To: National Indian Gaming Commission

From: CAPT (Ret,) Sam Horton MD, Chairman Fort Sill Apache Gaming Commission

Steve York, Fort Sill Apache Gaming Commission

Rick Grellner Esquire, Fort Sill Apache Tribe

Date: February 11, 2011 

Re: FINAL COMMENTS - Framework for evaluating the NIGC Notice of Inquiry and Request for Information
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NIGC 

Regulation Title Comment

502.15 Management Contract

This is NOT a priority item.

(1) Should the definition be expanded to include any contract that pays a fee based on a 

percentage of gaming revenue?

a. NO. This would be an improper and unauthorized expansion of the NIGC’s 

approval powers. Further, fees paid, as a percentage of gaming revenue does

not by itself constitute a management contract. The NIGC should follow IGRA 

in all its considerations. Since the NIGC approves management agreements 

below, equal, to and above and above 30% of net revenue (up to 40% of 

investment depending on investment) for a period of between zero and seven 

years, respectively, without said amount violating the “sole proprietary 

interest” requirement in IGRA, the fact a contract is merely a percentage

contract does not necessarily violate the sole proprietary interest provisions 

of IGRA. However, if a contract has a term that is based on a specific period of 

time and is not an “at will” contract (authorization terminable upon demand), 

then the fact that the net revenue amounts exceed 30%, makes the 

agreement a violation of the sole proprietary interest in IGRA. This is true 

because IGRA, by implication, does not authorize contracts above such 

amounts. Therefore, any contract that is time based that exceeds 30% of net 

revenue, or 40% of net revenue in the case of a large investment, and five to 

seven years, respectively, even though it may not meet the definition of a 

management agreement, violates sole proprietary interest.

(2) Should the calculation include reimbursement of expenses and development and 

other nongaming management fees – “acceptable compensation”?

a. NO. This proposal makes no sense because the reimbursement of expenses 

would not qualify as compensation under GAAP and general business 

principles. The jurisdiction of the NIGC to approve agreements does not 

extend to agreements that are not collateral to a management contract. To 

do so would represent to me that the NIGC was not following the directions 

provided in IGRA.
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Regulation Title Comment

(3) Having raised this particular area for possible regulatory action, if the NIGC decides to 

proceed or otherwise set this aside, a clear statement as to the reasons for such 

decision is advisable.

(4) The NIGC needs to make a statement on how Gaming Tribes will benefit from this.

502.16 Net Revenues

This is NOT a priority item.

(1) Should the definition of “Net Revenues” be revised to be consistent with GAAP?

a. While it might be good practice to the extent consistent with §2703 (9) to 

conform calculations to GAAP, the statue defines Net Revenue and the NIGC 

does not have authority to change the definition.

b. The NIGC needs to explain to Tribes how this benefits Tribes as change is not 

disclosed besides reflecting GAAP.

(2) Should there be a separate definition for “allowable uses”?

a. There is no statutory authority to expand the definitions under IGRA. The 

NIGC should not be able to arbitrarily create a new definition.

b. The existing Bulletin (05-1) defining Net Revenue should be withdrawn

because it is overreaching and outside the authority of the NIGC.

(3) The NIGC owes the Tribes a clear reason(s)/explanation for why such a decision is 

advisable or needed to maintain continuity for the Tribes.

514 Fees -- Priority for late payment 

procedure system

This is NOT a priority item.

(1) Fiscal vs. Calendar year for fee calculation?

a. Tribes should be allowed to elect either method. Fiscal year calculations 

should accommodate Tribal business practices.

b. IGRA outlines the collection of fees quarterly and allows Tribes freedom to 

adopt system that fits their need.

(2) Implementation timeframes?

a. The current NIGC regulations clearly explains how to calculate fees, as fees 

are based on last year revenues, it is based off IGRA on a quarterly basis 

which covers both fiscal and calendar year.

(3) Should the definition of “Gross Gaming Revenues” be revised to be consistent with 

GAAP?

a. The statue defines Gross Revenue and the NIGC does not have authority to
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Regulation Title Comment

change the definition.

b. Prior to NIGC, all tribes were covered by A-133 that does not have GAAP 

requirements. IGRA allowed for Tribes to following normal accounting used 

by Tribes.

