Comment on Grandfathered Class II Systems
May 31, 2017
Page -5-

reasons state above, the grandfather provision found at 25 C.F.R. 547.5 with its sunset provision
is an affront to the Nation’s sovereignty and the sovereignty of every other Tribe operating its
gaming facilities consistent with IGRA. The Wyandotte Nation requests that the NIGC remove
the sunset provision from the Part 547 regulations and add language that will authorize the
continued use of any Class II games previously certified by tribal gaming commissions.

Sincerely,
Norman Hildebrand

Second Chief
Wyandotte Nation


Comment on Grandfathered Class II Systems
May 31, 2017
Page -4-

render that provision arbitrary and capricious. Not only does it unreasonably interfere with
settled expectations as found in the language of IGRA and subsequent regulatory provisions, but,
as set out above, it renders heretofore lawful Class II gaming systems unlawful in direct
contravention of settled case law. The retroactive application of the Part 547 regulations to
technology that was perfectly acceptable at its inception is improper given that it serves no
legitimate purpose. The only acceptable grandfather provision is one that is indefinite without
strings or conditions.

It was apparent to the Wyandotte Nation, as reflected in its 2008 comments, that the rules
enacted in 2008 were not promulgated to advance serious regulatory objectives but were
designed to eliminate Class II gaming as a viable means for tribal economic development. The
grandfather provision, with its sunset clause, was the most clear evidence of this. No responsible
federal agency would establish new product standards and then apply them retroactively to
products that have been in the marketplace for years absent a compelling need, and even in that
case the factual basis would be supported by objective, credible, and verifiable data. No factual
basis was present in support for the implementation of the grandfather provision and its sunset
clause.

As the Oklahoma Tribal Gaming Regulator’s Association stated in its comments to the
grandfather provision in 2012:

these grandfathered games are valid, legal games, which have never presented,
nor do they now present a risk of any kind to either the tribes or the patrons.
Rather, these legal Class II systems are highly successful and lucrative gaming
systems that sovereign tribal governments should have the right to provide to
patrons if they choose to do so. In addition, the unilateral decision by the
NIGC to limit and ultimately eliminate these legal games is completely
inconsistent with the manner in which federal agencies address manufactured
products in a rule making process. In essence, the grandfather sunset clause
represents an industry-wide recall of a type of product which has posed no
threat, and does not now pose a threat to the public.
OTGRA Letter to NIGC, April 10, 2012.

And five years after the OTGRA statement, it remains true. The Class II games impacted
by the grandfather provision still has posed no threat to the public. The sunset provision should
be removed from the Part 547 regulations and language added that will authorize the continued
use of any Class II games previously certified by tribal gaming commissions in recognition
that the Class II games impacted by the grandfather provision have not and still do not pose any
threat to the public.

The Wyandotte Nation has a very limited number of Class II games that are subject to
this grandfather provision. However, whether the Nation is negatively impacted to any great
degree is not material in this matter. The Wyandotte Nation is a sovereign Indian tribe. For the


Norman Hildebrand, Jr.
2nd Chief

Phone: 918-678-2297
Fax: 918-678-2944

Billy Friend
Chief

64700 E. Hwy 60
Wyandotte, OK 74370

May 31, 2017

SUBMITTED VIA EMAIL: Vannice_Doulou@nige.gov
NIGC

Attn: Vannice Doulou

1849 C. St. NW

Mailstop #1621

Washington, DC 20240

Re: | Comment on 25 C.F.R. Part 547 Grandfathered Class II Gaming Systems

Dear Ms. Doulou:

The Wyandotte Nation currently operates three gaming facilities in two states—
Oklahoma and Kansas. The RiverBend Casino in Oklahoma offers Class III gaming consistent
with a compact between the Wyandotte Nation and the State of Oklahoma. Currently, the mix of
games in this facility breaks down as approximately 60% Class III and 40% Class II games. The
Wyandotte Nation’s other Oklahoma casino, Lucky Turtle, and the Seventh Street Casino in
Kansas City, Kansas offer only Class II gaming. The Wyandotte Nation had attempted to
negotiate a Class III gaming compact with the State of Kansas several years ago but was not
successful. The Nation does not reasonably anticipate entering into a compact with Kansas in
the foreseeable future.

On March 7, 2008, the Wyandotte Nation responded to the first solicitation for comments
on a set of proposed regulations that included a proposed grandfather provision for Class II
gaming systems. The Wyandotte Nation’s response to the initial proposal was as follows:

The Nation believes the grandfather provision contained in the Technical
Standards should have no time limitation. All current Class II games in the
Nation’s casinos, as now approved by the Nation’s Office of Public Gaming,
should forever be recognized as permissible games under IGRA.

Public Submission to NIGC on 03/12/2008. 1D: NIGC-2007-0009-0131

Other than the passage time, nothing has transpired that would cause the Wyandotte
Nation to change its original passage. In fact, as will be addressed hereafter, the passage of time
has provided greater support for the Wyandotte Nation position that the NIGC should


Comment on Grandfathered Class II Systems
May 31, 2017
Page -2-

permanently grandfather Class II games existing in the Nation’s casinos in 2008 that were
approved by the Nation’s gaming commission.

i; Application of the Grandfather provision _usurps Tribal regulatory authority.
Under IGRA, Congress found that tribal governments "have the exclusive right to regulate
gaming activity on Indian lands if the gaming activity is not specifically prohibited by Federal
law and is conducted within a State which does not, as a matter of criminal law and public
policy, prohibit such gaming." 25 U.S.C. §2701(5) (emphasis added). Congress also provided
through a "statutory basis for the operation of gaming by Indian tribes" and a "statutory basis
for the regulation of gaming by an Indian tribe." 25 U.S.C. §2702(1) and (2) (emphasis added)
IGRA is premised on a strong foundation and presumption of primary tribal operation and
regulation of tribal gaming activities.

