Tribal Government Gaming Regulation
Tribal governments with casinos have long held that their gaming operations are the most stringently regulated in the gaming industry.
Is this true?
You bet it is!
To put gaming into perspective, tribal government gaming, with 321 gaming operations nationwide, accounted for only 16.3 percent of industry revenues in 2000. Gaming in the state of Nevada alone, included 2,806 privately owned or publicly traded corporate operations in that same year. Commercial gaming, including riverboat gaming and Atlantic City and Nevada casinos, took in 43.7 percent of gaming revenues, with state lotteries, charitable gaming, horse racing and internet gaming accounting for the balance. Nationwide research conducted by the National Indian Gaming Association (NIGA) reports that tribal governments spend $212 million annually to regulate their gaming operations. This is compared to $155 million that states spend for regulatory activities covering casinos and riverboat gaming. Tribal gaming operations employ 2,800 regulators, as compared to 981 for riverboat gaming, 720 for Atlantic City and 432 for Nevada gaming operations.
Indian gaming operations at Viejas Casino and other tribes in California are subject to regulation by the U.S. Government, state of California, pursuant to tribal-state compacts and the respective tribal governments. This compares with commercial casinos, which are subject primarily only to state regulation.
At Viejas, the tribal government budgeted $4 million in 2006 for gaming regulation and surveillance. Another $6 million was budgeted by Viejas Casino for security personnel.
The Indian Gaming Regulatory Commission, as governed by the Indian Gaming Regulatory Act, is responsible for issuing federal regulations and ensuring tribal government compliance with the law.
The national commission also regulates bingo operations and has established minimum internal control standards based on those used by New Jersey and other gaming jurisdictions. The standards cover audits, cash and credit procedures, surveillance, electronic data processing, gaming devices, bingo and pull-tabs, card and table games, as well as pari-mutuel betting.
Tribal government gaming proceeds are also subject to oversight by the Bureau of Indian Affairs. Tribal government casinos also fall under U.S. Department of Treasury Title 31 regulations, governing financial transactions to prohibit money laundering. In addition, Indian gaming operations are subject to U.S. Justice Department and FBI investigations when it appears violations of federal law have occurred. Tribal gaming facilities are also subject to health and safety regulations promulgated by the federal Occupational Safety and Health Administration, and the Environmental Protection Agency.
At the state level, the framework for tribal government gaming falls under the California Constitution, as enacted by the voters in March 2000, when they approved Proposition 1A, permitting tribes to enter into tribal-state gaming compacts.
The compacts, such as those entered into by the Viejas Band of Kumeyaay Indians, other tribal governments and the state of California, provide for regulation by the California Gambling Control Commission. While tribes are the first line of regulators by federal law, the California Gambling Control Commission has jurisdiction over areas agreed to by the tribes in the 1999 tribal-state compacts. These include operation, concentration, supervision of gambling establishments, and persons or things having to do with the operations of gambling establishments in the State of California.
The interpretation of final authority in regulatory matters, plus the requirement for government-to-government consultation by the governor’s offices and tribes on regulatory expansion by the commission, is an area where a number of issues remain unresolved. In California, tribal casinos are also subject to regulatory jurisdiction by the Division of Gambling Control within the state Department of Justice.
Under the authority of the California Attorney General, the Division of Gambling Control is the law enforcement entity for gambling activities for the State of California, and it is the entity that conducts criminal background investigations for the Commission on gambling license and work permit applications received by the Commission.
The tribal governments themselves provide frontline, day-to-day regulation of Indian casinos under ordinances that are consistent with state and federal law, many of which are more stringent than those standards for commercial gaming. For gaming operations at Viejas, regulatory activity, including casino surveillance, rests with the independent gaming commissioner, whose responsibilities are governed by a tribal gaming ordinance. Reporting directly to the tribal council, the tribal regulators and compliance staff are completely independent from casino management.
