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Federal Judge Rules National Indian Gaming Commission Exceeded Its Authority, Improperly Regulated Tribes
August 30, 2005

CRIT Legal Victory Supported by Other Tribes, National Indian Gaming Association; Further Defines Roles of State, Federal Regulators

WASHINGTON, D.C. AUGUST 30, 2005 - It's been a good month for the Colorado River Indian Tribes (CRIT).

In early August President Bush signed a bill passed by Congress to right a historic injustice and return over 15,000 acres near Interstate 10 to CRIT. And just last week a federal judge sided with CRIT in ruling that the federal National Indian Gaming Commission overstepped its statutory authority in imposing standards on Class III gaming activities conducted by tribes.

The decision in the case, Colorado River Indian Tribes v. National Indian Gaming Commission, reinforces the distinct regulatory roles given to tribal, state and federal regulators, and prevents the federal agency from exercising authority that Congress gave to the tribes and states.

Class III gaming includes Vegas-style games such as slot machines, black jack and other table games. Class II gaming includes Bingo and other games. NIGC had adopted Minimum Internal Controls that it sought to apply to both Class III and Class II gaming. The court held that the Indian Gaming Regulatory Act does not allow the NIGC to regulate Class III gaming in that way.

“This is an important decision because it stops a federal agency from overstepping its bounds and improperly imposing regulatory requirements in a way that's contradictory to federal law,” said CRIT Tribal Chairman Daniel Eddy, Jr. “Indian gaming is heavily regulated, and rightfully so. The Indian Gaming Regulatory Act gave to each of the tribal, federal, and state governments its own layer of regulation of tribal gaming. The NIGC's attempt to impose mandatory internal control standards on Class III gaming damaged the balance created by Congress.

“As with any business, excessive and redundant regulation by the federal government can be expensive and confusing,” Eddy Jr. said.

“We have never denied that internal control standards are essential to the integrity of our gaming. They are, and we adopted our own years before the NIGC required it. We have only argued that Congress gave the authority to impose such standards on Class III gaming to the tribes and the states, not to the NIGC. It's wrong for any federal agency to exceed its authority and regulate activity in ways that are contrary to the law.”

The case was filed in 2001 after the NIGC sought to audit compliance with the federal standards at CRIT's BlueWater Resort & Casino. The Tribes challenged the audit team's access to Class III records and gaming areas, believing the NIGC did not have the statutory right to access.

NIGC did not complete the audit and fined CRIT for non-compliance with the Indian Gaming Regulatory Act and Commission regulations. CRIT made several attempts to reach a compromise with NIGC, but it could not reach agreement with the NIGC on terms.

The ruling by U.S. District Judge John D. Bates, a Bush appointee, found that NIGC does not have broad regulatory authority over Class III gaming. Because it lacked the authority to impose the internal control standards on the Tribe's Class III activity, the NIGC could not fine the Tribe for preventing the NIGC from auditing the Tribe's compliance with those unlawful regulations. The decision did recognize the agency's limited authority over other, specific aspects of Class III gaming.

CRIT, through its Tribal Gaming Agency, has primary regulatory authority over both Class II and Class III gaming. In the case of Class II gaming, CRIT shares that authority with the NIGC. CRIT shares its Class III regulatory authority with the Arizona Department of Gaming. All aspects of Tribal Class III gaming are governed by rules and regulations spelled out in CRIT's compact with the state.

Gaming tribes contribute a significant portion of their revenues to the regulation of Indian gaming. Last year, CRIT's Tribal Gaming Agency operated with a budget of more than $1.2 million. In addition, it paid over $250,000 to state and federal regulatory agencies, including to the NIGC.

“We're pleased the judge recognized that NIGC's attempted regulation was an incursion upon tribal rights and sovereignty,” Eddy Jr. said. “Our tribe and other gaming tribes contribute funds to the operation of NIGC. We're grateful to know now that our contributions are not going to be used inappropriately in the future.”

According to statistics provided by the National Indian Gaming Association, in Arizona, there is one regulatory employee for every 33 casino games. By comparison, in Las Vegas, there is one regulatory employee for every 450 games.

The National Indian Gaming Association and seven different Indian tribes from around the country filed briefs in support of CRIT's position in the lawsuit. No briefs were filed in support of the position taken by the NIGC.

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