(4) Fingerprint fees?

a. This is a useful service provided to the Tribes. The NIGC should allow Tribes, if 

their NIGC approved Ordinance requires the Tribal Gaming Authority to do 

background checks via fingerprinting on vendor representatives and their 

primary management officials. A primary IGRA function is to keep corruption 

out of gaming.

b. IGRA requires a law enforcement agency to run background checks, the NIGC 

currently uses FBI to fulfill the law. If FBI has concerns about meeting their 

mission as members of working group they should consult with both the NIGC 

and the Tribes. The NIGC should take a lead in this effort.

c. There is no need to do this by regulation; rather a Bulletin that sets out the 

process, procedures, and fees is all that is needed. The Bulletin can be 

updated and revised as needed.

(5) Late payment system vs. NOV?

a. A late payment system is preferable over the current practice of issuing an 

NOV. The NOV should be retained as a final action if necessary. The late 

payment system should include a grace period before assessing late penalties 

etc. A revised regulation must clearly state with supporting guidance given via 

Bulletins.

b. This area is of great interest to Tribes. A late payment system that is 

comprehensive and clear with due process protection would be a great step 

forward in the relationship the NIGC has with Tribes.

c. IGRA allows Chairman the flexibility to do what is best for NIGC and Tribes. All 

the Tribes are asking for is fairness in its dealings with the NIGC.

d. The NIGC should allow and make possible Electronic Transfer for payment of 
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Regulation Title Comment

fees. The Mineral Management Service(MMS) in the DOI allows all royalties 

under its systems. The fees paid by Tribes at best are a royalty. This is a winwin situation for both the NIGC and the Tribes as the funds would be 

automatically transferred and be available vs. being lost in the mail or 

mishandled on either end and resulting in unnecessary fines or posturing.

518 Self Regulation of Class II

THIS IS A PRIORITY ITEM.

(1) How can this section be made to be less burdensome to comply with and should it be 

revised?

a. The NIGC should revise these regulations so as to make certain the steps to 

Self Regulation as clear as possible and not punitive in nature. The current 

§518 is not consistent with the Statute §2710(c)(4).

b. The factors should be those contained in §2710(c)(4) and be weighted to take 

into consideration years of operating with integrity, honesty, and the 

implementation of a comprehensive Tribal regulatory group. The independent 

audit conducted by the Tribes CPA should serve as the basis for the 

accounting/process review and determination of financial soundness. Selfregulation is a hallmark of sovereignty and ought to be supported and 

encouraged by this §518 not suppressed.

c. It is suggested that the NIGC adopt a negotiated rule making process for 

amending these provisions so as to give Tribes a full voice and to create a 

transparent process and record.

d. Having raised this particular area for possible regulatory action, if the NIGC 

decides to proceed or otherwise set this aside, a clear statement as to the 

reasons for such decision is advisable and needed to maintain continuity for 

Tribes.

e. IGRA needs to be followed as to the fees(25% of 1%) being collected from 

Self-Regulation. Current regulations at time do not met requirements of IGRA.

519 Service See §539 below
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NIGC 

Regulation Title Comment

523 Review and Approval of Existing 

Ordinances or Resolutions

This is NOT a priority item.

(1) Should this section be eliminated because it only applied to ordinances enacted prior 

to January 1993?

a. No, IGRA requires the Chairman of the NIGC to approve or disapprove 

ordinances. I do not think the date of 1993 makes an ordinance less effective. 

As the Tribes are the Primary Regulators and have to follow all laws and 

regulations, so must then the NIGC follow IGRA.

524 Appeals See §539 below

531 Collateral Agreements

This is NOT a priority item.

(1) Should the NIGC consider whether or not it has the power to approve collateral 

agreements to determine if the cumulative effect of such agreements violates the 

sole proprietary provisions of IGRA?

a. Yes. In order to determine if a set of agreements violate sole proprietary 

interest test as outlined in 502.15 (i.e. any time based set of agreements 

exceeding 30% and 40% of net revenue, and five to seven years, respectively) 

such agreement(s) need to be required to be submitted so that the NIGC can 

review. The NIGC currently has the authority to require submission and 

review of all documents that are collateral agreements to a Management 

Contract. It is unlikely that a regulatory definition will anticipate all of the 

possible circumstances and conditions under which future management 

contracts might be negotiated. It may be a better practice to eliminate or 

revise current bulletins dealing with topic taking into account the effect of the 

submissions already acted upon by the NIGC and the practice and body of law 

that has developed as a result.

(2) Sole Proprietary Interest has historically been a lightening rod for both Tribes and 

non-tribal interests when attempting to form business relationships. The Ad Hoc 

nature of the historical NIGC approach has not brought clarity, thus leaving the field 

open and subject to uncertainty. The most visible result to date is the decision and 

fallout from the Lac du Flambeau case.

a. The NIGC has taken on a burden since this case of issuing declination letters 

specific to each set of agreements presented. Unfortunately, these decisions
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Regulation Title Comment

are not available to the public, so guidance is again lacking and the void 

continues.

b. Having a definition would in some ways help the market place, but also runs 

the risk of shutting the door on many business deals that, given specific risks 

and other business factors, will likely not fit into the definition or exceptions.

