Testimony for Senate Indian Affairs Committee 

Oversight Hearing 

April 17, 2008 

National Indian Gaming Commission 

Philip N. Hogen, Chairman 

Good morning Chairman Dorgan and members of the Committee. The National Indian 

Gaming Commission (NIGC) is delighted that the Committee has once again chosen to 

look at the NIGC and the role it plays under the Indian Gaming Regulatory Act (IGRA). 

As I have testified before, Indian gaming is the greatest engine for economic 

development that Indian country has developed. 

Indian gaming is not a federal program, and its genesis did not occur with the enactment 

of IGRA. Rather, tribes have been gaming since before the inception of the Act and in 

many respects, the structure established by IGRA has fostered the growth and 

development of that industry. IGRA created the NIGC and it is the nation’s only federal 

gaming regulatory entity. To put the regulation of tribal gaming in proper context, we 

need to appreciate that the vast majority of the regulation of tribal gaming is done by the 

tribes themselves, with their tribal gaming commissions and regulatory authorities. In 

many instances, where tribes conduct Class III or casino gaming, state regulators also 

participate in the process. NIGC has a discrete role to play in this process and is only one 

partner in a team of regulators. 

As I have often told this Committee, the growth of revenues generated by tribal gaming is 

large, and getting larger. For individual casinos, however, growth may slow and, in some 

cases, may even diminish. There has been and continues to be growth in the industry, 

which now generates nearly $26 billion of gross gaming revenues annually, and which 

represents the second largest component of gaming revenues generated by the gaming 

industry in the United States. 

NIGC’s role in the structure established by IGRA is to ensure ongoing integrity in the 

tribal gaming industry by assisting tribes to determine the suitability of those whom they 

approve or license to staff and operate their gaming operations and to ensure that the play 

at the casinos and bingo halls is fair, both to the customer players and to the facilities 

themselves. In addition, NIGC ensures that the revenues generated by the tribal gaming 

operations go to the tribal governments and are not wrongfully siphoned away or 

disproportionately paid to those who supply and assist tribes as they conduct those 

operations. 
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As the Committee knows, zero taxpayer’s dollars are provided to NIGC to fund its role, 

but rather the tribes pay their way through fees the Commission assesses on the tribes’ 

gross gaming revenues. The large and growing scope of Indian gaming of late has meant 

that NIGC, too, has grown and is growing to keep pace. The composition and staffing of 

NIGC is currently as follows: 

 

Overview of the Commission 

The NIGC is headed by three Commissioners. The Chairman is appointed by the 

President with the advice and consent of the Senate and the other two Commissioners are 

appointed by the Secretary of the Interior. One Commissioner position is currently 

vacant. 

Our current structure is comprised of our Washington D.C. Headquarters Offices, six 

regional offices (one of which is housed in our D.C. offices) and five satellite offices. 

The typical regional office is composed of a regional director, several field investigators, 

one or two auditors and administrative staff. 

Collectively our field personnel consist of six regional directors, field and background 

investigators, auditors, and administrative staff (with one vacancy). It should be noted 

that the auditors in the regional or satellite offices actually report to the Director of 

Audits in our D.C. offices. 

Our D.C. Headquarters houses the Directors of Enforcement, Training, Auditing, and 

Contracts. The Directors and our managers for Information Technology (IT), Freedom of 

Information Act requests, Finance and other administrative roles all report to a Chief of 

Staff. In addition there is the Office of General Counsel. The attached chart further 

breaks down the composition of our staffing. Of our 104 employees, 22 are Native 

American, 16 of whom are enrolled tribal members. 

A brief description of the function and achievement of the several divisions of the 

Commission follows: 

Enforcement Division 

NIGC’s Enforcement Division, through its field investigators, reviews the conduct of 

gaming at 416 tribal gaming operations run by 230 tribes. 

