Calendar No. 862 

INDIAN GAMING REGULATORY ACT 

Av~vsr 3tlqislntive day. Avcvar I). 1988.--Ordered to be prjnted 

hlr. INOUYE, from the Select Committee on Indian Affairs, 

subn~itted the following 

REPORT 

together with 

ADDITIONAL VIEWS 

[To accompany S. 5551 

The Select Committee on Indian Affairs, to which was referred 

the bill (S. 555) to regulate gaming on Indian lands, having considPURPOSE 

S. 555 provides for a system for joint regulation by tribes and the 

Federal Government of class I1 gaming on Indian lands and a 

BACKGROUND 

S. 555 is the outgrowth of several years of discussions and negoti- ations between gaming tribes, States, the gaming industry, the administration, and the Congress, in an attempt to formulate a 

system for regulating gaming on Indian lands. In developing the 

legislation, the issue has been how best to preserve the right of 
tribes to self-government while, at the same time, to protect both 

the tribes and the gaming public from unscrupulous persons. An 

additional objective inherent in any government regulatory scheme 

is to achieve a fair balancing of competitive economic interests. 

The need for Federal and/or State regulation of gaming, in addition to, or instead of, tribal regulation, has been expressed by various State and Federal law enforcement officials out of fear that 

Indian bingo and other gambling enterprises may become targets for infiltration by criminal elements. While some States have ab 

tempted to assert jurisdiction over tribal bingo games, tribes have 

very strenuously resisted these attempts. It was this conflict which 

gave rise to the California v. Cabazon Band of Mission Indians 

case (Cabazon), decided by the Supreme Court on February 25, 

1987. (480 U.S. 94 L.Ed.2d 244, 1987). The Court, using a balancing test betweed ~ederal, State, and tribal interests, found that 

tribes, in States that otherwise allow gaming, have a right to conduct gaming activities on Indian lands unhindered by State regulation. This decision followed a long line of cases that began with the 

case of Seminole v. Butterworth, (658 F.2d 3110, 5th Cir., 1982, cert. 

denied 1982). 

The Seminole Tribe of Florida in 1979 was the first tribe to enter 

the bingo industry. A court challenge by the State of Florida. led 

the Fifth Circuit Court of Appeals to decide, in the Seminole case, 

that the tribe could conduct gaming free from State interference, 

primarily because the Federal Government had never transferred 

jurisdiction to the State of Florida to impose its civil laws on 

Indian lands. 

Since Florida is a Public Lavr 280 state,' the Court a~~lied a civil 

regulatory/criminal prohibitory &st to' determine the extent of 

state authority over tribal activities. The Seminole court found that 

Florida's laws governing bingo are civil regulatory, not criminal 

prohibitory. Therefore, if Florida's laws governing bingo had been 

found to be criminal prohibitory in nature, they would have ap plied to the Seminole Tribe. But pursuant to the application of 

Public Law 280, the State's civil regulatory laws governing bingo 

were found not to apply to the Seminole Tribe's bingo operations. 

Since the Seminole Tribe opened its game and succeeded in 

court, over 100 bingo games have been started on Indian lands in 

states where bingo is otherwise legal. As established in testimony 

presented to the Committee, it was determined that collectively, these games generate more than $100 million in annual revenues 

to tribes. Indian tribal elected officials demonstrated to the Committee that bingo revenues have enabled tribes, like lotteries and 

other games have done for State and local governments, to provide 

a wider range of government services to tribal citizens and reservation residents than would otherwise have been possible. For various reasons, not all tribes can engage in profitable gaming operations. However, for those tribes that have entered into the busikquire tribd consent before jurisdiction could be transferred to a State.-Since then, no tribes 

have done so and no new states are permitted to come under the Public Law 280 statute. 
ness of business, the income often means the difference between an 

adequate governmental program and a skeletal program that is totally dependent on Federal funding. In deciding the Cabazon case, the Supreme Court used a balancing test, weighing the interests of States, tribes and the Federal 

Government. The Court relied heavily on the fact that the Department of the Interior. as trustee for Indian tribes. reviews tribal 

gaming ordinarices and approves or disapproves them, as well as 

all ioint venture and management contracts with outside firms. 

The" court also emphasized the Federal Government's interest in 

Indian self-government, including the goal of encouraging tribal 

self-sufficiency and economic development. 

However, in the final analysis, it is the re~ponsibility of the Congress, consistent with its plenary power over Indian affairs, to balance competing policy interests and to adjust, where appropriate, the jurisdictional framework for regulation of gaming on Indian 

lands. S. 555 recognizes primary tribal jurisdiction over bingo and 

card parlor operations although oversight and certain other powers 

are vested in a federally established National Indian Gaming Commission. For class I11 casino, parimutuel and slot machine gaming, 

the bill authorizes tribal governments and State governments to 

enter into tribal-State compacts to address regulatory and jurisdictional issues. 

Development of Legislation.-Congressional consideration of 

Indian gaming legislatiorb began in the 98th Congress with the introduction of several bills and the conduct of hearings. No further 

action, however, was taken by either the Senate or the House. In 

the 99th Congress, five bills were introduced in the House to provide a Federal role in the oversight of gaming on Indian lands. 

Congressman Morris Udall's bill, H.R. 1920, emerged as the primary vehicle for the Indian gaming legislation, and the House Interior Committee held three hearings on the H.R. 1920. The administration had no legislative proposal of its own to offer at that .time. 

In November 1985, representatives of the Department of the Interior and the Department of Justice testified in support of tribal 

bingo, regulated by a Federal agency, but in opposition to class I11 

gaming unless conducted under State jurisdiction. 

Over the course of the development of the legislation, the definition of class I has remained constant but class I1 and class I11 definitions have been subject to much debate. Class I is the term consistently used to describe traditional gaming conducted at Indian 

pow-wows and ceremonies, gaming activities which are entirely 

free of outside regulation or oversight. Under S. 555, class I1 is the 

term used for bingo, lotto, some types of card games, as well as 

other forms of bingo-type gaming such as pull-tabs, punch cards, 

tip jars, and the like. Class I11 is all other forms of gaming-slot 

machines, casino games including banking card games, horse and 

dog racing, pari-mutuel, jai-alai, and so forth. 

The bill reported to the House floor in April 1986 allowed the 

proposed National Indian Gaming Commission and the tribes to 

regulate both class I1 and I11 gaming. Class I11 gaming would have 

been regulated in accordance with State rules and regulations governing such gaming. However, no jurisdiction over Indian lands 

was conferred on States. A compromise bill (H.R. 1920) passed the 
House on April 21, 1986, calling for a 5-year moratorium on any 

new class 111 tribal gaming and a GAO study to determine the best 

regulatory scheme for class 111 gaming on Indian lands. 

On April 29, 1986, the Supreme Court docketed the Cubazon case, 

significantly altering the course of the legislation as it was referred 

to the Senate. (The Court actually granted certiorari on June 10, 

1986.) Tribes, concerned that the Court's ruling might adversely 

affect their position on the legislation, became more willing to compromise. Other partics, believing the Court would rule in favor of 

State regulation, became more adamant about furthering the position in favor of trcnsferring jurisdiction over Indian gaming activities to the States. Despite significant compromises made by tribes, 

the Senate failed to pass H.R. 1920 before the adjournment of the 

99th Congress. 

The Senate Indian Affairs Committee reported an amended version of H.R. 1920 to the Senate on September 15, 1986. The revised 

committee bill affirmatively recognized tribal jurisdiction over 

class I: and class I1 gaming but provided an additional Federal reguiatory system for class I1 activities. The bill prohibited class I11 

gaming. Tribes generally opposed any effort by the Congress to unilaterally confer jurisdiction over gaming activities on Indian lands 

to States and voiced a preference for an outright ban of class I11 

games to any direct grant of jurisdiction to States. The Senate bill 

reflected the tribal position, but left the option open to tribes to 

come under State jurisdiction if they chose to engage in Class I11 

gaming. 

The major provisions of the bill required tribes to adopt ordinances governing gaming operations and a newly established Federal gaming commission to approve such ordinances before a game 

could be licensed. It provided a detailed system for the investiga- tion and regulation of non-Indian investors and managers. It also 

established a system for civil and criminal penalties, including closure authority, to assure compliance with the act. 

Subsequent to reporting the bill, and in further response to administration and State concerns, additional changes were recommended by the Chairman of the Indian Affairs Committee. However, despite efforts to negotiate changes that were acceptable to certain parties, the bill was not considered by the Senate prior to ad- journment of the 99th Congress. 

LEGISLATIVE HISTORY-IOOTH CONGRESS 

Senators Inouye, Evans, and Daschle introduced S. 555 on February 19, 1987, just 6 days prior to the decision in Cabazon. The bill 

was based in large part on the Senate version of H.R. 1920 that 

was pending at the end of the 99th Congress. S. 1303 was intro 

duced on June 2, 1988, by Senators McCain, Inouye, and Evans, 

and reflected certain changes based on the Cabazon decision. Senators Hecht and Reid introduced S. 1841 on Novembcr 4,1987. 

In the House, Representatives Udall and Bereuter introduced 

H.R. 1079 on February 10, 1987; Representatives Coelho, Lujan, and Pepper introduced H.R. 964 on February 4, 1987, and Repre sentatives Udall, Young (Alaska), Campbell, Smith (Florida), and 

Bereuter introduced H.R. 2507 on May 21, 1987. H.R. 3605 (identi- 
cal to S. 1841) waa introduced by Representatives Vucanovich and 

Bilbray on November 3, 1987. S. 1303 and H.R. 2507 were identical 

bills when introduced and H.R. 2507 became the House legislative vehicle for Indian gamigg. 

On June 18, 1987, the Select Committee on Indian Affairs held a 

hearing on both S. 555 and S. 1303. 

STATEMENT OF POLICY 

The regulation of gaming activities on Indian lands has been the 

subject of much controversy. Representatives of States with experience in regulating some forms of gaming activities, such as Nevada 

and California, have expressed concern over the potential for the 

infiltration of organized crime or criminal elements in Indian 

gaming activities. The criminal division of the U.S. Department of 

Justice has expressed similar concerns, although as stated in the 

additional views of Senator John McCain, in 15 years of gaming activity on Indian reservations, there has never been one clearly 

proven case of organized criminal activity. 

Recognizing that the extension of State jurisdiction on Indian 

lands has traditionally been inimical to Indian interests, some have 

suggested the creation of a Federal regulatory agency to regulate 

class I1 and class I11 gaming activities on Indian lands. Justice Department officials were opposed to this approach, arguing that the 

expertise to regulate gaming activities and to enforce laws related 

to gaming could be found in state agencies, and thus that there was 

no need to duplicate those mechanisms on a Federal level. 

It is a long- and wellestablished principle of Federal-Indian law 

as expressed in the United States Constitution, reflected in Federal 

statutes, and articulated in decisions of the Supreme Court, that 

unless authorized by an act of Congress, the jurisdiction of State 

governments and the application of state laws do not extend to 

Indian lands. In modern times, even when Congress has enacted 

laws to allow a limited application of State law on Indian lands, 

the Congress has required the consent of tribal governments before 

State jurisdiction can be extended to tribal lands. 

In determining what patterns of jurisdiction and regulation 

should govern the conduct of gaming activities on Indian lands, the 

Com'mitke has sought to preserve the principles which have guided 

the evolution of Federal-Indian law for over 150 years. In 30 doing, 

the Committee has attempted to balance the need for sound enforcement of gaming laws and regulations, with the strong Federal 

interest in preserving the sovereign rights of tribal governments to 

regulate activities and enforce laws on Indian land. The Committee 

recognizes and affirms the principle that by virtue of their original 

tribal sovereignty, tribes reserved certain rights when entering into 

treaties with the United States, and that today, tribal governments 

retain all rights that were not expressly relinquished. 

