1

BULLETIN

No. 2022-4 June 23, 2022

Subject: Use of Net Gaming Revenues Bulletin (Updated)1

Introduction

The goals of federal Indian policy that the Indian Gaming Regulatory Act (“IGRA”) was 

enacted to promote tribal economic development, tribal self-sufficiency and strong tribal 

governments. Implicit in these goals is the concept of tribal self-determination. That is, it 

should be the tribe that determines its future, not outsiders, and certainly not just federal

officials. Thus, decisions about how tribal gaming revenues are to be utilized should be 

made and implemented by tribes, through their duly authorized tribal governments. 

In writing IGRA, Congress did, however, specify several broad categories for appropriate 

tribal expenditures of gaming revenues. These categories are discussed below.

Tribal governments determine the appropriate uses of net gaming revenues consistent 

with IGRA’s designated categories. The National Indian Gaming Commission (“NIGC”) 

acknowledges that tribal governments are well aware of the requirements for the uses of 

net revenues from Indian gaming under IGRA, and that tribal governments, in general,

have committed gaming revenues to fund essential government services, including 

education, health care, police and fire protection, water and sewer services, and elderly 

and child care. For most tribal governments, this Bulletin will reinforce existing 

practices. 

As might be expected, however, the NIGC often receives comments and complaints from 

tribal members with respect to their tribes’ expenditures of tribal gaming revenues. 

 1 This is an update to, and replaces, Bulletin 2005-1, dated March 8, 2005.
2

While the NIGC is committed to a government-to-government relationship with tribes, 

and most of our dealings are directly with tribal governments through their tribal gaming 

commissions, tribal councils, and other tribal governmental entities, when appropriate, 

we attempt to assist in the resolution of misunderstandings and disputes that can, and do, 

develop between tribal members and tribal entities regarding Indian gaming issues, such 

as expenditures of gaming revenues. Because tribes’ utilization and expenditures of tribal 

gaming revenues are so fundamental to the purpose of tribal gaming and to its continued 

success, the NIGC has deemed it appropriate to compile and share the information in this 

Bulletin to encourage tribes to employ policies and procedures in their expenditure of 

tribal gaming revenues that comply with IGRA and will minimize complaints and 

misunderstanding among the tribal membership and interested outside parties. The NIGC 

recognizes and respects that tribal governments are in the best position to determine tribal 

needs and priorities, and to incorporate tribal culture, traditions, and values in the 

processes and programs that they develop, utilize, and support with the expenditures of 

tribal gaming revenues. It is in this spirit that the information in this Bulletin is provided.

Further, the real-life examples of tribes’ use of net gaming revenue contained herein are 

shared not to highlight specific tribes but to provide actual incidences that not only 

illustrate proper uses under IGRA but also demonstrate its success in promoting tribal 

economic development, self-sufficiency, and strong tribal governments.

Net Revenues Used for Public Purposes

IGRA requires that net gaming revenues from Indian gaming be used for public purposes 

that are consistent with those typically provided by governments. “Net revenues” is 

defined in IGRA as “gross revenues of an Indian gaming activity less amounts paid out 

as, or paid for, prizes and total operating expenses, excluding management fees.”2 The 

five public purposes specified by IGRA for a tribe’s use of net revenues from its tribal 

gaming operations are:

1) To fund tribal government operations or programs;

2) To provide for the general welfare of the Indian tribe and its 

members;

3) To promote tribal economic development;

4) To donate to charitable organizations; and

5) To help fund operations of local government agencies.3

A. Funding Government Operations & Providing for the Tribe’s General Welfare

 2 25 U.S.C. § 2703(9); see also 25 C.F.R. § 502.16 (Net revenues means gross gaming revenues of an 

Indian gaming operation less—(a) Amounts paid out as, or paid for, prizes; and (b) Total gaming-related 

operating expenses, including all those expenses of the gaming operation commonly known as operating 

expenses and non-operating expenses consistent with professional accounting pronouncements, excluding 

management fees.). 3 25 U.S.C. § 2710(b)(2)(B); see also 25 U.S.C. §§ 2710(d)(1)(A)(ii) and 2710(d)(2); 25 C.F.R. §§ 522.4, 