As a result of NIGC field investigators’ work and with the help of NIGC’s Office of 

General Counsel, in 2007 NIGC issued seven Notices of Violation and entered into an 

additional 4 Settlement Agreements in lieu of notices of violation. Although informal 

compliance is the primary method for assuring compliance, approximately 160 Notices of 

Violation have been issued over the years. 
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Training 

Along with Congress’s grant of flexibility in the amount of fees collected to fund our 

activities came a mandate to provide technical assistance to tribal gaming operations. 

NIGC has always seen training as an important part of its mission but has taken special 

care to offer training since enactment of Pub. L. No. 109-221 on May 12, 2006. For 

example, in calendar year 2007, NIGC’s Division of Enforcement provided over 700 

hours of formal training to tribal regulators. This figure excludes all the hours of 

informal training that took place during the 715 site visits that were conducted during 

2007 or that took place at national and regional gaming conferences. Training topics 

include: tribal background investigations and licensing; environment, public health and 

safety programs; tribal gaming commission duties; and slot machine technology. 

NIGC recently hired a Director of Training, who will oversee the agency’s training 

efforts, integrating the work of our field investigators and field auditors in providing the 

training, both formal and informal, that is needed by tribal gaming facilities and 

regulators. 

Audit Division 

Since the U.S. Court of Appeals for the D.C. Circuit affirmed the holding in the Colorado 

River Indian Tribes (CRIT) decision, the Audit Division has foregone the conduct of 

Minimum Internal Control Standards (MICS) audits at most gaming operations 

conducting Class III gaming; however, at the time of the decision follow-up was being 

performed from several previous audits. At the request of some tribes, that work 

continued and reports of findings were provided to the tribal gaming regulatory 

authorities for their disposition. Furthermore, in addition to performing four compliance 

audits at Class II gaming operations, the Division has received two requests from Class 

III properties to conduct audits; one has been completed and the other is in progress. 

The Division has also conducted audits confirming that the uses of gaming revenue by 

three tribal governments were compliant with NIGC regulations. Complementing the 

audit work has been an increased demand for training assistance from gaming operations 

and tribal regulatory personnel. Since the beginning of the current fiscal year, audit staff 

have participated in or conducted training on 17 occasions. 

The Audit Division has also worked to install a computerized accounting system to 

improve various aspects of the agency’s financial management. The new system has 

allowed the automation of billings and receipts for the tribes that process fingerprints of 

tribal gaming operation key employees through the NIGC. The new system also allows 

us to better monitor the timely payment of NIGC quarterly fees and to more accurately 

track payment of fines and penalties that are deposited with the U.S. Treasury. The 

system will also help improve NIGC’s monthly financial management through 

preparation of monthly financial statements, comparing actual expenditures to budgeting 

revenues and expenses to facilitate financial planning for the future. 
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Contracts Division

The Contracts Division is responsible for reviewing all management contracts and 

amendments in order to make a recommendation to the Chairman, who must approve 

management contracts before they become effective. 

 

Tribal Background Investigations and Licensing 

The NIGC assisted in processing over 72,000 fingerprint cards for tribal gaming 

operations. All the fingerprint information is sent electronically to the Federal Bureau of 

Investigation, pursuant to a MOU with the Bureau with most of the results returned to the 

tribes within 24 hours. This is a marked improvement since the early days of NIGC 

when results were sent through the mail and not received for two to four months. 

Administration Division 

The NIGC Administration Division has responsibility for, among other things, 

responding to Freedom of Information Act (FOIA) requests. Our FOIA Office began FY 

2007 with 10 pending requests, and received 101 new requests. By December 31, 2007, 

the Office had processed and closed out 108 of those requests; the remaining three were 

closed out within the 20-day time limit. 

In addition to updating the Employee Manual with many new policies and procedures, 

the Division is also working to create an updated agency-wide data base. 

Office of General Counsel

The Office of General Counsel (OGC), a staff of 17, provides legal advice and counsel to 

the Commission. 

Currently, OGC attorneys, along with the Department of Justice, are handling 13 cases in 

Federal courts and monitoring 11 additional cases that impact the Commission. 

In 2006, 69 ordinances and amendments were submitted for review, and in 2007, an 

additional 49 were submitted. In every instance, those reviews were completed within 

the 90-day statutory deadline. 