Consistent with these principles, the Committee has developed a 

framewo~k for the regulation of gaming activities on Indian lands 

which provides that in the exercise of its sovereign rights, unless a 

tribe affirmatively elects to have State laws and State jurisdiction 

extend to tribal lands, the Congress will not unitaterally impose or 
allow State jurisdiction on Indian lands for the regulation of Indian 

gaming activities. 

The mechanism for facilitating the unusal relations hi^ in which 

a tribe might affirmatively seek-the extension of State firisdiction 

and the application of state laws to activities conducted on Indian 

land is a tribal-State compact. In no instance, does S. 555 contemplate the extension of State jurisdiction or the application of State 

laws for any other purpose. Further, it is the Committee's intention that to the extent tribal governments elect to relinquish rights in a tribal-State compact that they might have otherwise reserved, 

the relinquishment of such rights shall be specific to the tribe so 

making the election, and shall not be construed to extend to other 

tribes, or as a general abrogation of other reserved rights or of 

tribal sovereignty. 

It is also true that S. 555 does not contemplate and does not provide for the conduct of class 111 gaming activities on Indian lands 

in the absense of a tribal-State compact. In adopting this position, 

the Committee has carefully considered the law enforcement concerns of tribal and State governments, as well as those of the Federal Government, and the need to fashion a means by which differing public policies of these respective governmental-entities can be 

accommodated and reconciled. This legislation is intended to provide a means by which tribal and State governments can realize 

their unique and individual governmental objectives, while at the 

same time, work togeiher to develop a regulatory and jurisdictional 

pattern that will foster a consistency and uniformity in the 

manner in which laws regulating the conduct of gaming activities 

are applied. 

S. 555 is intended to expressly preempt the field in the governance of gaming activities on Indian lands. Consequently, Federal 

courts should not balance competing Federal, State, and tribal interests to determine the extent to which various gaming activities 

are allowed. 

Finally, the Committee anticipates that Federal courts will rely 

on the distinction between State criminal laws which prohibit certain activities and the civil laws of a State which impose a regulatory scheme upon those activities to determine whether class I1 

games are allowed in certain States. This distinction has been discussed by the Federal courts many times, most recently and notably by the Supreme Court in Cabazon. Under Public Law 83-280, 

the prohibitory/regulatory distinction is uscd to determine the 

extent to which State laws apply through the assertion of State 

court jurisdiction on Indian lands in Public Law 280 States. The 

Committee wishes to make clear that, under S. 555, application of 

the prohibitory/regulatory distinction is markedly different from 

the application of the distinction in the context of Public Law 83- 

280. Here, the courts will consider the distinction between a State's 

civil and criminal laws to determine whether a body of law is applicable, as a matter of Federal law, to either allow or prohibit certain activities. The Committee does not intend for S. 555 to be used 

in any way to subject Indian tribes or their members who engage in class I1 games to the criminal jurisdiction of States in which 

criminal laws prohibit class I1 games. 
COMMITPEE RECOMMENDATION AND TABULATION OF VOTE 

The Select Committee on Indian Affairs, in open business session 

on May 13, 1988, by unanimous vote and with a quorum present, 

recommends that the Senate pass S. 555, with an amendment in 

the nature of a substitute. 

HIGHLIGHTS-INDIAN GAMING REGULATORY ACT 

Class I (ceremonial gamin&.-Traditional gaming remains within 

the exclusive jurisdiction of Indian tribes and outside the scope of 

the Act. 

Class 11 (bingo, lotto, pull tabs, tip jars, punch boards and card 

games, with the specific exclusion of banking card games such as 

chenin de fer, baccarat and blackjack).-Class I1 continues to be 

within tribal jurisdiction but will be subject to oversight regulation 

by the National Indian Gaming Commission; care games must be 

played under state-mandated hour and pot limits, if any. 

Class III (all gaming that is not class I or class I& i.e., banking 

cards, all slot machines, casinos, horse and dog racing, jai-alai).- 

Tribes may engage in class I11 gaming if they enter into tribalState compacts for the operation of tribal class I11 games. 

Grandfather of existing banking card games.--(1) All card games 

operated by tribes on or before May 1, 1988 that would otherwise 

be considered as Class 111 game under the bill will be treated as 

Class I1 games; (2) individually owned class I1 games licensed by 

tribes will also be grandfathered. No new class I11 banking card 

games will be permitted to be regulated as class I1 games. 

Grace period.-All video machines and other electronic or electromechanical facsimiles of games of chance may continue to operate for 1 year after the date of enactment of the bill to give tribes 

the opportunity to negotiate tribal-State compacts to cover the operation of such games. 

Commission.-The National Indian Gaming Commission will be 

composed of five (5) persons, three (3) of whom must be members of 

federally recognized tribes; chairman will be appointed by the 

President with advice and consent of Senate, and the Department 

of Justice will conduct background investigations of all appointees. 

Commission powers.-The Commission will have authority to: 

permanently close tribal games; enforce collection of civil fines; enforce tribal gaming ordinances; monitor all Indian gaming activities; inspect faming premises; conduct background investigations of 

employees and contractors; access records, books and other documents and audit accounts; conduct any investigation necessary in 

connection with regulation of class I1 gaming; consult with law enforcement officials where appropriate; and request the U.S. Attorney General to conduct necessary criminal investigations. 

Commission funding,-Operating costs of up to $3 million per 

year derived from tribal assessments (50 percent) and congressional 

appropriations (50 percent). Assessments set on a sliding fee scale 

from Yz percent to 2% percent of first $1,500,000 of gross revenues 

and up to five (5) percent of amounts in excess thereof; gross revenue is all income less prize money paid, if any, and capital expenditures. 
8 

Tribal gaming ordinances.-Required for the operation of a class 

I1 or class III game; must be approved by the Commission; tribe 

must be the sole owner of the gaming enterprise; revenues can he 

used for tribal government operations, general tribal welfare (including per capitas that are subject to Federal income tax), ece 

nomic development, and charity; for class 11, tribe must have 

system for conducting background checks on key managers and a 

employees and must license such officials; tribes may also license 

an individual or entity to conduct gaming within the limits of ap 

plicable state law. 

Management contracts.-Permitted for fees up to 30 percent of 

net revenues with exceptions of up to 40 percent; Commission must 

investigate contractors and may disapprove a contract based on 

such investigation; contract must allow tribal access to daily operations of the game, monthly audits, minimum guaranteed payment 

to the tribe, and have terms of no more than five (5) years, with 

exceptions up to seven (7) years. 

Review of existing ordinances and contracts.-Commission must 

notify each gaming tribe of the review process and the tribe must 

forward existing contracts and ordinances within 60 days; Commission has 90 days to review ordinances and, if such ordinances conform to the act, they are approved; if not, the tribe is notified of 

needed changes and will have 120 days to comply; for contracts, the 

Commission has 180 days to review and if they meet the requirements of the act, they are approved; if not, the parties have 120 

days to comply (except those contracts previously approved by the 

Secretary have 180 days to comply). 

Civil penalties.--$25,000 fine for violation of any provision of the 

act; Commission has the power to close a game or to cancel a contract but must notify the tribe first of an intent to fine, close or 

cancel; appeals are provided for. 

Concurrent jurisdiction.-Tribes may exercise existing tribal governmental authority under tribal law over any gaming. 

Judicial review.-All decisions of the Commission are final 

agency decisions for purposes of appeal to Federal district court. 

Subpoena.-Commission may subpoena witnesses and documents 

and depose any person as part of its investigative powers. 

New lands.-Gaming on newly acquired tribal lands outside of 

reservations is not generally permitted unless the Secretary determines that gaming would be in the tribe's best interest and would 

not be detrimental to the local community and the Governor of the 

affected State concurs in that determination. 

Criminal penalties.-For theft from Indian gaming activities penalties will range from $100,000 fine and 1 year in prison to 

$1,000,000 fine and 20 years in prison. 

EXPLANATION OF MAJOR PROVISIONS 

Definitions.-Class I gaming is defined in section 40). The Committee was hesitant to attempt to define traditional or ceremonial 

gaming as it is clearly an area of tribal self-government. However, 

the necessity of classifying all types of gaming requires the mention of this form of gaming and the Committee's intent is to make 
certain that such gaming is never considered either as class I1 or 

class 111. 

Class 11 gaming is defined in section 4(8)(A)(B)(C) and (Dl Consistr 

ent with tribal rights that were recognized and affirmed in the Cabazon decision, the Committee intends in section 4(8)(A)(i) that 

tribes have maximum flexibility to utilize games such as bingo and 

lotto for tribal economic development. The Committee specifically 

rejects any inference that tribes should restrict class I1 games to 

existing games sizes, levels of participation, or current technology. The Committee intends that tribes be given the opportunity to take 

advantage of modern methods of conducting class I1 games and the 

language regarding technology is designed to provide maximum 

flexibilty. In this regard, the Committee recognizes that tribes may wish to join with other tribes to coordinate their class I1 operations and thereby enhance the ~otential of increasing revenues. For example, linLing participanfplayers at various reservations whether 

in the same or different States. bv means of telephone, cable, tele- , .. vision or satellite may be a reasonable approach-for tribes to.take. 

Simultaneous games participation between and among reservations 

can be made practical by use of computers and telecommunications 

technology as long as the use of such technology does not change the fundamental characteristics of the bingo or lotto games and as 

long as such games are otherwise operated in accordance with ap plicable Federal communications law. In other words, such technology would merely broaden the potential participation levels and is 

readily distinguishable from the use of electronic facsimiles in 

which a single participant plays a game with or against a machine 

rather than with or against other players. Section (4)(8)(A) also makes clear the Committee's intent that 

pull-tabs, punch boards, tip jars, instant bingo and similar subgames may be played as integral parts of bingo enterprises regulat- ed by the act and, as opposed to free standing enterprises of these 

sub-games, state regulatory laws are not applicable to such subgames, just as they are not applicable to Indian bingo. Section (4)(8XAMii) provides that certain card games are regulat- ed as class I1 games, with the rest being set apart and defined as 

class I11 games under section 4(9) and regulated pursuant to section 

ll(d). The distinction is between those games where players play against each other rather than the house and those games where 

players play against the house and the house acts as banker. The 

former games, such as those conducted by the Cabazon Band of 

Mission Indians, are also referred to as non-banking games, and 

are subject to the class I1 regulatory provisions pursuant to section 

ll(al(2). Subparagraphs (I) and (11) are to be read in conjunction 

with sections ll(aX2) and (bX1XA) to determine which particular 

card games are within the scope of class 11. No additional restrictions are intended by these subparagraphs. The Committee notes 

that, while existing law does not require that Indian card games 

conform with State law, it agreed to adoption of bill language to 

provide that these card games be operated in conformity with laws 

of statewide application with respect to hours or periods of oper- ation, or limitations on wagers or pot sizes for such card games. Subparagraph 4(8)(B) specifically excludes from class 11, and thus 

from regulation by a tribe and the National Indian Gaming Com- 
mission, so-called banking card games and slot machines. The Committee's intent in this instance is to acknowledge the important difference in regulation that such games and machines require and to 

acknowledge that a tribal-State compact for regulation of such 

games is preferable to Commission regulation. Subparagraph 4(8)(C) provides that card games actually operated 

by tribes in certain states on or before May 1, 1988, will continue to 

operate under tribal/Commission jurisdiction as class 11 games with the caveat that the games may not change their character, 

i.e., new or different kinds of games may not be substituted for the 

games that are grandfathered and the games must be played with 

the same pot and wager limits as currently operated. It is not the 

Committee's intention, however, to restrict these grandfathered 

games to a specific number of chairs, tables, or other similar conditions of operation. These are factors that are determined by the 

marketplace; games may contract or expand. All class I1 games are 

subject to the provisions of section ll(b) and (c). The Committee is 

cognizant of the fact that many of these games have been operating 

under tribal regulation free of Federal control for many years and 

are, in fact, crime free. While the Committee recognizes that this 

situation could be repeated on Indian lands in many states where 

such gaming is allowed, it also recognizes the State interest in participating in the regulation of such gaming. To come within the 

grandfather clause, the Committee intends to include all games in 

which an investment was made and the games were actually operated on or before May 1, 1988. Games are often closed temporarily 

for a variety of reasons, such as contract disputes, renovations, and 

collateral legal disputes, among others. Such closures are not 

meant to preclude a tribe's game from being included in this section. For this reason, the Committee specifically intends that the 

card room operated by the Lummi tribe in Washington State be included in this grandfather provision. 

