Senate Indian Affairs Committee Oversight Hearing
NIGC Chairwoman Tracie Stevens
July 28, 2011

United States Code, Title 31; advanced training on MICS; training for tribal gaming agents;
and advanced training relating to audits and surveillance. The respondents identified a strong
interest in the following currently offered courses: regulatory gaming technology, gaming
forensics, IT MICS, internal audits and slot machine compliance. How the NIGC provides
training and technical assistance will be an on-going and ever evolving process which will be
tailored to meet the needs of tribal regulators and the industry to ensure the integrity of Indian
gaming.

Regulatory Review

As | indicated in my testimony last year, the Commission is in the process of
reviewing its current regulations, examining their effectiveness, and seeking input from Tribes
and the public in an effort to identify areas of improvement and any needed changes. Our
activities on this priority focus on many of the same goals identified in the President’s recent
Executive Order concerning Regulation and Independent Regulatory Agencies, Executive
Order,13579. During our review we are asking the public for input on which of our
regulations may be outmoded or insufficient and we are considering whether to modify,
streamline, expand, or repeal such regulations based on this review. On November 18, 2010,
the Commission issued a Notice of Inquiry (NOI) advising the public that the Commission
was conducting a comprehensive review of its regulations and requesting public comment on
the process for conducting the regulatory review. The NOI requested public comment on three
basic questions: which of its regulations were most in need of revision, in what order the
Commission should review its regulations, and the process NIGC should utilize to make
revisions. In addition to seeking written comment, the Commission held eight regional tribal
consultations on the NOI.

On April 4, 2011, NIGC published a Regulatory Review Schedule setting out a
consultation schedule and process for our regulatory review. The Commission decided to
proceed with its regulatory review by organizing the regulations into five groups and
proceeding with a process in which the Commission would strive to circulate preliminary
drafts for comment before proceeding with the rulemaking process. Our goal is to maximize
input from the public.

As part of our regulatory review, and consistent with Executive Order 13175, we have
held 11 consultations throughout the country, including a consultation that is being held today
at the Department of the Interior. Transcripts of these consultations are posted on our website
as they become available. Further, all comments received in response to the NOI and to
preliminary drafts circulated by the Commission are posted on our website to facilitate input
from the public. As we move forward with our regulatory review, we are continuously
making improvements to this important process to ensure that we make well informed, fully
considered decisions.

Agency Operations

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Senate Indian Affairs Committee Oversight Hearing
NIGC Chairwoman Tracie Stevens
July 28, 2011

government-to-government consultation that the NIGC will be able to make well informed,
fully considered decisions concerning regulations and policies.

Over the past year, in addition to working closely with Tribes, we have also worked
with States and Federal agencies to oversee and protect Indian gaming. We work regularly
with the Department of the Interior to ensure that gaming is taking place on Indian lands and
if it is not, we refer those cases to federal and state agencies for appropriate enforcement. We
work closely with the Federal Bureau of Investigation, the Department of Justice and United
States Attorney’s when we receive information indicating a violation of criminal law. In
addition to these interactions, we are also working to strengthen coordination through the
Indian Gaming Working Group. This relationship building strengthens the collective ability
of Tribes, States and the Federal Government to protect this successful economic
development tool that has made a difference in so many lives of Indian people.

Technical Assistance and Training

As I testified last year, the Commission views training and technical assistance as an
essential component of statutory responsibilities as well as our mission and our commitment
to collaboration with Tribes. Successful regulation depends upon a properly trained and
informed workforce. Well targeted training and technical assistance programs provide a
foundation that maintains the integrity and success of Indian gaming. A good, well-targeted,
technical assistance and training program can preempt the need for additional regulations or
for enforcement actions, can reduce compliance issues, and can enhance operational
performance and integrity. In other words, proper training can help to prevent a potential
problem before it can arise. Since June of 2010, we have provided 831 instructional hours of
training to over 2,800 tribal leaders, tribal regulators and casino operations personnel.

Over the past year, we have reviewed our training catalog and sought input from
Tribes on how to best align NIGC training to maintain the integrity of the industry. NIGC
staff has played a key role in this effort. Earlier this year, we named Nimish Purohit as the
Acting Director of Training. Mr. Purohit brings a wealth of experience in the gaming industry
to this position, having previously worked for the New Jersey Division of Gaming
Enforcement, the Pennsylvania Gaming Control Board and an independent testing laboratory.
His in-depth experience in the areas of Class II technical standards and game mathematics has
proven invaluable to the Commission. Mr. Purohit is in the process of updating our training
catalog, examining means to better utilize existing technology and evaluating how to most
efficiently provide training.

In addition to our on-going internal review, the Commission distributed a survey to
approximately 596 tribal leaders, commissioners and casino operations personnel. The
Commission received 255 survey responses representing 123 Tribes (a 50 percent overall rate
of response). Overall, respondents identified common barriers to training, such as the lack of
funding, the proximity to training events and the need for better communication of training
opportunities. Respondents also requested more course offerings relating to compliance with

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Senate Indian Affairs Committee Oversight Hearing
NIGC Chairwoman Tracie Stevens
July 28, 2011

A top priority of the Commission is to ensure that we are maximizing our resources
through efficient operations. Last year I stated that because NIGC is funded entirely by tribal
fees, we must strive to use these resources wisely and effectively as we carry out our
responsibilities under the Act. The goal is to position the NIGC in the 21st century as a
smarter, more transparent and better-equipped agency that continues to be responsive and
adaptive to the needs of the tribal gaming industry.

