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July 11 - 13, 2018 KwaTaqNuk Resort & Casino Polson, MT
NIGA Seminar Institute Commissioner Certification Training LEVEL II AGENDA July 11-13, 2018 KwaTaqNuk Resort, Polson Mt.
NATIONAL INDIAN GAMING ASSOCIATION
Wednesday, July 11
8:00 AM 9:00 AM
Breakfast to be provided Journey of Submission Peter Nikiper, Director of Technical Compliance, BMM Test Labs Break Licensing: Key Employees & Primary Officials Danielle Brashear, Gaming Commission Seneca-Cayuga Nation Lunch Break Tribal Sovereign Immunity and The Gaming Regulator Liz Homer, Homer Law Break Licensing: Vendors Danielle Brashear, Gaming Commission Seneca-Cayuga Nation Thursday, July 12
9:00 AM 10:30 AM
10:30 AM 10:45 AM
10:45 AM 12:15 PM
12:15 PM 1:15 PM
1:15 PM 2:45 PM
2:45 PM 3:00 PM
3:00 PM 4:30 PM
8:00 AM 9:00 AM
Breakfast to be provided Effective Regulatory Writing Liz Homer, Homer Law Break Employment Issues for Regulators Richard McGee, Law Office of Richard McGee, LLC Lunch Break Internal Auditing-What's Required & How it Should Be Approached Sheryl Ashle y , Director of Risk Consulting, Blue Bird CPA's Break Financial Controls & Accounting Standards Sheryl Ashley, Director of Risk Consulting, Blue Bird CPA's Friday, July 13
9:00 AM 10:30 AM
10:30 AM 10:45 AM
10:45 AM 12:15 PM
12:15 PM 1:15 PM
1:15 PM 2:45 PM
2:45 PM 3:00 PM
3:00 PM 4:30 PM
8:00 AM 9:00 AM
Breakfast to be provided Roles of Surveillance Cheats & Scams Roy Hartog, Senior Investigator, Chickasaw Nation. Break Roles of Surveillance Cheats & Scams Roy Hartog, Senior Investigator, Chickasaw Nation.
9:00 AM 10:30 AM
10:30 AM 10:45 AM
10:45 AM 12:15 PM
Please plan to stay for the entire class on each day to get your certificate of completion. Please be on time for sessions
Journey of Submission What happens when a gaming machine is sent to a gaming test lab?
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Different laboratories… Do different testing.
Electrical
Safety
Gaming
And many more…
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General Process
Manufacturersubmits to a lab
The lab tests according to requested standards
The lab issues a report
The TGRA makesa finding basedon the report
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Submission to the lab 25 CFR 547.5 (c) Submission, testing, and approval – generally. Except as provided in paragraph (b) and (d) of this section, a TGRA may not permit the use of any Class II gaming system, or any associated cashless system or voucher system or any modification thereto, in a tribal gaming operation unless: …
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Submission to the lab (1) The Class II gaming system, cashless system, voucher system, or modification thereto has been submitted to a testing laboratory;
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Submission to the lab What does the lab need?
Hardware including peripherals, i.e. BV, printers
Submission letter
Math
Software
Servers
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Testing (2) The testing laboratory tests the submission to the standards established by: (i) This part; (ii) Any applicable provisions of part 543 of this chapter that are testable by the testing laboratory; and (iii) The TGRA ;
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Testing Scope of work / Submission management • Each submission is entered into a project tracking system • Kick off meeting – Engineersare assigned to the project
– Resources assigned – Timelineestablished – Any foreseen compliance issues
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Testing Random Number Generators (RNGs) • Source code review • Algorithm implementation • Samples • Analysis against Die-Hard battery
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Testing
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Testing Math Analysis • Review all combinations / patterns (wins & losses) • Calculate the game cycle • Calculate the game volatility • Calculate the RTP / hold or edge • Calculate the top award odds • Compare with manufacturers math • Emulate combinations on device and verify payouts
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Testing Functional testing
• Generate list of test scripts to be used • Based on Part 547 & 543 for Class II • Based on GLI-11/NV for Class III • Additional tests based on location or tribe the device will go to.