Section 4(8)(D) provides a 1-year grace period for the continued 

operation of any class 111 machine games or other facsimile games 

legally operated by tribes on Indian lands on or before May 1, 1988. 

This transition year is provided to enable tribes to enter into compacts for currently operated games such as video bingo, bingolet, 

bingo 21, and other similar games. The Committee is aware that 

the legality of these games are, in some cases, the subject of current litigation. The Committee has no opinion on the legality of 

such games and leaves that question to the courts where the merits 

can be decided on a case-by-case basis depending on relevant law. 

The grace period is simply intended to give those tribes that are 

currently operating those games which will become class I11 games 

Gpon enactment of this bill, the full spectrum of time envisioned in 

the compact process under ll(d) in which to conclude a compact 

with the State. This timeframe includes a 6-month negotiation 

period and, if negotiations should fail during that period, time to 

bring a court action. If the court finds for the tribe, it may order 

another 60day negotiation period, and, if that fails, there must be 

time for the mediator and the Secretary of the Interior to respond in accordance with the directives of the act. While the entire process may take more than a year, the Committee believes it is important to bring some finality to the operation of class I11 games 
unless they operate under a tribal-State compact. This grace period is contingent on the tribe requesting, within 30 days of enactment 

of the bill, that the state enter into negotiations leading to a compact to govern the continued operation of such games. If the tribe 

fails to make a request within the 30 day period, the Committee 

intends that games which are classified as class I11 will require 

closing of the games unless and until a compact is negotiated at 

some future date. The Committee specificall intends that this 

grace period cover the gaming operations of t e Menominee tribe 

of Indians of Wisconsin. 

i 

Class III gaming is defined in section 4(9) as all gaming that is 

not included as class I or class 11. All class I11 gaming will be subject to the terms and conditions of Tribal-State compacts agreed to 

under section ll(d). 

fill-time Commissioners.-Section 5(b) provides that the five 

Commission members shall serve on a full-time basis. Under the 

bill the Commission's principle responsibilities are with class I1 

gaming and it will participate only minimally in the regulation of 

class I11 gaming. The Committee retained the full-time service provision on the premise that, at least for the initial start-up phase of 

the Commission, such full-time service will be required. However, 

the Committee notes that section 7(c) requires the Commission to 

submit a report to Congress on December 31, 1989, that will include recommendations on whether Commissioners should serve 

full or part time. 

Transition.-Section 10 of the bill requires the Secretary of the 

Interior to continue to exercise his trust responsibility for Indian 

tribes in supervising gaming activities on Indian lands until the 

Commission is fully functioning. 

Jurisdiction.-Class I.-Section ll(a)(l) provides that traditional 

or ceremonial Indian gaming remains within the exclusive jurisdiction of Indian tribes and is not subject to any regulation pursuant 

to the act. Indian tribes enKzge in traditional gaming activities 

such as the "stick" or "bone ' games that are played by tribes in 

conjunction with ceremonies, pow wows, feasts or other celebrations. These activities are not covered by this legislation. Similarly, 

where rodeos, horse races, or other kinds of gaming with purses or prizes, have traditionally been held in conjunction wit5 such activities for members and guests, including publicly invited guests, such 

games are not to be considered class I1 or class I11 gaming for purposes of this legislation. 

Class II.-Section ll(a)(2) stipultibes that class I1 gaming remains 

within tribal jurisdiction but is subject to the provisions of the act 

where two conditions are met: The State within which the tribe is 

located must permit such gaming for any purpose by any entity; 

and such gaming is not otherwise prohibited by Federal law. The 

Committee recognizes that tribal jurisdiction over class I1 gaming 

has not been previously addressed by Federal statute and thus 

there has heretofore been no divestment or transfer of such inherent tribal governmental powers by the Congress. 

There are five States (Arkansas, Hawaii, Indiana, Mississippi, and Utah) that criminally prohibit any type of gaming, including bingo. S. 555 bars any tribe within those States, as a matter of Federal law, from operating bingo or any other type of gaming. In the 
other 45 States, some forms of bingo are permitted and tribes with 

Indian lands in those States are free to operate bingo on Indian 

lands, subject to the regulatory scheme set forth in the bill. The 

card games regulated as class I1 gaming are permitted by far fewer 

States and are subject to requirements set forth in section 4(8). The 

phrase "for any purpose by any person, organization or entity" makes no distinction between State laws that allow clm I1 gaming 

for charitable, commercial, or governmental purposes, or the 

nature of the entity conducting the gaming. If such gaming is not 

criminally prohibited by the State in which tribes are located, then 

tribes, as governments, are free to engage in such gaming. The phrase "not otherwise prohibited by Federal Law" refers to 

gaming that utilizes mechanical devices as defined in 15 U.S.C. 

1175. That section prohibits gambling devices on Indian lands but 

does not apply to de- ices used in connection with bingo and lotto. 

It is the Committee's intent that with the passage of this act, no 

other Federal statute, such as those listed below, will preclude the 

use of otherwise legal devices used solely in aid of or in conjuction with bingo or lotto or other such gaming on or off Indian lands. 

The Committee specifically notes the following sections in connection with this paragraph: 18 U.S.C. section 13, 371, 1084, 1303-1307, 

1952-1955 and 1961-1968; 39 U.S.C. 3005; and except as noted 

above,m 15 U.S.C. 1171-1178. However, it is the intention of the 

Committee that nothing in the provision of this section or in this 

act will supersede any specific restriction or specific grant of Federal authority or jurisdiction to a State which may be encompassed 

in another Federal statute, including the Rhode Island Claims Settlement Act (Act of Se~tember 30. 1978. 92 Stat. 813: P.L. 95-395) 

and the ~arine 1ndia; Claim ~ettlemeht A& (Act of October 10; 

1980: 94 Stat. 1785: P.L. 96-420). 

Individually owkd class 11 games.-Section ll(b)(4)(A) and (B) 

deal with the issue of individually owned and operated class I1 

bingo and card games. It is the Committee's intent that all gaming, 

other than tribally owned gaming, on Indian lands be operated under State law. The Committee views tribal gaming as govern- mental gaming, the purpose of which is to raise tribal revenues for 

member services. In contrast, while income may accrue to a tribe 

through taxation or other assessments on an individually owned 

bingo or card game, the purpose of an individually-owned enterprise is profit to the individual ownere) of Indian trust lands. 

While a tribe should license such enterprises as part of its governmental function, the Committee has determind that State law 

(such as purpose, entity, pot limits, hours or operation, etc.) should 

apply to such enterprises. These games are not to be confused with 

units of a tribe or tribal social or charitable organizations that op 

erate gaming to support their charitable purposes; such games are 

not covered by this paragraph but rather will come under tribal 

gaming. Those individual games operated prior to September 1, 1986, may continue to operate under tribal ordinance and without 

regard to State purpose or hour and pot limits if such games pro- vide 60 percent of net revenues to the tribe and the owner pays as 

assessment to the Commission under 18(a)(l). The date of Septem- ber 1, 1986, was incorporated in the final Senate version of H.R. 

1920 in the 99th Congress and all individuals were thus on notice 
on that data that individually owned games would not likely be 

per~nittcd in an final IqiRlntion ado tcd by tho Congress. Clms Ill-tri la laale con1 rc&.- c &tion ll(d) encompasses pro- visions relatin to tribnlSta compach tllnl will govern the oper- ation of elm 5 11 nming on Indian Inlllls. ARcr length hearings, ncgotintions and iscussrons, the Commrrtee concluded t 51 at the use 

of compacts between tribes and states is the best mechanism to 

assure thnt the interests of both fiovereign entitirs are met with respcct to tIto regulation of complex gan~ing enterprises such as pari- mutucl horso and dog racing, cnsino gaming, ja~ alai and so forth. 

The Committee notes the strong concerns of states that state laws 

and rcgulations rclnlin to sopllisticated forms of class I11 gaming be respected 011 indian f nnds where, with few exceptions, such laws 

and regulations do not now ap dy. The Committee balanced these 

concerns against the strong tri t nl opposition to any imposition of 

Stnte jurisdiction over activities on Indian lands. The Committee 

concluded thnt the compact process is a viable mechanism for set 

ting various matters between two equal sovereigns. The Statre of 

Nevada and the Fort Mojave Indian tribe negotiated a compact to 

govern future casino gaming on the Nevada portion of the tribe's 

mxrvation. While that compact itself may not be an appropriate model for otl~er compacts, the issues addressed by the compact are 

the snlne issues that the Committee considers may be the subject of 

negotiations between other States and tribes. 

In the Committee's view, both State and tribal governments have 

significant governmental interests in the conduct of class 111 

gaming. States and tribes are encouraged to conduct negotiations 

within the context of the mutual benefits that can flow to and from 

tribe and States. This is a strong and serious presumption that 

must provide the framework for negotiations. A tribe's governmen- tal interests include raising revenues to provide governmental services for the benefit of the tribal community and reservation residents, promoting ublic safety as well as law and order on tribal 

lands, realizing t 71 e objectives of economic self-sufficiency and 

Indian self-determination, and regulating activities of persons within its jurisdictional borders. A State's governmental interests 

with respect to class I11 gaming on Indian lands include the interplay of such gaming with the State's public policy, safety, law and 

other interests, as well as impacts on the State's regulatory system, 

including its economic interest in raising revenue for its citizens. It 

is the Committee's intent that the corn act requirement for class 

111 not be used as a justification by a tate for excluding Indian 

tribes from such gaming or for the protection of other State-licensed gaming enterprises from free market competition with 

Indian tribes. 

The practical problem in formulatin statutory language to accorn lish the desired result is the n eef to provide some incentive 

for tab to negotiate with tribes in good faith because tribes will 

be unable to enter into such gaming unless a compact is in place. That incentive for the States had proved elusive. Nevertheless, the 

Committee notes that there is no adequate Federal regulatory 

system in place for class 111 gaming, nor do tribes have such systems for the regulation of class 111 gaming currently in place. Thus 

a logical choice is to make use of existing State regulatory systems, 
ultliough tho .zdogt9on or Stnto Inw Le not hnhtnount (a an acce9- 

el011 to Stah Juddictlon. 'I'ilo urta of latory syetcme cnn 

IN nccompllmrhed through negotiated thls ie not to my 

claw 111 gen~in -mnny can and II 

that tribnl govera~menta can have in regulation of 

The terms o esch corn act may vary oxtcneively dopendin on 

tila typ of gnnrlng, the IP ocation, tho revious rclntionship o the E B 

tribe nnd Stale, ctc Section ll(dH3X ) describes the hues that 

may be the eubjwt of n~.gotiatiom between a tribe nnd a State in 

reaching n com mi. Tire Conitniltee rcqnim that eubparte of 

cnch of the bra if nm may be more inclue~vc. For example, licensing issues under clause vi may include agreements on days and 

hours of operatian, wage and pot lirnitct, types of wagel-s, and size 

nnd cnpncity of tho proposed facility. A compact may allocate most 

or dl of the jurisdictional responsibility to the tribe, to the State or 

to any variation in between. Tho Committee does not intend that 

compacta be used os a subterfuge for imposing State jurisdiction on 

tribal lands. 

