BULLETIN

No. 2021-6 October 5, 2021

Subject: Sole Proprietary Interest

In 1993, the National Indian Gaming Commission issued Bulletin No. 1993-3, 

Submission of Gaming Related Contracts and Agreements for Review. In that bulletin, the NIGC 

recommended that certain gaming-related contracts, such as consulting and development 

agreements, be submitted to the NIGC for an opinion on whether the agreements implicated 

management and needed to be submitted to the NIGC Chair for approval as management 

contracts. As these contract reviews developed, the NIGC began to include an analysis of

whether the agreement also met IGRA’s requirement that a Tribe maintain the sole proprietary 

interest in its gaming activity. 

At the time Bulletin No. 1993-3 was published, Indian Gaming, though not itself a new 

industry, was still relatively new to the requirements of the Indian Gaming Regulatory Act. 

IGRA had been passed a mere 5 years previously, and NIGC had only recently passed 

regulations implementing the Act. The NIGC had not yet developed the body of guidance 

clarifying what the sole proprietary interest requirement entailed.

In the nearly thirty years since Bulletin No. 1993-3 was issued, the NIGC has completed 

thousands of these reviews, many of which resulted in an opinion from the NIGC’s Office of 

General Counsel, called a “declination letter.” Per Bulletin No. 1993-3’s instruction, it has 

become commonplace for Tribes to submit contracts for a declination letter as part of the 

contracting process. Because the sole proprietary interest requirement is a part of the declination 

letter review, and one of the cornerstones of IGRA, the Agency issues this bulletin to provide 

guidance to the regulated community. This bulletin explains the sole proprietary interest

requirement, its bases, and NIGC’s interpretation of it. 

Although the NIGC’s Office of General Counsel will continue to issue declination letters 

upon request, the NIGC withdrew Bulletin No. 1993-3, finding that for all of the reasons 

discussed above, an agency review may not always be necessary. Rather, it is the Agency’s 

intent that tribes and the parties with whom they are contracting look to this bulletin, as well as
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the materials referenced above, to determine whether a particular agreement implicates 

management. If a particular contract adheres to the principles and analyses outlined below, the 

NIGC’s Office of General Counsel would likely opine that it does not indicate a violation of 

IGRA’s sole proprietary interest requirement.1

 

I. What is the sole proprietary interest requirement?

Before Tribes can engage in, license, or regulate Class II or III gaming, they must adopt a 

gaming ordinance and obtain approval of it from the NIGC Chair.

2 IGRA directs the Chair to 

approve the ordinance if, among other things,

3 it “provides that . . . the Indian tribe will have the 

sole proprietary interest and responsibility for the conduct of any gaming activity.”4 But what 

does that mean? First, only a Tribe may possess a proprietary interest in its gaming, no one 

else.5 A proprietary interest is “[a] property right, specifically, the interest held by a property 

owner,” including rights of possession in, control of, or present use of property — here, a 

business.6 In short, “the tribe must be the sole owner of the gaming enterprise,”7 and not share its 

ownership rights in it. Second, a Tribe must also have “the exclusive control and responsibility 

for” the gaming activity.8

The only exception from the requirement is for individually-owned gaming (meaning, 

individuals beyond the Tribe owning the gaming).

9 NIGC regulations make this plain: “[t]he 

tribe shall have the sole proprietary interest in and responsibility for the conduct of any gaming 

operation unless it elects to allow individually owned gaming....”10 Thus, the requirement is in 

place “unless a tribe elects to license individual owners” of gaming operations on its land.

11

II. Why is the requirement important?

 1 The information provided in this Bulletin may be updated as needed. Please email any comments on this topic 

to NIGC_outreach@nigc.gov.

