February 15, 2000
Public Sector Gaming Study Commission
325 John Knox Road
Bldg. 300, Suite 301EC
Tallahassee, Florida 32303
Dear Fellow Commissioners,
Enclosed you will find a copy of my Minority Statements. These Minority Statements constitute an analysis and critique of particular sections of the Final Report of the Public Sector Gaming Study Commission. They outline inconsistencies within the Final Report and clarify my objections to some of the PSGSC’s recommendations. In particular, the Minority Statement on Indian Nation governmental gaming provides a crucial historical and legal context for the economic and social impacts documented in the body of the PSGSC Final Report. Moreover, I provide additional recommendations on Indian Nation governmental gaming that thoroughly reflect the findings of the Final Report. Finally, these Minority Statements address what I consider to be the flawed process of the PGSCS and document the way that it mimics the NGISC.
The PSGSC’s Final Report contains unsubstantiated recommendations on Indian governmental gaming that I, as the Chairman of the National Indian Gaming Association, find problematic. It also fails to distinguish between individual Commissioner opinions, "state’s rights" political platforms and legitimate findings of fact. This failure to clearly identify the source of major recommendations on Indian governmental gaming is reminiscent of the process employed by the NGISC and one that the PSGSC was supposedly commissioned to correct.
The PSGSC’s Final Report is not the product of an objective study of gambling in America. Rather, it summarizes a "states’ rights" political agenda, a fact that the PSGSC acknowledges in its Final Report, to its credit. The fact that the PSGSC Final Report supports a states’ rights platform is not surprising given that the State of Florida provided nearly half of the Project’s budget. Moreover, the pari-mutuel industry provided one-fourth of the PSGSC budget. Having provided three quarters of the total budget, there should be little wonder, then, that state lotteries and the pari-mutuel industry came out so well in the PSGSC Final Report.
After participating in one study commission and serving on another, I have concluded that state governments simply do not want to accept the facts about Indian Nation governmental gaming or about tribal sovereignty in general. There is a crucial distinction between Indian Nation governments and state governments when it comes to sovereignty. Indian tribal nations are "independent political communities." That is, Indian Nation governments are wholly sovereign except where the Federal government has explicitly limited that sovereignty, such as through the Indian Gaming Regulatory Act’s requirement that Indian Nations negotiate with states for gaming compacts. Tribal sovereignty is not derivative; that means it is not granted by any outside body but is acknowledged as an inherent part of Indian nationhood. State sovereignty, on the other hand, is wholly derivative with regard to Indian affairs. That is, vis-à-vis Indian Nations, states have only those rights explicitly granted them by the Federal government. If not expressly granted to states, Indian nations and the Federal government retain exclusive authority over Indian affairs.
The inherent nature of tribal sovereignty differs qualitatively from the derivative nature of state sovereignty when it comes to Indian affairs in general and Indian gaming in particular. It is clear to me that states do not want to accept this fact. Most offensive to Indian Nations is the recommendation that "lands not recognized as tribal lands at the time of IGRA’s passage should be excluded from Indian gaming." This recommendation amounts to a moratorium on governmental gaming for currently landless Indian Nations, who are landless due to historical forces not of their own making.
The Indian Gaming Regulatory Act clearly outlines the limits of tribal sovereignty and states’ rights in the gaming context. To advocate for increased state input into Indian affairs, especially Indian Nation land rights, is to disregard centuries of Federal Indian policy and disregard the mandates of the IGRA. NIGA simply cannot support any recommendation that takes as its premise the desire to undermine the tribal-federal relationship outlined in the U.S. Constitution, over 200 years of Federal Indian policy, and the Indian Gaming Regulatory Act.
Sincerely,
Richard Hill
Commissioner
Minority Report Submitted by Richard Hill
to the Public Sector Gaming Study Commission
I. Why a Minority Report is Necessary
Political Platforms versus Findings of Fact
The Final Report of the Public Sector Gaming Study Commission (PSGSC) is not a research document. It is a largely a political platform piece advocating states’ rights. The Public Sector Gaming Study Commission was formed by the National Council of Legislators from Gaming States, so the fact that the PSGSC advocates a state’s rights position is not surprising. However, to present this states’ rights agenda as if it were the objective findings of an independent study commission is misleading to the public and ultimately harmful to tribal governments. The Chairman of the PSGSC, Florida State Senator Steven Geller, agreed to acknowledge that the PSGSC "takes a state perspective" and that the make-up of the Commission was skewed in favor of state’s rights. In spite of this caveat, however, some of the recommendations contained in the Final Report must be addressed in order to expose and counter the flawed process of casting policy platforms as objective findings of fact.
An Indian Governmental Gaming Moratorium
The Public Sector Gaming Study Commission was formed in direct response to disappointment with the composition, process and product of the National Gambling Impact Study Commission. Unfortunately, the PSGSC’s work has borrowed many of the NGISC’s flawed tactics and many of its conclusions. When it comes to Indian governmental gaming, the PSGSC Final Report is potentially more damaging to some tribes in the United States than the Final Report of the NGISC. While the NGISC called for a moratorium on the expansion of legalized gambling, the PSGSC has essentially called for a moratorium only on Indian governmental gaming through its recommendation that landless Indian Nations not be allowed to participate in Indian governmental gaming and be denied their Federal right to take land into trust for gaming purposes. This recommendation amounts to an informal moratorium on Indian governmental gaming since it will surely prolong the miserable conditions among some Native American communities. Furthermore, it violates federal law, leaving some tribes without recourse.
The PSGSC acknowledges in their Final Report that the Federal Government has done a poor job as trustee for Indian nations. For some Indian Nations, Indian governmental gaming has been a successful strategy for economic and community survival. Recommending that landless Indian Nations not be allowed to take land into trust for gaming purposes puts solutions to the alarming conditions in Indian country on hold. States have the opportunity to participate in the historic social and economic turn-around in Indian Country that is occurring because of Indian governmental gaming. It is not appropriate for the PSGSC to essentially recommend the perpetuation of the problem.
Commissioner Opinion versus Sources of Data
The PSGSC’s Final Report contains an important caveat that defines both the limited scope of the Public Sector Gaming Commission’s work and the limited nature of information about gambling in general. This caveat also outlines the three primary data sources for the PSGSC’s Final Report as 1) Information presented to Commission members in hearings; 2) Commission members own experience; 3) Findings gathered by Commission staff. The PSGSC had numerous sources upon which to base its findings, including information presented at public hearings, research provided by interested parties, original research conducted for the NGISC, the Federal 1976 study, and the PSGSC’s own staff research. In order to produce a credible Final Report, the recommendations should have been based upon this body of evidence rather than on "Commission members own experience." Unfortunately, some were not.
The Final Report states that "The Commission’s conclusions and recommendations reflect the best judgements of the Commission members at this point in time." Again, conclusions should have been grounded in the testimony, factual data submitted by tribal governments and research data, not an individual’s best judgement.
No Clear Relationship between Findings and Recommendations
Using Commissioner opinion as a data source is problematic, but the presentation of findings and recommendations throughout the Final Report is also troubling. First, some of the findings and recommendations bear little relationship to one another. There are numerous significant findings on Indian Nation Governmental Gaming that are never used to support any recommendations. The Minority Statement on Indian Nation Governmental Gaming seeks to correct that oversight. Conversely, there are recommendations that lack any documented support whatsoever in the text. In addition to the lack of clear linkages between findings and recommendations, the structure of their presentation fails to clearly display the progression from data to findings to recommendations. This progression is a necessary foundation for any credible research study.
