Gaming Systems Sunset Provision. Thank you for your consideration of this important
issue. Please do not hesitate to contact me if you have questions or would like additional
information.

Sincerely,
on D. AX: 4

Chief Executive Officer


NAVAS

Qe:

&, x
**auisuco TM

Gam,
aor We
2

.
asive®TM

Navajo Nation Gaming Enterprise Ph. 505.905.7100 Fax: 505.905.7240

.

May 31, 2017

National Indian Gaming Commission
Attn: Vannice Doulou

1849 C Street NW

Mail Stop #1621

Washington, DC 20240

Re: Comments on Elimination of the Sunset Provision in 25 C.F.R. § 547.5
Dear Ms. Doulou,

This constitutes the comments of Navajo Nation Gaming Enterprise (NNGE) on the
sunset provision, codified at 25 C.F.R. § 547.5 (b)(1), that would require tribal gaming
facilities to remove from operation and to replace their existing class II grandfathered
games by November 10, 2018, unless the games are brought into full compliance with all
provisions of the minimum technical standards before that time. The sunset provision is
unnecessary, because the existing grandfathering rule, and the Commission’s Minimum
Internal Control Standards for Class II games, have proven adequate to protect the integrity
of the games. Further, the sunset provision will impose tens of millions of dollars in costs
on tribal gaming facilities.

The NNGE operates Class II gaming machines at both our Flowing Water Navajo
Casino in New Mexico and our Twin Arrows Navajo Casino Resort in Arizona. We also offer
Class III gaming at these facilities, and because of this our operations maintain full
compliance with all Class III] Minimum Internal Control Standards (MICS). We want to
continue to operate our Class II games as we currently do and to continue to offer them
since they are appealing to our customers and we have had success with them.

1. There has been no history of problems with grandfathered games

When the Commission amended the minimum technical standards rule in 2012 to
extend the sunset period to November 2018, it acknowledged that there had been no
"major incidents" due to the operation of grandfathered games. 77 Federal Register 58473,
58475 (Sept. 21, 2012). As the Commission stated: "The Commission acknowledges that
grandfathered machines have, for the most part, continued to operate with relatively few
problems to the patron or the gaming operations." Id. This continues to be the case to the
present. We are not aware of any serious problems with any grandfathered games. The

Post Office Box 1700 Church Rock, NM 87311 Shipping Address: 249 E. NM 118 St. Hwy Church Rock, NM 87311


National Indian Gaming Association (NIGA)’s Class II Gaming Subcommittee with the
assistance of the research firm KlasRobinson conducted a survey across Indian Country to
determine the quantitative impact of the sunset provision and the level of risk, if any, posed
by grandfathered systems on the integrity and security of Class II gaming. NIGA’s survey
found no evidence to indicate or suggest that grandfathered Class II gaming systems are
any less secure or more susceptible to a breach than their fully compliant counterparts.

u. Existing Regulations Protect the Integrity of the Games

That grandfathered gaming systems have not presented problems is hardly
surprising, given that they are highly regulated. The Commission's minimum technical
standards impose certain non-waivable standards even on grandfathered games. 25 C.F.R.
§ 547.5 (a)(4). Grandfathered games must be certified to comply with the technical
standards for game initiation and play, 25 C.F.R. § 547.8 (b), software signature
verification, 25 C.F.R.§ 547.8 (f), and electronic number generators. 25 C.F.R. § 547.14.
Modifications to the software or hardware of grandfathered games must meet certain
standards, as determined by the TGRA. 25 C.F.R. § 547.5 (b) (5). In many instances,
software or hardware modifications have advanced the overall compliance of
grandfathered games with the minimum technical standards and TGRAs are also free to
impose additional standards.

Significantly, there is substantial redundancy or overlap between the minimum
technical standards and the Minimum Internal Control Standards ("MICS") applicable to
class II games so that the gaming public is protected by the MICS when engaging in gaming
using grandfathered gaming systems as grandfathered games must comply with all of the
MICS. The following chart illustrates this overlap.

Technical Standards MICS

requires account access components to be | requires controls and procedures to ensure
located within a secure and locked area. 25 | adequate control of physical access to
C.F.R. §§ 547.7(e). information technology environment and
infrastructure. 25 C.F.R. § 543.20(c).

requires last game recall. 25 C.F.R.§ 547.8 | provides for verification of draws where
(d). prizes are over $1,200 for a minimum of 24
hours. 25 C.F.R. § 543.8 (d).

each gaming system is required to Requires, inter alia, a drop and count

maintain data for the total value of all procedure that records individually the

financial instruments accepted and paid financial instrument storage components

out. 25 C.F.R. §§ 547.9(a)(1) & (2). and compares them against the currency
counter/system. 25 C.F.R. §§ 543.17(g) (8)
& (15)(i).

requires the recording of fault events, requires procedures to document



including malfunctions, and actions to be
taken during certain faults to ensure
integrity of the machines. 25 C.F.R. §§
547.10(a)(1) (i) - (vii).

malfunctions, and verification of the
integrity of the Class II gaming components
before restoring it to operation. 25 C.F.R. §
543.8(h)(1).

Sets technical standards for downloads to

requires that downloads be performed in

accordance with 25 C.F.R. § 547.12. 25
C.F.R. § 543,20(k).

gaming machines. 25 C.F.R. § 547.12.

requires downloaded software on a Class II
gaming system must be capable of being
verified by the using a software signature
verification method. 25 C.F.R. § 547.12(b).

requires verification by using a software
verification method. 25 C.F.R. § 543.20(1).

allows remote access provided that it is
preformed via a secure method. 25 C.F.R. §
543.20(h).

allows remote communications between
system components if authorized by TGRA
and the access is secure from
eavesdropping and unauthorized access.
25 C.F.R. § 547.15.

requires display of game rules and
disclaimers. 25 C.F.R. § 543.8 (g)(6).

requires display of game rules and
disclaimers. 25 C.F.R. § 547.16 (a) & (b).

The MICs also contain other provisions that require or enable the TGRAs to protect
the integrity of class II gaming. The MICS require controls to be established and
procedures implemented to safeguard the integrity of technologic aids to the play of bingo.
25 C.F.R. § 543.8 (g). In addition, the MICS provide minimum standards for surveillance, 25
C.F.R. § 543.21, and TGRAs and tribal gaming facilities employ surveillance as an important
tool in maintaining game security.

MM. The Sunset Provision Will Cost Tribes Tens of Millions of Dollars

The sunset provision would require tribal gaming facilities to remove from
operation and to replace their existing class II grandfathered games by November 10, 2018,
unless the games are brought into full compliance with all provisions of the minimum
technical standards before that time. During consultation with tribes in 2012 concerning
the technical standards, tribes submitted information showing that replacement of the
games would cost tribes tens of millions of dollars, as the Commission noted in the notice
announcing the final rule. 77 Federal Register 58475. We understand that this estimated
amount, if not more due to the passage of time, would still be the case.

Conclusion

The Commission should delete the sunset provision in 25 C.F.R. § 547.5 (b)(1)
because it is unnecessary and it will impose tens of millions of dollars in costs on tribal
gaming facilities. We also agree with the comments put forth by NIGA on the Class II