful. And so

22 that protection is, you know, for us is we've --

23 it's confusing. It's like what are you trying to

24 protect us from? A good deal? You know, I mean,

25 it's a beautiful deal for us. We've got great
1 friendships. We have 155 members in our nation,

2 154, excuse me. Half of them are under the age of

3 18. In order to have -- to take on the management

4 responsibilities the way of the team does it, we

5 would have to develop infrastructure. We'd have to

6 basically make half of our nation that's underage do

7 the jobs that are being held and done right now by

8 our team. And we control that team. That team is

9 under our mandates, under our -- what we tell them,

10 under our direction. You know, they're just simply a

11 part of our team that we're able to put forward and

12 do what we want done with it.

13 So essentially, we don't need the federal

14 government to tell us how long we should use a

15 management team. If we decide not to do all the

16 actions ourselves, it's because we decided that's

17 what best suits us as our tribe. You know, that's

18 what fits us, you know. As a sovereign nation, I

19 think that needs to be respected, you know, it's --

20 tribal oversight and guidance of the management team

21 is -- is the management. That's our management, you

22 know, but we have someone else do it as well.

23 So I think we need less federal and

24 colonial involvement and less paternalism. So we

25 just urge you as NIGC to move away from attempting
1 to increase the power and control and return to the

2 path of decolonization and reconciliation between

3 our governments, with all due respect, that's the

4 Kootenai Tribe stance on this.

5 CHAIRMAN CHAUDHURI: Thank you so much for

6 those comments, Chairman. You know, we absolutely

7 welcome and recognize the diversity of historical

8 experiences, diversity of perspectives in Indian

9 Country, and that's where consultation begins. This

10 is a place for us all to hear each other's

11 perspectives. So those comments are very, very

12 appreciated.

13 And if I could just share, finding that

14 balance between faithfully administering the law

15 that we're supposed to -- you know, the agencies --

16 the agency was committed -- or created to administer

17 on one end, and doing it in a way that supports

18 sovereignty, self-governance, self-sufficiency and

19 decision making for Indian Country on the other end,

20 that's what we strive to hear input on as much as

21 possible. Because as we're often on the record of

22 saying that IGRA in no way was perfect, and in many

23 ways IGRA restricted tribal authority, restricted

24 inherent sovereignty. And we recognize that in

25 trying to develop a sensible regulatory approach, we
1 do strive to apply IGRA in the most -- you know, in

2 the healthiest way possible that supports tribal

3 decision making. But how you do that, that's where

4 the detail -- I mean the details are critical.

5 And so this input is very, very

6 appreciated and we're grateful for it. I don't know

7 if anybody else wants to weigh in, but that

8 perspective is greatly appreciated.

9 COMMISSIONER SIMERMEYER: I appreciate

10 your comments as well. I think one of the

11 challenges in looking at this, and why we're kind of

12 bringing this for discussion in Indian Country, is

13 the -- what the Chairman said, I just also want to

14 echo, is that there's a statutory requirement that

15 exists. And so part of how this is being presented

16 is looking at and acknowledging that responsibility

17 that the agency has when the Chairman makes a

18 determination on the management contracts, which are

19 required by IGRA, and making sure that what the

20 agency is requiring to assist in making that

21 determination isn't overly burdensome. Because

22 being overly burdensome without justification for

23 it, I agree, is paternalistic, and it's contrary to

24 what the principles of self-determination call for.

25 VICE CHAIR ISOM-CLAUSE: I echo that and
1 just, you know, absolutely thank you for your

2 comments. We are always open to criticism. You

3 know, I very much appreciate to hear all

4 perspectives on it. So thank you very much for

5 that.

6 You know, I think we do strive to uphold

7 the same principles that you're talking about,

8 tribal self-determination, self-governance. And,

9 you know, that's how we approach it. I think as

10 Chairman said it and Commissioner Simermeyer said

11 it, always a fine line to walk. So how can we

12 fulfill our legal requirements and promote uplifting

13 tribes, uplifting self-governance and getting out of

14 tribe's way also.

