FROM THE ARCHIVE

Hogen says Okla. tribes skirting federal gaming law

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MONDAY, MAY 19, 2003

The head of the National Indian Gaming Commission (NIGC) warned Oklahoma tribes in a strongly worded letter last week that he will shut down their casinos if they continue to violate the law.

In the May 15 letter, NIGC chairman Phil Hogen criticized tribes for offering Class III games despite being told not to do so. He said they face $20,000 a day fines and closure of their casinos if they don't cooperate.

"We all want a level playing field for tribal gaming facilities in Oklahoma," he wrote, "but [the] playing field must be a lawful one."

Hogen's missive was prompted by activity that he said is occurring with regularity in Oklahoma, which currently prohibits almost all forms of Class III gaming, including slot machines and video poker. Over the years, NIGC has slapped several tribes with violation notices for operating Class III devices without an agreement with the state.

Despite the warnings, some of which have resulted in protracted litigation, Hogen said the tribes are only superficially complying with NIGC's mandates. "Unfortunately, following these enforcement actions some tribes simply choose to replace the gambling devices that had been the subject of a notice of violation with other Class III devices or allowed modification to original devices that did not alter their character," he wrote.

Hogen did not single out any tribes in his letter. But the practice he cited is well known in tribal gaming circles. With a flick of a switch or some reprogramming, a machine's outward look and feel -- even the name -- can be changed while the underlying technology remains much the same.

In Oklahoma, the problem has escalated with the advent of electronic gaming machines that skirt the line between Class II and Class III. The machines are pitched as souped-up versions of bingo or pull-tab games, which are legal in Oklahoma without a compact.

Two large suppliers in this market are Multimedia Games Inc. of Texas and Sierra Design Group. Multimedia's largest customer is the Chickasaw Nation and the company supplies machines to several other Oklahoma tribes.

Federal regulators say the electronic machines essentially function like slot machines and video poker games. Earlier this year, the Chickasaw Nation and Multimedia Games settled a dispute with NIGC over the classification of the MegaNanza game. They dropped their lawsuit and agreed that the game is of the Class III variety.

Regulation of the games could be taken out of NIGC's hands should the Oklahoma Legislature approve a measure that authorizes Class III gaming compacts. Language buried deep within the 91-page bill legalizes Multimedia and Sierra Design products in the state.

Through revenue sharing with tribes, the compacts would bring an estimated $27 million to $30 million to the state, according to published reports. The racetrack industry, which has suffered since the spread and success of Indian gaming, would be allowed to offer similar games, according to Senate Bill 533.

Several tribes met in Oklahoma City on Friday to discuss the measure but no consensus was reached. Some tribal leaders said they support compacting but others were concerned that Multimedia and Sierra Design machines appear to be the biggest beneficiaries of the bill.

Relevant Documehts:
PDF: Phil Hogen Letter to Oklahoma Tribes (May 15, 2003) | PDF: Senate Bill 553 | RTF: Senate Bill 553 (As of May 19, 2003)

Relevant Links:
National Indian Gaming Commission - http://www.nigc.gov

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