Viejas Band Leads in Stringent Gaming Regulation
Tribal government gaming is subject to more stringent regulation and security controls than any other type of gaming in the United States. In compliance with a host of federal laws, tribal gaming operations at Viejas Casino are regulated at three distinct levels––tribal government, federal government, and state government, where there is a tribal-state compact, such as those covering Class III gaming and the Viejas Off-Track Betting (OTB) facility.
No one has a greater interest in protecting the integrity of tribal government gaming than Indian governments. This is the most precious economic resource they have had since before the colonists arrived. As a result, the Viejas Government, like other governments, is the frontline regulator of gaming on the reservation, placing highest priority on protecting tribal assets, ensuring the integrity of gaming and assuring a safe, secure, and healthy recreational and work environment for customers and employees. During 2002, the Viejas Band spent in excess of $3.2 million on regulation to operate an independent Gaming Commissioner’s Office and surveillance operations.
The state of California regulates the State Lottery and horse racing and exercises regulatory oversight with local governments over card rooms, charitable bingo, and related games. By federal law, tribes have the primary oversight responsibility to protect the integrity of these gaming operations. The Viejas Government and other Indian nations have established industry standards and internal controls, as required by law. Tribal governments recognized early the vital need for stringent regulation. In response, well before the U.S. government established operational standards, the California-Nevada Indian Gaming Association (now the California Nations Indian Gaming Association) promulgated comprehensive “California Indian Gaming Internal Control Guidelines.” These controls cover a broad range of casino activities, from the integrity of the games to related operations and personnel. The genesis of these regulations was the desire of the Viejas Band to create a tribally governed regulatory framework that met or exceeded standards adopted by gambling jurisdictions, such as Nevada and New Jersey.
The U.S. Supreme Court ruled in 1987 that states had no authority to prosecute gaming conducted on Indian land (California v. Cabazon). State governments reacted with alarm and Congress began consideration of the Indian Gaming Regulatory Act (IGRA). In 1988, IGRA became law after tribes and states reached a compromise that gave states unprecedented regulatory participation through the negotiation of tribal-state gaming compacts.
IGRA recognizes the right of tribes to conduct gaming on tribal land in states where similar gaming is permitted outside the reservation for other purposes. IGRA also emphasizes the dire economic need of tribes, citing gaming as one of the few revenue-producing opportunities that has generated adequate revenues to sustain tribal governments.
The Indian Gaming Regulatory Act creates three classes of tribal gaming:
- Class I: Social games played solely for prizes of minimal value or traditional forms of Indian gaming as part of tribal ceremonies or celebrations;
- Class II: Bingo and related games, including pull tabs, lotto, punch boards, tip jars, instant bingo and some card games (excluding house-banked card games), and;
- Class III: All forms of gaming that are not Class I or Class II, including slot machines and house-banked table games, such as blackjack, roulette and dice games. (Only Class III games require tribal-state compacts.)
Viejas Independent Gaming Regulatory Framework
Tribal government gaming on the Viejas Reservation is governed in accordance with federal laws. In 1998, the band adopted by resolution the Viejas Tribal Gaming Ordinance and Tribal Gaming Regulations. These are comprehensive controls similar to those enforced in Nevada, which govern the Class II and Class III gaming operations of Viejas Casino. The mission of the Viejas Gaming Ordinance, Gaming Regulations, and Gaming Commission staff is to ensure full compliance with all applicable tribal, federal, and state statutes, as well as the tribal-state gaming compacts and to protect the integrity of the games for the patrons and the tribe.
The National Indian Gaming Commission (NIGC) is a federal watchdog with extensive regulatory authority over tribal gaming operations. The NIGC must give final approval to all tribal gaming ordinances and management contracts and has the power to conduct background investigations and object to any person hired and licensed by a tribal government to work in a casino.
The Viejas Tribal Gaming Ordinance established the tribally funded Viejas Tribal Gaming Office and staff, with the Viejas Tribal Gaming Commissioner as chief administrative and enforcement officer, reporting solely and directly to the Viejas Tribal Council.
