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Tony Batt

Feds Want Stiffer Tribal Gaming Regulations

29 April 2005

WASHINGTON -- Federal officials on Wednesday urged a Senate panel to stiffen regulations on tribal gambling, which has mushroomed into an $18.5 billion industry.

Sen. John McCain, R-Ariz., who is chairman of the Senate Indian Affairs Committee, and other members of the panel seemed receptive to the idea of reopening the Indian Gaming Regulatory Act of 1988.

"I believe it's time for this committee and the responsible federal agencies (to) engage in a constructive dialogue with the gaming tribes on where the act can be positively improved to meet its original intent," McCain said.

Earl Devaney, inspector general of the Department of Interior, said the act needs to be strengthened to reflect Indian gaming's growth.

"My law enforcement experience and intuition also tell me that when there is this much money involved, bad guys will come," Devaney said.

The Las Vegas gambling industry estimates its casinos lose 6 percent of their annual revenue to fraud and theft, Devaney said. Applying that same percentage to tribal casinos would mean they lost $1.1 billion in 2004.

Although the Nevada Gaming Commission had a 2003 budget of $35.2 million, this year's budget for the National Indian Gaming Commission is about $12 million.

Two years ago in Nevada, 279 auditors and investigators oversaw 365 gaming operations with revenues of $19.5 billion.

By contrast, 39 auditors and investigators monitor 200 tribes with more than 400 gambling businesses.

The top priority for federal regulators should be background checks on outside advisers hired by gambling tribes, Devaney said. Background checks are only triggered by management contracts. To avoid background checks, tribes often enter into what they call "consulting agreements," Devaney said.

U.S. Attorney Thomas Heffelfinger of Minneapolis said tribal gambling in California is growing by $1 billion a year, and is projected to surpass Nevada gambling revenues "in a year or two."

But Devaney and Heffelfinger acknowledged there is no evidence yet of rampant corruption in tribal gambling.

Phil Hogen, chairman of the National Indian Gaming Commission, said the act should be clarified so there is no doubt his agency has the authority to regulate Indian casinos.

The Colorado River Indian Tribes are opposing the commission's regulatory authority in federal court, Hogen said. They contend their casino is regulated by a compact with the state of Arizona, and the federal act only empowers the commission to regulate tribal bingo and less sophisticated games.

Hogen also sought stiffer controls over electronic gambling devices, which appear to be slot machines. The devices are popular among tribes because they are not considered a form of casino gambling so they are exempt from state regulaton.

McCain asked Hogen to work with the Department of Justice to produce regulatory guidelines for electronic gambling devices.