Regulatory Updates

Tribal Gaming Regulators: 20 Years of Fighting Theft, Fraud and Ensuring Public Confidence in Indian Gaming

Alan Bailey
Alan Bailey

Alan Bailey
Alan Bailey & Associates

On October 17, 1988, President Reagan signed into law the Indian Gaming Regulatory Act (IGRA), which led to the largest economic wave to hit Native American nations across the United States. The growth of Indian gaming in the last 20 years surpassed all expectations and has empowered many Native American tribes to become more self-sufficient, provide vital services to their members, create jobs and become an important economic and charitable partner to the surrounding communities.

There has been a long-standing media “talking point” that tribes have not done an adequate job with regulating their casinos, therefore public confidence that tribal gaming operations conduct fair and honest gaming begins to erode. This talking point was advanced from the bitter and expensive media war between California tribal casinos and Nevada casinos with the passage of Propositions 5 and 1A.

This article focuses on the history and success of tribal gaming regulators in policing and maintaining the public confidence in fair and honest gaming in the 423 tribal gaming operations in 28 states.

IGRA
IGRA set out to accomplish five things with Indian gaming: Provide a vehicle of self-sufficiency for tribes; establish Native Americans as the primary benefactors of gaming; provide fair and honest gaming environments; prevent the influence of organized crime on casinos by gaming regulation; and
establish the National Indian Gaming Commission (NIGC). Currently, tribal gaming operations are regulated by three separate and distinct levels: tribal gaming commission or agency (TGA), State Gaming Agencies and the NIGC.

NIGC Agency Regulation
NIGC is an independent federal regulatory agency of the United States and was established pursuant to IGRA. NIGC consists of three full-time commissioners, who are appointed by Congress. Additionally, NIGC has lawyers, auditors, field investigators and support staff. Some of NIGC duties are: oversee the tribal gaming commissions, approve casino management contracts, conduct background investigations and enforce federal gaming laws against tribal casinos.

State Agency Regulation
Each state involved in gaming has set up gaming commissions or gambling control boards to oversee gaming at tribal casinos. These gaming commissioners are appointed by the governor of the state. Additionally, some states have special agents with police powers to assist with criminal investigations. Some of the state agencies duties are: establish state gambling control board, assist TGA on internal investigations when requested, enforce violations of the tribal-state compact, and conduct background investigations as needed.

Tribal Gaming Commission (Agency) Regulation
Tribal Gaming Agencies (TGA) were established to conduct the day-to-day oversight and regulation of the gaming operations. TGA consists of full or part time commissioners, who are elected by the members of the tribe. Additionally, the TGA has surveillance observers, gaming agents (inspectors), auditors, background investigators and support staff. TGA duties include: conduct background investigations on all employees and vendors, provide a safe environment for patrons, and maintain compliance with the tribal-state compact, casino policy and procedures, tribal gaming ordinances, state and NIGC regulations. Additionally, the TGA tests and certifies Class III slot machines and provides a procedure to resolve patron disputes.

Regulatory Costs
Based on 2006 data, the National Indian Gaming Association (NIGA) revealed that tribal governments provided the following:

NIGC regulation costs: $12 million
State regulation costs: $70 million
Tribal regulation costs: $255 million
Total regulation costs: $337 million

In 2007, the Tribal Alliance of Sovereign Indian Nations (TASIN) had a study conducted on expenditures of California gaming tribes regarding their TGAs. The study concluded that the 64 gaming tribes in California have a projected budget of over $90 million for their individual TGA. The TGA in the study employ over 1,800 staff members in such positions as gaming commissioners, gaming agents, surveillance observers, support staff and background investigators. Based on 2006 data, the TASIN report revealed the following:

Total Gaming Agency Employees
Nevada: 461 California: 1896

Total Slot Machines
Nevada: 172,318 California: 64,543

Annual Regulatory Budget
Nevada: $41,586,720 California: $100,741,837

Statewide Regulatory Budge per slot
Nevada: $241 California: $1,560

Patron Disputes
The TGA employs gaming agents inside the casinos to investigate patron disputes. If the dispute cannot be resolved between the gaming operations and the patron, a gaming agent will conduct an investigation and forward it to the TGA.