The Cornmitteo doce view the concession to any im licit tribal 

ogrcxmcnt to the applicntion of State law for class I1 /' gaming as 

unique and dow not consider such agreement to be precedent for 

any other incursion of State law onto Indian lands. Gaming b its 

very nature is a unique form of emnomis enterprise and the Ammitie is ~trongly opposed to the application of the jurisdictional elections authorized by thie bill to any other economic or regulator issue that niay arise between tribes and States in the future. 

Anally, the bill allows States to consider negative impacts on existing gaming activities. That is not to say that the bill would allow 

States to reject Indian gaming on the mere showing that Indian 

gaming will compete with non-Indian games. Rather, States must 

show that economic coilsequences will be severe and that they will 

clearly outweigh positive economic consequences. 

Buden of pruofi-Section ll(dX7) grants a tribe the right to sue 

a State if com act negotiations are not concluded. This section is 

the result of t R e Committee balancing the interesh and rights of 

tribes to engngc in gaming against the interests of States in regu- lating such gaming. Under this act, Indian tribes will be required 

to give up any legal right they may now have to engage in class 111 

gaming if: (1) they choose to forgo gaming rather than to opt for a 

compact that may involve State jurisdiction; or (2) they opt for a 

compact and, for whatever reason, a compact is not successful1 negotiated. In contrast. States are not required to forgo any 8 tate 

governmental rights to engage in or regulate class 111 gaming 

except whatever they may voluntarily cede to a tribe under a compact. Thus, given this unequal balance, the issue before the Committee was how best to encourage States to deal fairly with tribes 

as sovereign governments. The Committee elected, as the least offensive option, to grant tribes the right to sue a State if a compact Ls not negotiated and chose to apply the good faith standard as the 

legal barometer for the State's dealings with tribes in class III 

gaming negotiations. While a tribe must show a prima facie case, 

aRer doing so the burden will shift to the State to prove that it did 

act in good faith. The Committee notes that it is States not tribes, 

that have crucial information in their possession that will prove or 
disprove tribal allegations of failure to act in good faith. Furthermore, the bill provides that the court, in making its determination, 

may consider any of the number of issues listed in this section, including the State's publlz interest and other claims. The Committee recognizes that this may include issues of a very general nature 

and, and course, trusts that courts will interpret any ambiguities 

on these issues in a manner that will be most favorable to tribal 

interests consistent with the legal standard used by courts for over 

150 years in deciding cases involving Indian tribes. 

Management contracts.-As used in section 12 and throughout 

the bill, the term "managment contract" refers to agreements governing the overall management and operation of an Indian gaming 

facility by an entity other than the tribe or its employees. The 

term "management contract" does not include contracts or agreements for the procurement of particular services, materials or supplies. These service or supply agreements, including the supply of 

gaming aids such as pulltabs, computers, punch boards, and communications or other equipment, are subject to regulation under 

section ll(b)(2)(D). Charges associated with such services, materials, 

supplies or equipment are to be included as part of the total operating expenses in determining the net revenues under section 4(10). 

Some concern has been expressed that the bill requires that existing management contracts be made consistent with the provisions of the bill that limit contract terms to 5 years and fee percentages to 30 percent (see sections 12(b)(5) and 12(c) and 13(c)). 

Compacts may, of course, provide for additional renewal terms. The 

Committee believes that the plenary power of Congress over Indian 

affairs, and the extensive government regulation of gambling, provides authority to insist that certain minimum standards be met by 

non-Indians when dealing with Indians. The Secretary's powers 

with respect to Indians are always subject to alteration or change 

by the Congress. In the area of gaming where many factors other 

than ordinary business risk enter into the equation, the Committee 

has no reluctance in requiring changes to existing gambling enterprise contracts, whether or not such contracts have been given a 

stamp of approval by the Secretary. Some of the contracts, approved or not, have been shown to be clearly unconscionable, and 

the mpmbers of the Committee believe that term of years and fee 

percentages set forth in the bill are adequate to protect any legitimate potential investor. 

SECTION BY SECTION ANALYSIS 

Section 1.-Title.-"Indian Gaming Regulatory Act". 

Sec. 2.-Findings.-Congress finds that tribes engage in games 

which generate revenues; Federal law provides no clear standards 

for regdating Indian gaming; the goal of Federl policy is to promote tribal econoinic development and, in States where gaming is 

otherwise legal, tribes have the right to regulate gaming on Indian 

lands. 

See. 3.-Declaration of Policy.-The purpose of the act is to pro- vide a statutory basis for operating Indian gaming to promote economic development, to shield tribes fr3m organized crime, to assure 
fairness to operators and players, and to establish a Federal regulatory authority for Indian gaming to meet congressional concerns. 

Sec. 4.-Definitions.- 

(1) Atbrney General (U.S. Attorney General) - - 

(2) Chairman (of National Indian Gaming Commission) 

(3) Commission (National Indian Gaming Commission) 

(4) Indian lands (reservation lands and lands held in trust) 

(5) Indian tribe (federally recognized) 

(6) gaming (to deal, etc., any banking or percentage game of 

chance for money or other value) (7) class I gaming (social, traditional games in connection 

with tribal ceremonies or celebrations) 

(8) class I1 gaming (bingo, lotto, pull-tabs, punch boards, tip jars, card games authorized or not prohibited by State iaw and 

played in conformity with statewide regulations, if any, regarding times of operation and wager and pot limits, excludes baccarat, chemin de fer, blackjack, and all slot machines or electromechanical facsimiles of any game of chance; grandfathers 

certain card games as class I1 and gives 1-year grace period to 

other games that are classified as class 111) 

(9) class I11 gaming (all gaming that is not class I or class 11) 

(10) net revenues (gross revenues, less amount paid for 

prizes, if any, and operating expenses except management fees) 

(11) Secretary (of the Department of the Interior) 

Sec. Ma).-Establishes National Indian Gaming Commission. 

&XI) Commission shall have 5 full-time members, the chairman 

appointed by the President with the advice and consent of the 

Senate and the remainder by the Secretary of the Interior. 

(2) Requires Justice Department to conduct background checks 

on persons considered for appointment and requires the Secretary 

to publish any pertinent information in the Federal Register. 

(3) Prohibits appointment of more than three members from 

some political party and requires that at least three be members of 

federally recognized tribes. 

(4) Sets staggered terms of appointments for initial terms. 

(5) Prohibits appointment of convicted felon, or of anyone with 

any interst in any gaming activity or management contract. (6) Sets criteria for removal from office for cause. 

(c) Provides for filling vacancies. 

(dl Provides that a quorum shall be three members. 

(el Provides for election of vice chairman. 

(0 Requires Commission to meet at call of Chair but at least 

three times a year. 

(gX1) Sets rate of pay for Chairman. 

(2) Sets rate of pay for other Commission members. 

(3) Requires that Commissioners be reimbursed for travel and 

other expenses. 

Sec. 6(a).-Empowers the Chairman to- 

(1) issue temporary closure orders 

(2) levy civil fines 

(3) approve tribal gaming ordinances (4) approve management contracts 

(b) Grants Chairman such other powers as the Commission may 

delegate. 
Sec. 7(a).-Delineates exclusive power of Commission to- 

(1) approve the annual budget (2) adopt regulations for civil fines 

(3) adopt annual assessments 

(4) authorize Chairman to issue subpoenas (5) permanently close a gaming activity (b) Delineates other powers of the Commission to- 

(1) monitor gaming activities 

(2) inspect gaming premises 

(3) conduct background investigations (4) demand access to records related to gaming (5) use U.S. mails 

(6) procure supplies (7) enter into contracts 

(8) hold hearings (9) administer oaths 

(10) promulgate rules and regulations 

(c) Requires biannual report to Congress 

Sec. 8(a).-Provides fbr appointment and rate of pay of general counsel. 

(b) Provides for appointment of other staff and for rates of pay. 

(c) Provides for procurement of temporary staff. (d) Provides for detail of other Federal personnel to assist the 

Commission. 

(e) Requires the GSA to provides administrative support services 

to the Commission. 

Sec. 9.-Grants Commission right to information from other 

agencies of government. 

Sec. 10.-Requires Secretary to exercise continuing authority 

over Indian gaming until Commission is in place. 

Sec. ll(a)(l).-Provides that class I gaming is within the exclusive jurisdiction of Indian tribes and not subject to this Act. 

(2) Provides that class I1 gaming is within Indian tribal jurisdiction but subject to the provisions of this act. 

(bX1) Permits class I1 gaming on Indian lands if the gaming is 

located in a State that allows the gaming for any purpose by any 

person or entity, and if the tribal governing body adopts an ordinance approved under this act. Requires a tribal license for each 

facility or location where class 11 gaming is conducted. 

(2) Requires the Chairman to approve an ordinance if the tribe 

has the sole proprietary interest and if net revenues ar used for 

government operations, general welfare, economic development, charity, or funding local government agencies and if the gaming is 

audited and conducted in safe: environment and if procurements 

over $25,000 are audited and if there is an adequate system for 

background checks on management and key employees, including 

tribal licensing of management and employees. (3) Sets forth conditions for per capita payments of revenues and 

makes same subject to Federal tax. 

(4) Sets forth conditions for tribal licensing of other non-tribal 

games on Indian lands and subjects same to standards comparable 

to that of State. Also provides for continued operation of individually owned/operated games operating on September 1, 1986 under 

certain conditions. 
(c)(l) Permits Commission to consult with other law enforcement : 

agencies and to notify tribes of objections to issuance of licenses.. 

(2) Provides for suspension and revocation of licensing after - - issued 

(dX1) Provides that class I11 gaming is lawful only when authorized by an approved tribal ordinance, located in a State that per- mits such gaming, and conducted in conformance with a tribalState compact. (2)(A) Requires that any tribe proposing to engage in or authorize 

any entity to engage in class I11 gaming activity must first present 

an ordinance to the Chairman that meets the requirements of subsection 6). 

(B) Sets forth the conditions under which the Chairman shall ap 

prove a tribal class I11 gaming ordinance and requires publication of the ordinance in the Federal Register. 

(C) Provides that class I1 gaming activity on tribes lands shall be 

subject to the terms and conditions of a tribal-State compact entered into under paragraph (3). (D) Provides that a tribe may adopt an.ordinance revoking any prior class I11 gaming ordinance but that any class I11 gaming activity may continue to operate for a 1-year period following publi- cation of the revocation ordinance. 

(3)(A) Requires that any Indian tribe planning to engage in class 

I11 gaming must request the State to enter negotiations for a tribalstate compact. (B) Provides that a compact shall take effect when notice of ap 

proval by the Secretary of such a compact has been published in 

the Federal Register. 

(C) Provides that a compact may include provisions relating to: 

application of tribe or State criminal and civil laws directly related 

to gaming; allocation of jurisdiction between the tribe and State; 

State assessments to defray any actual costs of regulation; tribal 

taxation; remedies; operating and licensing standards; and other 

subjects directly related to gaming operations. 

(4) Clarifies that this bill does not confer on any state any au- thority to tax or otherwise assess any Indian Tribe. 

(5) Provides that tribes continue to have the right to regulate class I11 gaming providing such regulation is consistent with the 

terms of a tribal-State compact. (6) Waives application of 18 U.S.C. 1175 (which makes certain 

gambling devices illegal on Indian lands) when a tribe engages in 

class I11 gaming in a State where such devices are legal and a compact is in place. 

