Indian Gaming Regulatory Act

The Indian Gaming Regulatory Act (USPL|100|497, UnitedStatesCode |25|2701 "et seq.") is a 1988 United States federal law which establishes the jurisdictional framework that presently governs Indian gaming. The law established the National Indian Gaming Commission and gave it a regulatory mandate. The law also delegated new authority to the U.S. Department of the Interior and also created new federal offenses, giving the U.S. Department of Justice authority to prosecute them. The law has been the source of endless controversy and litigation. One of the key questions that has arisen is whether the National Indian Gaming Commission and Department of Interior can be effective in regulating tribal economic decisions related to Indian gaming. Senator John McCain is in favor of greater regulation while a prominent professor in the field is skeptical that such regulation is effective. [Paternalism or Protection?: A Panel Discussion at Harvard Law School on Federal Review of Tribal Economic Decisions in Indian Gaming, [http://ssrn.com/abstract=1226542] ] Many of the controversies have produced litigation, some of it reaching the U.S. Supreme Court.

History

In 1976, in a case called Bryan v. Itasca County, the Supreme Court sewed the legal seeds that would eventually give rise to the Indian gaming industry. [Kevin K. Washburn, "The Legacy of Bryan v. Itasca County: How an Erroneous $147 County Tax Notice Helped Bring Tribes $200 Billion in Indian Gaming Revenue" 92 Minnesota Law Review 919 (2008), [http://ssrn.com/abstract=1008585] . ] In an opinion written by Justice William Brennan, the Supreme Court in Bryan highlighted tribal independence from state regulatory authority. Since regulatory authority is the primary legal mechanism for regulating some forms of gambling, it was suddenly apparent that states lacked the authority to exercise such authority on Indian reservations. High stakes Indian bingo operations soon arose in California, Florida, New York, and Wisonsin. The industry grew rapidly. Discussions about codifying Indian gaming had been ongoing from 1983 on. In 1987, the U.S. Supreme Court ratified the Bryan theory, holding that, as sovereign political entities, federally recognized Native American tribal entities could operate gaming facilities free of state regulation. The Indian Gaming Regulatory Act that emerged in 1988 was a set of compromises between the Indian tribes, who wanted to protect their sovereignty, and the various states, which did not want to see gambling enterprises emerge within their borders unless they had regulatory control over them.cite book |last=Mason |first=W. Dale |title=Indian Gaming: Tribal Sovereignty and American Politics |publisher=University of Oklahoma Press |year=2000 |isbn=0-806-13260-4 pp. 60–64.]

The primary legislators involved in drafting what would become the Indian Gaming Regulatory Act were Senator Daniel Inouye, Representative and then (as of 1987) Senator John McCain, and Representative Mo Udall.cite paper |url=http://ageconsearch.umn.edu/bitstream/17932/1/ar980140.pdf |author=Johnson, Tadd |title=Regulatory Issues and Impacts of Gaming in Indian Country |publisher=Increasing Understanding of Public Problems and Policies: Proceedings of the 1998 National Public Policy Education Conference |date=September 1998 |pages=140–144 ]

As S.555, the bill passed the United States Senate by voice vote on September 15, 1988. The House then passed the same bill, without it going through committee, by a 323–84 margin on September 27. President Ronald Reagan signed it into law on October 17, 1988.

Unclear language decided in the Senate Indian Affairs Committee required clarification of whether the Indian casinos were subject to taxation. This was established in the Supreme Court ruling "Chicksaw Nation v. United States". [cite web|url=http://www.tribalresourcecenter.org/legal/supcourt/opinions/2001.SCT.0000167.htm|title=Chicksaw Nation vs. United States|publisher=National Tribal Justice Resource Center's Supreme Court Decisions]

Three classes

The Act establishes three classes of games with a different regulatory scheme for each.

Class I

Class I gaming is defined as traditional Indian gaming and social gaming for minimal prizes. Regulatory authority over class I gaming is vested exclusively in tribal governments.