If the TGA decides the patron was entitled to the winnings, they will direct the gaming operations to pay the disputed amount. Nevada and New Jersey casinos do not have this type of independent dispute resolution in place.

Surveillance Department
Tribes have spent millions keeping pace with technology with access control systems, digital surveillance systems, facial recognition software and other devices. It should be noted many tribal surveillance departments have converted to digital recording systems from video recorders. However, even today many Nevada casino surveillance departments have not converted to digital format. Nevada casinos had to wait until 2005, before the Nevada Gaming Commission approved standards for digital recording.

Background Investigations
TGA conducts background investigations on all applicants and vendors. More extensive investigations are conducted on applicants who are deemed as “primary management officials” or “key employees.” Key employees are employees who earn more than $50,000 a year or hold key positions, such as cash handling positions, slot machine technicians or members of the security or surveillance force.

These investigations are used to establish whether the employee is “suitable” for employment in a tribal casino. The investigations are done on a continual basis. Commission staff members will also fingerprint, via a “LiveScan” device, all employees and send the prints electronically to the FBI to determine if the applicant has any criminal history, specifically a felony conviction.

If a TGA takes action on an employee’s gaming license, a report is sent to NIGC. This information can be accessed by other TGAs to determine if the employee was subject to any license sanctions.

National Gambling Impact Study Commission
In 1999, the most in-depth study of commercial and tribal gaming was done by the National Gambling Impact Study Commission. One part of the study was conducted on commercial casinos (Nevada and New Jersey) versus tribal casino regulations and practices. This area was documented by interviewing experts in law enforcement and in gaming regulation enforcement. Gaming studies and statistical data were also examined to provide the commission with specific opinions and conclusions.

In regards to the tools of regulation, such as background checks, fingerprinting, licensing, training, auditing and slot machine testing showed no “significant variance” between tribal and commercial casinos. The study revealed internal controls at tribal casinos are more significant in training and auditing, while commercial casinos are more significant in financial records.

Another area of the study revealed tribal gaming has more agencies that conduct enforcement and oversight functions than commercial casinos. These agencies are at the local, state and federal levels. Training is a very important area as it relates to the gaming regulation. The study found commercial casinos relied on “in house” training, while tribal casinos sent their employees to “external” professional schools and training.

Compliance activities consisted of on-site inspections by gaming regulators. Tribal regulators conducted on-site inspections on a daily basis, while commercial regulators were on an infrequent basis.

The National Gambling Impact Study Commission concluded the following:

1) Tribal casinos have more regulatory activity than commercial casinos.

2) Tribal casinos have more training activity than commercial casinos.

3) Tribal casinos have more compliance activity than commercial casinos.

Public Confidence
When millions of patrons visit tribal casinos each year, they want to have an enjoyable gaming experience and not feel they have been “cheated.” Americans spend over $25 billion in tribal casinos and the public expects a safe, friendly and honest gaming environment. Tribal gaming has been a huge revenue generator for tribes that depend on this money for essential tribal government functions such as education, health care, child and elder care, police and fire protection and other basic governmental infrastructure. Also, tribal governments give about $150 million a year to various charitable causes.

Tribes have a vested interest to protect the integrity and honesty of tribal gaming. If the public perceives tribal casinos are unsafe or there is “dishonest” gaming, revenue will stop flowing for needed tribal services.

In conclusion, over the past 20 years, tribal governments have spent millions of dollars to ensure fair and honest gaming. TGA have developed into very sophisticated regulatory agencies that employ numerous staff members to protect tribal assets and to maintain the public confidence that tribal governments have and will continue to police and regulate themselves.

Alan Bailey has been employed with tribal regulatory agencies in California for the past 15 years. He can be reached by email at abaileyandassociates@gmail.com.