Indian Gaming: Preliminary Observations on the Regulation and Oversight of Indian Gaming
Published: 2014-07-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the past 25 years, Indian gaming has become a significant source of revenue for many tribes, reaching $27.9 billion in 2012. At that time, about 240 of the 566 federally recognized tribes operated more than 420 gaming establishments ranging from bingo halls to multimillion dollar casinos across 28 states. IGRA, the primary federal statute governing Indian gaming, provides, among other things, a statutory basis for the regulation of Indian gaming to assure that it is conducted fairly and honestly. Tribes, states, Interior, and the National Indian Gaming Commission have roles in regulating or overseeing Indian gaming.
This testimony is based on GAO's preliminary observations from ongoing work that examines (1) the process Interior uses to ensure compliance with IGRA through its review of tribal-state compacts and the types of provisions contained in these compacts; (2) how states and selected tribes regulate Indian gaming; and (3) how the Commission regulates and oversees Indian gaming and how, if at all, recent organizational changes have affected its regulatory or oversight approach.
In its ongoing work, GAO analyzed compacts; visited three states and seven tribes (selected for geographic representations and revenue generation) to discuss the oversight of Indian gaming; reviewed Commission data on technical assistance and enforcement actions; and interviewed Interior and Commission officials. GAO will continue to collect information on these topics and produce a final report.
GAO is not making any recommendations in this testimony.
section_title: What GAO Found
paragraphs: The Department of the Interior (Interior) has a multistep review process designed to help ensure that compacts comply with the Indian Gaming Regulatory Act (IGRA). Such compacts are agreements between a tribe and state that governs the conduct of the tribe's Class III (or casino) gaming activities. Based on GAO's preliminary review, Interior has approved 78 percent (382) of the tribal-state compacts submitted since 1998. While the provisions in compacts approved by Interior are largely similar, they do vary in some respects, such as the terms of “revenue sharing” arrangements established between states and tribes. For example, some compacts do not provide for revenue sharing with states, while some require tribes to share significant portions of revenue with states. The remaining 22 percent (106) of compacts reviewed were either (1) considered approved without action by the Secretary of the Interior, (2) withdrawn, or (3) disapproved by Interior for various reasons, such as when they were not consistent with IGRA.
The roles of states and tribes in regulating Indian gaming vary and are established in two key documents: (1) compacts for Class III gaming and (2) tribal gaming ordinances, which provide the general framework for day-to-day tribal regulation of Class II (including bingo) and Class III gaming facilities. Based on GAO's preliminary observations of ongoing work, GAO found that the three states visited—Arizona, California, and Oklahoma—varied in their approaches to regulating Indian gaming, as seen through differences in their regulatory agencies' organization, staffing levels, and funding. For the seven tribes GAO visited, each has established tribal gaming commissions that perform various regulatory functions to help ensure that their gaming facilities are operated in accordance with tribal laws and regulations and, for Class III operations, the compact.
The National Indian Gaming Commission (Commission), an independent commission created by IGRA within Interior, plays an important role in regulating and overseeing Indian gaming by ensuring that Class II and Class III gaming facilities comply with IGRA and applicable federal regulations and tribal ordinances or resolutions. Among other things, the Commission monitors tribal gaming activities, inspects gaming premises, and takes enforcement actions when necessary. In 2011, the Commission implemented its Assistance, Compliance, and Enforcement initiative, which emphasizes providing assistance to tribes to achieve compliance with IGRA. Through this initiative, the Commission has sought to provide technical assistance and training to tribes so that compliance issues may be resolved early and voluntarily without the need for enforcement actions. According to Commission officials, in part, as a result of this initiative, the number of enforcement actions has decreased significantly. Also in 2011, as part of a broader organizational realignment, the Commission merged its Enforcement and Audits divisions into one Compliance Division. According to Commission officials, this merger was deemed necessary, in part, to better support the Commission's emphasis on compliance assistance under its initiative.

section_title: Letter
paragraphs: I am pleased to be here today to provide some preliminary observations  from our ongoing review of Indian gaming oversight for this committee.  Over the past 25 years, Indian gaming has become a significant source of  revenue for many tribes. In fiscal year 2012, the Indian gaming industry  generated revenues totaling $27.9 billion and included 420 gaming  establishments in 28 states.