Twenty-eight contracts in 2006 and 22 contracts in 2007 were submitted to OGC for a 

review of management and sole proprietary interest. The OGC issues advisory opinions 

on these contracts as a service to tribes and contractors so that they may avoid possible 

violations of the IGRA. 

The OGC also assumed responsibility for tracking whether tribal gaming facilities are 

located on Indian lands. It established an Indian lands data base to capture all of the 

information required to determine if the lands are eligible for gaming. That data base is 

undergoing a complete revamping to make it more user friendly. The OGC is also 

developing a system of maps to reflect where the gaming operations are located. 
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The OGC, along with NIGC’s program personnel, staffs the Commission's work on 

regulations. It also provides legal advice on the distinction between class II and class III 

games. As a consequence, over a period of five years, the Office helped draft and revise 

the Commission's several drafts of the regulations for classification, facsimile definition, 

technical standards, and class II minimum internal control standards. To do so, they 

staffed the meetings of two advisory committees, the meetings of a separate working 

group formed by the advisory committees, consultation hearings, and hundreds of 

individual consultations, and reviewed hundreds of written comments submitted by 

tribes, states and others. 

The OGC also drafted Facility License Standards which were published as final in the 

Federal Register in February of this year. The regulation requires tribes to notify the 

Commission 120 days before a tribe plans to license a new facility. The rule was 

finalized after nearly two years of consultation with tribal leaders and 217 written 

comments on prior drafts and proposed standards. Since the Facility License Standards 

were published, the NIGC has received seven tribal notifications of intent to open a new 

gaming facility in 120 days. We have requested information from another five tribes 

regarding their intent to open a facility within the 120-day timeframe. 

The Commission’s Evolving Mission 

Over time, of course, the methods by which the Commission fulfills its mission have 

evolved, and continue to evolve. Some of the areas of focus in this regard are as follows: 

Consultation 

 

In keeping with the obligation to consult, NIGC adopted its consultation policy in early 

2004, a copy of which is attached and which we published in the Federal Register. This 

policy was itself a product of the Commission’s consultation with tribes as it was 

formulated. In the course of formulating this policy, NIGC also gathered and examined 

the consultation policies of other federal agencies, and discussed the utility of those 

policies with those agencies. 

In the course of consulting on regulations, we typically first draft the proposed 

regulations, based on the agency’s experience of what is needed for healthy regulation, 

and then we present these proposed regulations to the tribes. The proposals are often 

published on our website and, for example, in the case of the classification regulations, 

are presented to tribal advisory committees, so that tribal gaming regulators with the most 

experience in the field can advise NIGC of how the regulations would affect them. 

We continue to seek consultation in the most effective ways. While there are 562 

recognized tribes in the United States, only about 230 are engaged in Indian gaming, and 

so it is that group to whom the NIGC has most often turned for consultation. In the two 

years 2006 to 2007, NIGC has conducted 154 government-to-government consultations. 
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In addition, I met with 41 tribes here in my office in D.C. at their request to discuss a 

myriad of issues. NIGC also attended 15 tribal advisory committee meetings, 15 national 

and regional conferences, and eight tribal leadership meetings to which we were invited. 

In addition, on September 16, 2006, we held a public hearing on the class II regulations. 

That hearing, at which 27 speakers made public comments, was attended by 129 

participants. 

It is not possible, of course, for the Commission to visit every tribe on its reservation each 

time an issue or policy might affect tribes. Gaming tribes have formed regional gaming 

associations, such as the Great Plains Indian Gaming Association (GPIGA), the 

Oklahoma Indian Gaming Association (OIGA), the Washington Indian Gaming 

Association (WIGA), the California Nations Indian Gaming Association (CNIGA), the 

Midwest Alliance of Sovereign Tribes (MAST), and the New Mexico Indian Gaming 

Association (NMIGA), among others, as well as national and regional organizations such 

as National Indian Gaming Association (NIGA), National Congress of American Indians 

(NCAI) and United South and Eastern Tribes (USET). Those organizations meet annually 

or more often, and NIGC has taken those opportunities to invite tribal leadership to attend 

consultation meetings on a NIGC-to-individual-tribe basis. Consulting at gaming 

association meetings maximizes the use of the Commission’s time and minimizes the 

travel expenses that tribes, who ordinarily attend those meetings anyway, must expend 

for consultation. 

