In closing, we would like t6 reiterate our appreciation for this opportunity to provide the above
comments on the discussion draft of the Class II Technical Standards. We look forward to
working with the NIGC as it moves through the rulemaking process.

ce S. Bozsum
Chairman
The Mohegan Tribe


April 25; 2012

Via Electronic Mail: reg.review@nige.gov

Ms. Tracie L. Stevens, Chairwoman
National Indian Gaming Commission
1441 L St. NW, Suite 9100
Washington, DC 20005

Re: Preliminary Discussion Draft of Class II Technical Standards

Dear Chaitwoman Stevens:

On behalf of the Mohegan Tribe, we offer the following comments on the National Indian
Gaming Commission’s (NIGC) discussion draft of 25 C.F.R. Part 547, which set forth the
Technical Standards for Class II gaming. We appreciate the opportunity to submit written
comments on the preliminary discussion draft of revisions to the Class II Technical Standards
and ask that you give favorable consideration to the comments provided below.

As an initial matter, we would like to express our support for some of the changes being
proposed in the discussion draft. We are pleased that the NIGC has removed references to
“entertaining displays” in relation to Class II player interface display requirements. The existing
Technical Standards place regulatory significance on the “entertaining display” on Class II
player interfaces, despite the fact that entertaining displays have no legal significance whatsoever
to the outcome of a bingo game. In doing so, the existing regulation only confuses the reality of
the game and increases the potential for patron disputes.

We are also pleased that the discussion draft now recognizes the right of tribal governments to
own or operate test laboratories. The underlying issue here has never been the ownership of the
test laboratory, but rather the independence and segregation of the laboratory from the tribe’s’

* gaming operation. We appreciate that the NIGC has removed the categorical prohibition against

owning or operating a test laboratory and replaced such prohibition with more flexible language
that requires testing laboratories to be independent from the entity for whom it is providing the
testing functions.

And finally, we appreciate the NIGC’s proposed removal of the provisions. requiring
Underwriter’s Laboratory testing of player interfaces. The establishment and enforcement of

THE MOHEGAN TRIBE

13 Crow Hill Road ¢ Uncasville, CT 06382 ¢ Telephone (860) 862-6100


electrical product safety standards is an important function that we believe falls more properly
within the authority of tribal governments. Moreover, we note that such standards are already
subject to the jurisdiction of other federal agencies.

While we recognize and appreciate the favorable changes identified above, there are several
outstanding issues that we believe warrant additional consideration by the NIGC, the most
important of which concerns the grandfather provisions in the discussion draft.

1. 25 C.F.R. § 547.5: Grandfather Provisions

Despite the strong objections raised by the Tribal Advisory Committee, the Tribal Gaming
Working Group, manufacturers, and tribal governments, the NIGC has decided to retain the
substantive requirements of the grandfather provisions. The discussion draft still requirés all
grandfathered Class II gaming systems to be retired and removed from operation by November
10, 2013. In addition, the grandfather provisions apply only to those gaming systems that were
manufactured or placed in a tribal facility on or before November 10, 2008. It seems unfair and
inappropriate for a federal agency to promulgate a rule that has retroactive application to
products already in the marketplace without a compelling need such as a life-threatening defect
in the product. We can think of no administrative agency, including those with specific statutory
authority to promulgate product standards that would require a general recall of products in the
marketplace without a showing of a defect or flaw that poses an imminent threat to human life.

In fact, the Supreme Court has ruled that “federal regulations do not, indeed cannot, apply
retroactively unless Congress has authorized that step explicitly.” Bowen v. Georgetown
University Hospital, 488 U.S. 204 (1988). Nothing in the IGRA indicates that Congress intended
for the NIGC to promulgate retroactive regulations with respect to product safety standards.
Moreover, we note that grandfathered Class II gaming systems have been operating without
safety or integrity issues for many years.

We are concerned that the NIGC may not yet understand the full scope of harm that is threatened
by its grandfather provisions, which applies to even those systems that have been approved by
federal courts. Many millions of dollars have been spent in the development of Class II gaming
systems and in litigation to vindicate the lawfulness of such systems. Tribes have invested
hundreds of millions of dollars in their construction of gaming systems based solely on the
lawfulness of these products and the availability in the marketplace. If left unchanged, the five-
year sunset clause would effectively invalidate federal court decisions that have sanctioned the
use of certain gaming systems and create a substantial hardship on tribal gaming operations and
interdependent industries. The forced removal of certain gaming products would create
competitive imbalances by seriously disadvantaging those tribes that have invested in the
development of gaming facilities based on the legal permissibility of such products.

We note that the protection of grandfathered systems is necessary for not only economic reasons,
but also for purposes of dealing with states in compact negotiations. Tribes are required to
negotiate gaming compacts in good faith under IGRA; protection of these systems under the


regulations or by a federal court decision can provide tribes with additional leverage in ensuring
that states meet this duty of good faith when negotiating compact provisions.

For the foregoing reasons, we ask the NIGC to reconsider the five-year sunset clause and add
language that will authorize the continued use of any Class II system component previously
certified or validated through judicial proceeding. We also ask that the regulation account for
future certifications, of systems that have already been certified or approved by a federal court
decision.

Additionally, we ask the NIGC to resolve a major oversight in the discussion draft which
operates to invalidate pre-existing certifications issued by the TGRA. As drafted, the changes in
the discussion draft pose additional requirements that will affect the certified status of currently
compliant Class II gaming systems. More specifically, the discussion draft imposes new rules
on previously certified products that make it virtually impossible for any certification to remain
valid. There is an element of impossibility in maintaining certified status since certification is
based on standards that were unavailable at the time of certification.

2. 25 C.E.R. § 547.2: Definition of Proprietary Class II System Component

It is unclear why a definition of a Proprietary Class II System Component has been added to the
regulation given that the term is not used anywhere ‘in this Part. Since the term adds no value to
the regulation and only creates confusion as to its applicability, we ask that it be removed or, in
the alternative, clarified so that tribes can understand how the term-will be used.

3. 25 CFR. § 547.2: Definition of Reflexive Software

The definition of “reflexive software” should be revised to clearly identify the harm associated
with the term — that is, the denial of a prize to which the player is otherwise entitled based on the
random outcome of the game. Such a change would also make the definition more consistent
with the industry’s understanding of reflexive software in the Class II gaming context.

4. 25 C.F.R.§ 547,3(a): Regulatory Authority of TGRAs

This section provides that TGRAs “also regulate Class II gaming,” which is inconsistent with the
regulatory framework established under IGRA that vests tribes with exclusive and primary
regulatory authority over their gaming activities. We ask that the NIGC amend this provision to
clarify that tribes are the primary regulator of their gaming operations.

5. 25 C.E.R.§ 547.7(d): Player Interface

In light of existing gaming technology that utilizes hand-held devices rather than machines, we
ask the NIGC to consider revising this provision to read that player interfaces must bear rather
than display the serial number and other information. ,