2 See 25 U.S.C. § 2710(b)(1)(B); 25 U.S.C. § 2710(d)(1)(A). 3 25 U.S.C. § 2710(b)(2)(B) – (F). 4 25 U.S.C. § 2710(b)(2)(A); see also 25 U.S.C. § 2710(d)(1)(A)(ii) (requirement applies to Class III ordinances). 5 See Bettor Racing, Inc. v. Nat'l Indian Gaming Comm'n, 47 F. Supp. 3d 912, 925–26 (D.S.D. 2014), aff'd, 812 F.3d 

648 (8th Cir. 2016); S. Rep. 100-466, 1988 U.S.C.C.A.N. 3071-3106, 3078; ENTERPRISE, Black’s Law Dictionary 

(7th ed. 1999) (“a business venture or undertaking”). 6 INTEREST, Black's Law Dictionary (10th ed. 2014) (proprietary interest & property interest); Evans v. United 

States, 349 F.2d 653, 658 (5th Cir. 1965). 7 S. Rep. 100-466, 1988 U.S.C.C.A.N. 3071-3106, 3078; ENTERPRISE, Black’s Law Dictionary (7th ed. 1999) (“a 

business venture or undertaking”). 8 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147, 1150 (8th Cir. 2013); Bettor 

Racing, Inc. v. Nat'l Indian Gaming Comm'n, 47 F. Supp. 3d at 925, aff'd, 812 F.3d 648 (8th Cir. 2016). 9 25 U.S.C. § 2710(b)(2)(A). 10 25 C.F.R. §§ 522.4(b)(1), 522.6(c). 11 58 FR 5802-01.
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The sole proprietary interest requirement is essential to Congress’ purpose for the statute: 

ensuring that Tribes are the primary beneficiaries of their gaming operations.12 Meaning, tribes 

must receive the primary benefit of their gaming revenue.13 What constitutes the primary benefit

is informed by Congress’s other directives in IGRA as to the payment of gaming revenues.

14

Individually-owned operators must provide tribes 60% of net revenues.

15 And management 

contractors may not receive more than 30% of net revenues as a fee unless certain circumstances 

exist that allow for them to receive 40%.16 So the “majority share” of net gaming revenue going 

to a party other than the Tribe may indicate an unlawful interest.17

Further, Indian gaming is tribal governmental gaming,

18 and tribes must not only own 

their gaming operations, but also control them to “promot[e] tribal economic development, selfsufficiency, and strong tribal government[s].”19 In other words, “[t]ribes are not permitted to 

transfer the right to operate [their gaming] to an entity other than the tribe.”20 Nor may they 

transfer the right to regulate it.

21 Consequently, control over gaming or its regulation by another 

party22 may violate the sole proprietary interest requirement.23 As aptly stated by the 8th Circuit 

Court of Appeals, “Congress placed a high priority on the control of gaming ... to prevent the 

appropriation of the benefits of gaming by [others].”24

In light of these principles, the sole proprietary interest requirement is germane to the 

legality of management contracts; development and finance agreements; gaming device lease 

agreements; gaming compacts;

25 memoranda of agreements with municipalities; and actions by 

third parties as to tribal gaming facilities and operations. 

III. How is sole proprietary interest determined? 

 12 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 785 F.3d 1207, 1210 (8th Cir. 2015). 13 BETTOR RACING, INC. and J. Randy Gallo, Plaintiffs-Appellants, v. NATIONAL INDIAN GAMING 

COMMISSION, Defendant-Appellee, Flandreau Santee Sioux Tribe, Intervenor-Defendant., 2015 WL 1956293 

(C.A.8), 25 (hereinafter, U.S. Appellate Brief – Bettor Racing, Inc. v. NIGC). 14 Id. 15 25 U.S.C. § 2710(b)(4)(B)(i)(III). 16 25 U.S.C. § 2711(c). 17 See, e.g., U.S. Appellate Brief – Bettor Racing, Inc. v. NIGC at 26; see also Letter to Senators McCain, Dorgan, 

and Inouye from NIGC Chairman Hogen re: Contract review and IGRA’s sole proprietary interest requirement at 5-

6 (Feb. 1, 2005).

18 25 U.S.C. § 2701(1). 19 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d at 1150; 25 U.S.C. §§ 2702(1). 20 Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 93 F. Supp. 2d 850, 854 (W.D. Mich. 2000), aff'd, 271 F.3d 

235 (6th Cir. 2001); see also 58 FR 5802-01. 21 City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F. Supp. 2d 712, 723 (D. Minn. 2011), aff'd 

in part, rev'd in part and remanded, 702 F.3d 1147 (8th Cir. 2013). 22 Not including tribally chartered or created entities established by a Tribe to run, oversee, or regulate its gaming. 23 See Bettor Racing, Inc. v. Nat'l Indian Gaming Comm'n, 47 F. Supp. 3d at 929, aff'd, 812 F.3d 648 (8th Cir. 