Given these shortcomings, the enclosed Minority Statement on Indian Nation Governmental Gaming provides a meaningful historical and legal context for gaming and provides recommendations that thoroughly reflect the findings of the PSGSC reported in the body of the Final Report.
Following this necessary addition to the Indian Governmental Gaming material, the subsequent Minority Statements address contradictions within the Internet and Convenience Gambling portions of the PSGSC Final Report. Finally, this Minority Report will present an analysis of the ways the PSGSC perpetuated the flawed process of the NGISC.
II. Historical and Legal Context for Indian Governmental Gaming
Historically, regulation of gaming in the United States has been the purview of state governments while authority over Indian affairs has been at the Federal level. The tension created when tribal governments got involved in the gaming business is largely a result of these overlapping jurisdictions. While the PSGSC Final Report advocates for the continuation of state control over gambling regulation and public policy issues, it overlooks the long history of the primarily Federal-tribal relationship in Indian affairs. Therefore, a history of Federal Indian policies provides a necessary and meaningful context for the current deadlocks between state and tribal governments in the Indian governmental gaming context.
Indian Tribal Governments
Native American tribal nations occupy a unique legal and historical position in American politics. Prior to the arrival of Europeans to North America, Indian tribes were sovereigns that conducted their own affairs and were not dependent on outside sources of power to legitimize their acts of government. They conducted trade and commerce with other nations, including Europeans and other Indian tribes; they engaged in war and made treaties with Europeans and other Indian tribes; and, most importantly, they managed their internal affairs through their own government systems. During the colonization of America, the British Crown dealt formally with the Indian tribes as foreign sovereign nations. By treating the Indian tribes as foreign nations and by leaving them to regulate their own internal affairs, the colonial powers and later, the United States, established the precedent under international law that Indian tribes are sovereign nations.
The U.S. Constitution institutionalized the political or "government-to-government" relationship between the Federal government and Indian nations, and made that relationship distinct from that between the Federal government and the states or foreign nations. Under established international law at that time, only "international" sovereigns had the ability to enter into political relationships with the Indian nations. Identical to the constitutional provisions dealing with international sovereigns, the U.S. Constitution was drafted so that the Federal government would have responsibility for Indian affairs. Congress was granted the power to "regulate commerce with the Indian Tribes," while the President was empowered to make treaties, with the consent of the Senate.
The status of Indian tribes as international sovereigns soon became inconsistent with the desires of the new United States for westward expansion and a new legal basis for dealing with the Indian tribes was deemed necessary. However, since the political relationship was established in the Constitution, that political process could not be altered — only the status of tribes could be changed. This was accomplished through the United States Supreme Court that redefined the status of Indian tribes through a series of cases in the early 1800's. These cases are now commonly referred to as the "Marshall Trilogy."
Founding Doctrine: The Marshall Trilogy
The Marshall Trilogy (or Cherokee Nation Cases as they are also known) clarified the relationship of Indian tribes vis-á-vis the Federal government and states. The earliest of these cases did not actually involve the Cherokee Nation, but addressed the issue of legal acquisition of Indian land. In this case, Johnson v. M’Intosh, Chief Justice John Marshall ruled that under the Doctrine of Discovery, a principle of international law, the United States had "exclusive title" of all lands within its territorial jurisdiction, including Indian lands. Essential to Marshall's decision was the creation of a new legal principle, that Indian tribes, while sovereigns, were not "international states." While Marshall did not clarify exactly what type of sovereign Indian tribes were, he recognized that they had an "exclusive right of occupancy" which could not be extinguished by any person but the United States government. Thus the United States government "possessed the exclusive right of acquiring" the "Indian title of occupancy."
The second case of the Marshall Trilogy is also the first of the "Cherokee Nation Cases," Cherokee Nation v. Georgia. In this case Chief Justice Marshall clarified the sovereign status of Indian tribes as "domestic dependent nations." Chief Justice Marshall created this new category of sovereign to capture the unique nature of the Federal-tribal relationship in the United States, which he described as "unlike that of any other two people in existence." Following his reasoning in Johnson v. M’Intosh he ruled that Indian tribes "are considered as within the jurisdictional limits of the United States" and thus could not "be denominated foreign nations." This reasoning was bolstered by his finding that the Indian tribes "acknowledge themselves…to be under the protection of the United States." Since the Indian tribes were not states, as clearly stated in the U.S. Constitution, they had to be some other type of sovereign. In addition to finding that Indian tribes were "domestic dependent nations," Marshall further determined that "their relation to the United States resembles that of a ward to his guardian." This determination established the corollary principle of the federal trust relationship with the Indian tribes.
In 1832 the Supreme Court again had occasion to address the sovereign status of the Cherokee Nation. In Worcester v. Georgia, the second of the Cherokee Cases and last of the Marshall Trilogy, Chief Justice Marshall clarified the relationship between the Indian tribes as "domestic dependent nations" and the states. Marshall stated the legal relationship of states and tribes as follows:
"The Cherokee nation, then, is a distinct community, occupying its own territory, with boundaries accurately described, in which the laws of Georgia can have no force, and which the citizens of Georgia have no right to enter...[T]he whole intercourse between the United States and this nation is...vested in the government of the United States."
The Worcester case definitively stated the relationship of the three sovereigns designated in the Constitution — federal, tribal and state. In this relationship tribes and states did not interact on a direct political basis, but only through the federal government. Similar to the states, Indian tribes would be responsible, within their territorial jurisdiction, for all forms of government except those necessarily reserved to the federal government, such as the power to make war and treaties with foreign nations.
When considered collectively, the Marshall Trilogy provides a basis for this unique tripartite sovereign relationship. Indian tribes are not international sovereigns, thus they cannot make treaties with foreign nations, nor can they transfer territory without the agreement of the federal government. Yet Indian tribes retain most of the attributes of sovereignty, thus they are domestic dependent nations under the protection of the United States, which has a trust responsibility to them. Finally, as sovereigns separate and apart from the states and subject only to the federal government’s power, the Indian tribes have complete sovereign governmental authority over their territories, within which the states have no legal authority to intrude. These principles have provided the backdrop for the dynamic political relationship between the federal government, the states and the Indian tribes over the past 200 years.
Contemporary Framework—Public Law 280
Over the nearly 200 years of federal policy since Chief Justice Marshall began authoring his trilogy, the principles he enunciated have continued to frame federal-tribal relations. As recently as May 14, 1998, President Clinton reiterated the position of Federal and tribal governments in Executive Order 13084:
"The United States has a unique legal relationship with Indian tribal governments as set forth in the Constitution of the United States, treaties, statutes, Executive orders, and court decisions...The United States continues to work with Indian tribes on a government-to government basis to address issues concerning Indian tribal self-government, trust resources, and Indian tribal treaty and other rights."
Pursuant to its "plenary" power the federal government has from time to time altered slightly the strictly delineated divisions of jurisdiction between itself, the Indian tribes and the states. In 1885 Congress passed the Major Crimes Act making seven "major" crimes committed on Indian reservations punishable under federal law. This was clearly a usurption by the federal government of local governmental responsibility. In 1887 Congress also passed the General Allotment (Dawes) Act that allotted lands within certain Indian reservations to Indians and allowed non-Indians to homestead on unallotted or "surplus" lots. On the affected reservations, the Act had the effect of shrinking the tribal land base and greatly complicating the division of law enforcement and civil and criminal jurisdiction among the federal, tribal and state governments.