15 So, you know, just as we think about it,

16 we really appreciate if you have any -- any other

17 more specific comments you want to send in. If you

18 have anything you see in the regulations or your

19 team sees something we could improve on, we really

20 appreciate that global perspective. But if you do

21 see specific recommendations, we're very open to

22 hearing those as well.

23 MR. AITKEN: Gary Aitken, Jr., Kootenai

24 Tribe. I think part of that is interpretation as

25 well. I mean, I think some of those interpretations,
1 we might interpret it differently, you know, the

2 requirements. Some of it is cut-and-dry, some of it

3 is more open to interpretation and I believe we have

4 a lot of different interpretations. And we'll

5 definitely send in more written -- more detailed

6 comments, and we'll get it in in the time frame.

7 It's -- I must say, it's odd to us how

8 much work we do, how much collaboration we do with

9 so many entities from so many different federal

10 agencies. So many are so respectful of the

11 sovereignty, the treaty rights of just the entity

12 that is the tribe. So we work with them in a very

13 respectful manner and the respect is returned.

14 It's hard to have -- to deal with the

15 perspective that we're starting to get that some of

16 the federal agencies that deal the most -- some that

17 are directly designed to deal with Indian Country

18 are some of the most paternalistic, some of the most

19 -- you know with the most boundaries. And that's

20 frustrating, that's frustrating because we work with

21 some that have nothing to do with it but work with

22 us and it's such a different relationship. And some

23 of the most frustrating moments we have are with

24 some of the agencies that are designed to be for us.

25 And, you know, that's -- I mean, I think that's
1 something to take into consideration. I mean, it's

2 out there, and it's -- I don't know -- I can't call

3 it, but it's a shame sometimes. But I do appreciate

4 the time and the opportunity to be able to speak.

5 Thank you.

6 I think we got to get ready for some

7 flights, but I appreciate the time. Thank you.

8 CHAIRMAN CHAUDHURI: Thank you, Chairman.

9 Additional comments, concerns, questions?

10 As I mentioned, there will be a catch-all

11 opportunity at the end of our discussion. Even if

12 you think of something about this topic 20 minutes

13 from now, I want folks to have that the opportunity

14 to weigh in, even beyond today, share their

15 perspectives.

16 So if there aren't any additional

17 questions or comments on this topic, I think we can

18 move forward on the next topic.

19 But, you know, before we move on, again,

20 thank you so much for those comments. A

21 paternalistic approach is not what we're shooting

22 for and so we will take those comments to heart and

23 continue to do what we can to weigh all

24 perspectives, so thank you Chairman.

25 Any additional comments before we move on?
1 Okay. With that there is an audit

2 submissions topic. We have our chief of staff,

3 Christina Thomas, here to -- oh, I'm sorry, Dan

4 Catchpole and he'll be working with --

5 MS. THOMAS: No, Dan's going to do the

6 topic.

7 CHAIRMAN CHAUDHURI: Okay. We'll move

8 forward with audit submissions, our Auditing

9 Director, Dan Catchpole.

10 MR. CATCHPOLE: Thank you, Mr. Chairman.

11 Under IGRA and current NIGC regulations, gaming

12 operations regardless of income are required to

13 submit an annual audited financial statement,

14 completed by a certified public accountant to the

15 Commission within 120 days of their fiscal year end.

16 These audits may be encompassed within existing

17 independent tribal audit systems.

18 Submission of the annual audit report is

19 critical to the NIGC's mission to protect the

20 integrity of Indian gaming and provides a certain

21 level of assurance as to the safekeeping of tribal

22 gaming revenues. The audit report prepared and

23 submitted on a timely basis is evidence of, among

24 other things, the integrity of the gaming operation

25 and more specifically, of the adequacy of the books
1 and records, the functioning of the internal

2 financial controls, and the disclosure of

3 information having a bearing on the financial

4 statements.

5 The Commission, however, recognizes that

6 small or charitable gaming operations often struggle

7 with the cost of these requirements. With this in

8 mind, the Commission is seeking feedback and

9 recommendations on whether changes are needed to the

10 audit regulations. Specifically, we want input on

11 what level or levels of audits should be required

12 for smaller gaming operations or charitable

13 operations. To benefit this consultation, I will

14 briefly provide some background information before

15 turning it over to the Commission to lead the

16 conversation.