522.6. 
3

Under two of IGRA’s use of net gaming revenue purposes - funding tribal government 

operations and providing for the general welfare of the tribe, tribes commonly allocate 

gaming revenues for the creation and expansion of tribal government infrastructure. The 

following examples typify allowable expenditures of net gaming revenues for these 

purposes:

Constructing tribal administrative office buildings

Constructing fire stations

Constructing hospitals and health clinics

Installing a telecommunications center, including computers

Building and improving roads

Creating a tribal justice center, including trial and appellate courts, a law 

enforcement agency, a corrections facility, a prosecutors’ office and a 

public defender office

Constructing a cultural center

Constructing a youth recreation complex

Constructing a fitness center

Constructing a community swimming pool

Constructing a retirement center for tribal elders

Establishing tribal credit unions

Creating a museum

Creating a library with computers available for members’ use

Establishing utilities for the provision of water and sewer services

Establishing a waste treatment facility

Recent examples include: the Ho-Chunk Nation’s construction of a community center 

and government office; the Tulalip Tribe’s construction of a cultural center; the Mille 

Lacs Band of Ojibwe’s construction of a school; and the Kalispel Tribe’s investment in a 

museum and ceremonial grounds.

4

Beyond construction of buildings is funding of police, fire, water, and environmental 

services. The Flandreau Santee Sioux Tribe has funded its police department with gaming 

revenues.5 And the Tulalip Tribe was “able to take back criminal jurisdiction from the 

state of Washington by developing competent judicial, policing, and prosecutorial 

staffs.”6 The Nez Perce Tribe is engaged in endangered species management, and the 

Sandia Pueblo manages its water quality.7

 4 NIGC Website, Public Affairs, Community Impact, https://www.nigc.gov/public-affairs/communityimpact/; Journal of Economic Perspectives, The Indian Gaming Regulatory Act and Its Effects on American 

Indian Economic Development at 196 (August 2015). 5 Journal of Economic Perspectives, The Indian Gaming Regulatory Act and Its Effects on American Indian 

Economic Development at 196-97. 6 Id. at 204. 7 Id. at 197.
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Significantly, healthcare throughout Indian Country has been transformed by net gaming

revenues. It is reported that over 17% of funding derived from gaming supports 

healthcare for Native communities.8 With gaming revenue, tribes are building their own 

hospitals staffed by Native American doctors and nurses. Many tribes have established 

health clinics, dialysis centers, and fitness centers to benefit the health of their 

communities. In 1999, gaming revenue made it possible for the Choctaw Nation of

Oklahoma to become the first tribe to build its own hospital with its own funding.9

Today, the Choctaw Nation’s gaming revenue supports the health, safety, and welfare of 

rural communities throughout southeastern Oklahoma. Located in Talihina, Oklahoma, 

the Choctaw Nation Healthcare Center is a 140,000 square foot health facility, which 

serves as the center of health care services covering 10 1⁄2 counties of southeastern 

Oklahoma, providing: hospital care, dental, laboratory, x‐ray, CT and MRI scanning, 

mammography, ultrasound, pharmacy, primary medical care, surgical care, emergent 

care, physical and respiratory therapy, transportation, women’s health, pediatrics, 

podiatry, telemedicine, and ophthalmology.10 Also on campus is a diabetic wellness 

facility with a fitness center.11 Additional services located off-campus include behavioral 

health, women’s and men’s substance abuse facilities, and optometry.12 Since the 

development of the Talihina Healthcare Center, the Choctaw Nation has added clinics 

throughout the Tribe’s geographic boundaries including facilities in Atoka, Broken Bow, 