Over the course of the past twelve months, we have been performing a top-down
review of the internal workings of the Commission. We have brought in subject matter
experts and are working with the Office of Personnel Management (OPM) to evaluate our
operations and identify areas for improvement. Over the course of the past few months, OPM
has conducted a number of employee focus groups and surveys to analyze workflows. Using
this and other data, in the coming weeks, OPM will provide recommendations for the
Commission’s consideration.

In addition to maximizing our resources, the Commission is committed to providing
greater transparencies in our general operations. As a Commission, we have resumed public
meetings. Our first public meeting was held on April 7, 2011 in Phoenix, Arizona and most
recently, we held another public meeting on July 18th in Norman, Oklahoma. During these
public meetings, senior Commission staff provides updates on business before the NIGC.
Additionally, the Commission may take up votes or other business that may be pending.
These meetings provide an opportunity for tribes and the general public to learn about
ongoing Commission activities.

The Commission is committed to streamlining its operations in a manner that focuses
resources and maximizes cooperation and coordination with Tribes, States and Federal
agencies to ensure and maintain the integrity of Indian gaming.

Conclusion
This concludes my testimony. We hope that this summary of the activities of this
Commission over the past year provides the Committee with information regarding NIGC’s
enforcement and regulatory role in Indian gaming.
Thank you again, Chairman Akaka, Vice-Chairman Barrasso and Members of the

Committee for your time and attention today. I am happy to answer any questions that you
may have for me.

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Testimony of Chairwoman Tracie Stevens
National Indian Gaming Commission
Senate Indian Affairs Oversight Hearing
July 28, 2011

Thank you Chairman Akaka, Vice-Chairman Barrasso, and Members of the
Committee for inviting me to testify today. My name is Tracie Stevens and I am a member of
the Tulalip Tribes of Washington State. It is an honor to appear before you to testify in my
capacity as Chairwoman of the National Indian Gaming Commission (NIGC or Commission).

When I appeared before the Committee as Chair of the Commission in July 2010, we
were a new Commission. I was confirmed by the Senate and sworn into office by Secretary of
the Interior, Ken Salazar in June 2010. Vice-Chairwoman Steffani Cochran and Associate
Commissioner Dan Little were appointed by Secretary Salazar earlier in the year. Shortly
after that hearing, I retained Paxton Myers a member of the Eastern Band of Cherokee Indians
as the Chief of Staff, Dawn Houle, a member of the Chippewa Cree from the Rocky Boy
Reservation as the Deputy Chief of Staff, and Lael Echo-Hawk a member of the Pawnee
Nation as a Counselor to the Chair. As a Commission, we are working with staff in our
continuing assessment and evaluation of the Commission’s needs, opportunities for
improvement and implementation of the Commission’s priorities.

During the hearing last year, I discussed four important priorities of the Commission:
consultation and relationship building; technical assistance and training; a review of the
Commission’s regulations; and a review of Agency operations. Consultation and relationship
building are necessary to promote effective communications with Tribes, States and Federal
Agencies and to foster comprehensive and efficient regulation of the industry. Effective
technical assistance and training enhances operational performance and integrity and reduces
compliance issues. Regulatory review ensures a clear and comprehensive regulatory
framework that is proactive rather than reactive to the regulatory challenges of the industry.
Finally, we are focused on performing our internal operations in the most effective and
efficient manner so that we are able to maximize our resources. The Commission firmly
believes that accomplishment of these four priorities directly results in a better regulated
industry that fulfills the purposes of Indian Gaming Regulatory Act (IGRA or Act), 25 U.S.C.
§§ 2701 et seq.

Each of these priorities serves as a foundation for enforcing IGRA. We must work
with Tribes, States and Federal agencies to ensure the integrity of the industry. Our basic
principle for enforcing the Act is ACE: assistance, compliance and enforcement, in that order.
We are working with Tribes and States to assist regulators and ensure effective coordination
in the regulation of Indian gaming. We are working with Tribes to ensure compliance with
IGRA. However, if assistance and compliance do not resolve an issue, I do not hesitate to
enforce the Act.

Today, I will provide a brief overview of the status of tribal gaming and provide an
update on the Commission’s progress with its four priorities.

