Native American Press/Ojibwe News

1993 Report on Indian Gaming Compacts reveals genesis of present problems

September of 1993 saw a report to former Governor Arne Carlson on Indian gaming compacts from the Tribal-State Compact Negotiating Committee. Members of the Committee included Harry Baltzer, Senator Charles Berg, Senator Patrick McGowan, Representative Gil Gutknecht, and George Anderson. The following article is a review of that document. –JP

Minnesota became one of the first states in the nation to enter into compacts with the various tribes for gaming in 1989. At that time, and still to this date, 11 Minnesota tribes operate 17 casinos throughout the state. Gambling consists of blackjack and video games of chance.

            Indian gaming has had a major impact on the state’s economy, tourism, and tribal welfare. While many people believe that the state of Minnesota regulates Indian gambling, it in fact does not. The state’s role is limited to a monitoring function. Each tribal government is ultimately responsible for its own gambling operations.

Many direct and indirect costs are incurred by the State of Minnesota relative to gambling on reservations. Some of these costs are quite significant. The Department of Public Safety, Gambling Enforcement Division (Gambling Enforcement) is responsible for background checks and criminal investigations for lawful gambling, lottery, horse racing, and Indian gambling. Approximately 14,000 background checks are performed each year to support the Indian gambling enterprise. There is no mechanism in place for the reimbursement to the Gambling Enforcement group for the funds expended in doing background checks. For the sake of comparison, the state of Washington collects a $150 certification fee for each background search for each employee. If the costs exceed this amount, the applicant is assessed the fee during the investigation process. No such mechanism exists in Minnesota. If, for example, the state of Minnesota collected a similar fee, the state would accumulate $2,100,000 to cover its costs.

The Committee recommended that dedicated funding for Indian gambling be set up by the legislature without having to reduce the current funding for Gambling Enforcement.

The Attorney Generals office uses its existing staff to provide legal counsel for the Compact Committee and other state agencies involved with Indian gambling. Similar to the situation with Gambling Enforcement, the Committee also recommended that the legislature provide relief for the Attorney General’s office.

Many other units of government are affected by gambling on Indian lands. The institution of gambling places certain burdens on the infrastructure of the state of Minnesota, from roads to utilities, law enforcement, fire protection, and the challenges of compulsive gambling. Few of these costs are factored into the equation that supports the institution of gambling. The Committee recommended that these additional costs be identified and addressed by the state Legislature.

In July of 1993, Senator Inouye met with representatives of Indian tribes, the National Governor’s Association, and the National Association of Attorney Generals to discuss issues of national concern.

One of the areas discussed was the establishment of minimum standards for compacts in an attempt to bring standardization to the operation and regulation of Indian gambling nationwide. The need to standardize internal control of cash flow operations, record keeping and reporting, and accounting were highlighted as areas of concern. However, it should not be forgotten that the responsibility for casino operations rests firmly in the hands of the tribal governments.

The compacts authorize the Gambling Enforcement Division to inspect the records and documents relating to Class III gambling, review casino audits and internal accounting and audit procedures.

The Committee expressed concern over the possible infiltration of organized crime into casinos. Since casinos deal with such large amounts of cash, the fear existed that organized crime had laundered and skimmed money from other casinos and may attempt to do the same in Minnesota. It was decided that minimum standards, along with the proper oversight could help impede or check altogether the infiltration of organized crime.

The Gambling Enforcement Division has the primary responsibility for conducting background checks, testing machines, and reviewing the annual audits prepared by accounting firms retained by the tribes. The Gambling Enforcement Division has performed 14,000 background investigations per year. It has also worked to have all machines approved by an independent laboratory. At the time of the report in 1993, there were 12,000 machines in play and only 65 machines had been tested. This was due in large part to the scarcity of resources within the Gambling Enforcement Division. There were also approximately 500 blackjack tables in play at 16 casinos statewide. On-site reviews had been conducted at 13 of them in the prior two years.

If machines were found to be in noncompliance, the Gambling Enforcement Division has no authority to seize these machines. Instead, Gambling Enforcement must write to the tribes concerning the machine. The tribes have five days from receipt to remove the machine from play or the tribes may contest the findings.

Although background investigations are required, the casinos may hire an individual before the results are received, and in certain cases individuals may remain in the employ of the casino even if they fail the test. The blackjack compact language states that an applicant is not disqualified “from employment if the Community by government resolution waives such a restriction after the applicant has demonstrated to the Community evidence of sufficient rehabilitation and present fitness”. Also, whereas fingerprinting of key employees is required by IGRA rules, the Committee recommended that the fingerprinting be done before the employee be hired by the casino for the safety of the casino and the public.

The final conclusion of the Committee stated that: the Committee is of the belief that the Governor should consider initiating informal discussions with the tribes. Recognizing and respecting the sovereignty of each nation, the Committee recommends that the key points for the discussions should include clarification of state, tribal, and federal roles, minimum standards of regulation for all existing compacts, reimbursement of actual costs for services provided by the state, and other costs borne by local and state units of government.