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On Class II Gaming Regulations

Joseph Valandra
4/4/12

The National Indian Gaming Commission (NIGC) recently published discussion drafts of a set of regulations for Class II. These are the first set of regulations for Class II put forth by Chairwoman Stevens and are the result of a strenuous consultation process and with the advice of a NIGC organized Technical Advisory Committee (TAC). All of this follows years of pain-staking hard work by the Tribal Gaming Working Group (TGWG). The good news is that this set of regulations did not come down off the mountain, as was the process in the recent past. This is not to say that some significant work is not needed to make this set of regulations workable for the industry and, most importantly, for the Tribal governments that are the primary regulators of Class II.

This set of regulations encompasses Technical Standards and Minimum Internal Controls (MICS). There is no doubt that Class II will be better off when these regulations are adopted and become the measuring rod for enforcement at both the NIGC and for Tribal regulators. This article is not intended to be a specific review of each provision; rather, it is meant to take a broader policy view.

The Technical Standards set the minimum requirements that manufacturers of Class II hardware and software must build into their products. This newest draft will modify existing regulations and will bring needed clarity and direction. A set of standards like these has long been a goal of the industry. It is my view that most of the provisions that ensure a viable and profitable Class II industry are contained in this draft. What is lacking is largely highly specific and requires that the NIGC give great weight to the comments that will come from the Tribal governments, Tribal regulators, the TGWG, and the industry.

The NIGC will benefit from the technical expertise that will be contained in many of the comments to be filed. I urge this NIGC to be open-minded to the considerable expertise offered. To do anything less may allow historical failings to overshadow an otherwise propitious record of regulatory reform, consultation, and collaboration.

MICS are the heart and soul of gaming regulation. Tribal government gaming has a proud and enviable record of regulation over the past 24 years since the passage of the Indian Gaming Regulatory Act (IGRA). Historically the role of the NIGC in fulfilling its oversight role has largely been successful, with some notable exceptions. The exceptions grew out of a fundamental misinterpretation of the language of the IGRA by the previous NIGC administration that lead to overreaching and a “policing” mentality. I point this out not to open wounds, rather to make it clear that there is no room to return to that failed view.

The work of the TAC and the consultations along with the comments that will be offered to the NIGC will shape a regulatory view that must define the fundamental role of the NIGC as defined by the IGRA – oversight. Tribes are the primary regulators of Class II gaming and must be fully accorded that role by the NIGC in all of its regulations, especially these Class II regulations.

The draft NIGC regulations are not consistent and appear to place the NIGC on equal footing with Tribal regulators. The IGRA, established law and the stated policies of this NIGC should support and strengthen Tribal sovereignty. Lest I be accused of overreacting, let me say I speculate that when all of the comments are in and when the NIGC has a chance to reflect, this concern will be remedied.

This set of NIGC regulations is a good start; we must make sure that the end product does not drift back to historically and legally unsupported conclusions. Groups like the TGWG along with the advisors to Tribal government gaming will continue their good work and focus on this issue as well as the details of the regulations.

I urge all Tribal governments and regulators to take the time to comment on this draft set of NIGC Class II regulations paying particular attention to the proper role of the NIGC.

Due date for comments is April 16, 2012. For more information, see the NIGC website at NIGC.gov.

Joe Valandra, Sicangu Lakota, is principal owner and president of VAdvisors, LLC, chairman and CEO of Tehan Woglake, Inc., and former chief of staff of the National Indian Gaming Commission.

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