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Senate Indian Affairs Committee Oversight Hearing
NIGC Chairwoman Tracie Stevens
July 28, 2011

Facts Concerning Indian Gaming and Regulatory Oversight

Revenue generated by tribal facilities, even modest revenues, provide much needed
services to tribal members and create jobs in communities otherwise suffering from high
unemployment. Over the past five years, tribal gross gaming revenues have remained stable,
varying from $24.9 billion in 2006 to a high of $26.7 billion in 2008. The number of gaming
operations over this five-year period increased approximately 6 percent from 394 in 2006 to
422 in 2010. Currently, 240 federally recognized tribes operate a total of 422 tribal gaming
operations in 28 states. Tribal gross gaming revenues for 2010 essentially mirror 2009
revenues of $26.5 billion. Collectively, tribes located in our Portland, St. Paul, Oklahoma City
and Tulsa Regions have experienced an increase in tribal gross gaming revenue while gross
gaming revenue for those tribes located in our Washington, D.C., Phoenix and Sacramento
Regions have experienced a slight decrease. Revenue figures for 2010 compiled during our
review of independently audited financial statements indicate that approximately half of the
tribal gaming operations generate annual gross gaming revenues of $25 million or less.

IGRA establishes a framework under which Tribes, States, and the Federal
Government regulate Indian gaming. Within the Federal Government, multiple agencies take
part in ensuring the integrity of the industry. In 2003, the Indian Gaming Working Group was
established to better coordinate the efforts of federal agencies with authority over various
aspects of Indian gaming. The Indian Gaming Working Group includes NIGC, the
Department of Justice, the Federal Bureau of Investigation, the Department of the Treasury
Financial Crimes Enforcement Network, and the Bureau of Indian Affairs Law Enforcement
Services. NIGC works in cooperation with these law enforcement agencies to share
information that may potentially indicate a criminal violation of law.

NIGC is the primary federal civil enforcement agency charged with regulating class IT
and class III gaming on Indian lands. This includes the review and approval of tribal gaming
ordinances and management contracts. The Department of the Interior also performs certain
functions under IGRA, including the review and approval of tribal-state compacts for class III
gaming.

In addition to NIGC, tribal governments collectively employ approximately 5,900
tribal gaming regulators. In addition to tribal regulators, States collectively employ
approximately 640 people to regulate tribal gaming. Thus, NIGC, Tribal Gaming Regulatory
Authorities and States combine to employ over 6,600 people to regulate Indian gaming. While
the precise amount expended to regulation gaming is not known, , we do know that in 2009
that 4 percent of gaming tribes reported expending a total of $26 million for state regulation
of Indian gaming and that 32 percent of tribes reported expending a total of $130 million for
tribal regulation of Indian gaming. As I have repeatedly stated, one of my priorities is to
ensure a strong collaborative regulatory framework and relationship among the more than
6,600 regulators employed by all three regulatory bodies to maintain the integrity of Indian
gaming.

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Senate Indian Affairs Committee Oversight Hearing
NIGC Chairwoman Tracie Stevens
July 28, 2011

As the Committee is aware, nearly five years ago the United States Court of Appeals
for the District of Columbia held that the Commission did not have authority to promulgate
regulations establishing minimum internal control standards (MICS) for class III gaming. As I
explained at the hearing last year, this issue is a top priority for the Commission and we
continue to evaluate not only the present-day landscape of class III MICS but also how to
move forward on this complicated issue in the aftermath of the decision.

MICS protect tribal gaming revenues by ensuring that casino employees follow
appropriate procedures as money moves through the gaming facility. All tribes have internal
controls. Tribes and the public universally support class III MICS. The outstanding issue is
how to implement the MICS. In addition to seeking comment from the public, the
Commission has held a number of tribal consultations to discuss potential regulatory options
to address class III MICS. We have heard a variety of suggested approaches. Some suggest
that we maintain the NIGC MICS or issue guidance. Others suggest that MICS are a matter
to be addressed in tribal-state compacts. Finally, some suggest that MICS be incorporated in
tribal gaming ordinances. Given the diversity of how Tribes and States have addressed this
issue, a path forward may be a hybrid approach in which we strive to respect the sovereign
interests of all three governments. But let me be clear, the Commission will solve this issue in
a manner that ensures that Tribes receive the revenues generated by tribal facilities. The
Commission looks forward to working with this Committee as it moves forward on this issue.

COMMISSION PRIORITIES

Consultation and Building Relationships

Over the course of our first year, we implemented significant changes to how we
consult with Tribes. As a Commission, we are committed to consulting with Tribes in a
manner consistent with Executive Order 13175, “Consultation and Coordination With Indian
Tribal Governments.” Toward this end, we are in the final stages of revising our consultation
policy. During 2010 and 2011, we held 8 consultations on revising our policy, circulated a
revised draft of the policy based on comments received, and we are now evaluating final
comments on the revised draft. We hope to formally adopt the revised policy within the
coming weeks.

The process of consultation is just as important as the substance of consultation.
Government-to-government consultation must be inclusive, it must be collaborative and
meaningful, and it must be an on-going dialogue. Our consultations on broad, overarching
policies such as regulatory changes are held in a group format. This format allows for a frank,
open exchange of ideas, thoughts, concerns and solutions for all to hear, providing an
atmosphere in which governments can identify solutions together. If a matter is specific to a
particular tribe, we consult individually with that tribe, as appropriate. We are also looking at
developing more effective ways to consult with Tribes to streamline this process. This means
timely notice, candid discussions, and making the most of everyone’s resources to achieve the
most effective policies that will ensure the integrity of the industry. It is through meaningful

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