A regulation by its nature must be definite, even with exceptions, and as such 

cannot take into account the limitless permutations business risk and reward 

can come up with. Therefore, the desire for a definition comes with a cost, 

one that Tribes and the market likely will not find acceptable. If a new 

definition was to be designed, the NIGC is not the correct venue in which to 

develop it.

c. Given the above the following suggestions may form the basis for a solution 

that will address both long and short term needs:

i. Make all declination, rejection, or approval letters available to the 

public (with appropriate redactions).

ii. Make all declination, rejection, or approval letters final Agency Action 

so that the parties have recourse and so that a body of jurisprudence 

may develop.

iii. Perhaps limiting the review and potential regulation to a definition of 

“Primary Beneficiary” would be helpful and give enough guidance for 

the development of a jurisprudential approach. It would also 

necessarily involve a statement on the limits of “revenue sharing” in 

light of the Rincon Case and the decision by DOI disapproving the 

Habematolel Pomo of Upper Lake compact.

iv. Begin a process of comprehensive review of the topic, conducted in 

conjunction with Tribes. The review would take into account Tribal 

experience, experts in the evaluation of risk/reward and economics, 

business experience, and the NIGC history of advisory opinions, 

among other factors. The goal should be to develop guidelines to be 
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Regulation Title Comment

published in a Bulletin. 

d. One more observation - the development of strict criteria for sole proprietary 

interests published, as a regulation would be a continuation of the 

paternalistic policies of the federal government toward Tribes. Regardless, if 

the NIGC wants to pursue this it must be done in conjunction with Tribes.

e. IGRA makes it clear on priority interest and sets 70-30 or 60-40 in two 

sections of IGRA. One deals with Management agreements and other with 

individual run operations. The Creek Court took up issue between Tribe and 

Communities in 2009 and the court held firm to IGRA.

533 Approval of Management Contracts

This is NOT a priority item.

(1) Should this section add standards for the trustee standard as a basis for disapproving 

management contracts?

a. The trustee standard within the federal government has proven to be at best 

a moving standard cloaked in the sole discretion of the delegated 

administrator. At worst, the trustee standard has been used as a shield for 

misuse, misappropriation, misanthropy, and out and out thievery toward 

Tribes. As such, any attempts to codify this standard are fraught with dangers 

and may be viewed through a less than welcome perspective.

b. If the desire to give notice to Tribes and the market that a trustee standard 

will henceforth be an additional factor in the approval of a management 

contract, it would be preferable to do so by issuing a Bulletin.

i. Set forth factors that make up the trustee standard for the NIGC 

Chairman.

ii. Give examples of how these factors may be applied

iii. This is necessary for Tribes and business to apply the standard to 

future transactions.

c. This would be a continuation of the paternalistic policies of the federal 

government toward Tribes

(2) Suggest that two(2) grounds for disapproval be added – (a) not submitted in 

accordance with the requirements of §533 and (b) submission does not contain 
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Regulation Title Comment

requirements of §531.

a. If the submission does not fully meet the requirements of §533 or §531 then 

it should be held and no work be done for a specified period of time, with 

notice to the submitting parties. If the time period expires with no action by 

the submitter’s then disapproval can be the result.

b. This should be clarified via a Bulletin.

c. IGRA sets forth your standard as Trustee, as it sets the Standard at 70-30 or 

60-40% for five or seven years, respectively or any subset thereof, if contracts 

meet definition and Tribes and parties agree, NIGC can offer suggestions but 

cannot refuse approval, if standards meet and are agreed to.

537 Background Investigations for Persons or 

Entities with a Financial Interest in, or 

having Management Responsibility for, a 

Management Contract

This is NOT a priority item.

(1) Should changes be made to clarify the submission requirements for Class II and Class 

III background investigations?

a. Yes. 

b. Any changes to §537 it should be to make definitions and disclosures as 

consistent with other agency’s rules as possible. For example, the SEC and 

other financial regulatory agencies have disclosure thresholds and 

requirements; NIGC should to the extent possible and consistent with IGRA 

mirror those other agency requirements.

539 Appeals

This is NOT a priority item.