Many tribes accept these invitations, many do not. Some tribes send their tribal chair, 

president or governor, and members of their tribal council to these consultation sessions, 

while others only send representatives of their tribal gaming commissions, or in some 

instances staff members of the tribal gaming commission or of the tribal gaming 

operations. The consultation session is always most effective when tribal leadership, by 

way of tribal chair or council, is present. The letters of invitation identify issues that 

NIGC is currently focusing on, and about which the agency would like tribal input. The 

letters always include an invitation to discuss any other topics that might be of particular 

interest to an individual tribe. Some consultations, therefore, have been limited to a 

single issue, such as NIGC’s proposals to better distinguish gaming equipment 

permissible for uncompacted Class II gaming from that permitted for compacted Class III 

gaming. Others might focus on issues specific to the individual concerns of the tribes. 

We do not only make ourselves available for numerous consultations but we also listen 

seriously to what we hear at those consultations. The regulations NIGC adopts are 

published with thorough preambles, which attempt to summarize all of the issues raised 

in the government-to-government consultation sessions the Commission has held with 

tribes, as well as those raised by all other commenters providing written comment, during 

the comment period on the regulation. We write such detailed preambles so that 

commenters will know that we considered their comments and understand why those 

comments were or were not accepted. 

We also take to heart what we hear at consultations while we formulate our regulations. 

For example, the proposed regulations on Minimum Internal Control Standards for Class 
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II gaming were written completely in response to observations made by the Tribal 

Advisory Committee on the Class II regulations. Likewise, we have drastically revised 

our Class II classification regulations and technical standards based on tribal feedback. 

While it may not be patently clear to the Committee why reducing the number of daubs 

or ball releases in an electronic bingo game is important, I can assure you, it is a topic of 

hot debate among gaming tribes and the states. The fact that we have reduced the 

number of daubs from two (after the game starts) to one, makes a tremendous difference 

in the speed with which the game may be played. 

This is not to say that our responses to tribal feedback are met with applause in Indian 

Country. We believe that consultation should not necessarily mean agreement and that 

the parties consulting should not measure the good faith or effectiveness of the 

consultation by whether agreement is reached. We must also balance the desire for 

collaboration with the regulated community (Indian gaming tribes) with our statutory 

mission to provide robust and healthy regulation. 

Typically, there is little or no clamor for consultation if the action being considered is 

favorably received throughout the Indian gaming industry. NIGC’s recent reduction in 

the fees it imposes on gross gaming revenues to fund NIGC operations provides such an 

example. On the other hand, if the issue the agency is considering is viewed as 

problematic, often there are concerns expressed that consultation has been inadequate. 

A further challenge the NIGC has observed is that consultation is most often criticized by 

tribes when the eventual policy that the agency settles on is at odds with the position 

expressed by tribes during consultations. That is, the NIGC’s failure, from the tribal point 

of view, was not in the consultation per se but rather that the Commission did not agree 

with tribal points of view. It is often the case that the only consultation deemed adequate 

is that in which the Commission always fully comports with tribal points of view. NIGC 

often finds itself sympathetic to tribal points of view, but it is also bound by statutory 

constraints. For example, the IGRA’s characterization of certain games as Class III 

requires the sanction of tribal-state compacts. 

 

Government Performance and Results Act (GPRA) 

In mid- 2006 IGRA was amended by Pub. L. No. 109-221 (Act of May 12, 2006) to 

require the NIGC to formally comply with the Government Performance and Results Act 

(GPRA). 

