facility. In any case, at a minimum, the NIGC should continue the existing pilot program
offered through Memorandum of Agreements.

(b) Should NIGC provide fingerprinting for vendors? Should NIGC perform
background investigations? Yes, at the option of the Tribe, it would be helpful for NIGC
to provide fingerprinting for vendors either by processing individual fingerprints or
providing access to a database where such results have already been posted to avoid
duplication and undue cost for vendors (which would be passed on to tribes). We think
NIGC background investigations done at the option of the tribe should be careful to avoid
duplication in the states such as California where many of the same vendors are licensed
by each tribal gaming regulatory authority and found suitable by the State Gaming
Agency.

Part 559: Facility License

We do not think the facility license regulation needs revision. We think it works well and
strikes a careful balance of respecting tribal sovereignty while providing the NIGC with
an attestation that standards to ensure the public health and safety have been adopted by
the Tribe and implemented at the gaming facility. This federal regulatory oversight
furthers public confidence in tribal gaming facilities.

We appreciate this opportunity to provide written comment and look forward to
continued consultation on these issues.

”

ie Keyser A tdigoe —

Chairman

Cc: Ron Jaeger, UAIC Tribal Gaming Agency Chair
Tim McLaughlin, UAIC Tribal Gaming Agency Executive Director
Jane Zerbi, Esq.


MIWOK
MAIDU

® ®@ @® @® @®@

United Auburn Indian Community
of the Auburn Rancheria

David Keyser Kimberly DuBach Gene Whitehouse Brenda Conway Calvin Moman
Chairman Vice Chair Secretary Treasurer Council Member

February 8, 2011

Ms. Tracie Stevens, Chairwoman
National Indian Gaming Commission
1441 L St. N.W., Suite 9100
Washington, D.C. 20005

Dear Chairwoman Stevens:

The United Auburn Indian Community, which conducts Class III gaming at its Thunder
Valley Casino located in Placer County, California, welcomes the National Indian
Gaming Commission’s recent Notice of Inquiry seeking tribal input on the need (if any)
to review and revise existing federal regulations. We provide our written comments
below on those areas we believe are of greatest importance.

Revising Existing Regulations

We think that, while the process of reviewing existing federal regulations can be a
healthy one for the industry, it will be important to exercise caution and care to avoid
creating ambiguity or confusion regarding existing standards. The act of promulgating
revisions to existing federal regulations should be reserved for those areas where revision
is an actual necessity.

Part 542: Minimum Internal Control Standards for Class 11] Games

We support the NIGC’s continued provision of minimum internal control standards for
Class III gaming. These federal regulatory standards have an important and positive
impact on the industry, serving since 1999 as a uniform and solid baseline for tribes to
issue their own tribal internal control standards. The uniform federal minimum standard
facilitates regulatory compliance in such areas as external audit and shortens the learning
curve for internal audit, facility audit and regulators recruited from another state or tribal
jurisdiction. The industry’s reliance upon the federal standard has roots in the historical
evolution of Indian gaming as well as their efficiency and effectiveness.

Our Tribe has adopted the federal MICS standard, and our tribal gaming ordinance
approved by the NIGC confers regulatory oversight to the NIGC to monitor and enforce
the MICS. The federal Class III MICS currently are used as the standard in tribal-state
gaming compacts, regulations, tribal gaming ordinances, and Secretarial procedures. In
California, in addition to new compacts and compact amendments incorporating the
federal Class III MICS, a new state-wide regulation called CGCC-8 enacted pursuant to

Tribal Office 10720 Indian Hill Road Auburn, CA 95603 (530) 883-2390 FAX (530) 883-2380


the compact incorporates the federal MICS standards. It also provides an alternative
NIGC compliance section that enables California tribes to opt for NIGC monitoring of
MICS compliance, where a tribe has chosen to request such federal oversight in its
gaming ordinance. This alternative, which is entirely voluntarily and up to the sovereign
decision of each tribe, creates a safe harbor for tribes that may otherwise be subject to
intrusive state regulation and serves as a valuable asset generally for tribes interacting
with state regulators.

We think that the federal Class III MICS standard should remain in place, and any review
of these regulations at this stage should carefully take into account the important role
these standards have played and continue to play for many tribes. If your inquiry
regarding changing to a “guideline” means repeal of 25 CFR Part 542, then we believe
that this change would negatively impact our Tribe and many others that have relied upon
it as well as undermine the benefits of a federal industry-wide uniform standard.