Durant, Hugo, Idabel, McAlester, Poteau, and Stigler.13 The Pokagon Band of 

Potawatomi is yet another example; in 2014, it opened an integrated health care facility to 

deliver high quality healthcare services to its citizens.14

B. Providing for Tribal Members’ General Welfare

IGRA also specifies that net gaming revenues may be used for governmental programs 

benefitting or providing for the general welfare of individual tribal members. Tribes have 

developed a broad range of tribal government programs addressing needs of their tribal 

memberships:

15

 8 NIGC Website, Public Affairs, Community Impact, https://www.nigc.gov/public-affairs/communityimpact/ 9 Id.

10 Id. 11 Id. 12 Id. 13 Id. 14 Id. 15As an aside, per capita distributions made pursuant to the Indian Gaming Regulatory Act are subject to 

Federal taxation and tribes must notify members of such tax liability when payments are made. See 25 

U.S.C. § 2710(b)(3)(D). Payments that satisfy the Tribal General Welfare Exclusion Act of 2014’s 

definition of “Indian general welfare benefit” are not includible in income (not taxed).” See PL 113-168, 

128 Stat 1883 (Sept. 26, 2014) (“‘Indian general welfare benefit’ includes any payment made or services 

provided to or on behalf of a member of an Indian tribe (or any spouse or dependent of such a member) 

pursuant to an Indian tribal government program, but only if— (1) the program is administered under 

specified guidelines and does not discriminate in favor of members of the governing body of the tribe, and 

(2) the benefits provided under such program—(A) are available to any tribal member who meets such 

guidelines, (B) are for the promotion of general welfare, (C) are not lavish or extravagant, and (D) are not 
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Elder programs and services

Daycare and early childhood development programs

Foster care

Universal health care

Nutrition assistance programs

Housing assistance programs

Small business loan programs

Emergency loan programs

Legal aid programs

Public defender programs

Job and vocational training programs

Educational programs, grants, loans and scholarships

Drug and alcohol treatment programs

Culture and language programs

Youth and after-school programs 

Burial assistance programs

Eyeglass programs

Transportation programs

Programs offering culturally-based, alternative health care 

 and treatments

The above list is not exhaustive, as there are hundreds of different government programs 

currently being offered by the 573 federally recognized tribes in existence today. But as 

an example, the Coeur d’Alene Tribe created many programs to enrich its youth on the 

reservation, including: an early childhood learning center, summer youth programs, and 

after-school programs.16 Recognizing that the youth are the key to the future, the tribe 

also offers scholarships for its tribal students that seek to further their education beyond 

high school.17 The Osage Nation too provides college scholarships.18 Programs to care 

for specific groups of tribal members are conducted by the Tohono O’odham Nation via 

its elder care services and by the Fond du Lac Band through foster care.19 Another 

illustration is the Pokagon Band’s funding of a cultural revitalization program where 

cultural knowledge is shared via workshops, in areas such as: creating bone needles and 

basswood fiber cordage, quilt making, and stitching moccasins.20 The San Carlos Apache 

 compensation for services.”); see also IRS Revenue Procedure 2014-35, Application of the General 

Welfare Exclusion to Indian Tribal Government Programs That Provide Benefits to Tribal Members. The 

exemption for Indian general welfare benefits is inapplicable to the per capita payments an Indian tribe 

makes from gaming revenue pursuant to IGRA. See United States v. Jim (891 F.3d 1242). For question 

regarding the General Welfare Exclusion Act, we recommend contacting the Internal Revenue Service 

Office of Indian Tribal Governments. . 16 NIGC Website, Public Affairs, Community Impact, https://www.nigc.gov/public-affairs/communityimpact/ 17 Id. 18 Journal of Economic Perspectives, The Indian Gaming Regulatory Act and Its Effects on American 

Indian Economic Development, supra. 19 Id. 20 NIGC Website, Public Affairs, Community Impact, https://www.nigc.gov/public-affairs/communityimpact/ 
6

