When tribes think of the National Indian Gaming Commission’s compliance efforts, they might only think about the Notice of Violation (NOV) and assume it is the agency’s go-to enforcement tool to obtain compliance with IGRA. As I have written previously, any enforcement action I take is based on an exhaustive investigation and analysis of the unique circumstances involved, and it is not something I take lightly.
When NIGC must take enforcement action, we do so to preserve the integrity of the industry and protect the valuable tool Indian gaming represents for many tribes. But it is critically important for the Indian gaming community to understand that the majority of NIGC compliance efforts do not result in the issuance of an NOV and a subsequent Civil Fine Assessment that may result in an operation’s closure or a daily penalty of over $57,000 for each violation.
NOVs are rare. It is far more likely that noncompliance is addressed first with technical assistance efforts followed by a Letter of Concern (LOC). The agency uses the LOC to alert tribes to concerns regarding compliance with IGRA or NIGC regulations that have not been resolved through technical assistance efforts. The LOC identifies the concern(s) and provides a time period for the tribe to respond with corrective actions. Often, the LOC process results in resolution of the matter without penalty.
NIGC’s record usage of LOCs in recent years underscores the agency’s dedication to engagement in its oversight responsibilities and to a collaborative resolution of potential enforcement matters. In FY2022, NIGC issued 22 LOCs—only one resulted in an NOV. Of those remaining, 70 percent have been satisfied and 30 percent are working through their corrective action plan.
This voluntary compliance approach is NIGC’s proactive and collaborative handshake with gaming tribes to meet IGRA’s mandates. The agency is committed to providing gaming tribes with the best resources to help them successfully operate and regulate their gaming in a manner that sustains for generations what has become the lifeblood for many tribes’ communities.
Below is a short journey into aspects of the agency’s compliance environment. These highlights point out that the agency would rather use voluntary compliance than enforcement actions when possible.
NIGC and Regulatory Compliance
First, while tribes’ regulatory bodies and NIGC may have distinct oversight responsibilities, there is a shared interest in protecting tribal assets derived from gaming. Through NIGC’s Division of Compliance, the agency monitors tribal gaming operations, provides technical assistance and training, cultivates local-level relationships and supports the work of more than 6,000 tribal gaming regulators.
The division includes eight regional offices, an Audit Program and an Environmental Public Health and Safety (EPHS) Program. The Region Offices are comprised of compliance and audit staff, who conduct routine site visits and assessments at tribal gaming facilities, and perform audits and investigations to monitor compliance with the IGRA, NIGC regulations and tribal gaming ordinances or resolutions approved by the NIGC chair.
In addition, other NIGC components, including the agency’s Finance, Technology, Public Affairs and General Counsel divisions, regularly provide a variety of assessment, advisory, planning and communication tools in coordination with the NIGC Compliance Division to encourage tribes’ proactive efforts at compliance.
When technical assistance and training, intermediate communications and the LOC do not result in compliance with IGRA, NIGC regulations or the tribal gaming ordinance, the NIGC will undertake enforcement action. Enforcement actions may include imposing appropriate sanctions for violations, such as civil penalties, issuing orders for temporary closure and referring criminal matters to appropriate tribal, federal and state entities.
Fortunately for both patron and operator alike, these measures are few and far between. A majority of the time, once alerted to a violation, gaming tribes and NIGC work with a tribe’s regulatory staff and their gaming operations to correct the problem. This is what NIGC calls “voluntary compliance.”
The Letter of Concern
NIGC has historically approached IGRA violations with the mindset that once alerted, tribes will remediate a violation in a reasonable time if given a chance to correct it. Voluntary compliance is the agency’s goal. The first step to voluntary compliance is to alert the tribe to a potential violation; the agency codified that approach in 2012.
Set forth in 25 C.F.R. 573, an LOC describes the available facts and information, includes a preliminary assessment regarding the incident or condition and provides a tribe with a time period for its response. Voluntary compliance is often achieved when a tribe and the NIGC staff are able to resolve any potential enforcement issues prior to the chair issuing an enforcement action.
Over the past 10 years, LOCs have been used to address concerns such as a tribe not maintaining sole proprietary interest in and responsibility for the conduct of any gaming activity; entering and operating under contracts that contain management provisions which have not been submitted and approved by the NIGC chair; using net gaming revenues for purposes other than those set forth in IGRA (commonly called a misuse of revenue); instances where the construction, maintenance and operation of the gaming facility is conducted in a manner that does not adequately protect the environment, public health and safety of employees and patrons; failing to submit timely audits; failing to submit required licensing notices for facilities or employees; and instances where internal controls do not protect the integrity of gaming and protect tribal assets.
Recently, NIGC investigations revealed two tribes did not have an internal audit function for their Class II gaming operations. Internal audits as well as independent financial reviews are often the most effective tools to ensure a tribe is fully aware of how its licensed gaming operates and makes decisions impacting the tribal community’s access to gaming resources. For that reason, Part 543 of the NIGC Minimum Internal Control Standards (MICS) requires internal auditor(s) perform gaming operations audits for each department (at least annually) to review compliance with tribal and operational internal controls and NIGC MICS.
The agency issued an LOC in both instances, requiring the tribes to submit a plan of action to establish an internal audit function within a given time. Both tribes submitted an appropriate and timely plan and were able to successfully address the concerns. As a result, the NIGC issued LOC Satisfaction Letters and did not recommend further enforcement action.
NIGC Resources
Both the tribes in the example and similar past results demonstrate that the LOC approach works. As a fellow regulatory body in this process, NIGC provides tribes with the resources to keep compliant with IGRA and NIGC regulations. The agency maintains resources and processes in place to address compliance concerns that include offering tribes legal opinions and declination letters, management contract reviews, training materials, in-person and virtual technical assistance and training, site visits, required ordinance audits, Agreed Upon Procedures (AUP) audits and reviews, Internal Control Assessments (ICA) and EPHS assessments—all at no additional cost.
Since many tribes are well under way in their fiscal year operations, I encourage gaming leaders at all levels to take advantage of the tools and decades of regulatory expertise from a national perspective that NIGC has to offer. Again, by working proactively with NIGC, gaming tribes can quickly and efficiently resolve potential issues before they become major violations and help all of us protect the hard-fought reputation for integrity Indian gaming has earned over the past 35 years.
In 2021, the NIGC launched the NIGC’s Report A Violation campaign so the NIGC could more easily receive any information about potential violations of federal law or regulations in the Indian gaming industry. You may access the tab by isiting www.NIGC.gov.