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Results of Testing (3) The testing laboratory provides a formal written report to the party making the submission, setting forth and certifying its findings and conclusions, and noting compliance with any standard established by the TGRA pursuant to paragraph (c)(2)(iii) of this section;
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Results of Testing (4) The testing laboratory’s written report confirms that the operation of a player interface prototype has been certified that it will not be compromised or affected by electrostatic discharge, liquid spills, electromagnetic interference, radio frequency interference, or any other tests required by the TGRA;
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Results If everything works • Technical reviews of the testing • A draft report is generated
• A regulator and/or client review of the report • Final report issued to both regulator and client
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Results What happens if issues were found during testing? • Document the problem(s) • Steps to reproduce and/or show frequency • Assign a severity (Low to High) • Resubmission or withdrawal of the submission
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Final part of a submission (5) Following receipt of the testing laboratory’s report, the TGRA makes a finding that the Class II gaming system, cashless system, or voucher system conforms to the standards established by: (i) This part; (ii) Any applicable provisions of part 543; and (iii) The TGRA.
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Key Items for Class II • Bingo Patterns • Ball Draw Process • Bingo card distribution / generation • Minimum number of players • Game Ending Pattern • Bingo game type • Disclaimers
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Key Items for Class III • RNG Review & Analysis • Game Determination
• Game Play • Accounting • Game Recall • Emulation • Security
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7/2/18
LICENSING: KEY EMPLOYEES & PMO
Presented By: Danielle Brashear
Introduction
§ Lesson 1: Law ful Requirements § What laws require the licensure of casino employees § Definition of Key and PMO employees § Application criteria § Lesson 2: Investigative Procedures § Purpose of the license § Important background information § Reasons for investigations § Lesson 3: Determ inations § How to determine eligibility § Mitigating circumstances § Licensing denials
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LESSON 1: LAWFUL REQUIREMENTS
The laws and regulations governing the licensing requirements
Governing Authorities
§ Indian Gam ing Regulatory Act (IGRA ) 29 U .S.C . § 2701
§ N IGC Regulations 25 C .F.R . Sections 556 and 558
§ Tribal/State Gam ing Compacts
§ Tribal Gam ing O rdinance
§ Tribal Gam ing Regulato ry Autho rity (TGRA ) Rules and Regulations
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IGRA: Tribal Gaming Ordinance
• Background investigations are conducted on the primary management o fficials and key employees o f the gam ing enterprise and that oversight o f such o fficials and their management is conducted on an ongo ing basis; and § Tribal licenses fo r primary management o fficials and key employees o f the gam ing enterprise be issued w ith prompt no tification to the Comm ission [N IGC ] o f the issuance o f such licenses; § Standards whereby any person whose prio r activities, crim inal reco rd, if any, o r reputation, habits and associations pose a threat to the public interest or to the effective regulation o f gam ing, o r create o r enhance the dangers o f unsuitable, unfair, or illegal practices and methods and activities in the conduct o f gam ing shall no t be eligible for employment; and § No tification by the Indian tribe to the Comm ission [N IGC ] o f the results o f such background check before the issuance o f any o f such licenses.
Key Employee – 25 C.F.R. § 502.14
Key Employee means (a) A person who perform s one or more o f the fo llow ing functions: (1) B ingo caller; (2) Counting room superviso r; (3) Chief o f security; (4) Custodian o f gam ing supplies or cash; (5) Floo r manager; (6) Pit boss; (7) Dealer; (8) C roupier;
(9) Approver o f credit; o r (10) Custodian o f gambling devices including persons w ith access to cash and accounting records w ithin such devices; (b) If no t o therw ise included, any o ther person whose to tal cash compensation is in excess o f $50,000 per year; o r, (c) If no t o therw ise included, the four most highly compensated persons in the gam ing operation. (d) Any o ther person designated by the tribe as a key emp loyee .
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Primary Management Official – 25 C.F.R. § 502.19
Primary management o fficial means: (a) The person having management responsibility fo r a management contract; (b) Any person who has autho rity: (1) To hire and fire employees; or (2) To set up working policy for the gaming operation; or (c) The chief financial o fficer o r o ther person who has financial management responsibility. (d) Any o ther person designated by the tribe as a primary managemen t o fficial.