The formal GPRA process was new to NIGC, and we lacked knowledge and experience 

in our agency in preparing strategic and performance plans in accordance with GPRA 

procedures and requirements. Our staff, after reading GPRA and reviewing one or two 

existing plans from other agencies, drafted a plan for FY 2008. In light of feedback, 

including from tribal representatives who read the discussion draft on our website, the 

plan was essentially discarded and we started anew.
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The new draft was completed around the first of April 2008. We are now seeking review, 

guidance and assistance relative to our new plan. 

We hope to have a draft strategic plan suitable for submission to Tribes and Congress for 

comments by the end of June 2008. 

 

CRIT Decision 

In performing its oversight role, in the 1990s NIGC addressed concerns about the lack of 

internal controls in a number of tribal gaming facilities by adopting a comprehensive set 

of Minimum Internal Control Standards (MICS), which the NIGC applied to Class II and 

Class III gaming. While many tribes at that time already had excellent internal control 

systems, a number did not, and as a result of the application of those standards, the entire 

Indian gaming industry moved to a more professional level, some tribes adopting the 

NIGC MICS, some tribal-state compacts adopting those MICS, and many tribes 

combining the NIGC standards with their own, more rigorous standards. The annual 

audits IGRA requires tribes conduct and furnish to NIGC for review, thereafter included 

independent auditors’ analysis of tribal compliance with those standards. NIGC 

expanded its team of auditors and conducted tribal audits in connection with compliance 

with those standards. Those standards were applied to Class II and Class III gaming. At 

the time of their adoption, many tribes, while complying with the new regulations, voiced 

a concern that NIGC lacked the authority to so regulate Class III gaming – Class III 

gaming constituting more than 90% of the $26 billion of gross gaming revenues per year. 

Those concerns crystallized in a judicial challenge brought by the Colorado River Indian 

Tribes (CRIT) to the NIGC’s MICS’s application to Class III gaming. The United States 

District Court and the United States Court of Appeals in the District of Columbia agreed 

with the tribes reasoning and in 2006 decreed that NIGC could no longer mandate tribal 

compliance in that area. Thus, the role and approach of NIGC in that area has since 

changed. A number of tribes have recently amended their tribal gaming ordinances to 

adopt and include the NIGC MICS, and to recognize NIGC’s enforcement authority over 

Class III. In those instances NIGC has reverted to the role that it earlier played. 

Elsewhere, NIGC confines its review of MICS compliance to Class II gaming except 

when a number of tribes have invited the NIGC to their facilities to do Class III MICS 

audits on a voluntary basis. 

Classification Standards

Perhaps the highest profile initiative of the NIGC in recent years has been its effort to 

adopt a regulatory scheme to draw a brighter line to distinguish gaming equipment tribes 

may use for uncompacted Class II gaming (bingo, etc), from that which tribes employ for 

compacted Class III gaming (casino gaming). The IGRA recognized that the long 

standing Johnson Act prohibited “gambling devices” in Indian country, but made a 

specific exemption for the use of such equipment when it is utilized pursuant to the tribalstate compact. The Act also recited that tribes could use computers and electronic and 

technologic aids when they conducted their bingo and games similar to bingo, but further 

provided that slot machines of any kind and electronic facsimiles of games of chance fell 
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into the compacted Class III category. After taking enforcement actions, closing tribal 

gaming facilities and imposing significant fines, in instances where the NIGC observed 

slot machines or electronic facsimiles of games of chance being employed in the absence 

of compacts, the Commission attempted to better address the issue by providing a number 

of advisory opinions with respect to equipment it deemed playable without a compact. 

That process proved complex and difficult, and with the rapid advances in technology, 

we discovered that no sooner were such advisory opinions written, than they became 

obsolete. Thus, a long effort, assisted by tribal advisory committees, was commenced to 

write regulations to clarify what equipment could be used without a compact, and how 

such equipment could be identified and certified. This effort included a long discussion 

and negotiations with the Department of Justice, which has responsibility for enforcement 

of the Johnson Act, and drafting and proposing rules which, after strong criticism by 

tribes and others during many consultation sessions, were withdrawn. 