(7)(A) Grants United States district courts jurisdiction over actions by: A tribe against a State for failure to enter into negotiat!.ons or to negotiate in good faith; a tribe or state to enjoin illegal 

gaming on Indian lands; and by the Secretary to enforce procedures prescribed in (7)(B). (Bi Authorizes a tribe to bring a suit 6 months after asking the 

State to enter in a compact upon evidence by the tribe that a compact has not been entered into; provides that when a tribe shows. 

that the State did not respond or did not respond in good faith, 

then the burden of proof is on the State to show good faith negotiations; if the court finds for the tribe, it will order a 60-day negotia- 
tion period and may take into account public interest, public safety, criminality, fiiancial integrity, and adverse economic impacts on existing gaining activities, but any demand by a state that 

it tax a tribe will be evidence of lack of good faith negotiation; if a 

compact is not concluded in 60 days, a courtrappointed mediator 

will select from the last best offers submitted by the tribe and 

State which shall be submitted to the tribe and state and if the 

State consents, the compact goes into effect; if not, the mediator 

will notify the Secretary who will then prescribe procedures for the 

conduct of class I11 gaming on the land of the Indian tribe. 

@)(A) Authorizes the Secretary to approve any tribal-State compact governing gaming on Indian lands of an Indian tribe. 

(B) Provides that the Secretary may disapprove a compact only if 

the compact violates the act, any other Federal law that does not 

relate to jurisdiction over gaming on Indian lands, or the trust obligation of the United States to Indians. 

(C) Provides that if the Secretary does not approve the compact 

within 45 days, the compact shall be considered approved to the 

extent it is consistent with this act. 

(D) Requires the Secretary to publish notice of approval of any 

tribal-State compact in the Federal Register. 

(9) Requires the Commissioner to approve, under section 12, any 

management contract with respect to a class I11 gaming activity. 

(e) Requires the Chairman to approve an ordinance within 90 

days of its submission or it will be deemed approved to the extent 

it is consistent with the act. 

Sec. 12(a).-Provides that tribes may enter into management contracts subject to approval of Chairman on the basis of background 

checks. 

(b) Sets forth standards of contracts that must be met to receive 

approval, including a maximum term of 5 years or, on tribal request, 7 years. 

(c) Allows approval of fees based on percentage of net revenues 

up to 30 percent or, in tribal request, 40 percent. 

(d) Sets timelines for Chairman's approval of a contract. 

(el Prohibits Chairman from approving contracts if any person 

having an interest in the game is a tribal elected official, is a convicted felon, is a violator of this act, is a nefarious person with 

known criminal associations, or for other good and valid causes. 

(D Authorizes Chairman to reauire contract modifications or to 

void contract if its. provisions are iiolated. 

&) Prohibits a contract from conveying real property. (h) Transfers Secretary's authority to approve contracts to the 

Commission. 

(i) Permits Commission to require contractor to cover costs of investigation under (el. 

Sec. 13(a).-Requires the Chairman to notify tribes engaged in 

class I1 gamine: to submit existing authorizing documents and existing management contracts for r&iew and approval or disapproval. (b) Provides guidelines for Chairman to determine whether the 

authorizing ordinance conforms to ll(b) and guidelines for tribal 

modification. 
(c) Provides guidelines for Chairman to determine whether the 

contract in 13(a) conforms to section 12 and guidelines for tribal 

modification. 

Sec. 14(a).-Sets guidelines for Chairman to levy and collect civil 

finds for violation of this Act or any tribal regulations approved by 

the Commission. 

(b) Authorizes Chairman to order a temporary closure of a class 

I1 facility with a right to a hearing before the Commission. 

(c) Provides appeal to Federal dibtrict court from fines levied and 

from permanent closure orders. 

(d) Provides for tribal jurisdiction over gaming that is not inconsistent with this act. 

See. 15.-Provides that certain Commission decisions will be final 

agency decisions for purposes of court review. 

Sec. 16(a)-(0.-Provides guidelines for subpoena, deposition, payment of witnesses, and venue. 

Sec. 17(a)-(c).-Provides for confidentiality of Commission findings, for disbursement of information and authorizes the Attorney 

General to investigate laws that a~~lv to Indian lands. *- - 

Sec. 18(a).-provides that Commission will assess games on a 

sliding fee scale from one-half of 1 percent percent to 2% percent 

up to $1,500,000 of gross and up to 5 percent of amounts over 

$1,500,000; caps the total amount that may be assessed at 

$1,500,000; requires the Commission to adopt a fee schedule; provides that failure to pay will be grounds for revocation of Commission approval of license, ordinance, or resoliltion; provides that surplus funds in excess of costs of operating Commission be credited 

on pro rata bases to tribe for next year; defines gross revenues as 

total money wagered, less prize money and amortization of certain 

capital expenditures. 

(b) Requires the Commission to adopt an annual budget and to 

seek appropriations to cover one-half the costs of opersting the 

Commission. 

Sec. 19(a).-Authorizes appropriations to carry out section 18. 

(b) Authorizes $2 million for the first fiscal year., 

Sec. 20(a)-(d).-Sets forth policies with respect th lands acquired in trust after enactment of this act and applies the Internal Revenue Code to winnings from Indian gaming operations. 

Sec. 21.-Removes restrictions on use of mails and advertising 

with respect to gaming activities. 

Sec. 22.-Severability. 

Sec. 23.-Makes clear that gaming on Indian lands in the State 

of Rhode Island must be conducted in accordance with State law. 

Sec. 24.-Codifies criminal penalties for illegal gaming in Indian 

country and for theft from Indian gaming establishments. 

Sec. 25.-Conforming amendment. 

COST AND BUDGETARY CONSIDERATIONS 

The cost estimate of S. 555, as amended, as evaluated by the Congressional Budget Office, is set forth below: 
G U.S. CONOREM, CONGREMIONAL BUDGET OFFICE, 

Washington, DC, June 1c 1988. 

Hon. DANIEL K. INOUYE, 

Chairman, Select Committee on Indian Affairs, 

US. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget OMice has pre vared the attached cost estimate for S. 555, the Indian Gaming 

bgulatory Act. - 

If you wish further details on this estimate, we will be pleased to 

prosde them. - 

Sincerely, JAMES L. BLUM, 

Acting Director. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE 

1. Bill number: S. 555. 

2. Bill title: Indian Gaming Regulatory Act. 

3. Bill status: As ordered reported by the Senate Select Committee on Indian Affairs, May 13,1988. 

4. Bill purpose: This bill establishes the National Indian Gaming Commission within the Department of the Interior, and sets out 

the organization of the commission as well as its powers and duties 

in regulating gaming on Indian lands. The bill defines three classes 

of Indian gaming, giving the commission regulatory authority over 

class I1 gaming and the states, with commission oversight, authority to regulate class 111 gaming. S. 555 authorizes the appropriation of up to $2 million for the op eration of the commission in the first fiscal year after enactment. 

The bill also requires the collection of annual fees from each tribal 

gaming activity to support the commission; these fees would be 

supplemented by annual appropriations authorized in the bill. 

5. Estimated cost of the Federal Government: 

(By fixdl year, in millimm of ffllan) 

The costs of this bill would fall within budget function 450. 

Basis o Estimate: The bill specifies that the commission shall receive at f east one-half of its funding through assessments on gross 

gaming revenues, with the remaining funding to be appropriated. 

Gross gaming revenues are defined as total amounts wagered less 

payouts and amortization of capital expenditures for structures. 

The bill requires the assessment to be between 0.5 percent and 2.5 

percent for the first $750,000 of gross revenues, and no more than 5 

percent for amounts greater than this level. Based on Bureau of 

Indian Affairs estimates of annual gross revenues of $250 million 

to $300 million, annual assessments are estimated to be between $2 

million and $3 million. 
This implies a maximum annual commission budget of $6 million, up to $3 million of which may be appropriated. The estimate assumes that gross revenues remain constant over 

time. Any changes in gross revenues would affect the level of fees 

and could therefore affect the commission's request for appropriations. 

6. Estimated cost to state and local governments: Because this 

bill would give states new regulatory authority over gaming on Indian lands, states that permit class 111 gaming could experience 

some increased regulatory costs. However, based on information 

from the National Association of Gaming Regulatory Authorities 

and the Nevada Gaming Commission, most states would collect fees 

or reimbursements for their regulatory activities. Thus, the net 

cost impact of this legislation on states is not expected to be significant. 

7. Estimate comparison: None. 

8. Previous CBO estimate: None. 

9. Estimate prepared by: Carol Cohen. 

10. Estimate approved by: C.G. Nuckols (for James L. Blum, Assistant Director for Budget Analysis). 

REGULATORY IMPACT STATEMENT 

Paragraph 116) of rule XXVI of the Standing Rules of the 

Senate requires each report accompanying a bill to evaluate the 

regulatory and paperwork impact that would be incurred in carrying out the bill. The Committee believes that S. 555, as amended 

will have a minimal impact on regulatory or paperwork requirements. 

EXECUTIVE COMMUNICATIONS 

The Committee received the following letter the U.S. Deprrtment of Justice giving the Administration's views on S. 555. 

U.S. DEPARTMENT OFJUSTICE, 

OFFICE OF LEGISLATIVE AND INTERGOVERNMENTAL AFFAIRS, 

Washington, DC, January 1.4, 1988. 

Hon. DANIEL K. INOUYE, 

Chairman, Select Committee on Indian Affairs, Washington, - DC. - 

DEAR MR. CHAIRMAN: During the JU;~ 18.- 1987 hearing before 

the Committee concerning 1ndh gaming, thk ~e~artmenr of Justice ~romised to ~rovide a more comolete analvsis of S. 1303 than 

that hresented in-our prepared statement. his letter will describe 

our objections to that bill and will also comment tangentially on 

certain features of the other bill on this subject, S. 555. 

GENERAL CONSIDERATIONS 

As background for our views, we take the position that any legislatioa in the area of Indian gaming should have two overriding goals. First, such legislation should provide a set of "bright line" 

rules that set out the extent to which State gambling laws, both 

regulatory and prohibitory, apply in Indian country and provide that such rules apply in all States containing Indian country, not 

just in P.L. 280 States. After all, as the Court stated in Part I1 of 
the Cabazon opinion, Congress can expressly provide that certain 

Stat. laws apply to Indians in Indian country, as it did in enacting P.L. 280, and even in the absence of express congressional action 

the numerous Supreme Court cases dealing with Indian law "have 

not established an inflexible per se rule precluding state jurisdiction over tribes and tribal members [even] in the absence of express congressional consent." (Slip op., p. 11.) Second, as indicated 

in our prepared statement on S. 1303 and S. 555, any legislation should balance law enforcement concerns raised by commercial 

gaming with the understandable desire of the tribes to obtain revenue from this activity and, consistent with the interests of federalism, must pay due regard to the authority of the States to regulate 

activities within their borders. 

Admittedly these goals are not easy to reconcile. Nevertheless, 

we think it is extremely important that Congress legislate in this 

area to clarify for both the States and the Indian tribes the extent 

to which reservation gaming must comport with State law. In the 

present situation, there is the possibility that some tribes may 

engage in forms of commercial gaming that have been banned completely by the State in which that tribe has its resenration, and 

that some tribes may open pari-mutuel horse and dog tracks in 

competition with those licensed by the States. This situation results 

in uncertainty that is of no benefit to either the tribes or the 

States. 

Moreover, as pointed out by both the Cabazon opinion and by the 

Department of the Interior in its prepared statement for the June 

18, 1987 hearing, tribal gaming operations, including bingo, that do 

not comply with State law may be subject to prosecution as a violation of federal law, specifically 18 U.S.C. 1955. That provision 

makes it an offense to conduct a gambling business "in violation of 

the law of a State or political subdivision in which it is conducted." 

