Comments on Elimination of the Sunset Provision in 25 C.F.R. § 547.5
May 24, 2017
Page 4

The Absentee Shawnee Tribe is a small tribe near central Oklahoma, bracketed by large
tribes with enormous revenues and resources. In comparison, the Tribe's two modest facilities
generate the overwhelming majority of their class I] gaming revenues from grandfathered
gaming systems, which have proven wildly popular in our market over the years. There is a
reasonable expectation of reduced tribal gaming revenues accompanying any removal of those
systems as players migrate away from less popular class II products to class III games for which
the Tribe is responsible to pay the State of Oklahoma an exclusivity fee. In addition, if the
anticipated migration from class II to class III takes place, all Oklahoma tribes will be vulnerable
to the State in upcoming compact negotiations.

Conclusion

Grandfathered game systems represent a substantial amount of tribal gaming revenues for
the Absentee Shawnee Tribe of Oklahoma. The grandfathered systems are highly regulated and
have an unmatched track record of stability. It would be patently unfair to the Tribe for the
NIGC to remove the Tribe's main source of tribal gaming revenue and its key leverage against
the State of Oklahoma as the State looks to resolve a nearly impossible budget crisis of its own
making on the backs of tribes. Therefore, the ASTGC strongly urges the NIGC to 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 such as ours. Thank you for your
consideration of this important issue.

Sincerely,

Xealie hayr—
Leslie Tanyan

Executive Director
Absentee Shawnee Tribe Gaming Commission

cc: Eastman Switch, ASTGC Deputy Commissioner
Roy Larney, ASTGC Commissioner
Governor Edwina Butler- Wolfe, Absentee Shawnee Tribe of Oklahoma


Absentee Shawnee Tribe of Oklahoma

Tribal Gaming Commission
15700 East Hwy. 9
Norman, Oklahoma 73026

May 24, 2017

By email (Vannice_Doulou@nigc.gov)
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 of 25 C.F.R. § 547.5 for
Grandfathered Class Il Gaming Systems

The Absentee Shawnee Tribal Gaming Commission ("ASTGC") is the primary regulator
of Indian gaming within the Indian lands of the Absentee Shawnee Tribe of Oklahoma. As the
regulatory body for one of the very first tribal gaming operations in Oklahoma, the ASTGC has
been on the front lines of regulating gaming systems in Indian Country. The ASTGC
respectfully submits the following comments on the Class II gaming systems’ sunset provision,
codified at 25 C.F.R. § 547.5 (b)(1), that would require tribal gaming facilities to remove from
operation and replace their existing class I] grandfathered gaming systems by November 10,
2018, unless the systems are brought into full compliance with all provisions of the minimum
technical standards before that time. In short, the sunset provision is unnecessary, because the
existing grandfathering rule, and the Commission's Minimum Internal Control Standards for
Class Il games, have proven adequate to protect the integrity of the gaming systems.
Furthermore, retention and enforcement of the sunset provision will impose tens of millions of
dollars in costs on tribal gaming facilities and tribal gaming regulatory bodies, including the
ASTGC, impeding the primary goal of the Indian Gaming Regulatory Act to build strong tribal
governments through the generation of tribal gaming revenues.

I. 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. The ASTGC has not encountered any
serious regulatory problems associated with any of the grandfathered gaming systems or
corresponding games, nor are we aware that any of our fellow tribal gaming regulators have
experienced any breaches or compromises of integrity of such systems. We fully endorse the


Comments on Elimination of the Sunset Provision in 25 C.F.R. § 547.5
May 24, 2017
Page 2

comments of the Oklahoma Tribal Gaming Regulators! Association and the similar comments of
others echoing our experience with an absence of any serious compliance issues for these gaming
systems over the last decade.

Il. Existing Regulations Protect the Integrity of the Games

There is good reason that grandfathered gaming systems have not presented problems,
given that they are highly regulated. As the NIGC has recognized during the recent face-to-face
consultations, the existing minimum technical standards impose certain non-waivable standards
even on grandfathered game systems. 25 C.F.R. § 547.5 (a)(4). Grandfathered game systems
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
game systems must meet certain standards, as determined by the Tribal Gaming Regulatory
Authorities ("TGRA"). 25 C.F.R. § 547.5 (b) (5). In many instances, software or hardware
modifications have advanced the overall compliance of grandfathered game systems with
additional minimum technical standards TGRA like ourselves are also free to impose.

It is worth noting the substantial redundancy/overlap between the minimum technical
standards and the Minimum Internal Control Standards ("MICS") applicable to class II games,
that provide protection to the gaming public when engaging in gaming using grandfathered
gaming systems, since those systems must comply with all of the MICS. The following chart
illustrates this overlap.

Technical Standards MICS

requires account access components to be
located within a secure and locked area. 25
CER. §§ 547.7(6).

requires controls and procedures to ensure
adequate control of physical access to
information technology environment and
infrastructure. 25 C.F.R. § 543.20(c).

requires last game recall. 25 C.F.R. § 547.8
(d).

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

each gaming system is required to maintain
data for the total value of all financial
instruments accepted and paid out. 25 C.F.R.
§§ 547.9(a)(1) & (2).

Requires, inter alia, a drop and count

procedure that records individually the
financial instrument storage components and
compares them against the currency

counter/system. 25 C.F.R. §§ 543.17(g) (8) &
(15)(i).

requires the recording of fault events,
including malfunctions, and actions to be
taken during certain faults to ensure integrity

requires procedures to document
malfunctions, and verification of the integrity
of the Class II gaming components before



Comments on Elimination of the Sunset Provision in 25 C.F.R. § 547.5
May 24, 2017
Page 3

of the machines. 25 C.F.R. §§ 547.10(a)(1)(i) | restoring it to operation. 25 C.F.R. §
- (vii). 543.8(h)(1).

sets technical standards for downloads to | requires that downloads be performed in
gaming machines. 25 C.F.R. § 547.12. accordance with 25 C.F.R. § 547.12. 25
C.E.R. § 543.20(k).

requires downloaded software on a Class II | requires verification by using a software
gaming system must be capable of being | verification method. 25 C.F.R. § 543.20(1).
verified by the using a software signature
verification method. 25 C.F.R. § 547.12(b).

allows remote communications between | allows remote access provided that it is
system components if authorized by TGRA | preformed via a secure method. 25 C.F.R. §
and the access is secure from eavesdropping | 543.20(h).

and unauthorized access. 25 C.F.R. § 547.15.

requires display of game rules and| requires display of game rules and
disclaimers. 25 C.F.R. § 547.16 (a) & (b). disclaimers. 25 C.F.R. § 543.8 (g)(6).

The MICS also contain other provisions that require or enable the TGRA 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 TGRA and tribal gaming facilities employ surveillance as an important tool in
maintaining game security. Thus, the necessary, and now proven, regulatory standards for
grandfathered gaming systems are more than adequate to protect the integrity of gaming
involving such systems.

Il. The Sunset Provision Will Cost the Absentee Shawnee Tribe of Oklahoma and
other Tribes Tens of Millions of Dollars in Unnecessary Regulatory Activities and
Lost Revenues

The sunset provision would require tribal gaming facilities to remove from operation and
replace their existing class II grandfathered game systems 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 systems would cost tribes tens of
millions of dollars, as the Commission noted in the notice announcing the final rule. 77 Federal
Register 58475 (noting that one commenter asserted that replacing grandfather systems could
cost Oklahoma tribes alone $82 million, while other estimates for replacing grandfathered
systems ranged from $46 million to $65.5 million). This is still the case. If anything, the cost of
replacing grandfathered games with fully compliant game systems has increased.