The Indian Gaming Regulatory Act (IGRA) was enacted in 1988 to  provide a statutory basis for the regulation of gaming on Indian lands.  IGRA created three classes of gaming and sets out regulatory  responsibilities for tribes, states and the federal government. Class I  gaming consists of social games played solely for prizes of minimal value  or traditional gaming played in connection with tribal ceremonies or  celebrations. This type of gaming is within the exclusive jurisdiction of the  tribes. Class II gaming includes bingo, games similar to bingo, and certain  card games. Class III gaming includes all other types of games, including  slot machines, craps, and roulette. Class II and Class III are subject to  federal regulation or oversight; however, Class III is also subject to state  regulation to the extent specified in compacts between the tribe and state  that allow such gaming to occur. Compacts are agreements between the  tribe and state that establish the terms for how a tribe’s Class III gaming  activities will be operated and regulated, among other things. The  Secretary of the Interior (Secretary) approves compacts and must publish  a notice in the Federal Register before they go into effect.
IGRA also created the National Indian Gaming Commission  (Commission), a commission within the Department of the Interior  (Interior), and charged it with regulating and overseeing various aspects  of Indian gaming. The Commission is composed of a Chair, appointed by  the President and confirmed by the Senate, and two associate  commissioners, appointed by the Secretary. The Commission maintains  its headquarters in Washington, D.C. and has seven regional offices and  three satellite offices and it has approximately 100 full-time employees.  To help ensure compliance with IGRA and its implementing regulations,  the Commission engages in various activities to monitor the work of tribal  gaming regulators—such as examining records of gaming operations,  inspecting gaming facilities, and assessing tribe’s compliance with  minimum internal control standards for Class II gaming. In addition, the  Chair reviews and approves various documents related to gaming  operations, including tribal ordinances or resolutions adopted by a tribe’s  governing body.program by consolidating its Enforcement and Audit divisions into a single  Compliance Division.
In 2011, the Commission reorganized its oversight  This testimony reflects our preliminary observations from our ongoing  review that examines (1) the process Interior uses to help ensure  compliance with IGRA through its review of compacts and the types of  provisions contained in these compacts; (2) how states and selected  tribes regulate Indian gaming; and (3) how the Commission regulates and  oversees Indian gaming and how, if at all, recent organizational changes  have affected its regulatory or oversight approach.
To determine the process Interior uses to help ensure compliance with  IGRA through its review of compacts and the provisions contained in  these compacts, we obtained a list from Interior of all Indian gaming  compacts in effect as of July 2014 and analyzed the compacts to identify  key provisions, including those provisions related to tribal and state  regulation. We also obtained from Interior a list of all compact decisions  (e.g., approved, disapproved) from 1998 to the present. We are in the  process of verifying the accuracy of this list. We also examined written  guidance and other relevant documentation describing Interior’s process  for reviewing gaming compacts and we interviewed agency officials about  how this review process helps ensure compliance with IGRA.
To determine how states and selected tribes regulate Indian gaming, for  our ongoing review of Indian gaming oversight, we are in the process of  contacting all 28 states that have Indian gaming operations. We are  collecting information about how each of the 28 states oversees Indian  gaming including information on the states’ regulatory organizations,  staffing, funding and expenditures, and the types of monitoring and  enforcement activities conducted by state agencies. For our ongoing  review, we are visiting 6 states—Arizona, California, Michigan, New York,  Oklahoma, and Washington. We chose these states to provide  geographic representation and because they are among the states with  the greatest revenue generated from Indian gaming. We have completed  visits to Arizona, California, and Oklahoma, which have about 45 percent  of all Indian gaming operations. We are limiting the discussion of our site  visits to these three states for our preliminary observations in this  testimony. We are in the process of contacting the remaining 22 states by  telephone. Given that there are over 200 tribes that conduct gaming, we  will not be able to obtain information that is representative of all gaming  tribes. Rather, for each of the 6 states that we visit, we are interviewing  officials from at least one or two federally recognized tribes with gaming  operations regarding their approaches to regulating Indian gaming. Our  discussion today will focus on 7 tribes that we have already visited.
To determine how the Commission regulates and oversees Indian gaming  and how, if at all, recent organizational changes have affected its  regulatory and oversight approach, for our ongoing review we are in the  process of collecting information on the Commission’s policies and  procedures related to its regulation and oversight of Indian gaming. Also,  for fiscal years 2004 through 2013, we plan to obtain and analyze data  from the Commission about (1) technical assistance and training provided  to tribes, (2) monitoring activities and enforcement actions taken, and  (3) tribal compliance rates. We are also obtaining information about the  Commission’s recent consolidation of its Enforcement and Audit divisions  into a Compliance Division, including impacts of this consolidation, if any,  on the Commission’s regulatory and oversight approach.