17 So a gaming operation earning less that $2

18 million in gross gaming revenue annually can request

19 from the Commission to submit a CPA-reviewed

20 financial statement, if it has submitted an audited

21 financial statement for three consecutive years. A

22 reviewed financial statement must be completed by an

23 independent CPA and conform to statements on

24 standards for accounting and review services of the

25 gaming operation.
1 In fiscal year 2016, only 80 operations

2 earned less than $2 million in gross gaming revenue.

3 Of those 80, only six submitted the lesser financial

4 statement review. Smaller charitable gaming

5 operations often produce less than $100,000 in gross

6 gaming revenue annually, some less than $10,000.

7 Contracting a CPA firm to perform an annual audit

8 can prove cost prohibitive, and as a result, may

9 deter tribes from pursuing these gaming

10 opportunities.

11 NIGC-reviewed statutes and regulations

12 from a number of jurisdictions and agencies

13 concerned with financial entities, including the

14 State of Nevada, the Federal Deposit Insurance

15 Corporation and the Department of Interior. We

16 found no consistency in the audit requirements. For

17 example, Nevada regulations require audits of

18 financial statements for operations grossing more

19 than $5 million, but maintain the right to require

20 audits, compiled statements, or reviews of financial

21 statements of those operations whose gross revenue

22 is less than $5 million. Interior exempts non23 federal entities from their audit requirements if

24 the entity expends less than $750,000 per year.

25 As NIGC considers altering its own
1 regulations, it recognizes that there are currently

2 95 tribal operations that produce less than $3

3 million in gross gaming revenue. Further, the

4 Commission is aware that tribal operations comply

5 with the most regulations from their own governments

6 as well as state and federal entities.

7 Our hope through this consultation session

8 is to discuss opportunities or receive feedback and

9 recommendations on how to amend this regulation

10 while still ensuring we are supporting financial

11 stability and maintaining a high level of protection

12 of tribal gaming operations. Thank you for

13 listening. With that, I will hand the floor back

14 over to the Commission to lead the discussion.

15 COMMISSIONER SIMERMEYER: Thank you, Mr.

16 Catchpole. I just wanted to begin the discussion by

17 saying that like our topic we just looked at, you

18 know, what's being proposed here is looking at

19 what's required under that statute in terms of audit

20 submissions, and looking at how -- what takes place

21 practically on the ground, and how we can be sure

22 that we are not, as an agency, creating undue

23 burdens.

24 One of the things that Mr. Catchpole

25 mentioned was the lesser review standard. And
1 what's particularly helpful is to hear thoughts

2 about how to -- whether it's through the revenue

3 threshold, whether it's through other ideas that

4 folks might have about how to promote and help

5 tribes take better advantage of that.

6 It's also helpful to hear about for tribes

7 who are under lesser review standard how much --

8 what's the incentive for doing that on your part.

9 Is there a substantial enough incentive to be doing

10 that. But in general, the audit requirements, it's

11 essentially required. One of the things it does was

12 to increase and improve the capacity that tribes

13 themselves have for conducting these types of

14 reviews and these types of oversight. So that is a

15 positive thing that should continue and be

16 encouraged as well as the requirement of financial

17 stability within IGRA.

18 VICE CHAIR ISOM-CLAUSE: I'll just speak

19 briefly on this. This topic grew out of our

20 conversations on how we can help -- how we can

21 better be of service to smaller and rural

22 operations. So this one is a little bit more open23 ended because we do have a lot of constraints,

24 there's only so many things that we can do. But we

25 really appreciate hearing from you on ways that we
1 can be less burdensome, how tribes can take

2 advantage of the provisions that Commissioner

3 Simermeyer was noting. And if there's -- you know,

4 would trainings be beneficial? Would other ideas

5 help? You know, just really looking for more open6 ended suggestions on that.