Within this stated framework, Congress created the National Indian Gaming Commission
and conferred limited powers to the NIGC. Under IGRA, the NIGC’s role is primarily one of
oversight to see that a tribal government implements the "federal standards" set out in the tribe's
gaming ordinance. There is no question that the Commission has a "regulatory role" with respect
to class II gaming, but the legislative history of IGRA makes clear that the role of the NIGC is
not one of usurping the authority of the Tribe’s to regulate their own gaming but rather one of
limited "oversight" of a tribal government's own regulatory efforts under its tribal gaming
ordinance and the provisions contained in the IGRA. While the NIGC is empowered to approve
tribal gaming ordinances that meet the statutorily required "federal standards" in the IGRA, [25
U.S.C. §2710(b)(2) and §2710(d)(2)(B)] and is granted the authority to monitor and inspect class
II gaming activities [25 U.S.C. §2701(b), the NIGC does not have the authority to veto decisions
of the tribal gaming commissions. Yet, the grandfathering provision of Part 547 does exactly
that by forcing the tribal gaming facilities to remove Class II machines approved by the tribal
gaming commissions based upon the laws and regulations in existence in 2008.

The sunset provision should be removed from the Part 547 regulations and language
added that will authorize the continued use of any Class II games previously certified by
tribal gaming commissions in recognition that the grandfather provision exceeded the
regulatory authority of the NIGC.

2. Part 547 regulations should be applied prospectively. The Wyandotte Nation
agrees with the views expressed by many Tribes and their regulatory agencies that the

regulations set forth in Part 547 should be applied prospectively and the sunset provision for
grandfathered games should be removed. Not only is it unfair and inappropriate for the NIGC to
promulgate a rule that has retroactive application to gaming machines in tribal casinos, but it is
also prohibited by law. As the Supreme Court has ruled, “federal regulations do not, indeed
cannot, apply retroactively unless Congress has authorized that step explicitly.” Bowen v.
Georgetown University Hospital, 488 U.S. 204 (1988).


Comment on Grandfathered Class II Systems
May 31, 2017
Page -3-

A tule is retroactive if its “takes away or impairs vested rights acquired under existing
law, or creates a new obligation, imposes a new duty, or attaches a new disability in respect to
transactions or considerations already past.” Covey v. Hollydale Mobile-home Estates, 116 F.
3d. 830 (9th Cir. 1997). An agency may only promulgate a rule that has a retroactive result
where there is statutory authorization. Id. As the Supreme Court held in Bowen, rulemaking
authority will not, as general matter, be understood to encompass power to promulgate
retroactive rules unless that power is conveyed by Congress in express terms. IGRA cannot
properly be read to authorize the NIGC to promulgate regulations of retroactive effect, or even to
promulgate product standards.

Nothing in the Indian Gaming Regulatory Act indicates that Congress intended for the
NIGC to promulgate retroactive regulations with respect to these gaming devices. Prospective
application would preserve the Class II gaming systems certified prior to 2008 by the NIGC as
well as those that were judicially determined to be permissible Class II gaming systems. Among
the grandfathered systems that would potentially be impacted by the Grandfather provision are
Class II gaming devices that have been judicially determined to be Class II games under IGRA.
See United States v. 103 Electronic Gambling Devices, 223 F.3d 1091 (9th Cir. 2000); United
States. v. 162 MegaMania Gambling Devices, 231 F.3d 713 (10th Cir. 2000).

As stated above, in its 2008 comments to the NIGC’s proposed regulations the
Wyandotte Nation asserted that the games then currently approved by its gaming commission
should forever be recognized as permissible games under IGRA. The Wyandotte Nation
reasserts that same position now. The sunset provision should be removed from the Part 547
regulations and language added that will authorize the continued use of any Class II games
previously certified by tribal gaming commissions in recognition that the NIGC may not apply
the Part 547 regulations retroactively but, if at all, only prospectively.

3. No_Rational_basis_exists_for_not_removing the sunset provision, thereby
extending the Grandfather provision indefinitely. When extending the grandfather provision

for an additional five years in 2012, the NIGC stated that “The Commission acknowledges that
grandfathered machines have, for the most part, continued to operate with relatively few
problems to the patron or the gaming operations. Nevertheless, lack of a major incident in the
past does not mean that the grandfathered Class II gaming systems pose no risk to patrons and
the gaming operation.” 77 Fed. Reg. 58473, 58475. Now, almost five years later, the NIGC has
to again acknowledge that the grandfathered machines have continued to operate without
problems to the patron or the gaming operations.

Even if the NIGC had the authority to apply Part 547 regulations retroactively (which it
does not), such application cannot be arbitrary and capricious. An agency’s factual findings are
not arbitrary and capricious if they are “supported by substantial evidence” and there is a rational
connection between the facts found and the choices made. See Midwest ISO Transmission
Owners v. FERC, 373 F.3d 1361, 1368 (D.C. Cir. 2004). The Wyandotte Nation contends that
the NIGC's inclusion of a sunset provision in the grandfather provision is alone sufficient to