February 11,2011

VIA E-MAIL (reg.review(2l~nigc.gov) ONLYLael Echo-Hawk

General Counsel

National Indian Gaming Commission

1441 L Street N.W., Suite 9100

Washington, DC 20005

Re: Response to the NIGC’s November, 2010 Federal Register “Notice of Inquiry and

Request for Information; Notice of Consultation”

Dear Ms. Echo-Hawk:

Forman & Associates, Attorneys at Law, is legal counsel to the Cahuilla Band of Indians,

the Colusa Tribal Gaming Agency of the Cachil Dehe Band ofWintun Indians of the Colusa

Indian Community, the Morongo Band of Mission Indians, and the Sycuan Tribal Gaming

Commission of the Sycuan Band of the Kumeyaay Nation, all in the State of California. Our

clients have requested that we submit the following comments on their behalf.

INTRODUCTION

By Notice published in the Federal Register on November 18, 2010, the NIGC

announced its intention to conduct a comprehensive review of all regulations promulgated to

implement the Indian Gaming Regulatory Act (“IGRA”). Although the NIGC’s Notice

announced a “comprehensive review of all regulations,” the Notice actually specifies only a few

regulations of particular interest to the NIGC. Because the NIGC intends that its review of

existing regulations will be “comprehensive,” the comments set forth below will address those

regulations that are of particular concern to the undersigned, including regulations that have not

been specified in the NIGC’s notice.
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— management fee and Net Revenues — allowable uses.

2. Management Contract.

A The definition of “management contract” should not be expanded to

include any contract with a fee based on a percentage of gaming revenues Such an expansion

would introduce needless and burdensome delays and costs into the process ofprocuring gaming

equipment, and would serve no useful purpose

B. The undersigned agrees that there is a need to more clearly and narrowly

define the permissible elements of compensation under a management contract so as to protect

vulnerable tribes from overreaching by gaming developers.

2. Sec. 502.7, Electronic, computer or other technologic aid: As currently written,

the definition of “Electronic, computer or other technologic aid” has been the source of confusion

and controversy, not so much because of the existing definition’s language, but because of the

way that individual Commission members and/or staff, without legal justification and in waysthat have prevented judicial review, have imposed their own additional classification criteria so

as to significantly reduce the economic utility of electronically-aided Class II games to tribalgaming operations. In addition, and with particular reference to California, the unilateral

imposition of these limiting criteria have resulted in conflicts between tribes and statesconcerning tribal compliance with the terms of Class III gaming compacts.

Although tribal gaming agencies retain the authority to determine what is a permissible

electronic, computer or other technologic aid to a Class II game and what is a Class III gamingdevice, state gaming agencies often look to the NIGC as the ultimate authonty on this issue In

particular, the State of California has on several occasions cited a letter from a former NIGC

Chairman as authority for the contention that particular equipment that a tribal gaming agency

had classified as a permissible electronic, computer or other technologic aid to a Class II bingo

game actually constituted a Class III gaming device, operation of which allegedly violated a

tribe’s compact.

Therefore, the undersigned recommends that the N[GC add the following subsection (d)

to its existing definition as the four factors that, if satisfied, will conclusively determine that

equipment is a permissible electronic, computer or other technologic aid to a Class II bingogame:
(2) A minimum of two players must be present to initiate a game;(3) The math of the game is derived from a bingo ball drop;

(4) Ifthe electronic player interface is disconnected from the server,

the game cannot be played.

Adding those factors would ensure that electronic, computer or other technologic aids

would be properly classified in a manner that is consistent with IGRA and controlling case law,

and would enable tnbal gaming agencies to make their classification decisions without having to

worry about being second-guessed by the NIGC, or putting their tribal governments at risk ofbeing accused by states of violating the terms of compacts.

Because this issue currently is the subject of a number of tribal-state disputes iri

California and elsewhere, the undersigned recommends that the NIGC assign a high priority to

this issue.

Sec. 543.6(b), Charitable Gaming Operations.

25 U.S.C. Sec. 2710(b)(4) provides in relevant part that a tribe may license or regulate,

class II gaming activities owned by any person or entity other than the Indian

tribe and conducted on Indian lands, only ifthe tribal licensing requirements include the

requirements described in the subclauses of subparagraph (B)(i) and are at least asrestnctive as those established by State law governing similar gaming within the

jurisdiction of the State within which such Indian lands are located. No person or entity,

other than the Indian tribe, shall be eligible to receive a tribal license to own a class IIgaming activity conducted on Indian lands within the jurisdiction of the Indian tribe if

such person or entity would not be eligible to receive a State license to conduct the same

activity within the jurisdiction of the State.

