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Senators' letter questioned NIGC's agenda
Wednesday, January 26, 2005
The National Indian Gaming Commission was warned last month
that its review of tribal casino agreements with non-Indian
investors was having a "chilling effect" on the $16 billion
In one of their last actions as the leaders of the Senate Indian
Affairs Committee, retired Sen. Ben Nighthorse Campbell
and Sen. Daniel Inouye expressed concerns
about a number of the NIGC's practices.
A two-page December 15 letter suggested that
the agency was overstepping its authority
by reviewing certain casino contracts.
Campbell, who retired last month, and Inouye, who recently stepped down as vice-chairman of the committee, said they were prompted to write due to complaints from "a number" of tribes.
The two senators are known for championing Indian causes.
The letter, however, focused on an increasingly controversial
aspect of the Indian gaming industry:
the non-Indian investors
who finance casino projects in exchange for a share of
gaming revenues or other considerations.
NIGC Chairman Phil Hogen, a Bush administration
appointee who has sought to expand the government's oversight of
tribal casinos, is worried that these deals are escaping
But Campbell and Inouye told Hogen that he may be headed
in the wrong direction.
"As you well know, for many tribes entering the gaming arena,
their only means of providing compensation to those who
are involved in the start-up and development of gaming
enterprise," they wrote, "is to commit a percentage of
future net revenues to pay for these non-management
NIGC's scrutiny "is having a chilling effect on those ...
who would otherwise come forward to assist tribes in
the development of their gaming operations," they asserted.
The warning comes several months after the NIGC acted on
an agreement between the Chickasaw
Nation, an Oklahoma tribe with a large gaming enterprise,
and Multimedia Games (MGAM), a leading supplier of
In an April 22 letter, the agency's top lawyer
said the agreement was subject to review under the
Indian Gaming Regulatory Act (IGRA).
The deal requires the tribe to
devote approximately 80 percent of the floor space
at its Winstar Casino near the Texas border
for MGAM's machines, plus share 30 percent of
gross revenues from those machines with the company.
MGAM financed the facility, and has done so
for other Chickasaw casinos.
NIGC's concern stems from a requirement in IGRA
that tribes maintain "sole proprietary
interest" in their casinos. A review of MGAM's
agreement could violate this provision.
But Campbell and Inouye suggest the NIGC has
decided to apply this level of review to "lending, development,
and equipment lease agreements which provide
for a percentage of net revenues" without
"Apparently, the sole proprietary interest
standard is being applied with no notice
or guidance having been published that would inform
tribal governments and the public that seeks
to do business with the tribes of this new standard,"
the letter states.
Campbell and Inouye also chastised the NIGC for
issuing decisions through letters from the
agency's general counsel "that are not
subject to administrative or judicial review."
"We have every reason to believe that these complaints
are accurate and also pose serious considerations
of due process," they wrote.
Despite the suggestion that tribes are being negatively affected
by the NIGC's practices,
there is little to suggest that, at least in
the case of the Chickasaw Nation. The tribe has more gaming
facilities than any other tribe in the country and is
expanding with multi-million dollar projects.
On the other hand, MGAM has seen better days. Following
the NIGC's letter in April, the company's stock price plunged
15 percent. Other NIGC actions also have hurt the company's
Get the Letter:
(December 15, 2004)
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(12/07) MGAM subsidiary buys land for Chickasaw
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(11/19) McCaleb calls Chickasaws savvy, not
(10/26) Official tells Chickasaw land-into-trust
(10/25) Multimedia Games determined to have
(04/23) IGRA amendments mired in debate over
(04/13) Senate panel debates changes to Indian gaming
(03/25) Gaming company using $50.3M for seven
(03/08) Supreme Court move benefits gaming companies
(03/02) Supreme Court turns down gaming machine
(03/01) Tribes giving up revenues, exclusivity in
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