Self-Regulation for Gaming Is Good for Tribal Sovereignty

Joseph H. Webster

When Congress enacted the Indian Gaming Regulatory Act in 1988 (IGRA), it included an important provision to allow for self-regulation of Class II gaming by tribal governments that established a record of successful gaming regulation. Tribes that achieved a certificate of self-regulation would be responsible for most aspects of gaming regulation, with only limited oversight by the National Indian Gaming Commission (NIGC). Congress anticipated that this transfer of regulatory responsibilities would shift the cost of regulation to the tribes, and consequently included language in the IGRA to cap the fees paid to the NIGC by a self-regulating tribe.

Unfortunately, the promise of self-regulation went unrecognized for many years. In 1998, the NIGC promulgated implementing regulations for self-regulation. Those regulations, found at 25 C.F.R. Part 518, made it extraordinarily difficult for tribes to achieve self-regulation status, and once achieved, imposed requirements that essentially maintained and arguably expanded the NIGC’s regulatory role. For example, the NIGC imposed onerous submission requirements and effectively added to the statutory criteria to receive a certificate of self-regulation. Further, the regulations required tribes to re-satisfy the requirements for self-regulation on an annual basis, subjecting self-regulating tribes to stringent ongoing review and oversight by the NIGC. The NIGC also asserted in the regulations that it would maintain much of its regulatory oversight role with respect to self-regulating tribes, notwithstanding the clear language to the contrary in the IGRA. Finally, the NIGC imposed a tribal certification requirement regarding the use of gaming revenues that was above and beyond any requirement applicable to tribes that did not self-regulate. In short, there was little incentive for most tribes to go through the process necessary to achieve a certificate of self-regulation.

Recognizing that there were serious shortcomings with its Part 518 regulations, the NIGC took a fresh look at the regulations between 2010 and 2013 as part of its comprehensive regulatory review process. Tribes from around the country submitted comments on Part 518, with many urging the commission to revise the regulations to be consistent with the language and intent of the IGRA.

While the NIGC did not agree to all of the changes proposed by tribes, it promulgated a new Part 518 in 2013. The new Part 518 is a significant improvement over the previous regulations. While obtaining a certificate of self-regulation is still a difficult process, the regulatory requirements are now more in line with those set forth in the IGRA. The submission requirements also have been significantly reduced. Further, the new Part 518 includes fixed time periods for each stage of the review process and opportunities for tribal input throughout.

Perhaps most significant, the regulations now make clear that a self-regulating tribe is no longer subject to a broad range of NIGC powers. Those powers are found in 25 U.S.C. § 2706(b)(1)-(4) and generally provide that the Commission: 1) shall monitor class II gaming conducted on Indian lands on a continuing basis; 2) shall inspect and examine all premises located on Indian lands on which class II gaming is conducted; 3) shall conduct or cause to be conducted such background investigations as may be necessary; and 4) may demand access to and inspect, examine, photocopy, and audit all papers, books, and records respecting gross revenues of class II gaming conducted on Indian lands and any other matters necessary to carry out the duties of the Commission under this chapter.

While the previous regulations stated that self-regulation status did not alter the commission’s investigative and enforcement powers, the new Part 518 expressly states that the above-listed powers are “inapplicable” to a tribe with a certificate of self-regulation. As a result of these changes, the new Part 518 makes possible true self-regulation by tribes.

Obtaining a certificate of self-regulation provides a tribe with a number of significant benefits. First, tribes now have another important opportunity to assert tribal sovereignty by taking over regulatory responsibilities that otherwise would be carried out by the federal government. Second, obtaining such a certificate from the NIGC is a stamp of regulatory excellence, as it is issued only after a comprehensive review by the NIGC of the tribe’s regulatory structure and systems. Third, a self-regulating tribe is exempt from most NIGC oversight. Finally, there is a financial benefit to self-regulation, as the annual fee rate for Class II gaming by a self-regulating tribe is reduced by 50 percent.

The first certificate of self-regulation under the new regulations was issued by the NIGC to the Seminole Tribe of Florida in late 2014. Our firm had the honor to represent the Seminole Tribe through this process. In a press release announcing the issuance of a certificate of self-regulation to the tribe, NIGC Acting Chairman Jonodev Chaudhuri highlighted the significance of this achievement: “The Seminole Tribe has built not only an impressive gaming operation, but also an extraordinary regulatory structure to oversee that gaming. Being granted a certificate of self-regulation is a tremendous accomplishment.”

Associate Commissioner Daniel Little, who serves as Director of the Commission’s Office of Self-Regulation, noted the extent of the effort that was required: “This exhaustive assessment required the tribe to dedicate many resources over the past year, but it was necessary to ensure the stringent requirements of IGRA and NIGC regulations are met. We spent several months reviewing the tribe’s gaming regulatory structure and I commend the tribe for setting such an impressive standard for the industry.”

Each tribe will need to decide for itself whether to seek self-regulation status. However, the new Part 518 finally makes self-regulation a viable option for tribes that would like to assert greater autonomy over the regulation of their Class II gaming operations.

Joseph H. Webster is a partner in the DC office of the law firm of Hobbs, Straus, Dean & Walker LLP. He can be reached at [email protected].

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