NIGC Issues Final Rule Amending How Tribes Must Comply with Class II Minimum Technical Standards; Sunset Provision for 2008 Systems Officially Removed

To
NIGA Member Tribes
From

Chairman Ernest L. Stevens Jr.
Jason C. Giles, Executive Director
Danielle Her Many Horses, Deputy Executive Director/General Counsel

re
NIGC Issues Final Rule Amending How Tribes Must Comply with Class II Minimum Technical Standards; Sunset Provision for 2008 Systems Officially Removed
Date
January 3rd, 2018

On December 27, 2017, the National Indian Gaming Commission (NIGC) published a final rule in the Federal Register amending parts of 25 C.F.R. § 547.5, the regulation affecting how Tribes comply with the minimum technical standards for Class II gaming systems and equipment found in 25 C.F.R. Part 547. Importantly, the amended regulation no longer features a sunset provision requiring Tribes with non-compliant Class II gaming systems manufactured before November 10, 2008 (2008 Systems) non-compliant with the provisions of Part 547 to remove these machines from the gaming floor by November 10, 2018. Under the new regulation, 2008 Systems are instead subject to annual review requirements and testing

The NIGC's issuance of this final rule concludes for now a multi-year process in which it sought to regulate 2008 systems in a way that would ensure the integrity and security of Class II gaming and not disrupt the significant economic benefits Tribes receive from these 2008 Systems.

The effective date of the amended regulation is January 26, 2018.

Background

Pursuant to the Indian Gaming Regulatory Act, the NIGC first published a final rule establishing minimum technical standards for Class II gaming systems and equipment on October 10, 2008. To allow time for Tribes to comply with these standards, the NIGC allowed Tribes to continue to offer 2008 Systems on their gaming floors for what was initially a five-year sunset period to November 10, 2013. The NIGC later extended the sunset period another five years to November 10, 2018.

On November 22, 2016, the sunset period for 2008 Systems less than two years from closing, the NIGC decided to include this issue as an official consultation topic for 2017. Following the consultations, the NIGC released a Discussion Draft which, among other proposed amendments, proposed removing the November 10, 2018 deadline for non-compliant 2008 Systems. After further comments were received, the NIGC published a proposed rule on September 28, 2017, revising previously introduced amendments while still removing the sunset provision for 2008 Systems.

Summary of Changes in Final Rule

First and foremost, the new rule transforms the treatment of 2008 Systems from being treated as an exception to compliant gaming systems, to being treated as an alternative set of gaming system. This is exemplified in the fact that 2008 Systems are no longer threatened by a sunset date and are legitimized as a category Class II gaming system.

NIGA and its Class II Sub-Committee worked hard to provide documentation that Tribes are still using 2008 systems and that there has been no evidence to support the claim that 2008 Systems somehow pose a threat to the integrity of gaming, the safety of the public, the interests of the Tribes, or the public interest generally. With the sunset provision now removed, Tribes may continue to benefit economically from the 2008 Systems, subject to an annual review requirement.

This new mandatory process requires Tribal Gaming Regulatory Agencies (TGRAs) to annually review and assess each 2008 System operating within its jurisdiction for compliance with the minimum technical standards. This new provision requires TGRAs to not only identify specific Class II gaming systems not conforming to these standards, but to also enumerate all components of each system that functionally prevent compliance with Part 547.5(b).

TGRAs are also now required to submit to a testing laboratory all modifications to a 2008 System and be tested for compliance with all of Part 547. According to the NIGC, this will aid TGRAs in determining whether the modification will maintain the system's compliance or advance the system's compliance with the standards for newer systems.

Finally, a new subsection is included in the amended final rule relating to records inspection. Records related to the compliance of all of a Tribe's Class II gaming systems must be made available to the Commission upon request.

The new rule is available in the December 27th edition of the Federal Register and on this website:

https://www.federalregister.gov/documents/2017/12/27/2017-27945/minimum-technical-standards-for-class-ii-gaming-systems-and-equipment