Regulatory Updates

Class II Regulation: An Interview with Phil Hogen, Chairman of the National Indian Gaming Commission

Phil Hogen
Phil Hogen

by AJ Naff, Editor
Indian Gaming Magazine

The NIGC has been drafting a new set of Technical Standards for Class II gaming, a process that has received much attention due to the potential impact they could have not only on the Indian gaming industry, but also on the tribes themselves. Indian Gaming had the opportunity to speak with Phil Hogen, Chairman of the NIGC, about the current status of the proposed Class II regulations and their potential impacts.

The NIGC has been working on Technical Standards with tribal and manufacturer committees. What is the DOJ's position in relation to this process? Have they endorsed it or reviewed any drafts?
As part of NIGC's effort to clarify distinctions between the gaming equipment tribes may use for Class II (un-compacted) gaming, and that which constitutes electronic facsimiles of games of chance and falls into Class III (requiring tribal-state compacts), a Tribal Advisory Committee was established early in the process. Last September, NIGC held a day-long public hearing on its proposed Game Classification and Technical Standards, and one of the panels which participated consisted of representatives of major gaming equipment manufactures, who expressed concerns about the possibility of ill-advised regulations making Class II gaming equipment prohibitively expensive to design and build, and perhaps of questionable appeal to players.

Thereafter, at the request of the Tribal Advisory Committee, those manufactures and others, including tribal representatives worked diligently to draft and suggest alternative approaches to the Technical regulations that had been proposed. Those were presented to NIGC's Tribal Advisory Committee, and when NIGC convened a meeting of that Committee in Washington on January 25th, the Committee presented them to the Commission for its consideration and explained and discussed the approach embodied therein. Very generally, what was suggested was a shift in focus from the “box” players might utilize to play electronic bingo and the like, to the entire system which would constitute the game and its play. The Commission is intrigued by these suggestions, and is even now studying them carefully.

The Department of Justice has not been brought into this preliminary discussion, but NIGC will keep them informed. Much of this package concerns the technical aspects of the games and the systems, and addresses the data to be generated and preserved, and the security and integrity game. This is likely not an area of greatest concern to DOJ.

Will you publish for comment the new alternative draft of the Technical Standards once you make revisions to the current published document for which the comment period closes on January 31st?
No decisions have yet been made as to what might be published, or when.

Are you going to exhaust the Technical Standards process with a comment period on the alternative Technical Standards draft before going forward with Classification Standards?
Whatever the Commission does with respect to regulations in this area, it is important that it has internal consistency, and of course be in keeping with IGRA and the Courts' interpretations thereof. We're still studying all this, and therefore haven't finalized our thoughts on what, if anything, we'll finally do, or the order in which it will be done.

Will you consider a similar tribal/vendor process for Classification Standards (all working together to improve the document), similar to the Technical Standards that involved tribal representation and vendor organizations?
As we proceed with the rulemaking process, we'll attempt to abide by the Administrative Procedures Act and try to frame the advice we ask for and receive with appropriate comment periods and consultation. We've received a great deal of valuable input from many sectors so far. If we decide we need more, we'll take the steps to request it.

Will you find it necessary to publish final Classification Standards and a Facsimile Definition once you have considered and published Technical Standards?
If and when we finalize any regulations, of course, they will be published. If, as we move forward, we decide it would be useful to the process to seek comment on something we tentatively adopt, there could be a re-publication. We've decided none of that yet.

Do you anticipate enforcement actions pursuant to these regulations soon after they are finalized?
We don't anticipate enforcement actions; we anticipate compliance. Nevertheless, if we do finalize regulations in this area, there will be realistic time frames for their implementation. If thereafter there are instances of non-compliance, as we always have, we'll first ask tribes to comply. Only if that fails, would any enforcement become necessary.

What does the NIGC see as the potential adverse impacts in Indian Country from the Technical Standards, Classification Standards, and Facsimile Definition?
NIGC sees positive impacts as a result of any Classification and Technical Regulations that may be put in place. That is, the uncertainty which now shrouds the question of what equipment tribes may use without Class III compacts will be eliminated. Tribes can make large, long-term investments in equipment to meet their un-compacted needs, likely at better interest rates, without worrying if those might be deemed ineligible for their Class II facilities. When tribes and states negotiate Class III compacts, the tribes will know with certainty that is not now available, what they may fall back on, if the Class III gaming they seek is not obtained.

What is the status of the DOJ's proposed Johnson Act bill?
We have not yet seen the package of legislative proposals DOJ will be sending to the new Congress, but since the great need for consistency between the Johnson Act and IGRA remains, we anticipate they will again ask Congress to reconcile the two, by seeking an exemption from the Johnson Act's prohibition of gaming devices in Indian Country for electronic and technologic aids to Class II gaming.

Do you believe that the last election, with Democrats seizing the majority, will be positive for the tribal gaming industry or will there be no change in the view of Congress?
The need for economic development in Indian Country is not a partisan issue, and neither is the continuing need for integrity in gaming, when that is a tool utilized to bring that development to the reservations. I expect there to continue to be a strong interest by Congress in this area, and am
cautiously optimistic that some needed clarifications will be approved in this Congressional session.

Phil Hogen, an Oglala Sioux from South Dakota, is Chairman of the National Indian Gaming Commission (NIGC). He can be reached by calling (202) 632-7003. For more information about the NIGC, visit www.nigc.gov