We are conducting our ongoing work in accordance with generally  accepted government auditing standards. Those standards require that  we plan and perform the audit to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We believe that the evidence we plan to obtain will  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We provided a draft of this statement to Interior and the  Commission for their review. The Commission provided technical  comments which we incorporated as appropriate.
subsections: section_title: Background
paragraphs: Since fiscal year 1995, revenue from Indian gaming has grown from  $8.2 billion to $27.9 billion in fiscal year 2012 (see fig. 1). In fiscal year  2012, about 240 of the 566 federally recognized tribes operated more  than 420 Indian gaming establishments across 28 states. These  establishments included a broad range of operations, from tribal bingo to  multimillion dollar casino gaming facilities. Of these establishments, a few  large operations account for a major portion of the revenue.
IGRA is the primary federal statute governing Indian gaming.provides, among other things, a statutory basis for the regulation of Indian  gaming to shield it from corrupting influences, assure that gaming is  conducted fairly and honestly by both the operators and the players, and  ensure that tribes are the primary beneficiaries of gaming operations. The  act establishes the following three classes of gaming.
Class I gaming consists of social gaming solely for nominal prizes or  traditional gaming played in connection with tribal ceremonies or  celebrations and is regulated solely by tribes and not subject to IGRA.
Class II gaming includes bingo, pull-tabs, punch boards, and certain   and is regulated by the tribes and the Commission.
Class III gaming includes all other forms of gaming, including casino  games and slot machines, and although both Interior and the  Commission play a role in overseeing certain aspects of Class III  gaming, it is regulated by the tribes and the states pursuant to  compacts.
A tribe may only conduct Class III gaming activities if such activities are  conducted in conformance with a compact, among other things.  According to the relevant Senate committee report, IGRA was intended to  provide a means by which tribal and state governments can realize their  unique and individual governmental objectives. The Senate committee  report also noted that the terms of each compact may vary extensively  and may allocate most or all of the jurisdictional responsibility to the tribe,  to the state, or to any variation in between.negotiated agreements that establish the states’ and tribes’ regulatory  roles and specify the games that are allowed, among other things. IGRA  specifies that compacts may include provisions related to  the application of criminal and civil laws and regulations of the tribe  and the state that are directly related to and necessary for the  licensing and regulation of gaming,  the allocation of civil and criminal jurisdiction between the tribe and  the state necessary to enforce those laws and regulations,  state assessments of gaming activities as necessary to defray costs  of regulating gaming,  tribal taxation of gaming activities,  remedies for breach of contract,  standards for gaming activity operations and gaming facility  maintenance, and any other subjects directly related to the operation of gaming  activities.
IGRA authorizes the Secretary to approve compacts and only allows the  Secretary to disapprove a compact if it violates IGRA, any other federal  law that does not relate to jurisdiction over gaming on Indian lands, or the  trust obligation of the United States to Indians. Compacts only go into  effect when a Notice of Approval from the Secretary has been published  in the Federal Register.
Class II and Class III gaming may only be conducted on Indian lands in  states that permit such gaming. Indian lands, as defined in IGRA, are  (1) all lands within the limits of an Indian reservation; (2) lands held in  trust by the United States for the benefit of an Indian tribe or individual  over which the tribe exercises governmental power; and (3) lands held by  an Indian tribe or individual that are subject to restriction against  alienation and over which the tribe exercises governmental power.
section_title: Interior Uses a Multistep Review Process to Help Ensure That Compacts Comply with IGRA
paragraphs: Interior has a multistep review process that helps to ensure that compacts  comply with relevant IGRA provisions and other applicable laws. While  compacts approved by Interior share similar provisions, they do vary in  some respects, such as the terms of “revenue sharing” arrangements  between states and tribes and the extent to which the compact addresses  tribal interactions with local governments. Interior cited a variety of  reasons for allowing compacts to take effect without Secretarial action  (deemed approved) and for disapproving compacts.
