New Federal Policy May Open Door For Off-Reservation Casinos

As reported in the Wall Street Journal, the Department of Interior is reconsidering a Bush administration policy that limited Tribes from developing off-reservation casinos unless the sites were within “commuting distance” of the reservation. The new policy would eliminate that proximity requirement and allow Tribes to build casinos on trust land farther from their reservations – and thereby likely closer to larger population centers that would offer more customers. Some areas Tribes are considering are actually on their ancestral lands, but were separated from the Tribe’s main land base through 19th Century treaties.

Over 20 Tribal casinos on non-reservation land exist, and about 20 tribes have off-reservation plans in the works. The Confederated Tribes of Warm Springs of Oregon want to develop a casino along the Columbia River Gorge, and the St. Regis Mohawks have plans for a site in the Catskill Mountains, about 350 miles away from the Tribe's reservation -- but less than a two-hour drive from New York City. Some state governors such as David Paterson of New York and Arnold Schwarzenegger of California have come out in favor of certain projects in recent months.

Despite concerns about the economy, some off-reservation casino projects near major population centers have been able to line up financing for construction and operations. A private investment company that has financed start-ups of major Indian casinos in Connecticut and New York, is acquiring a near 50% stake in Empire Resorts Inc., the company that has been working with the St. Regis Mohawks on plans for a casino in Monticello, N.Y.

Tribes across the country have opened hundreds of casinos since the 1987 U.S. Supreme Court ruling that loosened state restrictions on Tribal gaming. In 1988, Congress authorized development off-reservation casinos. Interestingly, some Tribes that developed the first casinos are now working to block off-reservation gaming by other Tribes, and Senators from Nevada, California and Arizona wrote Interior Secretary Ken Salazar to oppose off-reservation gaming, saying it "violates the spirit" of Tribal gaming law.

Federal Gaming Regulators Under Fire From Tribes

The National Indian Gaming Association has asked the Obama administration to replace the chairman of the National Indian Gaming Commission immediately, and stop the current commission from publishing proposed revisions to gaming regulations until the new official is in place. In a letter to the President, NIGA asserts the Commission violates government-to-government consultation rules and is revising gaming machine regulations that would impose huge and unnecessary compliance costs on Tribal gaming operations, and “overreaching” because they exceed the NIGC’s statutory authority.

NIGA is a nonprofit organization representing Tribal nations and businesses engaged in gaming enterprises, and acts as an educational, legislative and public policy resource for tribes, policymakers, and the public on gaming issues and Tribal community development. NIGA has asked Obama and Interior Secretary Ken Salazar to immediately replace NIGC Chairman Philip Hogen, who “is holding out for almost five years past his original term,” and appoint a new commissioner to fill a seat that has been vacant for years. The Chairman’s position is a Presidential appointment approved by the Senate.

Barbara Kyser-Collier, Quapaw Tribal Gaming Agency director, has written to Obama seeking “urgent action” in appointing a new NIGC chairman. “It is beyond understanding that a federal agency established to protect tribal gaming as a source of revenue for tribal governmental services and functions, in fact, would persist in efforts to disseminate regulations that will inflict financial damage to Native American tribes,” Kyser-Collier said.

The proposed new gaming rules would also extend NIGC’s authority beyond its statutory limits, Kyser-Collier wrote. For example, NIGC has inserted into the proposed regulations a new technical standard that would require a jackpot payout be validated by the backroom accounting system. This would require a type of technology that is usually patented in a manufacturer’s gaming system, requiring the gaming operation either to have that particular manufacturer’s system or to pay the manufacturer a royalty fee to use its proprietary technology. “The NIGC characterizes these potential regulations as ‘internal control standards,’ when in fact they constitute product standards. A most important danger is that such rules could favor certain manufacturers and drive tribal costs higher,” Kyser-Collier said.