224 Second Street SE, WashingtonDC20003 • Tel. (202) 546-7711 • Fax (202) 546-1755 • www.indiangaming.org

June 29, 2017

Via Electronic Mail: Vannice_Doulou@nigc.gov

Mr. Jonodev Chaudhuri, Chairman 

National Indian Gaming Commission 

1849 C Street NW

Mailstop #1621

Washington, DC 20240

Re: Comments on 2017 Consultation Topics

Dear Chairman Chaudhuri:

On behalf of the National Indian Gaming Association, we offer the comments below in response to the 

National Indian Gaming Commission’s (“NIGC”) request for comments on the following six 

consultation topics: (1) draft Class III Minimum Internal Control Standards (“MICS”) guidance; (2) 

rural outreach; (3) development of a strong tribal workforce through training; (4) management contract 

regulations and procedures; (5) technical standards for mobile gaming devices; and (6) fees provided in 

Part 514. We appreciate the NIGC’s efforts to reach out early and consult with tribal governments 

before initiating any formal rulemaking procedures and hope our comments prove helpful in both the 

consultative process and the deliberations that follow. 

I. Draft Class III MICS Guidance.

The NIGC is seeking feedback on its proposal to suspend the Class III MICS at 25 C.F.R. Part 542, 

which would preserve the text of the regulation in the Code of Federal Regulations, but clarify that the 

regulation is not enforceable by the NIGC. The NIGC is also seeking comments on the draft voluntary, 

non-binding guidance for Class III MICS dated January 26, 2017. 

We understand and do not object to the NIGC’s proposal to suspend enforcement of Part 542 and issue 

an updated version of the Class III MICS as non-binding guidance. Such an approach is not only 

consistent with the ruling in CRIT v. NIGC in which the D.C. Circuit Court of Appeals held that the 

NIGC lacks the authority to enforce or promulgate Class III gaming regulations, but also accords 

appropriate deference to tribal regulators in developing their own Class III internal controls and/or 

applying specific compact provisions. We have some concerns, however, that the draft guidance could 

introduce a degree of confusion for those mixed-use gaming facilities offering both Class II and Class III 

gaming, particularly with respect to any additional standards that may be required under their respective 

compacts. 

For instance, it is unclear whether and how the draft guidance will be applied to NIGC audits moving 

forward. Most of the changes in the draft guidance are intended to harmonize the control standards in 

Parts 542 and 543 by creating a uniform set of standards for mixed-use facilities to follow. These 

changes beg the question as to whether the NIGC will similarly adopt uniform audit checklists for both 

Class II and Class III gaming and, if so, whether a mixed-use facility could be subject to an audit finding 
for an exception that only touches a Class III gaming activity. Since audits are typically conducted for 

the whole gaming facility, there may be some confusion when parsing out any compliance issues and 

findings based on binding vs. non-binding control standards for Class II and Class II gaming, 

respectively. 

We are also concerned that the draft guidance leaves open the potential for conflict with any internal 

control standards required under a tribe’s compact. Since the draft guidance will not be binding or 

enforceable, the conflict provisions in the current 25 C.F.R. § 542.4 would no longer be applicable, 

thereby making it unclear which standard is to prevail in the event of a conflict. This could result in 

some confusion for those mixed-use gaming facilities that will have to navigate between non-binding 

guidance and compact standards in operating, regulating, and auditing their Class III gaming activities. 

To address these and related concerns, we recommend establishing a tribal advisory committee to

identify the impacts of any unintended consequences that may result from the NIGC’s proposal for the 

Class III MICS. The committee would help bring to light any unidentified issues with the NIGC’s 

proposal and propose solutions for ensuring a positive and smooth transition. 

We also recommend instituting a more formal rulemaking process before finalizing the draft guidance 

on the Class III MICS. This could happen concurrently with the publication of the NIGC’s proposal to 

suspend 25 C.F.R. Part 542 and draw on the findings and recommendations from the tribal advisory 

committee. Given the far-reaching implications of this proposal, it is critical that the NIGC seize very 

opportunity – whether informal or formal – for tribal participation and input. 

II. Rural Outreach.

The NIGC is seeking comments on its initiative to increase its communications and enhance its 

regulatory partnerships with smaller, rural gaming operations. As part of this initiative, the NIGC is 

seeking to create a new regional office in Rapid City, South Dakota, to cover the four states (Montana, 

Wyoming, North Dakota, and South Dakota) that are currently part of the St. Paul region. The new 

regional office would replace the satellite office in Rapid City, which was opened in 2003 to assist the 

St. Paul regional office in reaching the tribes in these four states. 