License Application – 25 C.F.R § 556.4
(1) Full name, other names used (oral or written), social security number(s), birth date, place of birth, citizenship, gender, all languages (spoken or written); (2) Currently and for the previous five years: Business and employment positions held, ownership interests in those businesses, business and residence addresses, and driver's license numbers; (3) The names and current addresses of at least three personal references, including one personal reference who was acquainted with the applicant during each period of residence listed under paragraph (a)(2) of this section; (4) Current business and residence telephone numbers; (5) A description of any existing and previous business relationships with Indian tribes, including ownership interests in those businesses; (6) A description of any existing and previous business relationships with the gaming industry generally, including ownership interests in those businesses; (7) The name and address of any licensing or regulatory agency with which the person has filed an application for a license or permit related to gaming, whether or not such license or permit was granted;
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License Application – 25 C.F.R § 556.4
(8) Fo r each felony fo r which there is an ongo ing prosecution o r a conviction, the charge, the name and address o f the court invo lved, and the date and disposition if any; (9) Fo r each m isdemeano r conviction o r ongo ing m isdemeano r prosecution (excluding m inor traffic vio lations) w ithin 10 years o f the date o f the application, the name and address o f the court invo lved and the date and disposition; (10) Fo r each crim inal charge (excluding m ino r traffic charges) whether o r no t there is a conviction, if such crim inal charge is w ithin 10 years o f the date o f the application and is no t o therw ise listed pursuant to paragraph (a)(8) or (a)(9) o f this section, the crim inal charge, the name and address o f the court invo lved and the date and disposition; (11) The name and address o f any licensing o r regulato ry agency w ith which the person has filed an application for an occupational license or perm it, whether or no t such license o r perm it was granted; (12) A pho tograph; (13) Any o ther in formation a tribe deem s re levan t ; and (14) Fingerprints consistent w ith procedures adopted by a tribe acco rding to §522.2(h) o f this chapter.
TGRA Rules and Regulations
§ C reate a comprehensive set o f Rules and Regulations that address all requirements and processes for licensure under the various laws and Gam ing Compact. § That outlines an Applicant’s eligibility to apply fo r and be issued a gam ing license in your jurisdiction. § That provides you w ith the autho rity to define the types o f licenses your agency shall issue. § That provides you the autho rity to condition, deny, suspend, and revoke licenses. § That outlines the term s and conditions Licensees must meet to maintain a gam ing license in your jurisdiction. § That provides you the autho rity to consider m itigating circum stances when licensing individuals. § That provides Licensees w ith due process o f law when conditioning, denying, and revoking licenses.
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LESSON 2: INVESTIGATIVE PROCEDURES
Conducting Background Investigations
Purpose of Gaming Licenses
§ Ensures that individuals who may pose a threat to the assets o f your tribe are no t employed w ithin your gam ing operations. § Ensures that individuals who may pose a threat to the public o r conduct illegal activities w ithin the gam ing operations are no t employed. § Licensing is the first line o f defense in pro tecting the assets and the integrity o f your gam ing operations. § The Gam ing License provides your jurisdiction over the licensee, allows you to enfo rce compliance w ith internal contro ls and applicable laws. § It is important that you have the authority to license all persons who work w ithin your gam ing operations, that have access to the public, and secure areas o f your gam ing facility.
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Personal Information
§ Personal identifiers (i.e., Name, SSN , DOB , etc.) consistent w ith documentation: § Is the Applicant’s name and place of birth accurate; § Are they legal residents of the U.S.; § Are there fraudulent reports on their SSN, when and where was it issued. § What are the Applicant’s aliases. § Where has the Applicant resided over the past 10 years. § What is the Applicant’s marital status. § A re there any fam ily ties w ith respect to the casino or its business relationships.
Professional History
§ What is the Applicant’s employment history and what are the identities o f their prior employers. § What are their reasons for separation from past employers. § Is the information disclosed accurate regarding the past employers. § Is there any relevant information om itted from their resume or social pro file. § Were there any controversies at a prior employer which could explain a m isrepresentation. § D id they accurately disclose their education history.
