Okla. tribes banking on Hogen stance

WEDNESDAY, SEPTEMBER 25, 2002

Phil Hogen goes before the Senate today for his confirmation hearing as chief regulator of the $12.7 billion Indian gaming industry. Some tribes are already lining up with a wish list for the former federal prosecutor.

Three Oklahoma tribes in particular hope the Bush appointee and two aides will revisit a controversial aspect of Indian gaming: casino game classification. The Chickasaw, Choctaw and Cherokee nations operate a suite of machines that were ruled illegal in their state this past spring.

But the way the tribes see it, Hogen might be persuaded to change his mind. In court papers, they pleaded with a federal judge to keep a lawsuit over the games alive pending the installment of the new National Indian Gaming Commission.

The incoming officials, they argue, should be given a chance to review the status of the MegaNanza family of games. "[I]t would appear prudent to afford the soon-to-be-newly-constituted NIGC an opportunity to address this issue," the tribes wrote in a September 19 filing.

Game classification is one of the most important duties of the NIGC, and members of the Senate Indian Affairs Committee are expected to ask Hogen questions about the touchy subject. It's something the nominee knows a thing or two about, having sat on the regulatory body during the Clinton administration.

The stakes are considerably higher now, however, as Indian gaming revenues have doubled in recent years. The Oklahoma tribes cite millions of dollars in lost revenue due to the illegal status of the MegaNanza machines.

Multimedia Games Inc. (NASDAQ: MGAM) of Texas fought the classification in a lawsuit. But a federal judge in Oklahoma dismissed the case earlier this month. And this week, U.S. District Judge James H. Payne threw out the tribes' attempt to join the battle.

So the tribes are banking on Hogen's relaxed interpretation of new classification guidelines that were finalized in June. Under the rules, MegaNanza is legal, they contend.

Before his departure, former NIGC chairman Montie Deer, who objected to the modified regulations, argued in court papers otherwise. There is little to suggest Hogen will depart from the position.

That spells financial disaster for the tribes. The Chickasaw Nation faces multi-million dollar fines for operation of the illegal games. An administrative appeal has been filed and it would be up to Hogen and his new aides to review it.

Multimedia, whose stock plunged 50 percent when its flagship product was questioned, is in a similar predicament. A company spokesperson said Payne's dismissal of the suit was being appealed to the 10th Circuit.

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