Tribe has invested in artifact repatriation.21 And the Cherokee Nation has initiated a 

language revitalization program.22 Lastly, the Sisseton-Wahpeton Oyate have created a 

comprehensive jobs-support program, addressing vocational and job training, 

employment assistance, child care, a works program, and food assistance.23

C. Promoting Tribal Economic Development

In addition, pursuant to IGRA, net gaming revenues can be used to promote tribal 

economic development. “Typically, [this] begins with [tribes] developing adjacent hotels, 

conference halls, amphitheaters, and other amenities . . . [to their] gaming facilities.”24

Tribes have also invested in nearby retail businesses and outlet malls.25 Some tribes have 

invested in other sectors such as banking, commercial real estate, and federal facilities 

management.26 For the Blue Lake Rancheria, net gaming revenue has provided 

investment capital, allowing for diversification and development of the Rancheria’s 

economy and improving the health and environment of the region’s population.27 The 

Rancheria partnered with California, academia, the federal government, and industry to 

install a community-scale microgrid with solar photovoltaic (PV) power and advanced 

energy storage as its backbone.28 For day-to-day activities, the microgrid provides 

cleaner and far less expensive power -- but in emergencies, the Rancheria can disconnect 

from the larger grid and generate emergency power for as long as needed.29 Looking to 

the future, the Rancheria is exploring a community water system, starting first with an 

emergency water treatment and storage venture.30 

D. Funding Local Government Operations & Donating to Charities

Finally, net gaming revenues may be provided to local government agencies to help fund 

operations or donated to charitable organizations. Recent contributions to local 

governments and charities include:

• The Saginaw Chippewa Tribe provided surrounding non-Indian communities in 

Michigan (both local and state governments) more than $64 million annually for 

police and fire protection, social and health services, and housing. Committing a 

semi‐annual 2% distribution from funds derived from gaming, the Tribe has 

contributed over $230 million to schools, local businesses, and other vital 

 21 Journal of Economic Perspectives, The Indian Gaming Regulatory Act and Its Effects on American 

Indian Economic Development, supra. 22 Id. 23 Id.; http://www.swo-nsn.gov/?page_id=803 24 Journal of Economic Perspectives, The Indian Gaming Regulatory Act and Its Effects on American 

Indian Economic Development at 197. 25 Id. 26 Id. (the Citizen Potawatomi Nation, the San Manuel Band of Mission Indians, and the Winnebago Tribe, 

respectively).

27 NIGC Website, Public Affairs, Community Impact, https://www.nigc.gov/public-affairs/communityimpact/

28 Id. 29 Id. 30 Id.
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community programs since 2015. These programs include community learning 

centers and youth and community services.;

• In March of 2017, the Blue Lake Rancheria surpassed $1.5 million in educational 

donations to the local school, student scholarships, and workforce development 

in its community.;

• In 2016, the Pokagon Band of Potawatomi entered into two voluntary agreements 

with a city to collaborate on numerous municipal improvement projects, 

community programs, and poverty reduction services including: expanding the 

city’s sewer and water system to a nearby tribal village and casino development, 

restoring a local creek, and contributing funding to a YMCA women’s shelter, a 

boys and girls club, and a children’s hospital.;

• The Ho-Chunk Nation has donated its gaming revenue to numerous organizations 

and entities including local fire and rescue centers, local school districts, youth 

programs and public libraries.; and

• For over two decades the tribal leadership of the Coeur d’Alene has been making 

donations throughout the state of Idaho and beyond. Donations in 2015 were 

approximately $1.1 million. Over the last 20 years, the Coeur d’Alene Tribe has 

donated more than $22 million to classrooms, schools, and nonprofit 

organizations across Idaho and the inland Northwest.

31

Thus, net gaming revenues strengthen not only tribal communities but local communities. 

Additionally, tribal gaming supports hundreds of charitable organizations throughout the 

United States. Given the significance of these contributions, the NIGC details examples 

of them on its website - https://www.nigc.gov/public-affairs/community-impact/

Revenue Allocation Plans – Payments to Individual Tribal Members

Direct distributions of payments to individual tribal members, outside of a government 

program, are not allowed under IGRA. However, there is an exception to this limitation. 