As a result of a long arduous effort by the NIGC’s tribal advisory committees, working 

with a working group of representatives who build, design and regulate such equipment 

at the tribal level, a new package of proposals was published in the Federal Register in 

October, 2007. Much consultation with respect to those proposals was held thereafter, 

and the comment period was extended several times, most recently concluding on March 

9, 2008. In connection with this effort the Commission commissioned an economic 

impact study which will be considered together with the comments on the proposals 

under consideration. This long-standing effort deserves to be fairly and finally 

concluded, and the Commission is cautiously optimistic that with the information 

received from tribes, states and the public, it can publish final rules with respect to at 

least some aspects of this concern in the near future. 

Unless or until clarity is brought to this area, challenges will remain for gaming tribes, as 

well as those of us who attempt to regulate them. Tribal gaming is by no means the only 

sector where concerns of this nature exist. In many states, there is a significant expansion 

of what is purported to be charitable gaming using automated bingo equipment. These 

states find themselves struggling with questions about whether such equipment complies 

with their charitable gaming laws or runs afoul of their gambling laws, and, generally, 

with the scope of permissible charitable gaming within their borders. In some instances, 

this has raised issues about violating the “exclusivity” that tribes understood they had 

bargained for in their Class III compacts in exchange for revenue sharing with the states. 

Tribes cannot expect to have an unfettered breadth of Class II gaming equipment in their 

sector, yet require states to view the issue very narrowly. Clarity in this area will serve 

many purposes. 
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Change in the Face of Growth 

The NIGC, in the context of the federal family, is a relatively young and small agency. It 

was not long ago when NIGC’s staff consisted of only a handful of people, operating 

from a single office. As the industry grew from at most a $200 million industry when 

IGRA was enacted to a $26 billion industry, the agency’s budget grew from $1.2 million 

in 1991, to $13 million in 2006, to $20.5 million in 2008. The days are not long past 

when there were only five “field investigators” operating out of their homes and the 

trunks of their cars, spread throughout Indian country. 

As this growth has occurred, it has become necessary to adopt more and more formal 

policies and procedures. The agency has always attempted to look at federal statutes, 

such as most of Title 5 U.S.C. governing government organization and employees, and 

through more specific procedures of the Department of the Interior under our interagency 

arrangement with the Department to provide administrative support. With the agency’s 

growth, it has become necessary to develop and adopt more agency-specific policies, and 

this is a work in progress. Recently the agency has adopted policies relating to 

reasonable accommodations under Equal Employment Opportunity Commission 

guidance, and undoubtedly as the agency continues to grow, further policies of this nature 

will be deemed appropriate. Common sense and good judgment has always been the 

approach the agency has attempted to take when dealing with its management. As the 

NIGC has now grown to have a staff of more than 100, formal policies and procedures 

become a greater necessity. While an informal approach kept the agency nimble in its 

early days, experience is showing that as it has grown, more bureaucracy, to ensure due 

processes and transparency, is appropriate and the agency continues to examine its 

practices to develop measures that are necessary. In this connection, the agency is using 

its own audit staff to conduct audits of a number of its programs, and greater consistency 

and clarity is resulting there from. 

That is an overview of how we are evolving in carrying out our mission. I will be happy 

to answer any questions the Committee have. Thank you. 
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Staffing at the NIGC Headquarters 

 1 – Chief of Staff 

 2 – Commission assistants 

 1 – Director of Audits 

 1 – Director of Enforcement 

 1 – Director of Training 

 1 – Director, Region VI 

 1 – Director, Congressional and Media Relations 

 1 – Director of Contracts 

 1- Financial Analyst 

1 – NEPA Compliance Officer 

2 - Tribal Background Investigation Staff 

 1 – Support Staff 

 1 – Director of Administration (vacant) 

 11 – Administration Personnel (1 vacant) 

 1 – IT Manager 

 4 – IT Staff (1 vacant) 

1 – Acting General Counsel 

 13 – Attorneys (2 on detail) 

 5 – Legal staff 

 ____________________________ 

D.C. Total 50 

Field Total 54 

 ___________ 

Agency Total 104 

April, 2008