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Business Interests
§ Is the Applicant connected w ith any domestic or foreign-based corporations. § Is the Applicant connected w ith any nonpro fit organizations, charitable foundations, o r po litical action comm ittees. § Is the Applicant connected to any gam ing related corporations or business. § Is the Applicant connected to any businesses that ho ld a vendor license in your jurisdiction. § Is the Applicant connected to any tribally owned or operated businesses. § Has the Applicant ever been a significant shareho lder in a publicly -traded company. § Has the Applicant ever served as an o fficer or board member for any co rpo ration o r LLC . § Have any o f these affiliated entities been the subject o f prior controversy, bankruptcy, litigations, or sanctions.
Regulatory Issues
§ Has the Applicant (or their business affiliates) ever had a gam ing license revoked, suspended, conditioned, or denied. § Has the Applicant (or their business affiliates) ever been invo lved in any tribal, state o r federal regulato ry complaints. § Does the Applicant ho ld any pro fessional business licenses or pro fessional designations. § Has there ever been any complaints or disciplinary actions taken against the Applicant. § Has the Applicant ever been sanctioned by a tribal, state, or federal regulatory agency.
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Financial Status
§ A re there any no teworthy issues or po tential red flags in the Applicant’s credit report. § A re previous employers and business entities reported consistent w ith application.
§ Has the Applicant previously filed for bankruptcy pro tection. § Has the Applicant been a party to any civil judgments.
§ Has the Applicant had any state or federal tax liens filed against them . § Does the Applicant own any real property or o ther tangible assets such as mo tor vehicles, aircraft, or watercrafts. § Does the Applicant own any assets through entities which they contro l.
§ Has the Applicant recently pledged any assets as co llateral. § Has the Applicant had any assets repossessed by a lender.
Criminal/Civil Cases
§ Has the Applicant ever been convicted o f a local, tribal, state, or federal crime. § Has the Applicant ever been invo lved in any crim inal matters that resulted in dism issal, suspended sentencing, or deferred sentencing. § Is the Applicant currently serving a deferred sentence, probation, or an ongo ing prosecution. § Has the Applicant ever been invo lved in any tribal, state, or federal civil litigation. § Do the details o f the litigation filings provide any o ther relevant information. § Has the Applicant ever been the defendant o f a pro tective order or restraining order. § Does the Applicant have a history o f failure to pay fines and costs in crim inal matters.
§ Does the Applicant have an outstanding arrest warrant. § Does the Applicant have a negative driving record.
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News Media - Social Network - Internet Sources
§ Has the Applicant been the focus o f, or referenced in any mainstream domestic, or international news media. § Does the Applicant maintain any personal blogs, websites, or social networks. § Review Facebook, Tw itter, You Tube, type o f accounts. § What is the information the Applicant is posting. § What are fo llowers saying about the Applicant. § Conduct general internet searches on the Applicant through basic search engines such as Google, Yahoo , and B ing.
Personal References
§ Ask for the Applicant to provide personal references they have worked w ith or worked for in the past. § Ensure at least one reference has known the Applicant fo r at least 5-10 years. § Ensure personal references are no t fam ily members, ask how the Applicant knows the individuals. § If you are unable to verify addresses, ask for personal references that can verify a Applicant’s residential history. § Do former co lleagues, employers, and/or business partners have any relevant info rmation regarding the Applicant’s character. § Can references provide additional facts which may no t have been reported in the public domain.
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Reasons for Investigations
§ To verify factual info rmation provided by Applicants. § Verify all aspects o f the application. § To uncover damaging info rmation. § To determ ine the truthfulness o f the Applicant. § To determ ine the character, habits and associations o f the Applicant.
LESSON 3: LICENSING DETERMINATIONS
Analysis of investigative findings
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Investigative Report
§ C reate an investigative report that includes the steps taken in conducting the background investigation. § List all sources you obtained information from , remember a good report answers the questions:
§ Who; § What; § When; § Where; and § How. § Document all results obtained from the investigative steps. § Conclusions reached. § The basis fo r those conclusions.