Tribes may distribute net gaming revenue to individual tribal members if the tribe has a 

Revenue Allocation Plan, or “RAP,” that authorizes per capita payments and has been 

formally approved by the Secretary of the Interior (“Secretary”).32 In the RAP, the tribe 

describes how it will allocate and distribute net gaming revenues for public purposes and 

to individual tribal members on a per capita basis.33 “Per capita payment means the

distribution of money or other thing of value to all members of the tribe, or to identified 

groups of members, which is paid directly from the net revenues of any tribal gaming 

activity. This definition does not apply to payments which have been set aside by the 

 31 NIGC Website, Public Affairs, Community Impact, https://www.nigc.gov/public-affairs/communityimpact/

32 25 U.S.C. § 2710(b)(3); see also § 2710(d)(1)(A)(ii); 25 C.F.R. § 290.13. 33 25 C.F.R. §§ 290.2 (definition of revenue allocation plan), 290.4, 290.12.
8

tribe for special purposes or programs, such as payments made for social welfare, 

medical assistance, education, housing or other similar, specifically identified needs.” 34

The responsibility for reviewing and approving RAPs is assigned by IGRA to the 

Secretary of the Interior, not the NIGC.35 

Tribes are not required to make per capita payments from net gaming revenues to 

individual tribal members.36 If they choose to do so however, they must comply with 

both IGRA and the administrative regulations of the BIA.

37 Tribes that elect to make per 

capita payments to individual tribal members from net revenues are required to take the 

following steps before making the payments:

1) Prepare a plan to allocate gaming revenues to one or all

of the five public purposes specified in Section 2710(b)(2)(B) 

of IGRA;

2) Submit the plan to the BIA and have it approved by the 

Secretary as “adequate,” particularly with respect to a 

tribe’s funding of tribal government operations and 

programs, and promotion of tribal economic 

development;

3) Ensure that the plan protects the interests of minors and 

other legally incompetent persons and makes per capita 

payments for them in amounts necessary for their 

health, education, and welfare, under a plan approved 

by the tribe and the Secretary; and

4) Notify tribal members, when per capita payments are 

made, that the payments are subject to federal 

withholding and taxation as personal income.38

If tribes choose to make per capita payments to individual members, they must be made 

to all enrolled members, unless there is reasonable justification for limiting payments to a 

group of enrolled members and excluding the remaining enrolled members.39 For 

example, a tribe may limit per capita payments to individual tribal members 65 years or 

older because of this group’s greater financial needs due to not working and increased 

health care expenses. Importantly, according to IGRA and BIA regulations, if tribes 

choose to make per capita payments, they are then required to notify members of the tax 

liability for the payments, and then withhold taxes for all recipients in accordance with 

the Internal Revenue Service (“IRS”) regulations found in 26 C.F.R. Part 31.40

 34 25 C.F.R. § 290.2. 35 25 U.S.C. § 2710(b)(3)(B). 36 25 C.F.R. § 290.8. 37 25 U.S.C. § 2710(b)(3); 25 C.F.R. part 290. 38 25 U.S.C. § 2710(b)(3); 25 C.F.R. § 290.12. 39 25 C.F.R. § 290.14. 40 25 U.S.C. § 2710(b)(3)(D); 25 C.F.R. § 290.12(b)(4).
9

Under the BIA’s regulations, tribes making per capita payments to individual members 

are required to establish and use a tribal court system, forum, or administrative process 

for the resolution of disputes concerning the allocation of net gaming revenues and the 

distribution of per capita payments.41 This requirement ensures that tribal members are 

afforded a process for challenging and appealing the distribution and allocation of 

gaming revenues under a RAP, giving them some recourse if they disagree with how 

tribal gaming revenues are spent and providing the tribe itself an opportunity to review

the propriety of the spending as well.