One of the more drastic alterations of the division of jurisdiction between the Indian tribes and the states was Public Law 280 (P.L. 280). P.L. 280 was the first serious grant of jurisdiction over Indian affairs to the states. Passed in 1953, P.L. 280 represented a major shift from a strictly tribal-Federal relationship to a tribal-federal-state structure. P.L. 280 granted criminal and civil jurisdiction over Indian country to specific states -- so-called P.L. 280 states. States not expressly covered by the act had the option of assuming jurisdiction by statute or state constitutional amendment.
Passed during a period when the Federal government was limiting its role in Indian affairs through termination and relocation programs, P.L. 280 did little to please either states or tribes. Tribes resented increased state presence on their reservations while states resented being handed additional police responsibilities without any increase in funding in order to implement their new duties. In addition, there was much confusion about the actual amount of jurisdiction transferred.
In Bryan v. Itasca County, the Supreme Court finally addressed the question of jurisdiction. The Court found that while Congress was particularly concerned about the lack of law enforcement on Indian reservations within the P.L. 280 states, it was only slightly concerned with civil matters and then only with state court access for Indians. Thus, the Court reasoned, Congress granted to the P.L. 280 states broad criminal jurisdiction within the territory of Indian tribes located within those states. However, a similar broad grant of civil jurisdiction was not passed to those states. Instead, P.L. 280 only specified that state courts would have "adjudicatory" power to hear cases involving individual Indians. Thus Bryan established the principle of "criminal/prohibitory" and "civil/regulatory" jurisdiction to describe the new allocation of state and Indian tribe governmental power within the P.L. 280 states, with the former granted to the state and the latter retained by the tribes.
Legal History of Indian Governmental Gaming
Tribes and States: Jurisdictional issues
The legal principles established in the Marshall Trilogy and Bryan v. Itasca Country provide an important background for understanding the jurisdictional issues between tribes and states during the Indian governmental gaming era. One enduring principle consistently reaffirmed by the Supreme Court is the inherent nature of tribal sovereignty. Thus federal authority is not necessary to permit an Indian tribal government to act, but rather Indian tribes are presumed to have the right to act since their authority derives from their pre-existing sovereign status. To determine whether a particular tribal action is legal, the more pertinent question is whether tribal authority has been limited in some way by the federal government. Unless tribal authority has been overtly modified, tribes are free to act under aegis of their laws and in their own forums and subject to the provisions of the Indian Civil Rights Act. States, however, have no authority over Indian affairs unless authorized explicitly by Congress (as they were by P.L. 280 and the Indian Gaming Regulatory Act). The question of jurisdiction begs analysis of the express limitation of tribal authority and the express consent of state authority since tribes and states derive their authority from different sources: tribes from their inherent sovereignty; states from the Constitution. These differing sources of power translate into complicated and often competing interpretations of law and policy.
The states lack jurisdiction over Indian affairs unless expressly granted that authority by the Federal government. Over the past 200 years, jurisdiction over Indian affairs has been delegated to the states on only a very few number of occasions and for limited number of issues. However, states have input into the political relationship through their representation in Congress, which body holds plenary power over Indian affairs.
The Butterworth Case
The first test case of P.L. 280 in the gambling context was in the 1983 case Seminole Tribe of Florida v. Butterworth. In the late 1970's, the Seminole Indian tribe of Florida opened a bingo hall on their reservation. In order to increase their customer base, the Seminoles offered jackpots that were higher than the $100 limit allowed by the state of Florida. Sheriff Robert A. Butterworth of Broward County, Florida informed the tribe that he would make arrests for any violations of the Florida state bingo statute, including the statute's provision that bingo be offered only by "charitable, nonprofit organizations." The Tribe sued, claiming that the statute was a regulatory document and did not fall under the criminal authority granted to the state of Florida.
The federal court was charged with determining whether the Florida State bingo statute applied to Indian tribes. Florida was one of the "optional" states under P.L. 280 that had assumed jurisdiction over reservation Indians. Therefore the question of state jurisdiction in the Butterworth case was decided under the criminal/prohibitory civil/regulatory analysis set forth in Bryan v. Itasca County. The state would only have the power to prosecute if the court found the Florida Bingo statute was criminal/prohibitory rather than civil/regulatory in nature.
In determining whether the Florida bingo statute should be classified as criminal or civil in nature, the 11th Circuit Court of Appeals considered both the public policy of the state on the issue of bingo and the intent of the legislature in enacting the bingo statute. The Court found that "the game of bingo is not against the public policy of the state of Florida." Rather than prohibit bingo, the Florida bingo statute regulates the legal act of conducting bingo by imposing certain limitations. Therefore, "the Seminole Indian tribe is not subject to that regulation and cannot be prosecuted for violating the limitations imposed". Regarding legislative intent, the Court determined that "although the state of Florida prohibits lotteries in general, exceptions are made for certain forms of gambling including bingo."
By determining that the Florida Bingo Statute merely regulated the legal act of running a bingo hall and playing bingo, the Butterworth decision established that if a P.L. 280 state did not expressly prohibit a type of game, then a tribe could offer that game without state regulation.
The Cabazon Decision
In 1987 the U.S. Supreme Court decided another gaming jurisdiction case, California v. Cabazon Band of Mission Indians. The Cabazon Band of Mission Indians began offering bingo and card games on their reservation in the early 1980's. Similar to the Seminole Tribe of Florida, this operation, open to the public, offered bingo games with prizes larger than California law allowed. The State of California and Riverside County attempted to enforce state and local regulations against the tribe's enterprises. However, federal district court and the United States Court of Appeal for the Ninth Circuit held that neither the state nor the county had any authority to enforce gaming laws on the reservation.
The U.S. Supreme Court approached the issue of state authority over the Cabazon Band in the same manner as the Butterworth court, by looking to the Bryan criminal/prohibitory or civil/regulatory analysis. The Court addressed the issue by asking whether the state of California regulated or prohibited bingo and card games. The Court concluded that since bingo and card games were permitted in California in some form and were merely regulated by the State, these games were subject to civil/regulatory jurisdiction and were subject only to tribal regulations, not state regulations. The Court stated that, "in light of the fact that California permits a substantial amount of gambling activity, including bingo, and actually promotes gambling through its state lottery, we must conclude that California regulates rather than prohibits gambling in general and bingo in particular."
It is significant that the 1987 Cabazon case was decided in California because California is a "mandatory" P.L. 280 state. The Cabazon case determined, among other things, whether P.L. 280 constituted Congressional consent to the application of state or county gambling laws to Indian tribal operations. The Court decided that P.L. 280 does not extend state gambling jurisdiction to tribes because the state laws prohibiting non-charitable bingo and limiting pots were no "criminal/prohibitory" but "civil/regulatory". The Court described the distinction as follows:
"If the intent of a state law is generally to prohibit certain conduct, it falls within Public Law 280’s grant of criminal jurisdiction, but if the state law generally permits the conduct at issue subject to regulation, it must be classified as civil/regulatory and P.L. 280 does not authorize its enforcement on an Indian reservation. The shorthand test is whether the conduct violates the State’s public policy."