The Sixth Circuit has held that a tribally licensed casino in Michigan which featured blackjack, poker and dice games violated 

Michigan law and 18 U.S.C. 1955. See United States v. Dakota, 796 

F. 2d 186 (6th Cir. 1986). While the Department of Justice has not 

yet decided to employ 18 U.S.C. 1955 against tribal bingo operations that do not comply with State laws, that remains a possibility if such a course of action is necessry to halt criminal infiltration 

of tribal gaming. Rather than using the heavy hand of federal prosecution, however, we believe it would be preferable for Congress to 

make the difficult policy choices as to what forms of Indian gaming 

are to be exempt from federal, as well as from State, laws. 

DEPARTMENT OF JUSTICE OBJECTIONS TO 8. 1303 

Our major objection to S. 1303 is that it allows the tribes to run 

casino gaming, slot machines, and lotteries free of any regard for 

State laws and policies banning or regulating these activities. In 

addition to traditional bingo, S. 1303 defines Class 11 gaming as I< card games, . . . electronic or electromechanical facsimiles [of 

bingo cards], pull tabs, punch boards, tip jars, instant bingo, [and] 

other games similar to bingo." The inclusion of these other forms 

of gaming with traditional bingo is significant because subsection 

10(b) provides that Class I1 gaming shall be within the jurisdiction 
of the tribes, subject to the provisions of the Act, "where such 

Indian gaming is located within a State that permits such gaming for any purpose by any person, organization or entity and such 

gaming is not otherwise specifically prohibited on Indian lands by Federal law." This, in effect, greatly expands on the holding of Cabazon and allows tribes in any State where traditional bingo is per- mitted to operate not only bingo but also several other forms of 

gaming. Moreover, while it contemplates the adoption of some but 

not all State laws and regulations concerning pari-mutuel wagering, it sets out a cumbersome, difficult mechanism for applying 

even those State laws it adopts. 

A. Casino Gaming and Slot Machines 

Casino gaming in the United States typically consists of.card 

games like blackjack and poker, craps, roulette and slot machines. 

S. 1303 would clearly empower the tribes to run most casino games 

and arguably all of them. Lumping together bingo and card games 

would allow the tribes to run blackjack-one of the most common 

casino games-and poker in a State that allowed only charitable 

bingo. By authorizing "electronic or electromechanical" bingo, the 

bill would authorize the tribes in any State that allowed charitable 

bingo to use slot machines even if such devices are illegal under 

State law. The "electronic or electromechanical" bingo provision 

also raises a question of consistency with another federal law, 15 

U.S.C. 1175, part of the Gambling Devices Act, which presently 

makes it unlawful to use or possess a gambling device-defined as 

including slot macbines and roulette wheels-in Indian country. In 

our view, there is no justification for carving out an exception for 

slot machines on which vedeo or electronic bingo is played. Finally, 

including within the definition of Class I1 gaming "other games 

similar to bingo" is an invitation to a tribe in any State that allows 

charitable bingo to run craps and other less common casino games. Arguably they are all "similar" in that they involve an element of 

luck. In short, S. 1303 would allow virtually all casino games with 

the exception of roulette, in any State that allowed bingo. 

B. Lotteries 

Through its inclusion of "instant bingo" in the definition of Class 

I1 gaming along with traditional bingo, S. 1303 would also allow 

the tribes to run lotteries in any State that authorized charitable 

bingo even if the State had not authorized a lottery. What is apparently contemplated by "instant bingo" is the sale of tickets, like 

those of the Eistrict of Columbia and other lotteries, designed so 

that the purchaser scratches off a portion of it to reveal a hidden 

number or symbol which may entitle the holder thereof to a cash 

prize. These tickets are traditionally sold at numerous outleta and 

the only thing that such lotteries have in common with bingowhich is played by a gathering of persons for a finite amount of 

time-is that they both involve an element of chance. In short instant bingo allows lotteries in States that have not authorized lob 

teries and allows unauthorized forms of lotteries in lottery States. 

In either case, the tribes would be allowed to ignore the public 

policy of a particular State. . 
C. Bingo and its definition 

In our view, legislation should ideally limit tribal gaming to 

bingo although we are willing to consider an exception to this gen- eral rule. While bingo is certainly as much a target for criminal 

infiltration as any other cash gaming operation, limiting the tribal 

games to bingo at least maximizes the chances that whatever commission is established to assist the tribes in policing the games will 

achieve some degree of success, although as we pointed out in our 

prepared statement, based on the long experience of the States, 

there is no guarantee that even the niost sophisticated structure 

will ensure against abuses. 

Moreover, bingo s'lould be defined to include only a game played 

by a gathering of persons at one location. For example, if a State 

allows charitable organizations to run bingo games, tribes, even 

though they do not meet the State definition of a charitable organization, could run bingo games without complying with State laws 

or regulations concerning such things as prize limits or hours of 

play. A tribe should not, however, be allowed to run some other 

type of gaming, like slot machines or lotteries by defining such 

games as a form of bingo. However, some tribes apparently have 

derived revenue from instant bingo and the virtually identical 

games of pull tabs, punch boards, and tip jars played during a session of regular bingo.' We would not necessarily oppose the inclusion of such games within the definition of Class I1 gaming provided they were played only during a regular session of conventional 

bingo. Such a restriction increases the chances that these games 

can be policed with some hope of success. Not to include the restriction would, in essence, permit the sale of lottery tickets at 

multiple locations and at all hours which would result in a set of 

regulatory problems quite different from those associated with regulating bingo and a few card games. 

D. Pari-mutuel wagering 

Pari-mutuel wagering on horse and dog racing and on jai-alai is 

deserving of special and separate treatment. The States typically 

closely regulate the conduct of these activities. Regulation takes 

the form not only of how the actual racing and attendant wagering 

shall be conducted-for example the type of medications allowed to 

be used on horses, types of betting allowed, etc.-but also deals 

with the critical questions of who shall be allowed to run a particular type of racing, where it shall be conducted, and for how many 

days. In our view, the Indian tribes should engage in pari-mutuel 

racing~or jai-alai only if they comply with all State licensing requirements. Anything less will likely wreak havoc with the elaborate State regulatory schemes that have been developed for parimutuel wagering operations. It is important to note that few, if 

any, tribes are presently deriving significant revenue from pari- 

' As Assistant Secretary of the Interior for Indian Affairs Rass 0. Swimmer indicated at the 

June 18, 1987 hearing, we have no way of obtaining precise information about the ty s of 

ames run by the varioua tribes or how much generate. Thus we are unaEe to 

fazard even a guess as to how tabs and other forms of "instant 

the past. 

bingo" might be, although we are aware have asserted their importance in 
mutuel wagering and no tribe has build a new pari-mutuel facility 

in reliance on the comparatively recent cases in which courts have 

found State civil/regulatory laws inapplicable to Indian tribes. The 

requirement that the tribes comply with State law would thus have 

a minimal practical impact. Moreover, while pari-mutuel wagering 

is certainly regulated by a number of States, thus suggesting that 

laws dealing with it are civil/regulatory in nature and hence not 

enforceable on Indian reservations by the States, the very fact that 

pari-mutuel wagering requires such extensive regulation is a strong 

argument for letting the States, which have developed expertise 

over the years, continue to have exclusive responsibility in this 

area. In short, for the Congress to authorize tribes to enter the 

horse racing, dog racing, and jai-alai fields without complying with 

all State licensing and other requirements, as does S. 1303, is to exclude unreasonably the States, the very entities with the most experience and expertise. 

While S. 1303 does treat pari-mutuel wagering differently from 

other forms of gaming, it does so in a way that would create a 

nightmarishly complex scheme to administer. The basic scheme of 

S. 1303 is to divide gaming into three classes, Class I, Class 11, and 

Class 111. Class I gaming is defined as "social games solely for 

prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as part of or in connection with tribal ceremonies or celebrations." Class I1 gaming has already been discussed, and Class I11 gaming is defined as all gaming not included 

in the definition of Class I and Class 11. Thus, Class I11 would include any casino games not already covered by the definition of 

Class 11 and, most importantly, pari-mutuel wagering. 

Section 12 of the bill deals specifically with Class I11 gaming. 

Unlike Class I1 gaming, which requires licensing of the operation 

only by the tribe, Class I11 gaming requires the tribe to be licensed 

by the Commission. Before obtaining a license the tribe must have 

passed an ordinance similar to one required for Class I1 gaming in 

the sense that the ordinance must provide for tribal, rather than 

individual ownership, must provide for independent audits, must 

limit the uses of net revecues to certain specified purposes, and 

must include a number of otnpr provisions. Before granting the license the Commission must ascenhin the ability of the prospective 

licensee and any management contractor to comply with the provisions of the Act and of Commission rules and must determine the 

suitability and fitness of the management contractor to operate the 

establishment honestly and for the general economic benefit of the 

tribe. The Commission must grant the license "unless it makes a 

specific finding that such applicant cannot operate the gaming activity in accordance with the standards established under the Act 

and the gaming codes established by the Commission pursuant to 

this section." Thus, the Commission is extraordinarily restricted in 

its ability to deny a license. By way of contrast, an applicant for a 

casino license in Nevada has the burden of proving to the Nevada 

Gaming Commission that the applicant is, among otiner things, a 

person of good character, honesty, and integrity and "in all other 
respects qualified lo bo liconscd or found suitable consistently with 

the declared policy of the etato." a 

111 nny event, before the Chairman of the Cornmimion approves a 

tribal ordinance for Clnss I11 gaming, he or she must first adopt "a 

comprchcneive regulatory schen~e for such gaming activity,' and 

tho regulatione must be developed in consultation with tribal ofticials and oficiols of the Stab wherein the proposed track or other 

Claes 111 oporation is to be located. Moreover, the regulations are to 

be "identical to those provided for the same activity by the State 

within which such Indian gaming ie to be conducted which is appli- cnble to a State licensee subsequent to the issuance of the license, 

except that the Chairman shall exclude any provisions of the 

State's regulations which impose any tax, assessment, fee, or other 

financial burden upon a gaming activity and shall exclude or 

modify any of the State's regulations which he determines are 

clearly inappropriate for application to Indian tribes and their op- erations or which would unreasonably impair the ability of the 

tribe lo conduct its operation.'' Thus, while some reference is made 

in S. 1303 to adopting State regulations, the exceptions allowing 

the Chairman to ignore State regulations are so broad that, for all 

pmctical purposes, State rules could be ignored. For example, State laws or regulations limiting the number of 

racing dates would not have to be complied with since the Commission regulations only have to be identical to those of the State licensee subsequent to the issuance of the license. State taxing provi- sions are to be ignored, although a subsequent provision in the bill 

allows the Commission to assess a tribe running a Class 111 operation the Commission's cost in investigating, licensing, and regulating the operation to the extent that the costs do not exceed the 

costs incurred by the State for regulating a similar gaming operation in its jurisdiction. 