While we support the NIGC’s efforts to provide better assistance and training to smaller, rural gaming 

tribes, we do not believe that the creation of a new regional office is necessary to achieve this objective. 

During its consultation, the NIGC noted that the current St. Paul region is relatively large and that a new 

regional office may be necessary to ensure sufficient coverage of the facilities in the plains region. It 

was further noted that a new regional office would be helpful for a number of administrative reasons, 

including enhanced coordination between the region and the Office of General Counsel at NIGC 

headquarters. 

In our view, the costs of this proposal would far outweigh any potential benefits to the affected tribes. 

The benefits noted by the NIGC seem to be more administrative in nature and aimed at increasing 

efficiencies and coordination between the regional and headquarters staff. We question whether this is a 

sufficient justification to support the significant costs involved in elevating the Rapid City satellite 

office, which would require hiring a new regional director as well as additional administrative staff to 

support the new office. We also question whether a compelling need for greater coverage may even 

exist given that many of the affected tribes, including those in South Dakota, operate under a compact 

and have limited Class II gaming.
We urge the NIGC to carefully weigh the expected benefits to affected tribes against the costs and 

determine whether establishing and staffing a new regional office would be the best use of tribal gaming 

fees. 

III. Developing a Strong Tribal Workforce Through Training.

The NIGC is seeking to develop its external training program for tribal gaming regulators and is 

requesting feedback on ways to provide more targeted training to meet tribal needs. 

We welcome and strongly support the NIGC’s increased efforts to provide greater training and technical 

assistance opportunities to tribes, particularly in topics concerning information technology. As 

technology and gaming products evolve, so do vulnerabilities and the impact of security risks. The

NIGC has responded accordingly by taking steps to expand training on information technology issues

and develop new assessment tools for identifying potential security threats. We are encouraged by the 

NIGC’s efforts to adapt its training programs to meet the evolving needs of tribal regulators.

As the NIGC continues this important work, we ask that it bear in mind the varying levels of skill and 

resources across Indian Country and tailor its training offerings to accommodate this wide range of

circumstances. This is especially important for trainings on network security and other information 

technology issues, the impact of which can vary widely depending on the size, scale, and staffing levels 

of the gaming operation. 

In addition, we encourage the NIGC to develop a cross-training program that promotes the exchange of 

information, insights, and perspectives between tribal regulators and the NIGC. Tribal regulators are on 

the front line of regulation and are responsible for the day-to-day implementation and enforcement of 

the policies and regulations developed by the NIGC. Often times, there can be a disconnect between 

what is perceived by policymakers to be a regulatory concern and the reality of what is actually taking 

place. A cross-training program that includes site visits by NIGC staff from various departments and 

regions would give participants a firsthand look at the unique challenges and dynamics of on-site 

regulation. This would, in turn, enable NIGC staff to make better and more informed decisions 

regarding the actual needs and demands of tribal gaming regulation. 

IV. Management Contract Regulations and Procedures.

The NIGC is seeking recommendations on how the management contract and background investigation 

regulations at 25 C.F.R. Parts 531. 533, 535, and 537 can be improved. Specifically, the NIGC is 

seeking input from tribes on how it can improve its efficiency in processing management contracts and 

background investigations.

As an initial matter, we note that it is somewhat difficult to provide meaningful recommendations given 

our limited understanding of the NIGC’s internal processes for reviewing and approving management 

contracts. It is our understanding that each management contract undergoes review by both the finance 

and general counsel’s offices, and that the content review and background investigation processes 

typically happen simultaneously. Beyond that and the basic criteria specified in the NIGC regulations,

however, it is not clear exactly what considerations are involved in determining whether to approve a 

management contract. 

This lack of transparency has led to frustration over the approval process, which can take anywhere from 

six months to several years to complete. In fact, an argument could be made that the recent rise of 
gamesmanship issues are attributable, at least in part, to parties seeking to avoid the uncertainties and 

delays associated with the management contract approval process. 

In our view, a major part of the problem is the lack of guidance on the factors considered by the NIGC 

in determining whether a contract submission is complete in accordance with 25 C.F.R. Part 533. For 

example, we understand that the financial terms in particular are subject to heightened scrutiny to ensure 

that the contract does not violate the tribe’s sole proprietary interest in its gaming activities. However, 

there is no guidance to help tribes understand the type of contract terms and conditions that will be 

viewed as constituting an impermissible financial arrangement. 

One way of addressing this problem would be to provide clear examples of contract language and 

provisions that will likely be viewed as non-compliant with the NIGC’s standards for management 

contracts. This could be accomplished through the publication of Bulletins or other guidance 

documents. To the extent possible, the NIGC should draw clear lines and provide examples that make

clear the type of relationships and financial arrangements that will be deemed impermissible under 

federal standards. This would help prevent future submitters from including similarly fatal provisions in 

their contracts and avoid any delays that would have otherwise occurred. 