We recognize the issues presented by the CRIT decision issued in 2006, where the court
found the NIGC lacked authority to adopt mandatory internal control standards for Class
I] gaming and to impose MICS regulation on tribes. The important distinction here is
that the NIGC is maintaining the valuable federal MICS standards for those tribes who
have chosen to voluntarily rely upon them by adopting and incorporating the MICS into a
regulation, tribal-state compact, tribal gaming ordinance, or Secretarial procedures, and
providing regulatory oversight where chosen and agreed to by tribes.

We think it is premature to speculate about the most effective and efficient manner to
update the federal MICS as necessary and believe this topic should be covered in the
NIGC’s upcoming tribal consultations this year.’ Any resulting process should recognize
and utilize the extensive work of the most recent Tribal Advisory Committee to review
and update the Class III MICS.

Part 533 agement Contracts — whether the definition should be expanded to
include any contract that pays a fee based upon percentage of gaming revenue.

The definition of management contract should not be expanded to include any contract,
such as a slot lease agreement, that pays a fee based upon percentage of gaming
revenue. Such an expansion would have a detrimental impact on the tribal gaming
industry. It is common industry practice to have some slot lease agreements based upon a
percentage of revenue, including well known wide area progressive games. Requiring a
lengthy federal approval process for these contracts would cripple the ability to quickly

1 Included among the options to discuss would be promulgating updated regulations. Another option for discussion may be
publishing recommended updates or best practices recommendations for the 2006 MICS specifying that they meet ot exceed the 2006.
MICS and necessarily account for changes in the industry and technology. With either option, it could be made clear that tribes can
cchose to adopt the updates into their tribal MICS, preserving some of the federal uniformity of regulation in the industry and avoiding
costly duplication of efforts. This is essentially the model used in our tribal gaming ordinance which incorporates the federal MICS as
published or amended by agreement of the NIGC and the Tribe. ‘This approach would also compliment the California state-wide
regulation CGCC-8, which provides for the standard of compliance to be 25 CFR Part 542 as in effect on October 19, 2006, of as it
may be amended, as well as an alternative material compliance standard where a tribe adopts MICS that meet or exceed 25 CFR Part
542, as in effect on October 19, 2006, or as it may be amended,


change vendors based upon performance and would be cost prohibitive for vendors
placing games on a trial basis. Nor does there appear to be any regulatory benefit. These
vendors have no management responsibility and at our facility are subject to state
suitability determinations and tribal licensing. Additionally, requiring federal review as a
“management contract” would provide the vendor with bargaining power to obtain for the
first time control over the operation and management of the gaming activity.

Moreover, the definition of “management contract” in the regulations should not be
revised to capture vendors who have no management responsibility, when IGRA provides
a management contract is one in which another entity has responsibility for the operation
and management of a gaming activity. (See 25 USC 2711(a)(1)).

Part 514; Gross Gaming Revenue which the NIGC Annual Fee is based.

(a) Whether fees should be based upon the gaming operation’s fiscal year. We believe it
is inconsequential if the fees are paid based on a calendar or fiscal cycle. However, it is

important for any revision to provide for: (i) the period end corresponding to the end of a
calendar quarter; and (ii) a remedy in the first year so that the amount is based on a
twelve month period payment and fee rates and increases/decreases are consistent for all
tribes uniformly.

(b) Whether NIGC should consider amending this part to define gross gaming revenue
consistent with the GAAP definition. While using the GAAP definition may make the

calculation easier, the definition should not be revised in any way that eliminates the
deduction for amortization of capital expenditures for structures, as provided for in IGRA
at Section 25 U.S.C. Section 2717(a)(6).

(c) Should fingerprint processing fees be included? If so, how? To the extent that
revenue generated from fingerprint fees collected from licensees would be included as

revenues for the purpose of calculating gross gaming revenue, the expense of fees that
tribes pay to the NIGC for fingerprints should be netted against revenue collected from
fingerprinting so that we are able to deduct our net expense.

(d) Should NIGC consider adding a type of “tick stem to 514 NOV wouk
only be issued in instances of gross negligence or wanton behavior? Yes, but equally
important is maintaining the current and past practice of the NIGC issuing a letter
providing notice of a problem and an opportunity to cure. This approach provides an
incentive for all parties to quickly a cure problem, and frequently achieves the regulatory
result in the most expeditious manner. A ticket system is punitive in nature, and while it
may serve a future role in NIGC regulation, it should not replace the collaborative
approach which has been successfully used for years.

Part 556: Bac ind Investigations for Licensin

(a) Should the pilot program be formalized into regulations? Yes, the pilot program has
enhanced greatly the efficiency and effectiveness of tribal licensing at our gaming