Eligibility Conclusions
§ Analyze the information discovered. § Has the applicant ever been convicted o f any crime, or participated in any event invo lving fraud, dishonesty, m isrepresentation, or any gam ing-related o ffense. § Has the applicant participated in vio lence resulting in serious bodily injury, death, or weapons vio lations. § Has the Applicant had a license revocation by ano ther regulatory authority. § Financially responsible. § Has know ingly or w illfully provided false, or m isleading material, statements, o r info rmation, o r om itted info rmation on the gam ing license application. § Term ination from previous employers fo r cause o r accusations o f improper conduct.
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Mitigating Circumstances
§ The circum stances under which the o ffense occurred. § Age o f the person at the time o f the comm ission o f the crime. § Amount o f time that has elapsed since the applicant’s last crim inal activity. § Conduct and work activity o f the person prior to and fo llow ing the crim inal activity. § Evidence o f the applicant’s rehabilitation during incarceration, o r fo llow ing release. § Evidence o f the applicant’s fitness, letters o f recommendation from prosecution, law enfo rcement, co rrectional o fficers, o r o ther persons who had the applicant under direct supervision. § Relationship o f the crime to the purpose for requiring the license, and the extent to which the applicant m ight o ffer an oppo rtunity to engage in further crim inal activity o f the same type.
Tribal Eligibility Determination – 25 C.F.R. § 556.5
§ To make a finding concerning eligibility o f a Key employee o r PMO fo r granting o f a gam ing license, an autho rized tribal o fficial shall review a person’s: § Prior activities; § Criminal record, if any; and § Reputation, habits, and associations. § If the authorized tribal o fficial determ ines that licensing o f the person poses a threat to the public interest o r to the effective regulations o f gam ing, o r creates o r enhances the dangers o f unsuitable, unfair, o r illegal practices and methods and activities in the conduct o f gam ing, an authorizing tribal o fficial shall no t license that person in a key employee o r PMO position. § Use the information discovered in the background investigation to determ ine the prio r activities, reputation, habits, and associations o f a person to make a licensing determ ination.
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Notification of Results – 25 C.F.R. § 556
§ A Tribe must no tify the N IGC o f the results o f the background investigation w ithin 60 days o f an individual beginning work. § The NOR must include the fo llow ing info rmation: § Applicant’s name § Date of Birth § Social Security Number § Date they begin work, or date the temporary license was issued § The eligibility determ ination in the NOR must include a summary o f:
§ The steps taken in the investigation § Verification of all gaming licenses § Specific notations regarding previously denied and revoked licenses § Criminal charges within the last 10 years of the application § Every felony conviction
Licensure
§ A fter the subm ission o f the NOR , the N IGC has 30 days to make a determ ination whether or no t they object or concur w ith your eligibility determ ination and recommendation regarding licensure. § W ithin 30 days after the issuance o f a license, a tribe shall no tify the Comm ission o f its issuance in accordance w ith 25 C .F.R . § 558. This is a no tification o f the applicants licensed by the tribe that you subm itted NOR ’s fo r. § You must also include in your no tices all applicants no t issued a license, either because they were denied, revoked, o r quit befo re a license could be issued. § Should the N IGC object to your issuance o f a license you must ho ld a hearing and determ ine whether or no t the tribe w ill deny the Applicant. Based upon the testimony and evidence presented the tribe may decide to issue a license.
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Retention Obligations – 25 C.F.R. § 558.3
§ A tribe shall retain the fo llow ing for inspection by the Chair or his or her designee for no less than three years from the date o f term ination o f employment:
§ Applications for licensing; § Investigative Reports; and § Eligibility Determinations.
§ T IPS : Ensure you maintain the appropriate investigative materials and licensee files. Maintain a database o r method o f tracking your licensees, their license expirations, positions, and o ther pertinent info rmation. Be well o rganized, diligent, and through in conducting investigations. Be respectful, maintain confidentiality, and make ethical determ inations regarding applicants. Ensure your processes and standards for licensure are comprehensive and allows your agencies the ability to make fair determ inations that pro tect your gam ing operations.