Class II

Class II gaming is defined as the game of chance commonly known as bingo (whether or not electronic, computer, or other technological aids are used in connection therewith) and if played in the same location as the bingo, pull tabs, punch board, tip jars, instant bingo, and other games similar to bingo. Class II gaming also includes non-banked card games, that is, games that are played exclusively against other players rather than against the house or a player acting as a bank. The Act specifically excludes slot machines or electronic facsimiles of any game of chance from the definition of class II games. Tribes retain their authority to conduct, license, and regulate class II gaming so long as the state in which the Tribe is located permits such gaming for any purpose and the Tribal government adopts a gaming ordinance approved by the Commission, Tribal governments are responsible for regulating class II gaming with Commission oversight.

Class III

The definition of class III gaming is extremely broad. It includes all forms of gaming that are neither class I nor II. Games commonly played at casinos, such as slot machines, blackjack, craps, and roulette, would clearly fall in the class III category, as well as wagering games and electronic facsimiles of any game of chance. Generally, class III is often referred to a casino-style gaming. As a compromise, the Act restricts Tribal authority to conduct class III gaming.

Before a Tribe may lawfully conduct class III gaming, the following conditions must be met: (1) The Particular form of class III gaming that the Tribe wants to conduct must be permitted in the state in which the tribe is located; (2) The Tribe and the state must have negotiated a compact that has been approved by the Secretary of the Interior, or the Secretary must have approved regulatory procedures; and (3) The Tribe must have adopted a Tribal gaming ordinance that has been approved by the Chairman of the Commission.

The regulatory scheme for class III gaming is more complex than a casual reading of the statute might suggest. Although Congress clearly intended regulatory issues to be addressed in Tribal-State compacts, it left a number of key functions in federal hands, including approval authority over compacts, management contracts, and Tribal gaming ordinances. Congress also vested the Commission with broad authority to issue regulations in furtherance of the purposes of the Act. Accordingly, the Commission plays a key role in the regulation of class II and III gaming.

FBI jurisdiction

The Act provides the FBI with federal criminal jurisdiction over acts directly related to Indian gaming establishments, including those located on reservations under state criminal jurisdiction. Since the inception of IGRA, the FBI has devoted limited investigative resources to Indian gaming violations. Meanwhile, the Indian Gaming industry has grown from one that produced nearly $100 million in total revenues in its first year, to one that exceeds $22 billion annually; a total that exceeds the combined gaming revenues of Las Vegas and Atlantic City. This growth, coupled with confusing jurisdictions and limited regulatory resources, has generated great concern over the potential for large-scale criminal activity and influence in the Indian gaming industry. Recent allegations of large scale fraud and corruption have led to extensive media scrutiny and inquiries from Congressional leaders as to the FBI's response to these allegations. This document provides information regarding Indian gaming and the resources that are available to personnel investigating criminal allegations associated with Indian gaming establishments and/or tribal gaming operations.

The Industry

The most recent Indian gaming statistics, provided by the National Indian Gaming Commission (NIGC), indicate that there are approximately 360 Indian gaming establishments in the United States. These casinos are operated by approximately 220 federally recognized tribes and offer Class I, Class II and Class III gaming opportunities. The revenues generated in these establishments can be substantial. Currently, the largest casino in the United States, Foxwoods Casino, is owned by the Mashantucket Pequot Tribe and located in Mashantucket, Connecticut. Tribal casinos located in the eastern United States generated roughly $3.8 billion in FY02. Those located in the Central United States recorded gross revenues of approximately $5.9 billion, while those located in the Western United States generated close to $4.8 billion. Most of the revenues generated in the Indian gaming industry are from Indian casinos located in, or near, large metropolitan areas. Currently, 12% of Indian gaming establishments generate 65% of Indian gaming revenues. Indian gaming operations located in the populous areas of the West Coast (primarily California) represent the fastest growing sector of the Indian gaming industry.

It is important to note that currently there are 562 federally recognized tribes in the United States. While not all tribes will seek to establish tribal gaming establishments, it can be safely assumed that many more will. Additionally, many of the non-federally recognized tribes are seeking federal recognition so that they can gain access to Indian gaming opportunities.

Regulations

The Act's purpose is to provide a statutory basis for the operation of gaming by tribes to promote tribal economic development, self sufficiency, and strong tribal governments. IGRA provides a basis for the regulation of Indian gaming adequate to: shield it from organized crime and corrupting influences; ensure that the tribe is the primary beneficiary of gaming revenues; and ensure Indian gaming operations are fair and honest for the operator and the players. IGRA also establishes an independent federal regulatory authority for gaming on Indian lands, Federal standards for gaming on Indian lands, and the creation of the NIGC.