7 CHAIRMAN CHAUDHURI: Thank you. Just to

8 join my colleagues, so we mentioned the focus on

9 protecting gamesmanship is one of our tent-pole

10 initiatives. We have four of them. The second one

11 is rural outreach. As Vice Chair mentioned,

12 supporting small and rural operations, new

13 operations. We see that as providing yielding

14 benefits for the entire Indian gaming industry. So

15 we're looking at any and every way to support

16 smaller operations, recognizing that compliance

17 issues with one facility have the potential for

18 affecting all tribal facilities. So we're all in it

19 together. Compliance is important across Indian

20 Country and we want to support rural outreach.

21 So these -- now looking at what can we do

22 on the auditing side is important to rural outreach

23 because we recognize a lot of operations are in many

24 case jobs -- job programs. Some of them barely make

25 payroll. And when you're thinking about charitable
1 operations, small operations, very rural operations,

2 you want to do what you can to ensure integrity, but

3 also you don't want to create roadblocks to economic

4 development when that economic development may be

5 primarily, you know, tribal employment or employment

6 of the local community. And so finding that balance

7 is what we're here to talk to you about today.

8 We have this proposed language that we

9 threw out there as possible suggestions, but if

10 there are other ideas, we want to hear that as well.

11 So we're going to turn it over to the floor for

12 comments, question, concerns.

13 I know audits are the most exciting thing

14 to talk about on the very last day of ATNI, and the

15 last afternoon, but it's important stuff.

16 Chairman.

17 MR. IYALL: Yes, thank you, Chair, and

18 staff. I think as we heard earlier, there's concerns

19 about paternalism versus trust responsibility,

20 that's a fine line you walk, but I do believe this

21 is viewed as a step in the right direction. So

22 hopefully people will see that initiative is clearly

23 a part of your mission so I thank you for that.

24 CHAIRMAN CHAUDHURI: Thank you so much,

25 Chair.
1 MR. WHEAT: Scott Wheat on behalf of the

2 Spokane Tribe. The Spokane Tribe does have one of

3 those remote rural operations that's really a

4 provider of employment, and certainly not a

5 generator of general funds for the tribal

6 government. So I appreciate the NIGC's sensitivity

7 to those marginal operations and how difficult it

8 is. You know, when you got an operation that

9 struggles to barely run in the black every year, you

10 know, these outside audit requirements can just be

11 debilitating. I mean for my client, we have more

12 than gaming operation so that, you know, the more

13 successful one kind of carries the whole weight for

14 the marginal one, but I can only imagine if that was

15 your one operation, not being able to piggy-back on

16 outside audits that you're otherwise required to do

17 could be very onerous. So I appreciate NIGC's

18 efforts in that regard. I mean, given the statute

19 that you have to work with that I think is kind if

20 inherently a little paternalistic, that you guys are

21 doing the best to work with the mandates that you're

22 charged with fulfilling.

23 CHAIRMAN CHAUDHURI: Thank you, Mr. Wheat.

24 Thank you. Additional comments, questions,

25 concerns?
1 As we always say, there's never any crime

2 in finishing early so we'll just move on to the next

3 topic. So here to talk about management and sole

4 proprietary interest definitions, we have Ms. Esther

5 Dittler, regional attorney for the Portland

6 regional.

7 I do want to kind of clarify the record.

8 I may have misstated a job title earlier, but the

9 point is we're all here as subject matter experts.

10 I really appreciate our auditor Dan Catchpole's role

11 in this, as well as Esther Dittler's role as

12 regional attorney.

13 So Esther.

14 MS. DITTLER: As previously discussed,

15 IGRA provides that a tribal gaming operation owned

16 by the tribe may either be managed by a tribe or by

17 a management contractor subject to a management

18 contract approved by the NIGC Chair. This applies

19 to any arrangement in which a contractor manages all

20 or a part of a gaming operation. To provide better

21 clarity, the Commission is considering developing

22 regulations clearly setting out its standards for

23 what constitutes management as well as criteria for

24 evaluating when a sole proprietary interest

25 violation has occurred. With this in mind, I'll
1 provide some brief background information of these

2 terms and then pass it back to the Commission to

3 open the floor for questions and discussion.

4 To assist the tribes in determining

5 whether an activity constitutes management, NIGC

6 published Bulletin Number 94-5, which explains the

7 terms that encompasses activities such as planning,

8 organizing, directing, coordinating, and controlling

9 all or part of a gaming operation. In addition, the

10 NIGC Office of General Counsel issued an opinion

11 letter expanding on these terms by providing

12 examples of management activities.