The Supreme Court thus confirmed the Eleventh Circuit’s Butterworth analysis by ruling that in P.L. 280 states the issue of whether gaming would be allowed, and what types, would be established by that state’s public policy; that is, if a particular type of gaming was allowed in a P.L. 280 state in any form, then tribes could offer that same form of gambling without regulation by the state. Since this ruling was made in a P.L. 280 state, tribes in those states not subject to P.L. 280 considered themselves to be in an even more advantageous position with regards to their governmental power to authorize such games.
The Indian Gaming Regulatory Act
The Cabazon decision confirmed tribal regulatory authority over gambling on Indian reservations and left states concerned about being left out of the process. Therefore, after much political maneuvering, the 1988 Indian Gaming Regulatory Act (IGRA) was crafted and passed as a compromise: tribes wanted to exercise their federally-validated right to offer and regulate gambling on their reservations and states wanted some input over the regulation of gambling within their borders.
Thus IGRA did a number of things to balance the interest of states and tribes. The delicate jurisdictional balance struck in the IGRA relies upon the classification of gambling activity into three classes: Class I to be wholly tribally-controlled; Class II to be regulated by the federal government and tribal governments through the National Indian Gaming Commission; and Class III to be regulated through a compact between the tribes and states, thus allowing states to share regulatory jurisdiction with tribes over casino-style gambling within their borders.
Tribal Government Gambling Classification and Regulation
The Three Classes of Gaming
The regulatory system outlined in IGRA divides tribal government gambling activity into three distinct categories that are each regulated differently.
Class I
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Class I gambling is social gambling for minimal prizes and includes traditional Native American games. These games are regulated exclusively by tribes and are not subject to the provisions of IGRA.Class II
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Class II games include "the game of chance commonly known as bingo," as well as "pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo." Class II gambling is regulated jointly by the tribe and the National Indian Gaming Commission, an independent federal commission established by IGRA. A tribal government may engage in, or license and regulate, Class II gaming on Indian lands within such tribe's jurisdiction, if (1) such Indian gaming is located within a State that permits such gaming for any purpose by any person, organization or entity (and such gaming is not otherwise specifically prohibited on Indian lands by federal law), and (2) the governing body of the Indian tribe adopts an ordinance or resolution which is approved by the Chairman of the National Indian Gaming Commission.Class III
The National Indian Gaming Commission
The National Indian Gaming Commission (NIGC) is an independent Federal commission within the Department of the Interior established pursuant to section 5 of the IGRA. The NIGC is an essential component of the regulation of Indian gaming since it is involved in all the phases of development of a tribal gaming operation as well as directly charged with monitoring Class II gambling.
During the set-up phase for a gambling venue, the NIGC must review and approve all gaming ordinances. If a tribal government is working with an outside investor, the NIGC also reviews all contracts with that outside management company. This review includes the use of field investigators to conduct background investigations on individuals and entities with a financial interest in, or a management responsibility for, a Class II gaming contract. NIGC also reviews and approves Class III gaming contracts.
After the gaming venue is operational, NIGC has a number of important roles. IGRA requires that all "key employees" and primary management officials of a gaming operation be licensed by the tribe. NIGC defines "key employee" very broadly to include bingo callers, floor managers, security chiefs, and employees with access to cash. All gaming tribes submit finger print cards on key employees along with employee applications, investigative reports and suitability determinations. NIGC reviews this information and acts as a channeling agency on behalf of the tribes to process finger print cards through the FBI.
The NIGC is specifically authorized to monitor Class II gaming, inspect and examine the gaming premises and demand access to and audit Class II records. NIGC also has the broad authority to determine whether a tribal gaming operation is complying with all provisions of IGRA, all NIGC regulations and all tribal regulations. With this broad regulatory authority comes broad enforcement authority. If NIGC determines that IGRA, NIGC or tribal regulations are violated, NIGC may issue notices of violation, closure orders, and civil fines up to $25,000 per day, per violation.
The Class III Compacting Process
IGRA requires that tribes and states negotiate an agreement, known as a compact, in order to regulate Class III gambling on Indian lands. A tribe-state compact is a regulatory document meant to specify the terms of joint regulation of gambling activities that are already permitted in the state. IGRA's compacting process is outlined as follows:
1) If a tribe is interested in operating Class III gaming, they may initiate a compacting process by requesting the State to enter negotiations.
2) When the state receives the request, they are obliged to negotiate "in good faith [with the Indian tribe] to enter into such a compact."
3) If the State fails to negotiate in good faith, the Tribe may file a civil suit against the State in Federal district court.
4) If the court finds that the State has failed to negotiate in good faith, it must order the State and the Tribe to conclude a compact within 60 days.
5) "If a State and an Indian tribe fail to conclude a Tribal-State compact governing the conduct of gaming activities within the 60 day period...the Indian tribe and the State shall each submit to a mediator appointed by the court a proposed compact that represents their last best offer for a compact".
6) "The mediator shall select from the two proposed compacts the one which best comports with the terms of this Act and any other applicable Federal law."
7) If the State consents to the proposed compact, it is treated as a Tribal-State compact.
8) If the State does not consent, the Secretary of the Interior shall prescribe procedures (1) which are consistent with the proposed compact selected by the mediator, the provisions of IGRA, and the relevant provisions of the State laws, and (2) under which Class III gaming may be conducted on the Indian lands over which the Indian Tribe has jurisdiction.
In most states, the compacting process has been successful. However, some provisions of the IGRA have been problematic for state governments. First, there is no clear guideline in IGRA for who is designated to represent the State during compact negotiations with Tribes. Second, some states have expressed concern that tribal governments will force states to negotiate for gambling that is illegal in the state (A concern that is often glossed as the "scope of gaming" issue). Third, there have been disagreements between states and tribes regarding whether a particular game should be classified as Class II or Class III, which determines whether or not a tribal-state compact is required. Fourth, state's are concerned with the constitutionality of IGRA in terms of the Eleventh Amendment and state's rights.
Who is the State for purposes of compact negotiation?
IGRA does not specify which governmental entity or individual shall act as the State in Class III compact negotiations with tribal governments. In most states, the governor has taken the initiative to work with tribes and negotiate compacts. In some states, however, the state legislature has inserted itself into the negotiation process and plays a role in executing the compact.
There is no standard reason why a state legislature would insert itself into the compacting process. However, the most common instances have been where legislative approval is necessary for the execution of the compact.
The Scope of Gaming issue
According to IGRA, a tribal government can offer Class III games if the tribe is "located in a State that permits such gaming for any purpose by any person, organization, or entity." Cabazon’s shorthand test for legal Class III gaming is whether the state’s public policy permits gaming. However Cabazon did not clearly address the issue of the scope of that gaming. The primary concern of many states is that they may be compelled to negotiate for gaming that they believe violates their public policy. Tribes counter by arguing that if a particular game is offered ever, by anyone, it does not violate state public policy.
Other states that do not offer commercial gaming have parleyed this particular interpretation of IGRA and the Cabazon standard into a "win-win" situation. These states, including Connecticut, New Mexico and Wisconsin, negotiated for Class III gaming with tribes based on the precedent of "Las Vegas Night" charity games. In exchange for exclusivity in such states, tribes pay a percentage of their gaming revenue directly to states.
