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NIGC asks Congress for authority over Class III gaming

The National Indian Gaming Commission asked Congress on Wednesday to strengthen its authority over the $19 billion tribal casino industry in the wake of a court decision that limited the agency's powers.

NIGC Chairman Phil Hogen, a Bush administration appointee, said it was urgent that lawmakers act quickly in order to ensure adequate regulation of Class III gaming. He told the Senate Indian Affairs Committee that the court decision "has the potential to seriously compromise" the agency's abilities.

"I think it's urgent that we have a remedy to this problem," testified Hogen, whose three-year term expires at the end of the year.

Sen. John McCain (R-Arizona), the chairman of the committee, also expressed urgency. He was adamant that Congress, through the Indian Gaming Regulatory Act of 1988, intended for the federal government to have a strong role over Class III gaming, a highly lucrative segment of the market that includes slot machines, table games and related offerings.

"Perhaps the language is somewhat murky, but I find it very difficult to accept the proposition that now that Indian gaming has gone a half a billion dollars a year to $19.5 billion -- and no sign of slowing -- that somehow now we don't need a regulatory agency," he said "It defies logic."

Sen. Byron Dorgan (D-North Dakota), the vice chairman, agree that changes are in order. But he was unsure about what steps Congress should take, in light of the sovereignty of tribal governments, who are the primary regulators of their casinos.

"The Indians weren't given sovereignty," he said. "Sovereignty is theirs. It's theirs. ... Indian gaming has been extraordinarily beneficial to some folks in this country who have lived in the shadow of poverty and who now have an economic activity that provides jobs and opportunity and a revenue stream to address the crisis of health care, education and housing."

Mark Van Norman, the executive director of the National Indian Gaming Association, said Congress should not intervene in the court case that limited the federal role in Class III gaming. He noted that IGRA, through the compact process, leaves that role to tribes and states.

"Under the tribal-state compact process, tribes and state have established strong relationships over the past 17 years," he testified.

Kevin Washburn, a former Department of Justice official who is now a professor at the University of Minnesota law school, said tribes are doing a good job regulating their casinos. But he said Congress should act to address an issue raised by the court case.

"My sense is that the public has great confidence in Indian gaming largely because they believe there's a strong federal regulatory presence," he told the committee. "I think tribal regulators do a lot better with the federal presence," he added.

The hearing was prompted by the August 24 decision in the Colorado River Indian Tribes case. The tribes challenged the NIGC's ability to issue and enforce the Minimum Internal Control Standards (MICS) for Class III gaming, saying IGRA left that role to tribes and states.

U.S. District Judge John D. Bates agreed wholeheartedly. He rejected the federal government's arguments that the NIGC has authority over all aspects of Class III gaming.

"A careful review of the text, the structure, the legislative history and the purpose of the IGRA, as well as each of the arguments advanced by the NIGC, leads the court to the inescapable conclusion that Congress plainly did not intend to give the NIGC the authority to issue MICS for Class III gaming," Bates wrote.

The NIGC has downplayed the decision, noting that it only applies to the Colorado River Indian Tribes, who are based in Arizona. But in response to a question by McCain, he acknowledged that other tribes are beginning to "push back" and, in his written testimony, he said there is nothing to prevent other tribes from using the decision to attack the MICS "in other forums."

The Colorado River Indian Tribes didn't testify yesterday, as the case is ongoing, but officials have said the dispute is about sovereignty. The tribal casino is operated under tribal law and under a tribal-state compact that has been hailed as a national model.

Although figures aren't exact, the NIGC estimates that Class III gaming makes up 80 percent of the $19 billion tribal casino industry. Through compacts, states have taken on various roles in the regulation of Class III games, with some sharing in revenues from this segment.

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

Relevant Links:
Colorado River Indian Tribes -
Senate Indian Affairs Committee -