13 However, to date, the Commission has not

14 issued a regulation formally defining management.

15 The Commission believes that in consultation with

16 tribes, developing a regulatory definition

17 consistent with past interpretations would help

18 provide greater certainty to the tribal gaming

19 commission regarding what constitutes management.

20 The Commission recognizes that the Seventh Circuit

21 has also recommended that the Commission provide

22 more certain guidance.

23 A stated purpose of IGRA is to ensure that

24 the Indian tribe is the primary beneficiary of the

25 gaming operation. Seeking to serve this purpose,
1 IGRA requires that the tribal gaming ordinances

2 provides that tribes have the sole proprietary

3 interest and responsibility for the conduct of any

4 gaming activity, unless the gaming activity is

5 individually owned.

6 To determine whether a third party has

7 received a proprietary interest in a tribal gaming

8 operation in violation of the sole proprietary

9 interest mandate, the NIGC considers the term of the

10 relationship, the amount of revenue paid to a third

11 party, and the right of control over the gaming

12 activity provided to the third party.

13 The Commission has previously consulted on

14 developing guidance or regulations concerning sole

15 proprietary interest in 2008 and 2010. Courts have

16 had the opportunity to consider and discuss the

17 issue in the intervening years, noting and upholding

18 NIGC's formulation of criteria to evaluate for such

19 violations. The Commission believes that a

20 regulation consistent with past NIGC enforcement

21 actions and litigation would provide greater clarity

22 and certainty to the tribal gaming industry

23 regarding what constitutes a violation of the sole

24 proprietary interest mandate.

25 The draft regulations we have provided you
1 today as a handout incorporate these interpretations

2 for consideration as an addition to the Commission's

3 compliance regulation.

4 I would like to now turn it back over to

5 the Commission to lead the discussion.

6 COMMISSIONER SIMERMEYER: Thanks, Ms.

7 Dittler.

8 As was mentioned, there's been guidance

9 opinions internally from legal counsel as well

10 Courts that have provided some interpretation of

11 these issues. As a member of the Commission who

12 would review decisions or actions taken by the

13 agency that rest on these definitions of management

14 or sole proprietary interests, we have these

15 additional interpretations to kind of capture a lot

16 of what the discussion has been over the years would

17 be beneficial. At the same time, too, there's a

18 hope that we're looking at, what the right tool or

19 vehicle is to do that.

20 It was mentioned earlier, too, that

21 there's increasing costs associated with reviewing -

22 - with, like, declination letter reviews, for

23 example, and looking to see if this type of

24 articulation through regulations would help to

25 provide some stability or certainty in that area as
1 well. So just in general, this topic, I think,

2 strikes on a number of ways for us to kind of

3 improve our approach of striving for good governance

4 and clarity and transparency and how things are

5 looked at. I would really appreciate during this

6 discussion and future discussions more feedback in

7 terms of what the appropriate vehicle to do that,

8 and if the vehicle that's being proposed here has an

9 impact on the partnership arrangements that you, the

10 tribes, are making, that you have the authority to

11 make in your own right too, whether it's too broad

12 or too narrow, so thank you.

13 VICE CHAIR ISOM-CLAUSE: I would certainly

14 echo Commissioner Simermeyer's comments on that. We

15 didn't intend to introduce any new requirements or

16 any changes with this. This is really just an

17 effort to bring more clarity and certainty to the

18 industry that we hoped would be reflected later in

19 efficiencies down the road by just having these

20 financial regulations. But, you know, we're very

21 interested in hearing is that the appropriate way we

22 move forward. If so, is this the right language.

23 Just because we have it set down on paper, that's

24 just a basis maybe to start with. So we are in no

25 way committed to what we have down. We just want to
1 have something out there for discussion and hear

2 from you all, what your thoughts are.

3 CHAIRMAN CHAUDHURI: Thank you. The only

4 thing I would add to that, and I fully agree with

5 everything my fellow commissioners mentioned, I

6 think the process of issuing declination letters was

7 brought up earlier today, and declination letters

8 are a service the agency provides through our Office

9 of General Counsel. That process was mentioned.