(1) Should the NIGC consider more comprehensive and detailed procedural rules 

addressing (a) service of process and computation of time - §519; (b) intervention by 

3

rd parties; (c) motion practice and briefings; and (d) the nature of written submission 

in enforcement appeals.

a. Yes. It would be good practice to formally adopt procedural rules. The 

underlying principle should be the guarantee of due process. The NIGC should 

adopt process and procedures that require it to conduct regular periodic 

meetings where a record is made and final agency action is taken.

b. The NIGC should also adopt rules and procedures that require a written 

record be maintained of all meetings and available to the affected parties. 

This record would also be available for formal proceeding and litigation.
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Regulation Title Comment

542 Class III MICS

THIS IS A PRIORITY ITEM.

(1) Should this section be struck and replaced with recommended guidelines?

a. There is a diversity of opinion on this issue. Some Tribal-state compacts make 

reference to §542 and as such are part of regulatory framework approved in 

the compact. This is where the argument has most strongly been made that 

§542 must be updated.

b. There is a view that §542 can be updated by:

i. Stating clearly that the provisions are advisory only but those specific 

Tribes may choose to adopt the regulations along with NIGC oversight 

by written agreement. This would require continual updating and 

revision of §542 with a time frame of every 3 to 5 years.

ii. Another view is that §542 state the above with the addition that the 

provisions will be issued as guidelines in a Bulletin. The Bulletin will be 

regularly updated based on input from Tribes and other affected 

parties.(Tribes adopt standards consistent with IGRA.) A Bulletin vs 

the issuance of regulation would allow much more ease in changing 

advisory information in a world that can alter itself virtually overnight.

iii. Yet a third view that §542 and its future amendments should be 

issued pursuant to DOI regulations as part of the compact approval 

process wherein the states and the tribes are allowed to either opt in 

or opt out of the regulations as additions to the compact upon 

completion and submission of the negotiation process.

(2) What are the implications?

a. This process envisioned in (1)(b)(ii) above would more closely resemble the 

way that Nevada works with the industry to keep rules current and relevant.

b. Standards could be submitted to the Tribal Gaming Regulatory Authority that 

meet the needs of State Compacts and Industry Standards.
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Regulation Title Comment

543 Class II MICS

THIS IS A PRIORITY ITEM.

(1) Should these regulations be reviewed and revised and how?

a. Yes.

b. A first step in the process should be to withdraw the current §543 regulations 

and/or suspend any enforcement of the regulations. The current §543 is in 

need of total replacement. 

c. Tribes, as Primary Regulators, should develop Tribal Internal Controls which 

would cover all aspects of gaming to protect the Tribal assets. This could be 

done utilizing the NIGC MICS Standards as a guide. As Class II is an important 

asset to all tribes and we know what areas require we should submit 

suggestions that best reflect that duty. There are areas yet uncovered by the 

NIGC MICS some items such a Security. The current NIGC MICS and check lists 

are currently used more as a punitive device than advisory one. The NIGC 

product should be more proactive – a guide for the tribes to use.

(2) What is the appropriate starting point for this review (which document/draft should 

be used)?

a. The Tribal Gaming Working Group has identified the last published NIGC draft 

used by the last Tribal Advisory Committee as the starting point.

b. A broad approach to IGRA and a standard can be used to fulfill this 

requirement. The NIGC needs to look to primary regulators for guidance as

they fulfill their role daily.

547 Class II MTS for Gaming Equipment

THIS IS A PRIORITY ITEM.

(1) Should these regulations be revised and if so, what process should be used?

a. Yes

b. The current §547 is in need of revisions and clarifications. 

c. Tribes have formed a working group that is preparing a revised §547 to be 

adopted by Tribes and to be recommended to the NIGC.

d. Tribes are writing Class II standards that fulfill Class II in all aspects. The NIGC 

should look at this concept.
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Regulation Title Comment

556 Background Investigations for Licensing

This is NOT a priority item.

(1) Should the pilot program for submission and processing of fingerprints through the 

NIGC be formalized with regulations?

a. Yes and No

b. The pilot program has been a success in Tribal and NIGC cooperation. It is also 

a necessary and vital enforcement tool used by Tribal Gaming Regulators.

c. The NIGC continued facilitation of fingerprinting resources of the FBI is vital 

and should be made a part of the regulatory framework of the NIGC.

New Fingerprinting for non-Primary 

Management Officials or Key Employees

This is NOT a priority item.

(1) Should the fingerprinting process be expanded to include vendors, consultants, and 

other non-employees that have access to the gaming operations?

a. Yes, if requested by Tribes. This cannot be a mandate from the NIGC; Tribes 

must request such fingerprint requests on a case-by-case basis and be 

consistent with Tribal regulations or ordinances.

b. This will require close cooperation between the NIGC and Tribes in order to 

be certain the procedural requirements of the FBI are adhered to as well as 

the NIGC and Tribal regulations.

c. If the NIGC has approved a Tribal Gaming ordinance that requires background

checks on specified individuals and the Tribes have paid the NIGC fir the 

service then the NIGC should honor the request. If the FBI has an issue with 

this then the NIGC should aid in the clarification of the issue with the FBI.