A Tribe cannot compel a state to negotiate a tribe-state compact if Class III gaming violates state public policy and if it is not allowed by anyone else at any time. In fact, if particular Class III games are strictly criminally prohibited, a state cannot allow tribes to have those games.
The Rumsey Case
The 1994 Rumsey case clarified a slightly different question related to the scope of gaming issue: If a state allows one version of a particular game, is it required to negotiate with tribes for all or other versions of that game? The issue was raised in compact negotiations in California as to whether an electronic version of pull tabs, poker, bingo, lotto and keno (the "Proposed Gaming Activities") violated state public policy since the state of California allowed these games to be played in non-electronic format. The state refused to negotiate and the tribe sued in federal court.
The United States District Court determined that, except for banking and percentage card games, the "Proposed Gaming Activities" were a "proper subject of negotiation" under IGRA. The court relied on the "civil/regulatory or criminal/prohibitory" test established in Cabazon. Under this test, if a state absolutely prohibits gaming activities and makes their commission a crime, then such activities are determined to violate a state’s public policy. If a state does not absolutely prohibit such gaming activities, then the state is determined to merely "regulate" the activity, and thus it is "permitted" for the purposes of applying IGRA. The district court, consistent with the Supreme Court’s reasoning in Cabazon, found that, since the state allowed the proposed gaming activities to be conducted, albeit in non-electronic format, state public policy did not prohibit the activities.
The state appealed the district court’s decision to the United States Court of Appeals for the Ninth Circuit. In its appeal the state contended that the "Proposed Gaming Activities" in electronic format were not permitted by the state, so therefore the IGRA did not obligate the state to negotiate for the regulation of those activities. The Ninth Circuit in its opinion accepted the state’s argument for a very narrow interpretation of the IGRA. The court stated that:
IGRA does not require a state to negotiate over one form of Class III gaming simply because it has legalized another, albeit similar form of gaming. Instead, the statute says that, if a state allows a gaming activity 'for any purpose by any person, organization, or entity,' then it also must allow Indian tribes to engage in that same activity. In other words, a state need only allow Indian tribes to operate games that others can operate, but need not give tribes what others cannot have.
In short, the court ruled that the state was only required to negotiate regarding the exact type and format of the gaming activities allowed to others, rather than the more logical "class of gaming activity" analysis which other courts had accepted.
Determining if a Particular Gaming is Class II or Class III
IGRA’s classification system requires that tribes and states negotiate compacts for the regulation of Class III gaming activities only, with Class II gaming activities to be regulated by the tribes and the NIGC. Determining which gaming activities are class II and which are class III has regulatory implications, since this determination establishes those gaming activities that require tribe-state compacts and those gaming activities that do not.
For purposes of federal law enforcement, the NIGC makes the determination regarding whether a particular gaming activity is Class II or Class III, subject to the views of the U.S. Attorney as to whether the Class II games may be Johnson Act devices. The distinction between Class II and Class III activities has become more complicated as gambling technology becomes more sophisticated. Predictably, courts have struggled with the distinction.
Constitutionality and the Eleventh Amendment
When the IGRA was first proposed and debated in Congress, a number of states lobbied for a role in the Indian gaming process. They recognized that in non-P.L. 280 jurisdictions they would have no role, and even in the P.L. 280 jurisdictions their role was very limited. Eventually, in the final legislation, states were given an unprecedented role in sharing public policy decisions and negotiating regulatory jurisdiction with Indian tribal governments. Several years later, however, several states began objecting to the provision in IGRA’s compacting process that authorizes tribal governments to sue their respective state in federal district court if that state did not negotiate in "good faith" for regulation of Class III gambling.
The primary objections of these States were twofold. First, these states claimed that some tribes asserted "bad faith" when they were not allowed to offer Class III games in a state that does not permit them for any person or organization. Second, these states argued that this provision violated their sovereign immunity under the Eleventh Amendment to the United States Constitution. Supreme Court jurisprudence has interpreted the Eleventh Amendment to have preserved the sovereign immunity of the states, except for those clauses of the Constitution which specifically delegated powers to the federal government (ie. the Commerce Clause) or those clauses which are part of amendments through which the states ceded portions of their sovereignty (such as the Fourteenth Amendment).
The states of Florida and Alabama, believing that their Eleventh Amendment immunity from suit was not abrogated by the IGRA’s federal court supervised mediation provisions, refused to negotiate with the tribes within their borders. These tribes filed suit for bad faith refusal to negotiate.
The Seminole decision
Eventually these cases found their way the Supreme Court. The district courts and the Court of Appeals for the Eleventh Circuit all dismissed the suits by the tribes, based on Eleventh Amendment immunity. In 1996 the Supreme Court heard the appeal of the Seminole Tribe of Florida whose case, Seminole Tribe of Florida v.Florida, played the lead role in the drama.
Seminole was not simply an "Indian" case. Rather it was the latest chapter of a tale of the struggle for power between the federal government and the states. The crux of Seminole is that Congress lacks the power under both the Interstate and the Indian Commerce Clauses to render states liable to individuals’ federal suits. Seminole overturned a major Supreme Court decision, Pennsylvania v. Union Gas Co., which held that Congress could subject states to suit in federal Court.
Notwithstanding the implications for Congressional authority raised by Seminole, the immediate and long-term effect of that ruling for tribal governmental gaming is that it deprives tribes of the ability to obtain judicial relief if states fail to comply with IGRA's "good faith" provisions. After Seminole, if a tribe brings a "bad faith" suit against a state in Federal court, it can be dismissed through an Eleventh Amendment defense. If a state claims Eleventh Amendment immunity to suit, it effectively creates a state veto over IGRA's dispute resolution system. The Seminole decision created a stalemate in negotiations between a number of tribal governments and states. This stalemate has continued over the 4 years since the Seminole decision.
The Secretary of the Interior's Procedures
In an attempt to resolve the impasse caused by Seminole, the Secretary of the Interior promulgated regulations in April, 1999, designed to fulfill his duties specified in the following provision of IGRA:
If the State does not consent during the 60-day period described in clause (iv) to a proposed compact submitted by a mediator under clause (v), the mediator shall notify the Secretary and the Secretary shall prescribe, in consultation with the Indian tribe, procedures--
(1) which are consistent with the proposed compact selected by the mediator under clause (iv), the provisions of this chapter and the relevant provisions of the laws of the State, and
(II) under which class III gaming may be conducted on the Indian lands over which the Indian tribe has jurisdiction.
The Secretary and the Solicitor of the United States Department of the Interior determined that he has the authority to prescribe Class III gaming procedures when a state raises an Eleventh Amendment bar. This authority to promulgate procedures arises from the statutory delegation of powers contained in 25 U.S.C. 2710(d)(7)(B)(vii) (II) of IGRA. In addition to that specific authority, the Secretary has been also delegated broad authority by Congress under 25 U.S.C. 2 and 9 to issue such regulations as are necessary to manage Indian affairs and carry into effect legislation relating to such affairs.