10 That process isn't something that grows out of IGRA.

11 After a pretty significant case, the Lake

12 of the Torches case, finance companies have worked

13 with tribes to get weigh-in from NIGC before

14 entering into certain finance agreements, wanting

15 the assurance from NIGC that certain agreements

16 don't constitute management agreements, because

17 management agreements have to be approved by the

18 Chair.

19 And so if nothing else, if there's a

20 benefit to bringing clarity in that finance process,

21 bringing clarity in the front end so that each and

22 every agreement doesn't have to read the tea leaves

23 about how the agency would define something like

24 management, that in itself we see as a benefit.

25 So the hope is the tribes, in working with
1 lenders, have some baseline regulatory language,

2 nothing new, but stuff that kind of codifies what's

3 already been issued. The hope is, at least on the

4 financing side of things, that will help streamline

5 at least one very important step.

6 Same thing with sole proprietary interest.

7 While there are pieces of authorities and our

8 guidance and cases, we believe there will be a

9 benefit to the industry to kind of bring all that

10 together in one place so people don't have to hunt

11 and peck in a million different places to see what

12 the different parts of the definition is.

13 So, again, you know, we're putting this

14 out there for discussion purposes in the hopes of

15 trying to take the best crack that we could take,

16 based on all the discussions that we've had through

17 consultation. But we're not -- we're not, you know,

18 we're definitely not predecisional. We haven't made

19 any decision on these -- this language. We very

20 welcome questions, comments, and concerns. So with

21 that, we'll turn it over to everyone in the room.

22 Yes, sir.

23 MR. IYALL: If I may, again, I'm Jerry

24 Iyall with the Cowlitz Gaming Commission. We

25 support this initiative. What we ask that you do
1 with the regulation is to provide some clarity and

2 some definition and some details of what sole

3 proprietary interests means, but also management.

4 And you mentioned gamesmanship a little bit earlier,

5 and I think a well-written regulation could even

6 reduce gamesmanship. So that's our input, thank

7 you.

8 CHAIRMAN CHAUDHURI: Thank you, sir. From

9 our perspective, this definitely ties to the

10 gamesmanship initiative that we have. Thank you.

11 MR. WHEAT: Scott Wheat, for the record,

12 on behalf of Coos, Lower Umpqua and Suislaw and

13 Spokane.

14 Also support the initiative and just

15 wanted to give a real brief example of why there's a

16 need for clarity on sole proprietary interest. I'm

17 reading -- I'm going to read to y'all just a couple

18 sentences from correspondence that the Spokane Tribe

19 recently received from the Washington State Lottery.

20 Washington State Lottery has this, you know, great

21 business deal that they proposed to tribes, which

22 is, you know, let us sell your lottery tickets on

23 your Indian lands and we'll give you a five percent

24 of the cut.

25 And, of course, Spokane is -- you know,
1 we're IGRA and we're going -- we've read, you know,

2 the City of Duluth decisions and we're scratching

3 our head going, we don't understand how five percent

4 of the cut could possibly be IGRA compliant, but who

5 knew that the State of Washington has some really

6 smart lawyers who have figured out how this is IGRA

7 compliant.

8 So I'm going to share the wisdom of the

9 Washington Attorney General with NIGC council and

10 this group, briefly, today.

11 Jurisdictional powers. This is a quote.

12 "The confusion about gaming profits appears to come

13 from misunderstandings around jurisdictional powers.

14 The gaming profits referred to in IGRA applied to

15 tribal controlled, in bold, gaming on Indian land,

16 both Class II and Class III. Lottery is considered

17 Class III. When the tribe waives sovereignty for the

18 purpose of granting the State Lottery full legal

19 jurisdiction over ticket sales, IGRA does to not

20 apply because the ticket sales are not tribal

21 controlled. All tribes currently licensed have

22 these issues -- have had these issues reviewed by

23 their tribal attorneys, and have acknowledged the

24 State Lottery compensation requirements without

25 conflict with IGRA."
1 So I just -- you know, who knew that

2 somebody who has been practicing IGRA for two

3 decades, that all you have to do was to get the

4 tribe to waive sovereignty and then just anybody, I

5 mean, not just the State of Washington, we're

6 assuming organized crime could just move in and

7 engage in Class II and Class III gaming because the

8 tribe has disavowed any jurisdiction over the

9 activity.