42

Please note that if a RAP is revised or amended by a tribe, it must be submitted to Interior 

for approval.43

As discussed previously, the NIGC shares regulatory authority and responsibility for the 

proper use of gaming revenues with the tribes, tribal councils, and tribal gaming 

commissions. Tribal regulatory bodies are the primary regulators of their tribe’s uses of 

gaming revenues. In light of tribal sovereignty and in recognition of the primary authority 

of tribal regulators, when the NIGC exercises and discharges its regulatory authority and 

responsibilities under IGRA, it is committed to maintaining a respectful and meaningful 

government-to-government relationship with tribes and their authorized government 

leaders and regulators. Therefore, tribal members’ concerns about their tribe’s allocation 

of net gaming revenues should first be brought to their tribal regulators and tribal 

remedies exhausted in a tribal court, forum, or administrative process prior to requesting 

action by the NIGC.

44

Misuses of Gross and Net Gaming Revenues

There are two primary ways in which tribes can misuse their gaming revenues and run 

afoul of IGRA. 

A. Distributing Net Gaming Revenue for Personal Uses Outside of a RAP 

or a Government Program

Impermissible use of net gaming revenues occurs when gaming funds are directly 

distributed to individual tribal members (or select members) for their personal use 

without a RAP or outside of a government program.45 Simply put, unless these payments 

are issued through a tribal governmental program, tribes need an approved RAP prior to 

 41 25 C.F.R. § 290.12(b)(5); 25 C.F.R. §§ 290.22 and 290.23. 42 25 C.F.R. §§ 290.22 and 290.23. 43 25 C.F.R. § 290.24. 44 See 25 C.F.R. § 290.23. 45 See, e.g., NOV-09-37 (2009) (notice of violation issued for distributing per capita payments of net 

gaming revenue to tribal members without an approved RAP), 

https://www.nigc.gov/images/uploads/enforcement-actions/NOV-09-37.pdf ; NOV-10-01 (2010) (notice of 

violation issue for distributing payments of net gaming revenue to select tribal members outside of 

government programs), https://www.nigc.gov/images/uploads/enforcement-actions/NOV-10-01.pdf .
10

distributing them to tribal members or select group(s) of members.46 BIA regulations 

explicitly state: “you are in violation of IGRA if you make per capita payments to your 

tribal members from net gaming revenues without an approved tribal revenue allocation 

plan. If you refuse to comply, the DOJ or NIGC may enforce the per capita requirements 

of IGRA.”47 Importantly, the RAP must be approved by Interior prior to the per capita 

payments being made.48

 

For example, in one tribal court case, revenue payments were not based on or distributed 

pursuant to a bona fide tribal government program.49 Forty percent of gaming revenues, 

or approximately $2 million, was being distributed through a betterment project to 

individual tribal members from a certain district, based solely upon membership in the 

tribe. The tribal court characterized the payments as “simple cash payments to individual 

enrollees of a particular district with no strings attached”—in other words, per capita 

payments. Similarly, a federal district court ruled that calling gaming revenue payments 

made to individual tribal members “interim payments,” “Reservation Lifestyle 

Betterment Grants,” or “On-Reservation Lifestyle Betterment Grants” did not change the 

true nature of the payments.50 The court held that they were really per capita payments, 

not exempted from IGRA’s requirements for per capita payments. (“Just as a rose by any 

other name is still a rose, a per capita payment by any other name is still a per capita 

payment”). Both courts ordered that the payments from gaming revenues be stopped. 

Additionally, purchases with net gaming revenue or cash payments of it that are used for 

personal reasons and not for tribal business purposes, or for the tribe as a whole, are 

prohibited. These include buying such items as personal cars, boats, houses and 

clothing,

51 or other personal items.52 Unauthorized expenditures also include such things 

as non-business trips,

53 visits to health spas, residential landscaping, and payment of 

outstanding bills of tribal members. They also include payments to businesses or clubs 

that are owned by tribal members and may be located on tribal lands, but are not titled to 

or owned by the tribe.

