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NIGC takes narrow reading of Class III court decision

The National Indian Gaming Commission plans to continue enforcing its Class III regulations despite a court decision stating that the agency "overstepped" its boundaries.

On August 28, U.S. District Judge John D. Bates held that NIGC has no authority to issue or enforce Class III regulations. In a 42-page decision, he said Congress reserved that role to tribes and states through the compacting process.

But in a response to tribal leaders, NIGC Chairman Phil Hogen said the agency disagrees. He said the NIGC will continue to enforce its Minimum Internal Control Standards (MICS) for Class III gaming.

"We take this view because experience has clearly shown that the NIGC MICS have been one of the most effective regulatory tools for both the NIGC and tribes to ensure the integrity of tribal gaming operations and to protect their gaming assets," Hogen said in the letter to tribes.

In adopting a narrow reading of the ruling, Hogen said it only applies to the Colorado River Indian Tribes, whose leaders challenged a MICS audit of their Class III gaming operation. The court ruled that the NIGC had no authority to conduct the audit or fine the tribe for delaying the audit.

As a result, Hogen said the decision can't be expanded throughout Indian Country. "What it did not do was to enjoin the NIGC from applying its MICS on Class III gaming elsewhere, or from conducting audits to monitor tribal compliance with the MICS," he told tribes.

At the same time, Hogen said that "future developments" will affect the NIGC's stance. The agency could revise the MICS regulations, he said, or a court could block them altogether or take other action.

Congress could also step in and clear up the matter. In years past, NIGC officials have asked lawmakers for legislation to clarify that the agency has authority over Class III gaming.

The bills have never become law. But the NIGC has a strong backer in Sen. John McCain (R-Arizona), the chairman of the Senate Indian Affairs Committee and an original author of the Indian Gaming Regulatory Act.

"The purpose of IGRA was to regulate Class III gaming," he said at an April 27 hearing.

The MICS were first issued and implemented during the Clinton administration. The spell out, in considerable detail, the minimum practices tribes must follow in conducting Class II and III gaming.

Tribes have countered that the agency lacks the power to regulate Class III gaming, a lucrative segment of the industry that includes slot machines and card games. These games can only be played pursuant to a negotiated tribal-state compact.

In his decision, Bates agreed with that stance. He wrote that "Congress understood that it would be the tribes and the states, not the federal government, who would be responsible for the regulation of Class III Indian gaming."

The Colorado River Indian Tribes have a compact with the state of Arizona. Tribal leaders and state officials have held it up as a model for Indian Country, saying it ensures strong regulation of tribal casinos. McCain himself has praised it.

The compact was the subject of a voter referendum in November 2002. CRIT had proposed an alternate agreement that was rejected at the polls and later signed the approved compact.

According to the recent Indian Gaming Industry Report, Arizona tribes took in $1.5 billion at their casinos in 2004, second only to the $5.3 billion in California.

Court Decision:
Colorado River Indian Tribes v. NIGC | Order (August 24, 2005)

Relevant Links:
Colorado River Indian Tribes -
National Indian Gaming Commission -