More basically, section 12 of S. 1303 does not squarely deal with 

the question of whether a tribe in a State which has no pari- mutuel racing may open a horse track or whether a tribe in a state 

with pari-mutuel horse racing may open another type of pari- mutuel operation such as a dog track or jai-alai. It may be the intention of the drafters that the tribes may not engage in parimutuel operations other than those authorized by the State, since 

there would be no State regulations with which the Commission 

regulations would have to comport, at least to some extent, but this 

point should be made clear. Moreover, the thrust of section 12 is 

that the Commission will prepare a separate set of regulations for 

Class I11 gaming operations ir. each State, a prodigious task and 

one that would divert valuable time and attention from what 

should be the Commission's principal job of scrutinizing tribal 

Class I1 gaming. We have one additional concern about S. 1303's treatment of 

pari-mutuel wagering based on its definition of Class I gaming. In- cluded within the definition are "traditional forms of Indian 

gaming engaged in by individuals as part of or in connection with 

tribal ceremonies or celebrations." That would arguably allow pari- 6 - 

2 See Nevada Revised Statutes 5 463.170. 
tnu(uel wngering on horn row in corrneclDon with a tribal fogtival 

or fair if bolting on hem raca waa a "tradition" with the tribe in 

qucsUon. In short, thin definition of Clw I griming, which is also 

contilined in S. 655, would or ably allow pan-mutuel gaming to be 

trcntcd, at lcmt by some in % , ae Clw I, rather than Class 111 

gaming. 

In sunr, WQ think thnt S 1303 h eeriously defective in ita treat 

mont of pari-mutuel wagering. Wo strongly urge that any Indian 

gaming legislntion mainbin the etatua quo in thie area, clearly mvido that all form of pari-mutuel wagering in Indian country k conduclcd only in a~mndnnce with State lawn, including State 

liccminp quirements, and thnt Commission resources not be 

wustcd 111 an athmpt to duplicate those of the State." 

IAW ENPORCEMENT PROBLEMS IN 8. 1303 

From a law enforce~nent perspective, there are other aspects of 

S. 1303 that the Committee should consider. In general, the Commission contemplated by the bill lacks the necessary licensing nu. 

thorit which at least maximizes the chances that gaming can be 

kept ? n?e of' criminal infiltration. Consequently, the type of federal 

control asserted over high stakes tribal aming is generally much 

too weak. To have any chance to su dthe Commission must, as 

a minimum, be 'ven the authority to license tribal gaming oper- ations, not mere f' yapprove tribal l~censing ordinances which allow 

the trik themselves to do the actual licensing. Moreover, the 

Commission must have the authorit to approve all key employees of a gaming establishment and al t' management contractors. To 

carry out this authority, the Commission must be given adequate time to investigate. In this connection, S. 1303 sets out a time 

frnme that would likely prove unrealistic in many cases. It pre vides that the Commission must consider a proposed management 

contract within 120 days and any contract not acted upon in this 

time period shall be deemed ap roved. The lack of adequate authority to car? out these crucia licensin and investigative functions is the bill s greatest shortcoming in t C e law enforcement area. 

Our next biggest concern in this area is with section 18 of the bill. 

A. Unreasonable restrictions on access to information in the hands 

of the Commission 

Subsection 1qa) provides that "except as provided in subsection 

(b)," all information received by the Commission pursuant to the 

'Assuming. however. hat the Committee decides not to we such a major change with rerrrri .r... tn nnri-mutu?l uwerinn. there are other asrecta of sectlon ~~~ 

12 of ~ the bid thnl deserve clae 

e~srni-~~~~.~~~m~~l%1) pro\id*iihaTkher&a~tate hw or re$atioo ado ted by the 

Commission as applicable to Cla=a 111 gaming in the State invol,? mmid pedies for its 

8iolstion. those criminal penalties are to be "enforced" the State d the State "has the requisite criminal juridiction . . . pursuant to Public Law 83- '380 ,"or by "the United State pursuant 

to the Animilative Crimes Act (18 USC. 13)." Ihe reference to P.L 288 80 tco tm. As the 

Chmith Loon% there are Lana similar to PL 280 that 've variou other States juridiction 

orpr certain crimes in hdh+ combs. See 18 USC &giving Kansas jwkdkboa over at 

led nonmajor crimes conxpttpd-bx or qpbt lndians on reservalom that State; and 25 

USC 232 gir' New York j mr oiT- comrmt* b or agamst Lndiana in Indian 

country in &%ate. bbmx!me- b the Ashilalx%? dunes Act h amfue.ing. if the 

i?tent in to a&date State .- law pmvbions it should be dearly eted that whoever 

~~)lntesaruledLbeC~ which inearporntes a State law pe- to ing, or a 

n@Bt@ p-u)gsted t to such a State law, which pmFide for a dmty for 

a wlah them4 of a like offen= and djgt to a Ue puni=hment 
Act shall be preserved as "confidential pursuant to the provisions of paragraph (4) and (7) of section 552(b) of title 5," the financial 

information and law enforcement records exceptions to the Freedom of Information Act. (Initially, it is likely that only information 

such as that received from prospective management contractors 

and financial information concerning their gaming operations received from the tribes is intended to be so protected from public 

disclosure. There is no reason to afford other information received 

by the Commission-for example, the salaries of employees, or statistics concerning the number of minority group members employed-any greater protection than that afforded to such information in the hands of other federal agencies. Moreover, while perhaps not a matter of concern for criminal law enforcement, it appears unreasonably restrictive not to make information such as the 

types of gaming being operated by each tribe and an indication of 

the financial success or lack thereof available to the public.) 

Subsection 18(b) then provides that: "The Commission ma.y, when 

such information indicates a violation of Federal, State, or tribal 

criminal statutes or ordinances, provide such information to the 

appropriate law enforcement officials." (Emphasis added.) It is inappropriate that the Commission-a federal body-have discretion 

over whether to inform federal law enforcement officials of violations of federal law. The Commission should have an obligation to 

make such information available and subsection 18@) should be 

amended to reflect that duty. 

B. Unnecessary provisions with res2ect to the Attorney General 

Subsection 18(c) is equally troublesome. It provides in the first 

sentence that the Attorney General is authorized to investigate activities associated with gaming authorized by the Act including but 

not limited to crimes in violation of 18 U.S.C. 1153 (the Major 

Crimes Act), 18 U.S.C. 13 (the Assimilative Crimes Act), and 18 

U.S.C. 1163 (theft of tribal funds). The next sentence then provides: 

"The Attorney General is authorized to enforce such laws, or assist 

in the enforcement of such laws, upon evidence of violation as a 

matter of Federal law, or upon the referral of information by the 

Commission pursuant to subsection (b) of this section." The analysis of this subsection says only that it "reaffirms the existing power 

of the Attorney General to investigate and prosecute crimes on 

Indian reservation (sic) in connection with gaming activity." If that 

is all the subsection is intended to do it is unnecessary. In fact, 

however, the subsection may be intended to authorize the Department of Justice to investigate state and tribal law violations in connection with Indian gaming. While the Department would not be 

required to do so, such authority-will inevitably prompt requests 

that the Department do so. For the Department to investigate violations of state or tribal law is unacceptable both on federalism 

grounds and from the standpoint of allocation of resources. We 

strongly urge that subsection 18(c) be deleted. 

We note that section 17 in S. 555 and section 18 in S. 1303 are 

identical. Therefore, if S. 555 is chosen as the vehicle for Indian 

gaming legislation, we hope that these concerns will be addressed. 
ADMINISTRATIVE LAW PROBLEMS 

A. Appointment and removal of Commission members 

S. 1303 raises a number of Administrative Law issues. First, it 

establishes an "independent commission" within the Department 

of the Interior. As a part of the Interior Department, the Commission is subordinate to the Secretary of the Interior and cannot be 

independent of his or her authority. Yet section 5(b)(5) states that 

the four members appointed by the Secretary can only be removed 

for cause. The extent of Congress' power to place limitations on the I removal of subordinate executive branch officers is unclear, see 

United States v. Perkins, 116 U.S. 483 (18861, but in the context of 

this legislation such limitations should be avoided. The Secretary is 

responsible for the actions of the Commission's members, a majority of whom he appoints, and will be charged with defending them 

if they act in an illegal or controversial fashion. If S. 1303 were enacted as is, we would read the "for cause" provision broadly to give 

the Secretary maximum flexibility. Nevertheless, to give the Secretary the authority needed to supervise the Commission adequately, 

we strongly recommend that he or she be given the clear right to 

remove members at will. In this regard, we note that the provisions 

of S. 555 are somewhat better. It establishes the Commission as 

part of the Interior Department, rather than making it an "independent commission", and provides that a commissioner may be removed from office by the appointing authority "for neglect of duty, 

or malfeasance in office, or for other good cause shown." 

B. Commission authority to levy fines 

Section 15(a)(l) of S. 1303 permits the Chairman of the Commission to lew civil fines of UD to $25.000 against a tribal earning - OD- * 

erator or &anagement con&acto'r for a &lation of any provision of 

the Act or regulation ado~ted ~ursuanthereto. While such authority is clearly necessary, t6e pr6vision in section 15(a)(l) stating that 

"[flines collected pursuant to this section shall be utilized by the 

Commission to defray its operating expenses" raises due process 

concerns. In essence, fines imposed as civil penalties would be used 

to supplement the Commission's funding. Although this is consistent with the concept of a self-supporting Commission which we 

firmly believe should be a feature of any final Indian gaming legislation, the Due Process Clause requires that such fines be assessed 

by a neutral tribunal. See Ward v. Monroeville, 409 U.S. 57, 62 

(1972). While it is true that Commission members would not benefit 

personally from the money, as was the situation in the well-known 

old case of Tumey v. Ohio, 273 U.S. 510 (19271, the provision raises 

questions about how impartial the Chairman would be in levying 

fines when he knows that the proceeds will be applied directly to 

the operating expenses of the Commission. Although it is highly 

unlikely that anyone appointed as Chairman would ever impose an 

unjustified fine for purposes of raising revenue, the provision would inevitably be seized upon by a person or organization on 

whom the Commission imposed a fine as a means of challenging 

the levy. 

While we cannot say definitely whether such a challenge would 

succeed, the issue is similar to that in Marshall v. Jerrico, Inc., 446 
- - --- -- - 

31 

U.S. 238 (1980). That case involved the power of a Department of 

Labor regional administrator to assess a civil penalty of up to 

$1000 against employers who violated child labor laws. The penal- ties collected in each region were returned to the national office 

which allocated them for various parts of the program, including 

the regional offices. The statute was challenged on the grounds 

that regional administrators would assess extra fines in the hope 

that some of the money would be returned to their regions. The 

Court rejected the challenge but highlighted several factors that 

are relevant in the consideration of S. 1303. First, the Court noted 

that the regional administrator levying the fine did not have the 

role of a judge, as in Ward and Tumey, but was more akin to a 

prosecutor since the employer on whom a fine was levied was entitled to a de novo hearing before an administrative law judge where 

the administrator would have to prove his case. Unlike judges, 

prosecutors need not be entirely neutral and detached, and the 

first level of adjudication, rather than accusation, was before an 

unbiased judge. 

By contrast, under S. 1303 the Chairman and the Commission 

are not analagous to prosecutors in that they do not have to prove their case before an independent administrative law judge. Indeed, 

the Chairman's decision to lew a fine is reviewed not by an independent judge, but by the enti& Commission which, in &ory, is as 

interested in the matter as the Chairman. The next level of adjudi- cation is in the court of appeals.4 Marshall indicates that if a financially interested administrator acts as a judge, the "rigid requirements of Tumey and Ward, designed for officials performing 

judicial or quasi-judicial functions" would apply. Marshall, 446 U.S. 

at 248. 

Another consideration in Marshall was the fact that the penal- ties collected by the regional administrators constituted less than 

one percent of the agency's budget, an amount so trifling that 

there was no realistic possibility that the administrator's "judgment would be distorted by the prospect of institutional gain as a 

result of zealous enforcement efforts." Id. at 250. In contrast, it is 

possible that the civil fines may generate much more than one percent of the Commission's operating costs, thus allowing a tribe or 

management contractor anot.her argument on which to distinguish 

this situation from that in Marshall. 