NIGC's headquarters is located in Washington, D.C. It is managed by a chairman, appointed by the President of the United States, and divided into five regions. NIGC Regional Headquarters are located in Portland, Oregon; Sacramento, California; Phoenix, Arizona; St. Paul, Minnesota; and Tulsa, Oklahoma. NIGC auditors and investigators are responsible for ensuring that Indian gaming establishments are complying with the minimum gaming standards outlined in IGRA. To accomplish this, NIGC auditors conduct yearly audits of gaming records maintained by Indian gaming establishments and, when appropriate, investigate regulatory matters. The NIGC has a large responsibility in the growing Indian gaming industry and, based on its congressional mandate, dependent on the FBI and/or other federal agencies to investigate allegations of criminal activity in Indian gaming establishments sometimes.

The Indian Gaming Working Group (IGWG)

In February 2003, in an effort to identify and direct resources to Indian gaming matters, the FBI and NIGC created the IGWG. The IGWG's purpose is to identify resources to address the most pressing criminal violations in the area of Indian gaming. This group consists of representatives from a variety of FBI subprograms (i.e. Economic Crimes Unit, Money Laundering Unit, LCN/Organized Crime Unit, Asian Organized Crime Unit, Public Corruption/Government Fraud Unit, Cryptographic Racketeering Analysis Unit, and Indian Country Special Jurisdiction Unit) and other federal agencies, which include Department of Interior Office of Inspector General (DOI-OIG), NIGC, Internal Revenue Service Tribal Government Section (IRS-TGS), Department of Treasure Financial Crimes Enforcement Network (FINCEN), Department of Justice (DOJ), Office of Foreign Assets Control (OFAC), US Department of the Treasury, and Bureau of Indian Affairs Office of Law Enforcement Services (BIA-OLES). The IGWG meets monthly to review Indian gaming cases deemed to have a significant impact on the Indian gaming industry. As a result of these meetings, several investigations have been initiated and the IGWG, through its member agencies, has provided financial resources, travel funds, liaison assistance, personnel resources, coordination assistance and consultation.

The IGWG works as follows:

# If suspected criminal activities are taking place in the Indian gaming industry and the interested office/agency does not have adequate resources to investigate this matter, the office/agency contacts the Indian Country Special Jurisdiction Unit, FBIHQ, at 202-324-3666. This contact may come from the FBI or an outside source or agency.
# A small group of IGWG members will convene to determine if the alleged criminal violation is a matter of "national importance" in its effect(s) on the Indian gaming industry. If so, the IGWG will invite representatives from the affected FBI division, other federal agencies (if appropriate), the affected United States Attorney's office, and IGWG member agencies to meet and further review the case.
# During this review, the agency eliciting the support of the IGWG will make a case presentation. Following a full review, the IGWG will assist the requesting office/agency to identify and obtain resources to assist in the investigation.
# Throughout the investigation, the IGWG will assist by providing "experts" to assist in the investigation; allocating special funding (i.e. facilitating TDY travel, Title III support, special forensic examination, etc.); conducting liaison with other federal agencies; facilitating the establishment of Indian gaming task forces, and/or providing consultation.

To properly detect the presence of illegal activity in the Indian gaming industry law enforcement offices with jurisdiction in Indian gaming violations should:

# Identify the Indian gaming establishments in their territory.
# Establish appropriate liaison with Tribal Gaming Commission (TGC) members, State Gaming Commission Representatives, State Gaming Regulatory Agency Representatives, and Casino Security Personnel.
# Establish liaison with representatives from the NIGC and regional Indian gaming intelligence committees. Both will provide valuable information on scams, allegations of criminal wrongdoing, and other patterns of illegal activity.
# Make proactive attempts during crime surveys to identify criminal activity in Indian gaming establishments.
# Send investigators and financial analysts to training which provides them with the knowledge and skills they need to effectively investigate criminal activity in Indian gaming establishments.

See also

* Gambling in the United States
* Gaming law

References

External links

* [http://www.nigc.gov National Indian Gaming Commission]
* [http://www.fbi.gov/hq/cid/indian/indgaming.htm Federal Bureau of Investigation: Indian Gaming Investigations]