(B) (i) The provisions of subparagraph (A) of this paragraph and the provisions of

subparagraphs (A) and (B) of paragraph (2) shall not bar the continued operation of an

individually owned class II gaming operation that was operating on September 1, 1986,

if—
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(II) income to the Indian tribe from such gaming is used only for the purposes

described in paragraph (2)(B) of this subsection,

(III) not less than 60 percent of the net revenues is income to the Indian tribe, and(IV) the owner of such gaming operation pays an appropriate assessment to the

National Indian Gaming Commission under section 1 8(a)(1) for regulation of such

gaming

A number of tnbes in California and elsewhere desire to support chantable or other non

profit organizations licensed under state law to conduct bingo games for charitable purposes to

operate bingo games on their Indian lands However, requinng such organizations to pay at least60% oftheir net revenues over to the tribe exercising jurisdiction over the lands on which the

games would be played not only would deprive the organizations of much of the economic

benefit ofthe games, but also may require the organizations to violate the state laws applicable to

such organizations (for example, California law prohibits a charity operating a bingo game from

paying more than 20% of its net revenues as overhead).

Section 543.6(b) of the NIGC’s regulations permits the exemption of charitable gaming

operations from the application of the NIGC’s Minimum Internal Control Standards if certain

conditions are satisfied. One of those conditions is that the annual gross gaming revenue cannotexceed $2 Million.

In a state where compacts have conferred upon the state jurisdiction to enforce the state’s

gambling laws against gambling activities conducted by persons or entities other than the tribeitself~, and assuming that a tribal government desires to authorize a charitable or other non-profitorganization to operate bingo games on tribal lands in strict accordance with state law (andsubject to state regulation), tribal sovereignty and self-determination, the, principles underpinning

IGRA, would be advanced by the NIGC’s adoption of a regulation specifically allowing tribalgovernments to permit the operation of bingo games by charitable or other non-profitorgamzations eligible and licensed under state law and regulated by state licensing authonties

Part 514, Late Payment System in Lieu ofNOV for late submission of fees.The undersigned supports the creation of a late payment system in lieu of issuing NOVs

for late submission of fees due to inadvertence, excusable neglect or circumstances beyond a

tribe’s control.
certificate of self-regulation has demonstrated the capacity to implement effective selfregulation. However, the existing regulation unnecessarily intrudes into areas of tribalgovernment outside the area of gaming regulation, and to that extent should be revised to limit

the NIGC’s inquiry into the tribe’s self-regulatory capacity, rather than into other areas of tribal

governance A Tribal Advisory Committee would be of assistance to the NIGC in revising this

regulation.

Part 523 Review and Approval ofExisting Ordinances or ResolutionsThis Part should be deleted as obsolete Given its irrelevance, it should not be given high

priority.

Part 531, Collateral Agreements.

Because collateral agreements often are integral to the relationship created by a

management agreement, the Commission should consider whether it has the authority not only torequire the submission of collateral agreements, but also to approve them. So doing would

greatly reduce the risks to both tribes and would-be management contractors, thus reducing tribal

vulnerability to overreaching by developers and financiers.

The undersigned regards this issue as one of fairly high (but not necessarily the highest)

priority, and recommends formation of a Tribal Advisory Committee to assist the Commission in

its analysis.

Part 533, Approval of Management Contracts.The NIGC’s proposed revisions to this Part may prove useful, but the undersigned does

not regard them as warranting high priority or the convening of a Tribal Advisory Committee.

Part 542, Class III MICS.The undersigned recommends retention of the NIGC’s existing Class III MICS as a

regulation. If so retained, the NIGC’s MICS not only would continue to set a clear industry-wide

standard, but also would set a clear standard for compact compliance, particularly in

circumstances under which states have agreed to accept the NIGC’s MICS and MICS complianceaudits in lieu of state-imposed MICS or compliance audits. Revisions to the NIGC’s MICS
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Part 543, Class II MICS.Tribal Gaming Agencies should be given the opportunity to provide comment on the

NIGC’s proposed revisions to its existing Class II MICS in advance ofpublic meetings. Input

from accounting practitioners can be provided through TGAs. A legitimately constituted TAC,

with representation proportionate to the number of Class II gaming operations or activities in

each state, would be of assistance to the NIGC in the ongoing administration of the regulation.

Part 556, Backgrounds and Licensing.The undersigned supports promulgation of a regulation formalizing the pilot NOR

program as a matter of moderate priority, through standard notice and comment rulemaking. The

undersigned also supports promulgation of a regulation, through standard notice and commentrulemaking, allowing tribes, at their option, to submit fingerprint cards for vendors, consultants.

and other non-employees having access to the gaming operation.

Part 573, Enforcement.The undersigned supports promulgation of a regulation that would permit the withdrawal

of a NOV after issuance, either at the discretion of the Chairman or by a vote of a majority of theCommissioners.

Sole Proprietary Interest Regulation.

Adoption of a regulation that clearly defines the standards for determining whether an

agreement violates IGRA’s requirement that a tribe have the sole proprietary interest in its

gaming operation, and establishing a process by which a definitive determination on thisquestion can be obtained quickly, would be very helpful in the negotiation of management,consulting, development and financing agreements. This is an issue of high priority that can beaccomplished through standard notice and comment rulemaking.
Very truly yours,

FORMA~i& ASSOCIATES