In addition, the NIGC should consider establishing timeframes for the extensive vetting process that 

each management contract must undergo before it reaches the Chairman for decision. Experience has 

shown that delays typically occur during the initial review period in which the NIGC staff must 

determine whether the submission is complete in accordance with 25 C.F.R. Part 533. Since the 

Chairman’s 180-day timeframe for taking action on a management contract cannot begin until this 

determination has been made, this initial review period is a critical step of the process that can dictate 

how long the approval process will ultimately take. Establishing a timeframe within which the NIGC 

must respond to the initial and any subsequent submissions would bring greater certainty and 

predictability to the overall process. 

We understand that some of the delays in the review process may be caused by a lack of adequate 

staff and/or resources to handle the volume and complexity of management contract reviews. Many of 

the management contracts submitted for review involve complex financing arrangements that require 

specialized knowledge of financial products and their liability and risk implications. Hiring additional 

staff with the expertise necessary to review and analyze complex financial transactional documents 

could help expedite the review process and alleviate the delays associated with the review process. In 

fact, we believe this may well be a better use of the resources that Indian Country provides to the NIGC 

than the above-referenced proposal to establish and staff a new regional office. 

V. Technical Standards for Mobile Gaming Devices.

On January 26, 2017, the NIGC issued draft language to amend 25 C.F.R. Part 547 by adding new 

technical standards for wireless gaming systems and communications between mobile communication 

devices and mobile gaming systems. We understand that the proposed new standards will not authorize 

internet gaming and are solely intended to regulate handheld mobile devices used on tribal lands. 

While we understand the NIGC’s interest in ensuring the security of mobile gaming, we have serious 

concerns with this proposal to open up and amend Part 547 to include this particular type of gaming 

technology, especially given that 25 C.F.R. § 547.15 already addresses the requisite standards for 

wireless security and communication. The NIGC has previously indicated that this new regulation will 

enable the NIGC to “stay ahead of the technology curve.” However, if that is in fact the desired 
outcome driving this proposal, we believe the more viable and sustainable approach would be to issue 

these technical standards as guidance instead of a regulation. 

As the NIGC is aware, gaming and network security technologies are constantly evolving and adapting 

to the changing conditions of the gaming environment. Our concern is that by locking in these proposed 

technical standards as a regulation, the NIGC may inadvertently impede a tribe’s ability to take 

advantage of new technologies and innovations. Regulations, by nature, are inflexible in that they 

cannot respond to changes in technology and the gaming environment, and can quickly become outdated

as a result. Given the rapid rate of innovations in this arena, it is virtually impossible to draft regulations 

governing electronic technologies that will remain current and keep pace with changes in the gaming 

environment.

If the NIGC wishes to stay ahead of the technology curve, we strongly urge the NIGC to revise its 

approach by withdrawing the proposed draft and issuing the new technical standards through guidance 

documents that are readily changeable and can easily be adapted to respond to an ever-changing 

technology curve. This would provide tribes the flexibility needed to integrate and adapt to new 

technologies without significant delay. 

VI. Fees.

The NIGC is considering amending the time period stated in 25 C.F.R. Part 514 for setting and 

announcing the annual fee rate. Under the current regulation, a preliminary fee rate is adopted by March 

1st and a final fee rate is announced by June 1st of every year. The NIGC is proposing to adopt a new 

schedule in which the fee rate will be announced just once a year on November 1st. One of the stated 

benefits of adopting a later fee rate announcement date of November 1st is that it will coincide with the 

completion of the NIGC’s budget for the next fiscal year. 

If the NIGC decides to move forward with this proposed change, it should bear in mind that some 

gaming operations operate on a calendar year while others may operate on a fiscal year ending 

September 30 or possibly June 30. The regulatory text should provide for a smooth transition in the first 

year the rule goes into effect to avoid confusion. It may help to clarify that in the first year, the previous 

year’s fee rate will carry over until November 1st. Finally, we urge that the regulation should make clear 

that in the event of an underpayment, the gaming operation may adjust prior payments in the next 

quarter to comply with fee rate established for that year. 

VII. Conclusion 

In closing, we would like to reiterate our appreciation for this opportunity to provide the above 

comments on the consultation topics under consideration by the NIGC. We look forward to working 

with the NIGC as these proposals are developed further. Please do not hesitate to contact us if we can 

provide any additional information. 

Sincerely,

Ernest L. Stevens, Jr.

Chairman