Indian Gaming and Greed

According to this editorial in the Seattle Post-Intelligencer, tribes' gaming success breeds greed -- but not the kind many folks think.

Often, gaming tribes are portrayed as greedy: their casinos are too successful, their members too rich. But in the current political environment, greed is evident on the part of states wanting to "share" tribal gaming revenue. As the editorial suggests, "share" or even "pressure" doesn't accurately capture the efforts of some state legislators; "force" or "extort" may be better words.

The Downside of Practicing Indian Gaming Law?

The National Law Journal reports on November 17th that Dorsey and Whitney, a Minnesota-based "brand name" law firm, is facing paying millions for legal malpractice in connection with its involvement in the Akwesasne Mohawk casino in upstate New York.

The Great Migration

For the past three years, the National Indian Gaming Commission has been seeking to implement new rules that would create a “bright line” between Class II or electronic bingo machines and Class III slot machines. Of concern to the NIGC as well as prominent members of Congress, such as Senator John McCain, is fact that game makers have used technological innovation to blur the line between such games. (If you’ve ever seen a new Class II bingo machine, you know it’s not your grandmother’s bingo – in fact, sometimes it’s hard to remember that the electronic bingo card is still there, up in the corner of the video screen.)

Aside from the merits of the perceived need for the NIGC to draw a bright line, which we’ve addressed in our regular column in Casino Lawyer magazine and will take up here in future posts, a study commissioned by the NIGC suggests that a great migration will occur in the state of Oklahoma if the proposed rules take effect. The migration will be from Class II to Class III machines, as gaming tribes undertake a shift to more lucrative slots in lieu of what the study suggests will be slower, more cumbersome bingo machines.

Intriguingly, the state will benefit if this occurs, as tribal revenue sharing would be as much as $74.5 million above the $9.3 million that tribes paid the state last year.

Election Results of Interest in Indian Country, Too

Although Indian gaming dominates the headlines – when it comes to headlines about American Indian tribes, that is – the fact is that tribes and tribal members care about many other issues, too. The outcome of the 2006 midterm election, as well as certain key races, has a tremendous potential impact in Indian Country.

In this article from Native American Times, you can begin to see why tribes and tribal associations monitored the election closely, and sought to influence critical races. In particular, congressional committees and subcommittees control programmatic and appropriations decisions.

For example, the Montana Senate race sent Conrad Burns (R) down to defeat. Burns chaired the Senate Appropriations Subcommittee on Interior, which deals with programs in Indian Country. In Washington, Maria Cantwell (D) faced Mike McGavick (R) for a Senate seat. Senator Cantwell has been a strong supporter of Indian Country and sits on the Indian Affairs Committee. In the House, Richard Pombo (R) has been the Chair of the Committee on Resources, the principal committee of jurisdiction over Indian Affairs in the U.S. House, for the last four years. Pombo, of course, recently led the charge on an unsuccessful attempt to reform the Indian Gaming Regulatory Act to severely curtail, if not do away with, so-called off-reservation gaming.

On the whole, there is little doubt that Democratic control of the House and Senate will cause many tribes to breathe a sigh of relief. After all, there’s much more for them to worry about than Indian gaming.

Abramoff's Legacy

The Jack Abramoff scandal, as we predicted, has legs. In San Jose, mayoral candidates are trading barbs related to political donations related to gambling money. Interestingly, one candidate, Cindy Chavez, is being accused of using money donated by Indian gaming political action committees, while the other, Chuck Reid, is being accused of taking money from a donor convicted of failing to pay taxes on money he skimmed from a card club. Both seem to be seen as equally "shady" in the wake of Abramoff.

Federal Circuit Court Decision Limits NIGC Authority Over Class III Gaming

On Oct. 20, the U.S. Court of Appeals for the D.C. Circuit held that the National Indian Gaming Commission's regulations setting minimum internal control standards (MICS) could not apply to Class III gaming operations.

The MICS, promulgated in 1999, are highly detailed operating standards that cover aspects of gaming from requiring that a bingo ball be displayed to patrons before it is called to requiring two employees to initial a corrected error on a slot machine count. The NIGC intended the MICS to apply to both Class II and Class III operations.

The federal court said that IGRA does not give the NIGC authority to regulate Class III gaming; instead, IGRA leaves Class III regulation to the terms of tribal-state compacts.

The ripple effects of this decision will be intriguing. Congress currently is considering an amendment to IGRA to give the NIGC power to regulate Class III gaming, though passage of the bill, introduced by Sen. John McCain, may be unlikely this term.