In short, the civil penalty provisions in S. 1303 invite judicial 

challenge. We think that fines should be deposited in the general 

fund of the Treasury rather than used as a supplement to its other 

funds. We note also that S. 555 contains the same language as S. 

1303, namely that fines are assessed by the Chairman subject to 

initial adjudication before the Commission and "shall be utilized by 

4 Section 16 of S. 1303 provides that all important decisions made by the Commission shall be 

considered fmal agenc deciaions for pur es of appeal to the appropriate Federal district court 

pumuant to chapter ?'of title 5, ~niteEtates Code. Ap arently it is intended that a person aggrieved by a Commksion decision have no right to furt \ er administrative review such as an 

appeal to an administrative law judge or to the Secretary, and that the mope and standard of 

review be as set out in 5 U.S.C. 706. Section 15 of S. 555 contains a aimilar provision. Although the Secretary may prefer not to be involved in reviewing Commksion decisions concerning such 

things as approval of tribal gaming ordinances and management contracts, preclusion of Secretarial review as is done in section 16 of S. 1303 and section 15 of S. 555 might be invalidated by the courts as eroding the unitary executive authority required by the Constitution. 
the Commission to defray its operating expenses." (S. 555, sec. 

14(aXl)). 

C Appointments clause ksue with respect to off reservation gaming 

Section four of S. 1303 generally prohibits tribes from running a 

gaming operation anywhere but within the boundaries of their 

present reservations. It provides that gaming regulated by the Act 

shall be unlawful on lands acquired in trust for the tribe after the 

effective date of the Act. However, the section does not apply "if 

the Indian tribe requesting the acquisition of such lands in trust 

obtains the concurrence of the governor of the State and the governing bodies of the county or municipality in which such lands 

are located." This provision would give individuals not appointed in 

accordance 1;rith the Appointmenb Clause, Article 11, section 2, 

clause 2, the authority to waive a federal statute. In order to avoid 

t!le consti'cutional problems inherent in such a situation, section 

4(b) should be revised to begin "Subject to the approval of the Secretary," a change that would ensure that implementation of this 

part of the statute remains in the hands of a properly appointed executive branch officer. We note that this, in essence, is the ap proach adopted in the comparable provision in S. 555, section 

20(bXl). 

CONCLUSION 

In sum, there are a number of problems with S. 1303. As we suggested at the June 18, 1987 hearing, using S. 555 as a point of departure for Indian gaming legislation is preferable. Whatever bill is 

chosen, we do not oppose dividing gaming into Classes I, 11, and I11 

as long as it is made clear that tribally-controlled Class I gaming 

does not include things like pari-mutuel racing which is properly 

Class 111, and so long as Class I1 gaming is defined to include ony 

traditional bingo with the limited exceptions, as discussed, for concurrently played instant bingo, punch boards, and pull tabs. As for 

the powers of the Commission necessary to police Class I11 gaming, 

we hope to be able to discuss this matter further with the Committee staff. With respect to the basic criminal law scheme applicable 

to gaming in Indian country, the approach in S. 555 of assimilating 

all State laws pertaining to gambling but excluding from the definition of gambling Class I and Class I1 gaming "regulate by" the 

Act comes very close to the mark. For the sake of clarity, however, 

we would suggest that the phrase "regulated by" be deleted in 

favor of "conducted under a tribal ordinance approved in accordance with." 

I hope that the above will be of assistance to the Committee. 

Sincerely, JOHN R.BOLTON, 

Assistant Attorney General. 

CHANGES IN EXISTING LAW 

In compliance with subsection 12 of Rule XXVI of the Standing Rules of the Senate, the Committee notes that, except for section 

23 which codifies certain crimes in Indian country, there are no 

changes in existing law made by S. 555. 
ADDITIONAL VIEWS OF MR. McCAIN 

This is the fourth consecutive year that I have been involved in 

the debate regarding the issue of Federal standards and regula- tions for the conduct of gaming on Indian reservations and lands. 

It is with great reluctance that I am supporting S. 555 as reported by the Committee. 

I characterize my support as reluctant because I believe a different and more favorable result for Tribes could have been achieved. 

Unfortunately, Tribes never banded together and offered their own 

gaming proposal. They also never found a consensus for supporting any particular legislative solution. Some would say that Tribes 

were united in calling for no gaming legislation, but such a position ignores the whole debate, and, more importantly, it provides 

no support to those Members of Congress who have attempted to craft legislation which would be sensitive to tribal concerns. The 

issue has never been: should there be federal regulation of Indian 

gaming? Four years of continuous debate on Indian gaming should 

lead even the most casual observer of the legislative process to realize that legislation was inevitable. The focus of debate has always been on what standards and regulations should govern the conduct 

of gaming on Indian reservations and lands. 

As a participant in the debate, I offered S. 1303 the companion to 

H.R. 2507 as introduced by Congressman Udall. This bill would 

have allowed Tribes to continue gaming activities that are consisb 

ent with current law under Federal regulations and standards, 

without State intrusion, while ensuring that adequate safeguards and careful monitoring are maintained to prevent criminal activity 

as called for by States. Unfortunately, I received no more than a 

handful of letters supporting this measure; only more calls for "no 

legislation". I believe Tribes and tribal organizations share part of 

the burden for the direction that Indian gaming legislation has 

taken. 

As the debate unfolded, it became clear that the interests of the 

states and of the gaming industry extended far beyond their expressed concern about organized crime. Their true interest was pro- tection of their own games from a new source of economic competi- tion. Never mind the fact that tribes have used gaming revenues, 

and S. 1303 would have restricted their use, to suwort tribal governmental functions as well as addressing .the heath, educaGon, 

social and economic needs of their members. Never mind the fact 

that in 15 years of gaming activity on Indian reservations there 

has never been ope clearly proven case of organized criminal activity. In spite of these and other reasons, the State and gaming industry have always come to the table with the position that what is 

theirs is theirs and what the Tribe have is negotiable. 

The debate now focuses on S. 555, as amended. The Committee 

Report is clear as to the purpose of TribalIState compacts as called 

(331 
J for in Section ll(d). I understand Senator Evans' concerns regarding the potential overextension of the intended scope of the Tribal/ 

State compact approach. Toward this end, I believe it is important 

to again underscore the statement that amears on page 10 of the 

memorial, %b& have been and will continue to be permanent governmental bodies exercising those basic powers of government, as 

do Federal and State governments, to fulfill the needs of their 

members. Under our constitutional system of government, the 

right of Tribes to be self-governing and to share in our federal 

system must not be diminished. 

Finally, some Members of Congress, including myself, have 

stated that they would rather see Tribes involved in other revenue 

raising activities. We must ask ourselves, however, if we have pre 

vided Tribes with sufficient opportunities to generate non-gaming 

revenues and thereby allow Tribes to increase their economic selfsufficiency. The answer is a resounding no. We have not done 

enough. Once this gaming debate is over, I challenge those involved 

in this debate to devote their cnergies toward increasing long-term 

economic development opportunities for Indian Tribes. 

JOHN MCCAIN. I 
ADDITIONAL VIEWS OF MR. EVANS 

I voted in Committee to report thk bill to the full Senate, but I 

did so with great reluctance. I am troubled by the potential impli- cations S. 555 may have for the fundamental legal relationship between the United States and the several Indian tribes and on the 

established principles of Federal Indian Law which guide that relationship. S. 555, the Indian Gaming Regulatory Act, should not be 

construed as a departure from established principles of the legal relationship between tho tribes and the United States. Instead, the 

bill should be considered within the line of developed case law extending over a century and a half by the United States Supreme Court, including the basic principles set forth in California v. Cabazon ~~ ~ Band ~ of ., Miqsion Indians. - ~~...~ ~-. 

The bill's statement of purpose is generally a sound analysis of 

the law as it a~~lies to iurisdiction in Indian Countrv ~ursuanto 

Public Law 83-i80, spec&cally as established by the &;rt in Serninole Tribe v. Butterworth and Cabazon. In light of the Committee 

statement I am confident that the Federal courts will interpret S. 

555 in the proper jurisdictional context. Nevertheless, I believe it is 

necessary to underscore an important distinction between this bill 

and Public Law 83-280. Under Public 83-280, the courts distinguish between a State's criminal laws which are prohibitory in nature 

and its civil laws which are regulatory in nature. This distinction is 

used to determine the extent to which State laws apply through 

the assertion of State court jurisdiction on Indian lands in Public 

Law 280 states. Under S. 555, application of the prohibitory/regula- tory distinction is markedly different from the application of the 

distinction in the context of Public Law 83-280. Here, the courts 

will consider the distinction between a State's civil and criminal 

laws to determine whether a body of law is applicable, as a matter 

of federal law, to prohibit Class I1 games. S. 555 should not be interpreted in any way to subject Indian tribes or their members who 

engage in Class I1 games to the criminal jurisdiction of States in 

which cr.binal laws prohibit Class I1 games. 

S. 555 should not be interpreted as going beyond Public Law 83- 

280 in another respect. Public Law 83-280 transferred to the States 

jurisdiction over criminal and civil causes of action in Indian Country. In other words Public Law 280 only subjected the actions of individual Indians to State enforcement. Public Law 83-280 did not 

subject the governing processes of the tribes to State law and 

public policy constraints, which would be a fundamental derogation of tribal eelf-government. Likewise, S. 555 should be construed not 

to subject tribal governance to State court jurisdiction, 

Section 10 purports to delegate the Secretary's trust responsibil- ity to the Gaming Commission. I am troubled to think that this section of the Act and the accompanying report language may be read 

to suggest that the Secretary's charge to carry out the United 

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States' trust responsibility ends where that of the Commission 

begins. The entire Federal Government owes a trust obligation to 

the tribes and the Secretary is still charged with carrying out that 

overall responsibility, especially in areas only incidentally affected 

by gaming and S. 555 in Indian Country. The Act should not be 

construed to relieve the Secretary, or any other Federal officer, of 

trust obligations to the tribes. 

Finally, this bill should be construed as an exp1icit.preemption of 

the field of gaming in Indian Country. Thus, in accordance the fundamental legal prineiples upon which the Supreme Court relie& in 

deciding Cabazon, where the Federal Government has preempted a 

field affecting Indians or Indian tribes, there should be no balancing of State public policy and interests when they conflict with 

tribal rights except where expressly provided in this bill. Tt is my 

understanding that S. 555 acknowledges that inherent rights are 

expressly reserved to the tribes. This bill allows tribes to relinguish 

some of those rights by way of compacts with the States, in accordance with the Federal Government's trust obligation to the tribes. 

This bill should not be construed, however, to require tribes to unilaterally relinguish any other rights, powers, or authority. 

We should be candid about gambling. This issue is not one of 

crime control, morality, or economic fairnsss. Lotteries and other 

forms of gambling abound in many States, charities, and church organizations nationwide. It would be hypocritical indeed to impose 

on Indian people more stringent moral standards than those by 

which the rest of our citizenry chooses to live. Moreover, Indian 

tribes may have a conlpetitive economic advantage because, rightly 

or wrongly, many states have chosen not to allow the same types of 

gaming in which tribes are empowered to engage. Ironically, the 

strongest opponents of tribal authority over gaming on Indian 

lands are from States whose liberal gaming policies would allow 

them to compete on an equal basis with the tribes. 

I am no more fond of gambling than any other member of this 

Committee and no less aware of the potential dangers of organized 

criminal infiltration of Indian gaming. In 15 years of commercial 

gaming on Indian reservations, however, tribes have proven more 

capable of controlling this potential problem than have States in 

which high stakes gambling is played. Given this fact, the bill 

should not be construed, either inside or outside the field of 

gaming, as a derogation of the tribes' right to govern themselves 

and to attain economic self-sufficiency. DANIEL J. EVANS.