“Where large sums of money are concerned it is advisable to trust nobody.” ~Agatha Christie
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5/9/18
TRIBAL SOVEREIGN IMMUNITY AND THE GAMING REGULATOR
Tribal Sovereign Immunity: General Principles
u Sovereign immunity is a fundamental aspect of an Indian tribe’s inherent sovereignty q As noted by the Supreme Court, tribal sovereign immunity “is a necessary corollary to Indian sovereignty and self-governance.” u Tribal governments are immune from lawsuits in
both federal and state courts UNLESS: q 1) Congress has authorized the suit; or q 2) The tribe has waived its immunity
u Sovereign immunity also extends to commercial activities conducted by tribal entities that are “arms” of the tribe
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Tribal Sovereign Immunity: Tribal Officials
u Sovereign immunity also protects tribal officials and tribal employees acting: q 1) In their official capacity; and q 2) Within the scope of their authority u Why protect tribal officials? q In suits against tribal officials, the sovereign entity (tribe) is the “real, substantial party in interest” q A plaintiff cannot circumvent tribal immunity simply by naming an officer of the Tribe as a defendant rather than the sovereign entity q Ultimately, relief would run against the tribe - need to protect the tribe’s treasury
Tribal Sovereign Immunity: Tribal Officials
u “Individual” Acts vs “Sovereign” Acts q Individual - acts outside the scope of delegated authority are considered individual acts and not protected acts of the sovereign (tribe). q Sovereign –acts taken in official capacity and within the scope of delegated authority are protected acts of the sovereign (tribe).
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Tribal Sovereign Immunity: Tribal Officials
u How to determine whether act is within “scope of delegated authority”: q Examine enabling statute or law and determine whether the official was authorized to carry out the action at issue q Ask: Was the official empowered to do what s/he did? If so, the action was taken pursuant to the official’s delegated authority and protected by the tribe’s sovereign immunity
Tribal Sovereign Immunity: Tribal Officials
u What if the official’s actions were wrong? q Merely being wrong or mistaken does not take an action outside the scope of delegated authority u The scope of authority analysis turns “on the breadth of official power the official enjoys and not whether the official is charged with using that power tortuously or wrongfully.” Tenneco Oil Co. v Sac & Fox Tribe , 725 F.2d 572, 576 (10th Cir. 1984) q Official action is still an action of the sovereign entity, even if the official’s actions were wrong or mistaken, so long as it does not conflict with the official’s valid authority
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Tribal Sovereign Immunity: Tribal Officials
u HYPOTHETICAL: q Gaming Commissioners revoke an employee’s gaming license q Revoked licensee sues Gaming Commissioners in their individual, personal capacities q Gaming Commissioners move to dismiss the suit on sovereign immunity grounds, arguing that the revocation action was taken in their official capacity as Gaming Commissioners and within the scope of their delegated authority q Tribe’s gaming ordinance specifically authorizes Gaming Commissioners to make licensing determinations, including suspensions and revocations q How should the court rule?
Tribal Sovereign Immunity: Tribal Officials
u Under these circumstances, the court should dismiss the suit because: q 1) The revocation was an official act of the Gaming Commission and performed by the Gaming Commissioners in their official capacities; and q 2) The revocation action was taken pursuant to the Gaming Commissioners authority under the gaming ordinance to suspend and revoke gaming licenses.
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Tribal Sovereign Immunity: Cosentino v Fuller
u Cosentino v Fuller q The hypothetical is based on a recent CA state court decision, Cosentino v Fuller q The state court did not find the Commissioners sovereign immunity claims persuasive q Contrary to the long-settled doctrine of sovereign immunity, the CA state court ruled that sovereign immunity did not apply, and that the Gaming Commissioners exceeded the scope of their powers by revoking the employee s license without cause u What went wrong?