subsections: section_title: Interior’s Process for Reviewing Compacts
paragraphs: Interior’s Office of Indian Gaming, under the supervision of the Deputy  Assistant Secretary of Indian Affairs Policy and Economic Development,  is responsible for reviewing compacts. According to Office of Indian  Gaming officials, on the day that a compact is received, the Office of  Indian Gaming date-stamps the compact and files the original version.  The Office of Indian Gaming has 10 days to conduct an initial review of  the compact. During this time, they will contact the applicant tribe or state  if any additional information is needed. After this initial review, the Office  of Indian Gaming sends a copy of the compact to Interior’s Office of the  Solicitor to conduct a legal review of the compact. The Office of the  Solicitor has 10 days to review the compact. After the Office of the  Solicitor’s review is complete, the Office of Indian Gaming provides a  copy of the compact and a summary of relevant information to the  Assistant Secretary of Indian Affairs, who has 45 days to approve or  disapprove the compact. Under IGRA, if a compact is not approved or  disapproved within 45 days of its submission, then the compact is  considered to have been approved (referred to as “deemed approved”),  but only to the extent that it is consistent with IGRA.
On June 18, 2014, the Office of Indian Gaming provided us with a list of  compacts that were approved, deemed approved, disapproved, or  withdrawn each year from 1998 to the present. We are in the process of  verifying the accuracy of this list. Based on our preliminary analysis of this  list of compacts, the Secretary received a total of 490 compacts during  this time period to review. Of these, 78 percent (382) were approved;  12 percent (60) were deemed approved; 6 percent (28) were withdrawn;  and 4 percent (18) were disapproved. The number of compacts  submitted varied from year to year, from a high of 66 in 1999 to a low of  8 in 2006.
section_title: Variety of Provisions Contained in Compacts Approved by Interior
paragraphs: The compacts approved by Interior share similar provisions but vary in  some respects. For example, while IGRA does not authorize states to  impose a tax or fee on tribes, apart from the assessment to defray  regulatory costs, the Secretary has approved compacts that contain  provisions for revenue sharing with states, so long as the states provide  the tribe with a comparable benefit in return—a benefit to which the tribe  would not otherwise be entitled. The amount of revenue sharing varied  widely in the compacts we reviewed. Some compacts do not provide for  revenue sharing, such as the 1991 compact between the Fond du Lac  Band of the Minnesota Chippewa Tribe and the state of Minnesota, or the  2011 compact between the Flandreau Santee Sioux Tribe and the state  of South Dakota. In contrast, some compacts require the tribe to share  significant portions of revenue with the state. For example, the 2010  compact between the Seminole Tribe of Florida and the state of Florida  establishes percentages of net revenue that the tribe must give to the  state—as much as 25 percent—based on how much revenue the tribe  makes each year.
Approved compacts had provisions that varied in other ways, such as the  extent to which the compacts require the tribe to enter into agreements  with local governments. For example, the 2003 compact between the La  Posta Band of Diegueno Mission Indians and the state of California  requires the tribe to consult with the county and other relevant local  governments to develop agreements to prevent and mitigate effects from  any proposed gaming facility. Some compacts make no mention of  agreements with local governments.
section_title: Reasons Compacts Are Deemed Approved or Disapproved
paragraphs: Compacts that are not approved or disapproved within 45 days are  deemed approved, but only to the extent that they comply with IGRA.  According to Federal Register notices or decision letters that accompany  the compacts, Interior might not take action on a compact within the  statutory deadline for a variety of reasons. Federal Register notices  indicate that some compacts take effect without Secretarial action  because they only change the expiration date of a previously approved  compact and do not require additional review. According to decision  letters accompanying other compacts, the compacts were deemed  approved because they contained provisions that the Secretary found to  be questionable but not outright objectionable. For example, the 2014  compact between the Mashpee Wampanoag Tribe and the state of  Massachusetts contained terms that could provide the possibility in the  future for the state to regulate certain Class II games, which IGRA does  not authorize, and Interior’s letter cautioned the state and tribe against  implementing the compact in a way that violated IGRA.