2016); City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F. Supp. 2d at 723. 24 In re Sac & Fox Tribe of Mississippi in Iowa/Meskwaki Casino Litig., 340 F.3d 749, 760 (8th Cir. 2003); see 

also Wells Fargo Bank, Nat'l Ass'n v. Lake of the Torches Econ. Dev. Corp., 658 F.3d 684, 700 (7th Cir.2011) (“One 

of IGRA's principal purposes is to ensure that the tribes retain control of gaming facilities . . . and of the revenue 

from these facilities.”). 25 Interior, not the NIGC, is charged with the review and approval of compacts. 25 U.S.C. § 2710(d)(3)(B) & (d)(8).
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Three criteria are used to assess if a Tribe has the sole proprietary interest in its gaming 

operation: 1) the term of the relationship with a third party; 2) the amount of revenue paid to the 

third party; and 3) the right of control provided to the third party over the gaming activity.26 In 

certain instances, these criteria in the aggregate support a violation of the requirement.27 In 

others, simply one element28 or two29 is sufficient. Examples of violations of the requirement 

include:

1) a vendor controlling gaming devices in a Tribe’s gaming facility or operation or any 

agreement providing such a right;

30

2) a third party possessing a security interest in a Tribe’s gaming operation if such

interest gives the party the right to control —in the event of default — the gaming

operation or its operating revenue;

31

3) tribal members owning stock in a Tribe’s gaming operation;

32

4) an unrecognized tribal group or faction controlling a Tribe’s gaming operation;

33

5) a third party’s right to seek the judicial appointment of a receiver over the gaming 

operation or its operating revenue;

6) a third party having control or the right to control a Tribe’s gaming regulations;

34

7) a management contractor receiving a percentage of net revenue that exceeds the 

statutory maximum (30% or, in some cases, 40%);

35

8) even if below the statutory maximum for management contracts, a third party 

receiving a large share of a Tribe’s gaming revenue that is not justified by the risk or 

debt assumed, the nature of services or financing provided, or the limitations on the 

Tribe’s ability to obtain such services or financing;36

 26 See City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F. Supp. 2d at 723; see also City of 

Duluth v. Nat'l Indian Gaming Comm'n, 89 F. Supp. 3d 56, 64 (D.D.C. 2015) (affording deference to agency’s 

interpretation). 27 Id.; NOV-11-02. 28 Id. at n.12. 29 Bettor Racing, Inc. v. Nat'l Indian Gaming Comm'n, 47 F. Supp. 3d at 929 (D.S.D. 2014) (revenue and control 

considered), aff'd, 812 F.3d 648 (8th Cir. 2016); NOV-07-02. 30 58 FR 5802-01. 31 Id.; Letter to Kent E. Richey, Faegre & Benson LLP, from NIGC Acting General Counsel re: Opinion regarding 

pledge of gross revenue from gaming operations (Jan. 23, 2009).

32 Id. 33 See In re Sac & Fox Tribe of Mississippi in Iowa/Meskwaki Casino Litig., 340 F.3d at 760. 34 See, e.g., City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 830 F. Supp. 2d at 723 n.12; NIGC 

NOV-11-02 at 7-8. 35 Bettor Racing, Inc. v. Nat'l Indian Gaming Comm'n, 812 F.3d 648, 651-652 (8th Cir. 2016). 36 See, e.g., id..
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9) a management contractor possessing exclusive control over a tribal gaming enterprise 

and being the sole owner of it37 —or, in other words, operating a Tribe’s gaming 

enterprise as the proprietor;

38and

10) a joint venture or partnership between a tribe and a third party.

 37 Bettor Racing, Inc. v. Nat'l Indian Gaming Comm'n, 47 F. Supp. 3d at 928-29 (D.S.D. 2014), aff'd, 812 F.3d 648 

(8th Cir. 2016). 38 U.S. Appellate Brief – Bettor Racing, Inc. v. NIGC at 26.