559 Facility License Notifications, Renewals, 

and Submissions

This is NOT a priority item.

(1) Should the section be revised and if so, what process should be utilized?

a. Yes.

b. There is a view that the current §559 is outside the authority of the NIGC and 

has great potential to create another CRIT like situation if and when 

enforcement actions are taken.

c. It is the view of some that §559 should be withdrawn and/or enforcement 

suspended until such time as substantial revisions or replacement can be 

agreed upon with Tribes.

d. Any revisions or replacement should not required elected governments to 

take any actions, etc. A comprehensive review and rewrite is required so as to 
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address the limits of the NIGC’s authority to order Tribal governments to act.

e. It would be preferable, after review, that the regulation be substantially

revised and the issuance of a series of Bulletins to cover best practices would

result.

f. Having raised this particular area for possible regulatory action, if the NIGC 

decides to proceed or otherwise set this aside, a clear statement as to the 

reasons for such decision is advisable and needed to maintain continuity for 

Tribes.

571 Inspection and Access

This is NOT a priority item.

(1) Should this section be revised to clarify access to papers, books, and records, 

including at sites maintained or owned by 3rd parties?

a. Yes. The CRIT case has established some limits that must be recognized.

b. Other types of enforcement actions and requests for information under for 

example, §2715 require a clear set of criteria and procedural rules so as to 

protect Due Process.

c. IGRA allows for Chairman to subpoena any information he needs to make 

decision.

573 Enforcement

This is NOT a priority item.

(1) Should there be a process for withdrawing a NOV after issuance?

a. Yes

b. It is the view of some that the Chairman possesses the power under the 

various provisions of IGRA that authorize the issuance of an NOV. If the 

Chairman has the discretion to authorize, then it follows that the Chairman

may withdrawal using that same discretion. This would be analogous to the 

power to enter into a settlement agreement.

(2) Under what conditions and circumstances is it appropriate to withdraw an NOV?

a. This would be at the discretion of the Chairman.

b. Prior to a hearing before full Commission.

c. After full commission meets and does not reach same conclusion as 

Chairman.
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Regulation Title Comment

New Tribal Advisory Committee

This is NOT a priority item

(1) When should a Tribal Advisory Committee (TAC) be formed?

a. When requested by Tribes and when the Chair needs comprehensive advice 

on a given topic. 

(2) Should a regulation be adopted or a policy statement made?

a. Policy statement along with plans for complying or exempting from FACA.

(3) Is financial cost a relevant factor in determining whether or not to form a TAC?

a. Yes, but a minor factor

(4) The Executive Order – Improving Regulations and Regulatory Review – issued on 

January 18th and the Presidential Memoranda issued on the same topic on the same 

day should be used in the development of any policy relating to TAC formation and 

utilization. 

New Sole Proprietary Interest

This is NOT a priority item

a. See comments above.

b. IGRA has established the interest as 70-30 and 60-40% for a time based 

agreement that is between five and seven years respectively. No other 

Standard exists.

New Communication policy or regulation 

indentifying when and how the NIGC 

communicates with Tribes

This is NOT a priority item

(1) Should there be a regulation that sets a process for determining how and with whom 

the NIGC communicates at a Tribe?

a. After extensive consultation with Tribes, the NIGC should use policy 

statements and Bulletins

b. It is likely that there will not be a one fits all answer. Tribes and Tribal 

governance process are varied based on culture and practical considerations. 

The NIGC must be prepared to adapt to Tribes not vice versa. The NIGC is 

funded by the Tribes to help the Tribes.

(2) What types of communication, and what protocols should be included?

a. Decide after consultation with the Tribes

(3) If so, what process should be used?

a. Decide after consultation with the Tribes
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Regulation Title Comment

New Buy Indian Act 

This is NOT a priority item

(1) Should the NIGC adopt a “Buy Indian” regulation consistent with 25 U.S.C. 47?

a. Yes – simple and straightforward

b. The Act was passed in 1910, and sister agencies(i.e. BIA, IHS, etc) have 

overlooked it until 2010. I suggest the NIGC follow the three criteria(at least 

51% American Indian owned, American Indians involved in the daily 

management of the business and that American Indians are the recipients of 

the majority of the funds accrued earnings) that is the basis of the Act.