 46 25 C.F.R. §§ 290.2 (definition of per capita payment), 290.10, 290.11, 290.13; 25 U.S.C. 

§ 2710(b)(3)(B).

47 25 C.F.R. § 290.10. 48 25 C.F.R. § 290.13. 49 Avis Little Eagle v. Standing Rock Sioux Tribal Council, Standing Rock Sioux Tribal Court 

Memorandum Opinion, TRO-03-131 (2003). 50 Ross v. Flandreau Santee Sioux Tribe, 809 F. Supp. 738 (S.D.S.D. 1992). 51 NIGC Settlement Agreement (Aug. 17, 2007) (purchase by the Casino of Pendleton jackets provided to 

tribal officials outside of a marketing promotion or any other legitimate business purpose), 

https://www.nigc.gov/images/uploads/enforcement-actions/20070817_Ltr_to_Settlement_Agreement_-

_Nisqually_Indian_Tribe.pdf

52 See e.g., NOV-10-01, supra (including jewelry, vehicle related purchases, and home security services). 53 NIGC Settlement Agreement (Aug. 17, 2007) (purchase of a Super Bowl Travel package for a former 

tribal official).
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B. Payments of Gross Gaming Revenue from the Casino that Do Not Qualify as

Operating Expenses

Tribal gaming operations must take care to use gross gaming revenues for goods and 

services, including leasing of equipment, vehicles, and land, so that they qualify as 

legitimate operating expenses. As discussed previously, IGRA defines “net revenues” as 

“gross revenues of an Indian gaming activity less amounts paid out as, or paid for, prizes 

and total operating expenses, excluding management fees.”54 NIGC regulations 

interpreting that definition provide:

Net revenues means gross gaming revenues of an Indian gaming operation less—

(a) Amounts paid out as, or paid for, prizes; and 

(b) Total gaming-related operating expenses, including all those expenses of the 

gaming operation commonly known as operating expenses and non-operating 

expenses consistent with professional accounting pronouncements, excluding 

management fees.

55 

Therefore, in line with this regulation, we look to the Generally Accepted Accounting 

Principles (“GAAP”) for the contours of what qualifies as an operating expense. 

According to GAAP:

Operating expenses are primary recurring costs associated with central operations 

(other than the cost of goods sold) that are incurred in order to generate sales. 

Operating expenses are normally reported in the following two categories:

a. Selling expenses

b. General and administrative expenses

Selling expenses are those expenses directly related to the company’s efforts to 

generate sales (e.g., sales salaries, commissions, advertising, delivery expenses, 

depreciation of store furniture and equipment, and store supplies). General 

administrative expenses are expenses related to the general administration of the 

company’s operations (e.g., officers and office salaries, office supplies, 

depreciation of office furniture and fixtures, telephone, postage, accounting and 

legal services, and business licenses and fees).56

In short, gaming operations may treat their purchases, leases, and payments for services

as operating expenses if they are made in an effort to generate sales or to conduct the 

normal day-to-day operations of a gaming facility (services, materials, supplies, 

equipment, salaries). For instance, sporting and entertainment tickets purchased by a 

 54 25 U.S.C. § 2703(9). 55 25 C.F.R. § 502.16. 56 2019 Wiley GAAP – Interpretation and Application of Generally Accepted Accounting Principles, Joanne 

M. Flood at 56.
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casino but not used in a manner to generate gaming operation revenue do not constitute a 

proper operating expense.57

Moreover, purchases by gaming operations of goods, services, and leases, as well as 

investments in capital improvements, must be made at their fair market values. To be 

clear, such purchases and investments should not be disguised transfers of gross gaming 

revenues to third parties. IGRA was enacted to ensure that tribes are the primary 

beneficiaries of their gaming operations.58 IGRA fulfills this purpose by requiring that 

gross gaming revenues be used either as operating expenses for the gaming operation or 

transferred to the tribal government as net gaming revenue. 