10 So I think -- I mean, you have some well11 intended folks north of the Columbia, you know, who

12 honestly believe that that's the way to get around

13 the primary beneficiary and sole proprietary

14 interest requirements. So I do think there's a real

15 need to clarify these issues.

16 CHAIRMAN CHAUDHURI: Well, without opining

17 on the validity of that statement, thank you very,

18 very much, Mr. Wheat. We appreciate it.

19 Other questions, comments, concerns?

20 Okay. With that, before we move to just a

21 catch-all portion of the discussion, I'm going to

22 check with my colleagues.

23 Anything you want to weigh in on before we

24 --

25 COMMISSIONER SIMERMEYER: Just to remind
1 folks that we appreciate folks being here today and

2 these comments are all being captured and helping to

3 inform our thinking process and the discussions

4 going on in the next few weeks. But, you know,

5 please -- hopefully you'll take a chance to look at

6 -- if you have anything to send in, please be sure

7 to send in specific requirements as you look closer

8 at how some of those definitions, particularly, or

9 if there might be anything else. Thank you.

10 CHAIRMAN CHAUDHURI: So before we close as

11 promised, we want to take every opportunity whenever

12 we're here meeting face-to-face to hear any ideas

13 about how we can be doing our jobs better. So I

14 don't want us to be tied to solely the topics that

15 we've discussed. But since we're all here in the

16 room, does anybody have anything else that they want

17 to share before we close?

18 Chair.

19 MR. IYALL: If I could, the Attorney

20 General's opinion from the State, that is

21 paternalistic.

22 CHAIRMAN CHAUDHURI: Thank you, sir. So

23 let me kind of forecast the next few months here.

24 So again, I think this part has already been framed.

25 We're in no way moving forward without fully hearing
1 from and working with our partners. When we talk

2 about consultation, we truly mean what we say. We

3 believe in active, engaged, meaningful consultation.

4 And so we're always very careful not to move forward

5 without dialogue, collaboration, discussion.

6 That said, we have a pretty aggressive

7 time frame that we're working under, and I know

8 we've already addressed this but let me kind of

9 restate it. Our hope is to move forward with

10 closing the comment period by the end of February,

11 at which point we're considering doing a virtual

12 update to Indian Country that will kind of give an

13 overview of all the comments received. From there,

14 we do anticipate taking a hard look to see at what

15 deliverables we can move forward on to get as much

16 done in the coming months as possible.

17 Again, as Vice Chair and my fellow

18 Commissioner mentioned, just because there may be

19 changes in the Commission on the horizon, one thing

20 that we pride ourselves in, from top to bottom, is

21 stability and a consistent path moving forward. So

22 while my term may be ending, I don't want to suggest

23 that major -- I mean that good work won't be just a

24 continuing hallmark and a trademark -- no, I'm sorry

25 -- a continuing hallmark of what we do at NIGC.
1 That said, we do want to run through the

2 tape and get as much done as we can while we have

3 the full commission, recognizing there have been

4 periods where we haven't had a full commission. So

5 we're trying to get everything done as quickly as

6 possible, and we appreciate your understanding of

7 our time frames. We're not trying to pull a fast

8 one by any means, but that's why we're under such an

9 aggressive time frame. So with that, again, any

10 final comments from anyone in the room?

11 With that, I think we'll close. Again our

12 deepest gratitude for being allowed into the

13 homelands of the nations of this region. And we

14 wish you safe travels and many blessings on your

15 continued journeys. Thank you for today's

16 consultation.

17 (Whereupon, meeting concluded at 2:47

18 p.m.)

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1 CERTIFICATE

2

3 I, Pamela Hamilton, do hereby certify that I

4 reported all proceedings adduced in the foregoing matter

5 and that the foregoing transcript pages constitutes a

6 full, true and accurate record of said proceedings to the

7 best of my ability.

8

9 I further certify that I am neither related

10 to counsel for any party to the proceedings nor have any

11 interest in the outcome of the proceedings.

12

13 IN WITNESS HEREOF, I have hereunto set my

14 hand this 31st day of January, 2018.

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19 Pamela Hamilton

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