The Secretary and the Solicitor were not alone in reaching this conclusion. The Eleventh Circuit Court of Appeals, after dismissing the tribe’s suit against the state, wrote:
"[W}e are left with the question as to what procedure is left for an Indian Tribe face with a State that not only will not negotiate in good faith, but also will no consent to suit. The answer, gleaned from the statute, is simple. One hundred and eighty days after the Tribe first requests negotiations with the State, the Tribe may file suit in district court. If the State pleads an Eleventh Amendment defense, the suit is dismissed, and the Tribe, pursuant to 23 U.S. C. 2710 (d)(7)(B)(vii), then may notify the Secretary of the Interior of the Tribe’s failure to negotiate with the State. The Secretary may then prescribe regulations governing Class III gaming on the Tribe’s lands. This solution conforms with IGRA and serves to achieve Congress’ goals, as delineated in Secs. 2701-02.
Resistance to the Secretarial Procedures: Prolonging the Misery on America’s Indian Reservations
While the Secretary of the Interior initiated the administrative procedure process to develop the regulations suggested by the Eleventh Circuit in May, 1996, the regulations did not become final until April 12, 1999. This three-year delay was due in large part to the concerted efforts of a handful of Senators. On September 17, 1997, Senator Enzi (R-WY) proposed an amendment to the FY 1998 Appropriations Bill that prohibited the Secretary of the Interior from approving any Class III tribal gaming procedures without the prior approval of the affected state. This amendment was adopted by the Senate and included in the Interior Appropriations conference report. The so-called "Enzi-Reid Amendment" instituted a delaying tactic that prolonged the impasse created by Seminole until April, 1999.
The "Enzi-Reid Amendment" effectively prevented the Secretary from acting on the regulations for FY 1998. On January 27, 1998, Senators Bryan (D-NV) and Reid (D-NV) introduced legislation in the Senate "to prohibit the Secretary of the Interior from promulgating certain regulations relating to Indian gaming activities." When this legislation failed to pass, Senators Reid, Bryan, Enzi and Sessions (R-AL) offered an amendment to the FY 1999 Interior Appropriations Bill. This amendment was adopted by voice vote on September 15, 1998, however it failed to postpone the procedures for an additional year because the Congressional budget amendment caused the "Enzi-Reid Amendment" to expire on March 31, 1999. Thus the Secretarial procedures were postponed for only another six months. Finally, on April 12, 1999 the Secretary’s regulations became a final administrative rule.
Desiring to obtain a judicial determination regarding his authority to issue the regulations, the Secretary of the Interior has written letters to Senator Gorton (R-WA), Chair of the Senate Interior Appropriations Subcommittee, and Representative Regula (R-OH), Chair of the House Interior Appropriations Subcommittee, promising not to allow a tribe to commence Class III gaming until the federal courts have ruled on his authority. Despite the Secretary’s promise, Senators Reid and Enzi have continued their attempts to prevent the Secretary of Interior from implementing the regulations by offering a new amendment to the FY2000 Interior Appropriations Bill.
The Secretarial Procedures
On April 12, 1999, the Secretary of the Interior published the Final Rule on Class III Gaming Procedures. This action followed the Department's careful review of over 417 comments submitted by states, tribes and others during the administrative rulemaking process. The following is a synopsis of the Final Rule:
1) The Triggering Event
A tribal government may pursue Secretarial procedures only after the tribe has filed suit against the state under IGRA and that lawsuit has been dismissed by reason of the state asserting Eleventh Amendment immunity.
2) Submission of Tribal Proposal
Tribes are required to submit a comprehensive plan that includes (a) a factual and legal analysis of the Class III games the Tribe wishes to conduct; (b) a regulatory scheme that includes state oversight, if any; (c) proposed secretarial procedures, including procedures for accounting, reporting, financial statements, internal control standards, record keeping, licensing and background procedures for management officials and key employees, and provisions for an autonomous tribal regulatory gaming commission and independent of gaming management.
3) Process:
(a)The Secretary has 30 days to determine whether the tribe is eligible;
(b) The Secretary notifies the state of the tribe’s request and solicits comments;
(c) The state has 60 days to respond and/or submit an alternative proposal.
(d) Based on his review of the submissions, the Secretary will advise the tribe and the state of its approval if he determines that there are no objections to the proposals, or that he is convening an informal conference with the tribe and the state within 30 days for the purpose of resolving any areas of disagreement;
(e) If the state offers an alternative proposal, the Secretary will appoint a mediator who will receive "last best offers" from the tribe and the state; the mediator then selects the proposal that "best comports with applicable federal and state law;" and
(f) Within 60 days of receiving the mediator’s recommendation, the Secretary must notify the state and the tribe of his decision to approve or disapprove the procedures submitted by the mediator, or to prescribe such procedures as he determines best comports with state law and IGRA.
The States have 10 different entry points into the current negotiation process.
Minority Statement on Land into Trust
One of the PSGSC’s recommendations on Indian Nation Governmental Gaming is that "lands not recognized as tribal lands at the time of IGRA’s passage should be excluded from Indian gaming." This recommendation has no support in the testimony or findings of the PSGSC and in fact contradicts the text of page 80 of the PSGSC’s Final Report. Moreover, the PSGSC acknowledges that Section 20 of IGRA "limited the power of the Secretary of the Interior to take land into trust off reservation for gaming purposes" and that this provision "was inserted into IGRA in response to state demands."
The PSGSC Final Report frames the "land into trust" issue as a "disagreement between states and tribes". This is an inaccurate and simplistic portrayal of a complex historical and legal issue. Trust status for tribal land has a long and deliberate history in Federal Indian policy. In general, trust status was meant to protect tribal lands from non-Indian land speculators by requiring that the Secretary of the Interior approve all land sales to non-Indians. This "extra step" was meant both to dissuade non-Indian speculators from targeting Indian resources and to provide protection for Indian landowners who might have been tempted to sell their land in order to survive.
Trust status for Indian land means that the Federal government retains the title for the land and the tribal community retains the benefit use and occupancy. As a result, tribal trust lands cannot be used as collateral by tribal communities. Additionally, trust lands cannot be taxed by the states since they are technically "owned" by the Federal government.
In spite of the land into trust process, however, many tribal communities were dispossessed of their land base, either through Federal relocation programs, removal policies or outright land theft. Contemporary tribal communities are attempting to reclaim these lost homelands for a host of reasons, including, but certainly not limited to, economic development. Because the Secretary of the Interior must approve all transfers, the process is long, arduous and costly. Many transfers never take place, even for non-gaming purposes.
Despite the proven success of Indian Nation economic development in partially alleviating unemployment, substandard housing and other problems in many of America’s poorest communities, states continue to resist Indian Nations’ attempts to build on this success by fighting "land-into-trust" applications. The PSGSC Final Report does not outline the arguments forwarded by states in their resistance to land-into-trust acquisitions, it only declares that "states are concerned" about "new groups" who wish to "take advantage of opportunities for gaming." However, the fears of states are vastly overdrawn.
Since 1988, only 18 parcels of land have been acquired by tribal communities for gaming purposes. Of those 18 parcels, only 2 were off reservation. The remaining 16 were lands that were at one time allotted to non-Indians within the original reservation borders or lands contiguous to the reservation. There is a public perception that Indian Nations are purchasing great amounts of land for gaming purposes. This is simply not the case. As Rick Hill stated in the NGISC Final Report, "there really is no reason for anyone to fear land-into-trust acquisitions. It’s not like Indian nations will ever be able to buy back the entire country."
Finding:
This Minority Statement finds that land into trust acquisitions have been addressed through Federal Indian policy and the Indian Gaming Regulatory Act. Section 20 of IGRA grants states an incredibly powerful new role in the land-into-trust process. This new role has proven very effective for states as evidenced by the very few instances of land acquisitions for gaming purposes that have occurred since 1988.