Of the disapproved compacts we reviewed, the reasons for disapproval  varied. For example, compacts were disapproved because lands  proposed to be used for gaming were not Indian lands as defined by  IGRA or the compact established a management contract that did not  meet the requirements of IGRA.
section_title: State and Tribal Regulation of Indian Gaming
paragraphs: Compacts establish the responsibilities of both tribes and states for  regulating Class III gaming and identify the standards for the gaming  operation and maintenance of gaming facilities, as well as the state and  tribal laws and regulations that will be used to regulate the gaming,  among other things. In addition, tribal gaming ordinances, which apply to  Class II and Class III gaming, provide the general framework for tribal  regulation of gaming facilities. The ordinances include specific procedures  that must be followed by tribes and standards that they must meet,  among other things. Based on our preliminary observations of ongoing  work, we found that the approaches of the three states we have visited to  regulating Indian gaming vary, as seen through differences in their  regulatory agencies’ organization, staffing levels, and funding. For the  seven tribes we have visited, each has established tribal gaming  regulatory agencies that govern the day-to-day operations of their gaming  facilities. These agencies perform various regulatory functions to help  ensure that their gaming facilities are operated in accordance with tribal  laws and regulations and, for Class III operations, the compact.
subsections: section_title: Compacts and Tribal Gaming Ordinances Establish the Roles of States and Tribes
paragraphs: The roles of states and tribes in regulating Indian gaming vary and are  established in two key documents: (1) compacts for Class III gaming and  (2) tribal ordinances for both Class II and Class III gaming. Compacts that  govern Class III gaming on Indian lands lay out the responsibilities of both  tribes and states for regulating gaming. For example, compacts may  include, but are not limited to, provisions allowing the state to conduct  inspections, certify employee licenses, and review surveillance records.  They may also include tribal responsibilities to notify the state when they  hire a new employee or when they make changes to their gaming  regulations or rules for gaming.
In addition, IGRA requires a tribe’s governing body to adopt, and the  Commission Chair to approve, a tribal gaming ordinance before a tribe  can conduct Class II or Class III gaming. According to the Commission,  the tribal gaming ordinances are a key part of IGRA’s regulation for tribal  gaming, providing the general framework for tribal regulation of gaming  facilities, and including specific procedures and standards to be met. For  the Chair to approve the ordinances, they must provide, among other  things, that  the tribe will have sole proprietary interest in the gaming activity; gaming revenues will only be used for authorized purposes; annual independent audits of gaming operations will be provided to  the construction, maintenance, and operation of the gaming facilities  will be conducted in a manner that adequately protects the  environment, public health and safety; and  the tribe perform background investigations and the licensing of key  employees and primary management officials in accordance with  certain requirements.
Along with the ordinance, a tribe must also submit other documentation to  the Commission, including copies of all tribal gaming regulations. The  Chair has 90 days after submission of a tribal gaming ordinance to  approve or disapprove it; if the Chair does not act within 90 days, the  ordinance is considered to have been approved but only to the extent it is  consistent with IGRA.
section_title: States Vary in Their Approaches to Regulating Class III Indian Gaming
paragraphs: Based on our preliminary observations, the three states that we have  visited—Arizona, California, and Oklahoma—vary in their approaches to  regulating Class III gaming. As illustrated in table 1, the three states differ  in their organization, funding, and staffing levels. For example,  California divides its regulatory responsibilities between two agencies,  whereas Arizona and Oklahoma each have one agency. We also  observed that state budgets for the regulation of Class III Indian gaming  ranged from $1.1 million to $19.8 million and staffing levels ranged from 3  to 136 full-time equivalents.
We also observed that the three states engaged in a variety of regulatory  activities, including conducting background checks on current and  prospective employees, licensing gaming devices, inspecting gaming  operations, and reviewing the gaming operator’s surveillance.
section_title: Tribes Are Responsible for the Day-to-Day Regulation of Indian Gaming
paragraphs: The Commission recognizes that tribal governments are responsible for  the day-to-day regulation of gaming conducted on Indian lands. While  tribal governments have the authority to engage in gaming, the  Commission stresses the importance of tribes establishing a  comprehensive regulatory framework for gaming. According to the  Commission, comprehensive regulation by tribes is a necessary  component to ensure the integrity of the games and to protect the interest  of the tribe.
Each of the seven tribes we visited in Arizona, California, and Oklahoma  for our preliminary observations have established tribal gaming regulatory  agencies—also called tribal gaming commissions or tribal gaming  agencies—that perform various regulatory functions to ensure that their  gaming facilities are operated in accordance with tribal laws and  regulations and, for Class III operations, the compact. For each of these  tribes, the tribal gaming regulatory agency was established by the tribal  government for the exclusive purpose of regulating and monitoring  gaming on behalf of the tribe. In general, the regulatory functions that can  be performed by tribal gaming regulatory agencies include developing licensing procedures for all employees of the gaming  conducting background investigations on primary management  officials and key employees, obtaining annual independent outside audits and submitting these  audits to the Commission, ensuring that net revenues from any gaming activities are used for the  limited purposes set forth in the gaming ordinance, promulgating tribal gaming regulations pursuant to tribal law, monitoring gaming activities to ensure compliance with tribal laws and establishing or approving minimum internal control standards or  procedures for the gaming operation.