The Gaming Commissioner
Under tribal ordinance, the Gaming Commissioner is responsible for regulating “all gaming activity” on the Viejas Reservation “to promote and ensure integrity, security, honesty and fairness of the operation and administration of all gaming activity.” In addition, the commissioner is charged with assuring “that all gaming activity is conducted in a manner which adequately protects the environment and the public’s health and safety.” The commissioner is also responsible for submitting reports as required by the NIGC. The commissioner must fingerprint and perform background checks on casino employees to determine suitability for licensing under stringent eligibility criteria. The Viejas Gaming Commissioner has responsibility for overseeing the surveillance, inspection, auditing and licensing departments, as well as compliance officers.
Viejas Gaming Ordinance
Under the Viejas Tribal Gaming Ordinance, no activity relating to the operation of Viejas Casino is exempt from review and inspection by the Tribal Gaming Office, nor is any manager or employee exempt from the provisions of the ordinance and regulations.
The ordinance also established the three-member Viejas Gaming Review Board, whose members and alternates are appointed to staggered three-year terms by the Viejas Tribal Council. The Gaming Review Board is responsible for reviewing and approving Viejas gaming regulations promulgated by the Gaming Commissioner and hearing appeals relating to licensing actions, impositions of fines, and patron disputes.
Among other provisions, the Viejas Tribal Gaming Ordinance and Regulations require:
All employees are to be licensed after undergoing fingerprinting and rigorous background and suitability investigations, which check criminal and civil history, financial status and credit references, prior business and employment, relatives, business and personal associates, and verification of education and military service.
All major vendor businesses are licensed only after undergoing background investigations similar to those of employees.
Annual outside independent audits (and random audits) of casino operations are conducted by qualified certified public accountants.
Adherence to minimum control standards governing, but not limited to, such activities as the handling of cash and the purchase and repair of gaming equipment. This is to ensure that assets and revenues are protected, financial records are accurate and reliable, and transactions are conducted in accordance with sound practices by competent and qualified personnel.
Full compliance with all applicable tribal, federal and state health, safety, construction and environmental laws, including compliance with all regulatory provisions of the tribal-state gaming compact.
The Viejas Surveillance Department is operated under the Tribal Gaming Office (independent of casino management and personnel) and is responsible ultimately to the Viejas Tribal Council, which provides its funding. Like many tribes, the Viejas Band has invested heavily in high-tech surveillance equipment and professional operators. Only new “state-of-the-art” electronic equipment and machines are in use. At Viejas Casino, the surveillance system is on par with any other in the world and exceeds security standards employed by many commercial gaming operations.
Operating under a substantial budget, Viejas Casino’s professionally managed security department consists of 147 certified members. The security force ensures that Viejas Casino is operated securely and that customers and employees have a safe and enjoyable place to be entertained and to work.
Federal Law Restricts Use of Gaming Proceeds
Not only does federal law govern gaming regulation, it also restricts the use of tribal gaming revenues to specific functions.
As mandated by Section 11 (a)(2)(B) of the Indian Gaming Regulatory Act, net revenues from tribal government gaming may be used only to:
- Fund tribal government operations or programs;
- Provide for the general welfare of the Native American tribe and its members (Indian governmental services and programs)
- Promote tribal economic development;
- Donate to charitable causes; and
- Help fund operations of local governments and mitigate impacts.
A tribe accomplishes these goals through decisions of democratically elected officials, just like a city council in a municipality. Since IGRA allows only the tribal government to enter gaming—not individuals—tribal governments determine short- and long-range goals and plans for allocating gaming proceeds. Like state governments, tribal governments use gaming revenues for law enforcement, education, economic development, tribal courts, and infrastructure improvement. Tribes are using gaming profits to fund social service programs, scholarships, health and dental care, new roads, new sewer and water systems, adequate housing, chemical dependency treatment programs, and senior care.