One of the most egregious misuses of gross gaming revenues involved a tribal casino’s

rental of land for use as a parking lot. The tribe rented the lot for seven (7) years, 

originally for four hundred dollars ($400) a month then five hundred dollars ($500) a 

month.

59 The land was sold to someone else.60 The casino’s CEO was involved in the 

land sale, providing the deposit from his personal account. And he was also involved in 

negotiating the lease of the land on behalf of the casino; plus, he instructed a casino 

employee to sign the new lease. Shockingly, the new cost was twenty-five thousand 

dollars ($25,000) and one-percent (1%) gross gaming revenue of the casino per month.

61

Thus, the tribe’s casino paid an increase of $24,500 per month along with 1% of the 

casino’s gross gaming revenues for leasing the same parcel of land – resulting in a 

transfer of $1,257,432.44 of gross gaming revenue to a third party.

62 The NIGC 

concluded that the new lease did not qualify as a bona fide operating expense as the 

highest rationally justifiable rent or fair market value would have been three thousand 

($3,000) a month.63 Consequently, the lease amount beyond such an amount was simply 

a pretext for transferring gross gaming revenue to a third party in violation of IGRA and 

NIGC regulations.64

To prevent intentional or inadvertent misuses of gross gaming revenue, the NIGC 

recommends that tribes do the following in regard to their gaming operations:

• Establish and maintain a financial records system as required by 25 C.F.R. § 

571.7(a). To do that consider obtaining the assistance of a qualified auditing firm

to devise a system for maintaining permanent books and records, including 

inventory of gaming machines, equipment, and supplies, and other gaming related 

 57 NIGC Settlement Agreement (Aug. 17, 2007), supra. 58 25 U.S.C. § 2702(2). 59 Settlement Agreement, SA-17-01, https://www.nigc.gov/images/uploads/enforcementactions/SA1701.pdf

60 Id. 61 Id. 62 Id.; Id. at 4, ¶ 26 (“The Casino paid three times more than the purchase price the Tribes had initially 

agreed to pay for the Land, ten times more than the Land's appraised value, and a minimum of $56,400 

dollars more per month than the Casino had paid to lease the Land in the prior 8 years for nearly the same 

usage with significantly less fiscal responsibility.”). 63 Id. at 5-6, ¶¶ 14, 18-19, 24-25, and 27-30. 64 Id. at 6, ¶¶ 15-20.
13

expenditures and/or disbursements sufficient to establish the amount of gross and 

net income, deductions and expense, receipts and disbursements, and other 

information required in any financial statement, report, or other accounting 

prepared pursuant to the IGRA and NIGC regulations;

• Establish minimum internal control standards for accounting and auditing as 

required by 25 C.F.R. §§ 543.23 and 523.24; 

• Develop and mandate an annual budget approval process;

• Issue written procurement policies for goods and services, including limitations 

on expenditures that require advance approval from tribal boards, legislative 

bodies, or tribal leadership;

• Issue donation policies, identifying what type of donations may be made by the 

gaming operation without advance approval from tribal boards, legislative bodies, 

or tribal leadership;

• Issue written credit card policies for credit cards issued by the gaming operation 

to casino employees and/or tribal officials, prohibiting personal use with them;

• Establish an audit plan for credit card statements and use by casino employees 

and/or tribal officials;

• Issue policies or procedures for entering leases for, and purchases of, equipment, 

vehicles, and land, including documentation or appraisals confirming that they are 

within the fair market value of the same;

• Issue a written policy and procedure for distributions of net gaming revenue from 

the gaming operation to the Tribe, defining gaming operation operating expenses, 

the frequency of distributions, and the manner of the distributions; and

• Establish an audit plan to review and substantiate gaming operation operating 

expenses.

In conclusion, the NIGC is hopeful that this Bulletin will be a helpful guide to tribes. If 

you have any questions regarding the use of gaming revenues, please contact the NIGC’s 

Office of General Counsel or your NIGC Regional Office.