Recommendation:
This Minority Statement recommends that both states and tribes work within the mandate of the Federal Indian Gaming Regulatory Act with regard to land-into-trust acquisitions for gaming purposes.
Findings and Recommendations of the Minority Statement
On Indian Nation Governmental Gaming
The PSGSC recommends that the dire conditions in Indian Country be considered when Indian Nations propose Indian governmental gaming as a means to counter their contemporary social and economic conditions.
The PSGSC recommends acknowledgment that the Federal government’s policies have consistently failed to adequately address its treaty and statutory responsibilities to provide basic health, education and welfare programs to Indian Nations, resulting in substandard living conditions within Indian Country. and that a number of Indian Nations have supplemented or replaced these failed Federal policies with a successful economic development agenda fueled by governmental gaming which has resulted in higher living standards within those Indian Nations.
The PSGSC recommends acknowledgement that Indian National governmental gaming has been a successful economic, social and governmental tool for many, but not all Indian Nations, and thus that further research must be done to identify additional avenues of economic development that can be successful in Indian Country.
The PSGSC recommends acknowledgment that IGRA’s requirement that Indian Nation governments reinvest their governmental gaming revenues into the community has been a great success to Indian and non-Indian communities due to the fact that Indian Nations provide generous support to numerous local, regional and state government programs, in addition to their own Indian communities.
The PSGSC recommends acknowledgment that Indian governmental gaming has provided more and better jobs on reservations than any other economic development strategy in history; in addition, that Indian governmental gaming has reduced unemployment rates in some parts of the United States that have often been overlooked by other industries.
The PSGSC recommends that Indian Nations be commended for their successful economic development through gaming, and encourages tribal governments to continue to expand their economic bases and diversify their businesses and economies, recognizing that not all tribal governments are in a position to expand and that not all tribes with gaming have been successful.
The PSGSC recommends that thorough and long-term research be done to determine the relationship between Indian Nation governmental gaming and the social ills that are most extreme in Indian Country.
The PSGSC recommends that states continue to work with tribes in the "good faith " spirit of the IGRA in order to continue to produce successful gaming compacts, and that states and tribes continue to abide by the Federal legislation that encourages states and tribes to work together on the scope of gaming and regulation issues.
The PSGSC recommends that the Federal government continue to exert authority over Class III Indian Nation governmental gaming due to the long-standing relationship between Indian Nations and the Federal government.
The PSGSC recommends that states and tribes continue to abide by Section 20 of the Indian Gaming Regulatory Act, which addresses "off reservation" land-into-trust for gaming purposes.
III. Minority Statements Regarding Internet Gambling, Convenience Gambling and ATM’s
Minority Statement on Internet Gambling
How the Recommendation to Prohibit Internet Gambling Contradicts the Message of the PSGSC
The PSGSC recommendation to prohibit Internet gambling contradicts both the message and findings of the PSGSC’s Final Report. Throughout the Final Report, the PSGSC argues that America’s policy of legalizing gambling over the past 25 years has been a "great success". The Final Report argues that legalizing state lotteries and expanding other forms of legalized gambling have drastically reduced the prevalence of illegal gambling. Indeed, one of the major arguments of the PSGSC is that the exponential growth in the availability of legalized gambling in America since 1976 has occurred without a significant increase in pathological gambling.
Internet Gambling is Inevitable
Page i of the Executive Summary states that the PSGSC "members believe…that gambling is an inevitable and common feature of American life, [and] government has a duty to bring this activity under public regulation, oversight, policing and taxation." The Report then asserts that "The commission opposes illegal gambling in all forms, and it supports efforts to replace illegal gambling with gambling that is publicly controlled and taxed, and in some cases, publicly operated." These statements are clearly at odds with a prohibition on Internet gambling and instead support the legalization of Internet gambling in order to regulate, control and tax the currently-thriving and publicly- condoned Internet gambling industry. Later, the PSGSC takes an even stronger stance against prohibiting forms of gambling that already exist in illegal form: "Strict prohibition of gambling may be a popular stance politically, and it may be a position easy to codify in statutes and constitutions, but it does not produce its intended result." Indeed, by the Final Report’s own logic, "as a practical matter, a gambling policy that leans toward prohibition is equivalent to a policy supporting illegal bookmaking, sports pools, and numbers rackets" and, I would add, illegal Internet gambling.
A False Choice
While the PSGSC Final Report faults gambling opponents for offering a false choice "between legalized gambling or no gambling at all," the PSGSC recommendation to prohibit Internet gambling offers exactly that. On page 6, the PSGSC Final Report acknowledges that "whether it is legal or not, gambling is going to occur in America on a large scale, and it is going to be widely endorsed or at least tacitly condoned". Given the fact that Americans are going to gamble, the recommendation to prohibit Internet gambling appears to be a political stance, and one that is not grounded in the PSGSC research, testimony or findings. Indeed, the prohibition concept contradicts the premise of the entire Final Report, wherein the PSGSC asks "The real question is whether government is going to regulate, shape and tax the activity, or instead let it remain private and unbridled and illegal." In all other cases the PSGSC advocates for regulation and taxation of gambling activity. Only in the case of Internet gambling does the PSGSC argue for letting a gambling industry "remain private and unbridled and illegal". This glaring contradiction suggests that politics, rather than research, supports this recommendation.
Internet and Pathological Gambling
One premise of the PSGSC is that "as gambling becomes more acceptable, it causes fewer problems for both the individual and the society, because norms for controlling the activity are developed and socially enforced". Given this premise, which the PSGSC argues has been tested by the growth spurt in gambling over the past 25 years, legalizing Internet gambling would actually limit pathological gambling since, over time, social norms would more successfully regulate Internet gambling behavior than would public policies. Indeed, the NORC study presents as its very first finding the point that past-year gambling has increased very little in spite of the exponential growth of gambling opportunities in America. The Executive Director’s transmittal letter acknowledges that that government should not protect people from themselves, and goes on to state very clearly that "we want government to regulate the merchants of temptation, not to prohibit their wares." How, therefore, can a prohibition of Internet gambling logically follow these findings and arguments? NIGA is concerned that the PSGSC’s recommendation to prohibit Internet gambling, like the NGISC’s concern with the dangers of so-called convenience gambling, provide a distraction from the hidden motives of the PSGSC–to protect state lottery interests and retain the market for the pari-mutuel industry. NIGA finds the process of presenting political positions as research findings to be offensive, although not surprising. If the goal of the PSGSC Final Report is truly to provide information for "the people", who will then decide what forms of gambling they wish to support, then its recommendations must be clearly identified as political platforms, not as findings of fact.
Why Tribal Governments are Uniquely Qualified to Operate Legal Online Casinos
NIGA supports the basic premise of the PSGSC’s argument about the success of legalizing gambling in the United States. NIGA also accepts the theory that once an activity is legalized, social norms develop that regulate people’s behavior more effectively than any public policy possibly could. NIGA also argues that of all the casino and bingo operators in the United States, Indian tribal governments are uniquely qualified candidates for operation of online casinos and bingo.
The primary non-moral arguments against Internet casinos are:
Tribal governmental gaming operations can address each of these arguments and are uniquely qualified to offer legitimate, regulated and accountable Internet gambling operations.