As part of our ongoing work, we plan to visit additional tribes to discuss  their approaches to regulating Indian gaming, and we will summarize our  findings in our final report.
section_title: The Commission’s Regulation and Oversight of Indian Gaming and Impacts of Recent Reorganization
paragraphs: The Commission plays an important role in regulating Class II gaming  and overseeing Class III gaming to ensure compliance with IGRA and  applicable federal and tribal regulations. Among other things, the  Commission monitors Class II gaming, inspects Class II gaming  premises, and takes enforcement actions when necessary. In 2011, the  Commission implemented its Assistance, Compliance, and Enforcement  (ACE) initiative, which emphasizes providing assistance to tribes to  achieve compliance with IGRA. Through this initiative, the Commission  has sought to provide technical assistance and training to tribes so that  compliance issues may be resolved early and voluntarily without the need  for a Notice of Violation, which we refer to as an enforcement action. Also  in 2011, as part of a broader organizational realignment, the Commission  merged its Enforcement and Audits divisions into one Compliance  Division. According to Commission officials, this merger was deemed  necessary, in part, to better support the Commission’s emphasis on  compliance assistance under its ACE initiative.
subsections: section_title: The Commission Is Responsible for Ensuring That Gaming Facilities Comply with IGRA and Applicable Federal and Tribal Regulations
paragraphs: IGRA established the Commission within Interior to provide federal  regulation of Class II and oversight of Class III Indian gaming. Among  other things, the Commission monitors tribal Class II gaming activity;  inspects Class II gaming premises;  reviews licenses issued by tribes for key employees and primary  management officials; audits and reviews financial records of Class II gaming operations  (and Class III operations when tribal gaming ordinances provide for  it); provides technical assistance and training to tribal gaming  commissions and operations, and; when appropriate, undertakes enforcement actions for violations of  IGRA, the Commission’s regulations and approved tribal gaming  ordinances.
The Commission also monitors tribal compliance with minimum internal  control standards, which specify in detail the minimum practices tribes  must establish and implement for gaming activities. The Commission  adopted these standards for gaming operations on Indian lands in 1999;  however, in 2006, a federal circuit court ruled that IGRA did not authorize  the Commission to issue regulations establishing minimum internal  control standards for Class III gaming. Commission officials explained  that the impact of the court’s decision is tempered by compacts requiring  tribes to adopt tribal internal control standards for Class III gaming and  that, in most cases, these standards are at least as stringent, if not more,  than the Commission’s Class III minimum internal control standards.  Specifically, as of July 2014, Commission officials said 115 compacts in  six states require tribes to adopt tribal internal control standards that are  at least as stringent as the Commission’s Class III standards. In addition  to these compact provisions, Commission officials said that 15 tribes in  California have gaming ordinances that provide for Commission  enforcement of the Commission’s Class III minimum internal control  standards in lieu of the tribe ensuring compliance with tribal internal  control standards and state verification of that compliance. However,  Commission officials expressed concern that its minimum internal control  standards are out of date since the Commission does not have the  authority to amend these standards for Class III gaming. For example,  gaming reporting functions have improved since the Class III minimum  internal control standards were promulgated in 1999, and now this  reporting is in digital format rather than in the analog format that the Class  III minimum internal control standards suggest.
section_title: The Commission’s Recent Initiative Seeks to Resolve Tribal Compliance Issues Voluntarily, When Possible
paragraphs: In 2011, the Commission implemented its ACE initiative, which  emphasizes, among other things, providing assistance to tribes to  achieve compliance with IGRA. Through this initiative, the Commission  seeks to provide technical assistance and training to tribes so that  compliance issues may be resolved voluntarily without the need for  enforcement actions. However, Commission officials told us that  enforcement actions will still be taken when necessary.
As part of its ACE initiative, the Commission provides guidance, technical  assistance, and training to tribes to help build and sustain their capacity to  prevent, respond to, and recover from internal control weaknesses and  violations of IGRA and Commission regulations. To improve the technical  assistance and training that the Commission offers to tribes, the  Commission tracks the number of training and technical assistance  events it offers, their length in hours, the number of people the training  and technical assistance reaches, and satisfaction rates with the training  the Commission offers. In fiscal year 2013, the Commission held  194 training and technical assistance events that provided 754 hours of  training and technical assistance and reached 2,751 participants who  were largely satisfied with the training and technical assistance provided,  according to a Commission report (see table 2).