Tribal Sovereign Immunity: Cosentino v Fuller
u Classic Case of “Bad Facts Making Bad Law”: q The licensee/plaintiff, Cosentino, was a blackjack dealer who, after observing criminal activity on the gaming floor, became a confidential informant for the California Department of Justice q The Gaming Commissioners scheduled a private meeting with Cosentino, but he was never personally notified of the scheduled meeting. After missing the meeting, he was suspended from work q The Gaming Commissioners notified him of his suspension and their intent to revoke license by letter mailed to his former address q About a month later, Cosentino met with the Gaming Commissioners and was asked to disclose information about his informant activities. Cosentino declined to do so. q Shortly after the meeting, Cosentino was notified by letter that his license had been revoked. q Cosentino sued Gaming Commissioners personally, claiming that the revocation was in retaliation for his informant work
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Cosentino v. Fuller
u Court’s Ruling: q The Gaming Commissioners overstepped their
authority by revoking the employee’s gaming license in retaliation and without cause q Sovereign immunity will not protect the Gaming Commissioners unless they can show that the license was revoked based on criteria identified in IGRA, Compact, or gaming ordinance q Nothing in the record shows that the Commissioners had the authority to revoke his license without cause or in retaliation q “Sovereign immunity . . . does not prevent inquiry into whether [they] exceeded their authority by using their official position to intentionally harm Cosentino.”
Cosentino v. Fuller
u Breakdown of the Court’s (Mis)Reasoning: q The court looked beyond the Commissioners’ “scope of authority” to consider the circumstances under which the Commissioners exercised that authority q The court focused on the lack of evidence/record to support the revocation decision – i.e., the Commissioners’ failure to provide evidence regarding plaintiff’s unsuitability for licensure q Without such evidence, the court simply accepted the plaintiff’s allegation that the revocation was without cause and in retaliation q Since the Commissioners did not have the authority to revoke licenses without cause or in retaliation, their conduct was outside the scope of their authority and not protected by the tribe’s sovereign immunity
q In other words, the Commissioners’ act of revocation was lawful, but their motives were not, so therefore the act was outside the scope of their authority
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Cosentino v. Fuller
u Where the Court Went Wrong: q State courts are not meant to have any role in tribal gaming licensing, let alone decide whether tribal officials are in compliance with their own laws q The Commissioners’ motives for carrying out an otherwise official and lawful act are irrelevant for purposes of sovereign immunity q Decision allows plaintiff to sue Commissioners individually for an action of the tribe’s government q This means tribal officials may be held personally liable simply by voting or participating in a decision to effect a sovereign act of the tribe
Impact of Cosentino v. Fuller
u It’s Not as Bad as it Sounds: q The case has been “depublished,” which means it’s non-binding and cannot be relied on as precedent q Also, bear in mind this is a state court decision u Nonetheless, the case serves as a cautionary tale for TGRA officials and employees u Key question is: what can you do to avoid finding yourself in this situation?
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Fundamental Principles for TGRAs
u Act within the scope of your authority q TGRA may only exercise such power as it has been delegated and NO MORE u Avoid arbitrary and capricious acts q There should be a rational connection between the facts examined and the action taken by the TGRA u Interpret the law fairly and reasonably q Be unbiased (free of personal animus) q Avoid prejudging the outcome
Process Matters
u Fundamental Fairness: q Fairness and consistency q Proportionality q Least adversarial means to achieve objective
u Due Process Requires: q Notice q Opportunity to be heard q Impartial adjudicator q Fair process
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Process Matters
u In other words, the affected person should always be advised of: q What is happening q When and where it is happening
q Why it’s happening q What could happen q And, what they can do if it does.
Administrative Record u Importance of an Administrative Record q Create a paper trail documenting decision-making process and basis for agency decision q Record should reflect the following: Ø TGRA collected the available information Ø Considered all relevant factors Ø Made a reasoned decision based upon credible, substantial evidence in the record q The administrative record will be your greatest weapon in defending against challenges to agency actions
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Final Thoughts
u Case may be non-binding, but that doesn’t mean it can be ignored u Sovereign Immunity is an affirmative defense u This means that if a case is filed, you have to present the defense, and u If it’s a state court, they might do something like the California court in the Cosentino case.
END
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LICENSING VENDORS
Presented By: Danielle Brashear
Introduction
§ Governing Authority § What laws and regulations require the licensing of vendors § Best practices for licensing vendors § Types o f Vendo r Licenses § Different vendor types § Licensing options § Licensing exemptions § Investigating Vendors
§ Conducting entity investigations § Conducting principle investigations § Conducting vendor employee investigations
§ Determ ining Vendor Eligibility § Purpose for licensing vendors
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GOVERNING AUTHORITY
The laws and regulations requiring vendor licensing.