First, tribal governmental gaming operations can be held accountable to players. Because tribal governmental operations are physically located within the geographic boundaries of the United States, unlike off-shore or illegal operations, they cannot set up "disappearing" sites that fail to pay out winnings.
Tribal governmental gaming operations are already highly regulated. Because the facilities, to be legal, must be located within the jurisdiction of the tribal government, and because that jurisdiction is within the geographic boundaries of the United States, enforcement of regulations would be no more difficult than for land-based operations. Effective oversight would also be as effective a deterrent to fraud as it is for land-based operations.
Tribal governmental gaming has never been infiltrated by organized crime (something that cannot be said for other traditional casino industries). Due to the geographical and jurisdictional uniqueness of tribal reservations, and to the highly effective regulatory environment within which tribal governmental gaming operates, online operations by tribal governments would remain insulated from the reach of organized crime.
Tribal governmental gaming already has an effective "tax strategy" for gaming operations–taxation at 100%. Since the tribal government owns and operates the business, there would be no "tax haven" flight. Additionally, all revenues would be used to support government operations, a very efficient tax strategy.
Tribal governmental gaming already contributes a greater portion of its revenues to addressing the societal costs of gambling than any other segment of the gambling industry. These voluntary contributions stemmed from a commitment to building a healthy community. This same philosophy points to tribal governments as the most socially responsible of potential online gaming operators.
Finding:
This Minority Statement finds that the PSGSC’s own research and policy orientation support the legalization, regulation and taxation of Internet gambling.
Recommendation:
This Minority Statement recommends that Indian Nations be considered uniquely qualified to operate Internet gambling operations.
Minority Statement on Convenience Gambling
Responding to the NGISC
The National Gambling Impact Study Commission’s Final Report implied that gambling was a temptation and then determined that "convenience gambling" is the most tempting and, hence, most dangerous form of legalized gambling in America. The NGISC’s definition of "convenience gambling" referred to "stand alone slot machines, video keno, video poker, and other EGD’s that have proliferated in bars, truck stops, convenience stores, and a variety of other locations across several states." The report went on to say: "This term may also be applied to many lottery games." The most dangerous and controversial aspect of these types of games is that they occur in close proximity to residential areas and/or at consumer-oriented sites. Therefore, patrons regularly encounter this type of gambling in the course of their day-to-day activities. In sum, "convenience gambling" is defined by location.
The PSGSC Final Report argues that gambling is not accurately portrayed as a temptation but can be more accurately interpreted as the expression of a human desire for risk-taking. From that position, gambling may actually benefit society by providing a benign outlet for risk-taking in lieu of fast cars or sky-diving. Therefore, the location of gambling machines does not determine whether or not a particular type of game will prove "tempting" to a gambler. Given this logic, the PSGSC Final Report goes to great lengths to distance video poker from video lottery terminals in order to undermine the integrity of the former and protect the latter. However, this logic does little to address the NGISC’s emphasis on location as the defining characteristic of "convenience gambling." It is a fact that video lottery terminals are located in convenience stores, grocery stores, airports and other consumer-oriented sites. The only true distinction between VLT’s and video poker is that the former is owned by the state and the latter is not.
The PSGSC Final Report goes on to state that "The PSGSC does not intend either to disagree with or endorse the NGISC’s criticisms of "convenience gambling". Rather, what the PSCSC attempts to do is to scape-goat video poker in order to protect state lottery interests. By insisting that there is "good" and "bad" gambling, the PSGSC mimics the NGISC’s strategy of pitting various industries against one another in order to target one form of gambling at the expense of another.
The Final Report argues on page 8 that the act of lumping "too many different types of gambling together under a single rubric" was a major flaw of the NGISC. The PSGSC’s Final Report continues to scapegoat "convenience gambling", but only after insisting that state lotteries do not rightfully fall into that category. By making that distinction, the PSGSC is employing the same strategy as the NGISC by selectively dividing the monolith of gambling into thinner and thinner slices, protecting lotteries and singling out video lottery terminals. Disassociating state lottery games from "convenience gambling" simply divides the gambling "pie" into smaller slices: Same pie, more slices.
Finding:
This Minority Statement finds that "convenience gambling," whether video lottery terminals, video poker, slot machines, or other EGD’s has proliferated across the United States. South Carolina reported 34,000 legal, non-casino EGD’s in 1999. Montana reported 17,397 the same year, while Louisiana reported 15,000. Gray machines are reported in a number of states. The Alabama Bureau of Investigation estimated that there were 10,000 illegal EGD’s in that state in 1993. Illinois is estimated to have 65,000. Regardless of who owns these machines, the state or private businesses, this form of gambling creates few jobs, and fewer quality jobs than other gambling industries. In addition, this type of gambling is not accompanied by any significant investment in the local community. Finally, this Minority Statement finds that the distinction between video lottery terminals and legal video poker is merely a political distinction, not one based in experience or fact
Recommendation:
This Minority Statement recommends that states with convenience gambling actively regulate that industry regardless of who owns the machines. In addition, this Minority statement recommends that states with legal EGD’s, regardless of owner, be considered to operate Class III gaming for the purposes of IGRA.
Minority statement on ATM’s
Recommendation to ban ATM’s borrows NGISC’s flawed notion of gambling as a temptation
The PSGSC recommendation that states consider legislation to remove automatic teller and other cash machines from gambling floors borrows the same flawed logic employed by the NGISC. In the NGISC’s Final Report, gambling is understood as a temptation that is most dangerous when it confronts people in their day-to-day activities. This "temptation" theory was the justification for many of the NGISC’s recommendations, including the one to ban ATM’s from the casino floor. Now the PSGSC is making a similar recommendation based on the same definition of gambling as a temptation. Justifying the ban on ATM’s by insisting that customers require a "cooling off" period implies that gambling is a temptation and that a "cooling off " period can break the "spell" of a pathological gambler by extending the length of time between his/her desire to gamble and his/her access to cash.
The notion that gambling is a temptation directly contradicts much of the PSGSC Final Report. In fact, the PSGSC Final Report spent a great deal of time refuting the notion that gambling is a temptation and analyzing the NGISC’s "temptation theory." The PSGSC Final Report argues that pathological gambling is not linked to increased gambling opportunities or access to money, two of the gambler’s greatest "temptations." The PSGSC also refutes the idea that for some people gambling grows progressively and inexorably habitual and out of control. Rather, the PSGSC Final Report supports the prevailing scientific theory that ""gambling is motivated not simply or even primarily by a quest for money, but by a natural human desire to take risks." Therefore, if the "natural human desire to take risks" is the primary motivation for gambling behavior, the access point for gambling funds is beside the point.
Recommendation to Ban ATM’s is a Political Position not a Research Finding
This Minority Statement finds that the recommendation to ban ATM’s from the floor of gambling venues is not supported by testimony, data, research or the PSGSC Final Report’s own internal logic.
This Minority Statement recommends that no recommendation be made regarding ATM’s on the floor of gambling venues since there is no supporting documentation to support this recommendation. Additionally, this Minority Statement recommends acknowledgement that the PSGSC recommendation is a political position rather than a research finding.
How the PSGSC mimics the NGISC
Composition of the Commission/Lack of Balance
Testimony overlooked
Inaccuracies appear in the Final Report in spite of the facts
Commission site visit was not thorough
Recommendations reflect Commissioner agendas
Convenience Gambling still "bad"