As indicated in table 2, the Commission has met or exceeded its goals for  training and technical assistance, with the exception of the percentage of  tribes attending training in fiscal year 2012.
To monitor tribal compliance with IGRA and applicable federal and tribal  regulations for both Class II and Class III operations—another component  of the Commission’s ACE initiative—the Commission conducts site visits  and audits and evaluations of tribal gaming facilities, among other things.  The Commission has developed various performance measures related  to these compliance activities to help measure progress toward achieving  its goals. As shown in table 3, the Commission met its goals for  conducting site visits and audits in fiscal years 2011 and 2012, but it did  not meet its goals for these activities in fiscal year 2013.
The Commission also tracks tribal compliance with what it defines as  eight primary obligations under IGRA, which are obtaining a compact approved by Interior prior to conducting Class III  submitting investigative reports and suitability determinations on each  key employee and primary management official, summarizing the  results of the tribal background investigation;  submitting fingerprint cards to the Commission for processing;  submitting gaming employee applications to the Commission at the  commencement of employment; adopting a gaming ordinance for Class II or Class III gaming that has  been approved by the Commission; paying a fee assessment to the Commission based on gaming  issuing a separate license for each facility where gaming is  conducted; and  submitting an annual independent audit of each Class II gaming  operation to the Commission.
In its 2012 report to the Secretary regarding tribal compliance with these  obligations, the Commission stated that tribes were in compliance with  most of the obligations. However, the report stated that a number of tribes  did not meet established deadlines for submission of fee payments and  audit reports.
In recent years, the Commission has rarely initiated enforcement actions.  Our analysis of the last 10 years of publicly available Notices of  Violation—documents that describe the circumstances surrounding the  violation of the law, Commission regulation or tribal ordinance and  measures required to correct the violation—peaked in fiscal years 2008  and 2009 (see table 4) before the implementation of the ACE initiative.  Prior to fiscal year 2010, the Commission issued Notices of Violation most  frequently to address untimely submissions of annual audit statements or  untimely fee statements.
Commission officials attributed the decline in the Commission’s  enforcement actions since fiscal year 2009 to its more proactive,  preventative approach taken to help ensure compliance as called for by  the ACE initiative. Specifically, the ACE initiative seeks to prevent  violations from occurring since Commission officials are working  collaboratively with tribal regulators. Under the ACE initiative,  Commission officials said that enforcement is generally viewed as a tool  of last resort. Also, the Commission modified its regulations in 2012 so  that fees or quarterly statements submitted late are now subject to a fine  rather than a Notice of Violation. As these were the most common enforcement action initiated prior to fiscal year 2010, some decline in  enforcement actions would be expected. We are continuing to collect and  analyze data related to the Commission’s regulations and oversight of  Indian gaming, and we will present that information in our final report.
section_title: The Commission’s Reorganization Appears to Align with Its Emphasis on Compliance Assistance
paragraphs: In 2011, as part of a broader organizational realignment, the Commission  merged its Enforcement and Audits divisions into one Compliance  Division. According to Commission officials, this merger was deemed  necessary, in part, to better support the Commission’s emphasis on  compliance assistance through its ACE initiative. These officials  explained that centralizing compliance, enforcement, and auditing staff  into one division improves communication among these staff and allows  the Commission to identify compliance issues early. Early identification of  compliance issues, in turn, allows the Commission to provide assistance  to tribes before an issue becomes more serious. In keeping with the ACE  initiative, Commission officials said they would prefer not to let  compliance issues reach the enforcement stage. We will continue to  collect information on the Commission’s reorganization, and we will  present this information in our final report.
Chairman Tester, Vice Chairman Barrasso, and members of the  Committee, this completes my prepared statement. I would be happy to  respond to any questions that you or other members of the Committee  may have.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff members have any questions about this testimony,  please contact me at (202)-512-3841 or fennella@gao.gov. Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this statement. Key contributors to this  testimony were Jeff Malcolm (Assistant Director), Amy Bush, Jillian  Cohen, John Delicath, Justin Fisher, Paul Kazemersky, Jeanette Soares,  and Lisa Turner.
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