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Senate panel urged to move with caution on gaming

Tribal representatives defended their casino operations on Wednesday amid criticism that the $18.5 billion and growing industry needs more oversight.

Norman DesRosiers, the longtime gaming commissioner for the Viejas Band of Kumeyaay Indians, said Indian gaming officials "are a little bit frustrated" by suggestions that tribal casinos aren't well policed. He told the Senate Indian Affairs Committee that his tribe is spending nearly $4 million a year on a staff of 52 people to regulate a single facility in southern California.

"This is more resources than some states appropriate," he said.

DesRosiers, who also serves as chairman of the National Tribal Gaming Commissioners and Regulators, said hundreds of people just like him are ensuring that casinos are being run properly. "It's us that that call in the Department of Justice," he testified. It's us that call in to find the improprieties, to find the thefts, embezzlement, the scams, the cheats."

"We're the ones there," he added. "And we're not an exception. Viejas is not an exception."

Charles Colombe, the president of the Rosebud Sioux Tribe of South Dakota and the treasurer of the National Indian Gaming Association, supported that statement. He said tribal casinos are regulated by more than 3,300 people at the tribal, state and federal level. The overwhelming majority of these regulators are employed directly by tribes, he said.

"We have stringent regulatory systems," he said. "Tribes meet or exceed federal standards."

The views clashed with those presented by Sen. John McCain (R-Arizona), the chairman of the committee. He said he had a "drastically different" stance on changes that may be needed to the Indian Gaming Regulatory Act. "It seems to me it's very appropriate to review the law, how it's been implemented, what the effects are -- intended and unintended -- and we have serious questions," he told the witnesses.

The problems McCain identified were many. He said he was concerned about Interior Department officials leaving their jobs and immediately going to work for tribes, technological advances that have blurred the line between Class II and Class III games, casino deals that are crafted to avoid federal review and tribes who acquire trust lands for gaming under questionable circumstances.

McCain said he would support efforts, either through new legislation of new regulation, to address every single one of these issues. His committee is currently considering a bill to block a California tribe from opening an off-reservation casino without first obtaining state and federal approval, one of many proposals raised during the two-hour hearing yesterday.

"Indian gaming is here to stay," he said. "The question is, do we protect patrons of Indian gaming to the fullest extent in keeping with our responsibilities?"

Tribal and other witnesses on the panel agreed there were concerns with the way the industry works. But they told McCain that putting more power in the hands of the federal government -- which has not always lived up to its obligations to Indian Country or provided adequate resources to carry them out -- may not be the best way to go.

"I have no objection to state regulators or federal regulators watching me, coming on our premises, looking at what we're doing and letting me know whether we're in compliance or not," he testified. "I would just be very cautious of where we go with any contemplated future legislation."

"Opening up IGRA has no merit at this time," Colombe added. "Further regulations -- whether it be fee-to-trust [or] all of those issues -- I think are fully covered within the act."

Kevin Washburn, a University of Minnesota professor who served as legal counsel to the National Indian Gaming Commission, acknowledged there are "bad actors" within the industry but he too urged caution about new legislation. He said tribes, not the federal government, should be given more power to make their own decisions -- with one important exception.

"The most serious failure of IGRA was the management contract provision," he testified. Of the nearly 200 tribes with casinos today, only 45 are operating them under management contracts that were approved by the NIGC, he pointed out.

While many of the remaining tribes operate casinos on their own, Washburn said "there are people involved in gaming that we don't know about. We haven't been able to take a look at them and figure out who they are, and that's a very serious problem."

The Bush administration has submitted a legislative proposal to make a number of changes to IGRA. Chairman Phil Hogen said his agency needs more resources to carry out its duties, and that stronger regulations are needed to clarify the difference between Class II and Class III machines. Additional Class III standards are also needed, he said.

But he noted that tribes, as the primary regulators of casinos, are the reason that the industry has grown from $100 million less than 20 years ago to the success it represents now. "Indians invented Indian gaming," he said, "and the Great White Father shouldn't tell them where to spend every penny."

Inspector General Earl Devaney said he has observed a number of problems with the industry, particularly with outside interests who pour millions into the federal recognition process in hopes of opening casinos. However, he said his investigations have not turned up any impropriety on behalf of Interior Department officials and employees.

But he said he supported changes in law that would bar ex-Interior Department officials from immediately going to work on tribal issues in the private sector. "It's not necessary," he told the committee, "to carve out this exception."

Devaney also said he was troubled with NIGC's "dual role" within Indian Country. On one hand, the agency is expected to consult and work with tribes but on the other hand, the agency has to enforce the law on the tribes, he noted. "It's hard to wear a white hat on Monday and Tuesday and switch to a black hat on Friday and Saturday," he testified.

Tom Heffelfinger, the U.S. Attorney for Minnesota and the chair of the DOJ Native American Issues subcommittee, talked about efforts to reign in casino crime but acknowledged he had limited data. "We have not been able to quantify the actual theft losses," he noted, but said any loss of revenues from tribal casinos is cause for alarm.

Efforts to change IGRA have always been met with serious resistance by tribes, state governments, the non-Indian gaming industry and lawmakers. Last year, retired Sen. Ben Nighthorse Campbell (R-Colorado), the former chairman of the committee, tried to advance a bill to address revenue-sharing in gaming compacts but the measure never came up for a vote.

Sen. Byron Dorgan (D-North Dakota), the current vice-chairamn of the committee, said it was important to respect tribal sovereignty. But he agreed with McCain that changes need to be made with respect to management contracts and Class III standards, and that tribes need to be protected from fraud.

"I think it is just natural that when you have an industry that has grown ... to $18 billion a year now that there will be those who want to break out of the boundaries and the restraints," he said. "No one likes regulation."

Relevant Documents:
Testimony: Oversight Hearing Before the Senate Committee on Indian Affairs on the Regulation of Indian Gaming (April 27, 2005)

Relevant Links:
National Indian Gaming Commission -
National Indian Gaming Association -