Governing Authorities
§ Indian Gam ing Regulatory Act (IGRA ) § 25 USC § 2702(2) – To provide a statuto ry basis fo r the regulation o f gam ing by an Indian tribe adequate to shield it from o rganized crime and o ther corrupting influences, to ensure that the Indian tribe is the primary beneficiary o f the gam ing operation, and assure that gam ing is conducted fairly and honestly by bo th the operato r and players. § N IGC Regulations 25 CFR § 537 requires background investigations for persons or entities w ith a financial interest in, or having management responsibility for a management contract. § Tribal/State Gam ing Compact § Tribal Gam ing O rdinance § Tribal Gam ing Comm ission Rules and Regulations
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TYPES OF VENDOR LICENSES
The different classifications of vendors.
Gaming Vendors
§ A gam ing vendor is a person or entity that provides any equipment, component, item , device, apparatus, goods, supplies, o r services used to directly or indirectly: § Conduct, operate, or play a gambling device; § The placement of a bet or wager; § Promotional activity in which prizes are awarded that involve the use of gaming devices, goods or services, whether monetary or non-monetary; § That secure, lock, or provide access to gaming equipment or systems. § Gam ing machines or system s, including hardware and so ftware. § Cards, chips, bingo paper, felts, gam ing tables, card shufflers, hoppers. § Cages, tumblers, locks, keys. § Casino management system s, or so ftware used to track gambling activity. § Any equipment or supplies determ ined by your jurisdiction to be Gam ing.
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Gaming-Related Vendor
§ A person or entity who provides so ftware or hardware designed to directly integrate o r interface w ith o r interact w ith any computerized system fo r monitoring, tracking, or reporting gam ing, promo tional activity, or revenue. § Requiring direct or remo te access to gam ing activities or equipment system s. § Link, connect, or integrate w ith gam ing equipment or system s. § Used to track, monitor, or servile game play; § D ispense cash, tickets, cards, or o ther item s used in play; § Used to count, weigh, transport, or process cash or cash equivalents; § Used to create marketing and promo tional ideas or materials; § Used to design, develop, or construct gam ing structures; § Used to equip, outfit, clo the, or support gam ing licensee’s in the performance o f contro lled functions and duties.
Non-Gaming Vendors
§ Persons or entities who provide goods or services that do no t have the ability to impact the integrity o f gam ing devices. § Food and beverage suppliers. § Suppliers o f general o ffice supplies and equipment. § Suppliers o f fuel and retail item s. § Design services, who provide art, furniture, and décor. § Landscaping services, linen and laundry services for facility maintenance. § Goods and services that constitute neither gam ing, nor gam ing-related goods, supplies, o r services, but are compensated w ith funds o f the revenue generated by the gam ing operation.
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Exempt Vendors
§ Vendo rs who provide unique goods, supplies, o r services on a one-time, occasional, infrequent basis that has no on -go ing contractual relationship. § Do no t require access to secured or contro lled areas o f the gam ing facility. § U tility providers, publishers o f newspapers and magazines, television, radio outlets providing advertising space or ads, companies that provide business travel o r outgo ing delivery services. § Providers o f training or educational services. § Entertainment contracts w ith acts, o r artists and their booking agents o r promo ters. § Banks, insurance agencies, benefit providers, that are o therw ise licensed/regulated. § Persons or entities operating under valid and effective pro fessional legal, accounting or o ther pro fessional licenses.
Permitted Vendors
§ Transactions w ith publicly traded co rpo rations o r who lly owned subsidiaries which provide non-gam ing goods and/o r services. § A method o f authorizing business w ith a publicly traded company in lieu o f a vendor license or registration. § Conditions for perm itting transactions could be companies whose stock is traded on a regular stock exchange, that is required to be registered w ith the SEC , and whose registration w ith the SEC is in good standing w ith all required subm issions. § A who lly owned subsidiary o f a publicly traded company whose information is accessible and contains no negative information that would make it unsuitable. § This can include computer hardware and so ftware used in non -gam ing applications, food and beverage suppliers, and o ffice equipment and supplies.
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INVESTIGATING VENDORS
Important information regarding vendors.
Entity Investigations
§ A rticles o f Incorporation. § Verification o f Business Licenses and Pro fessional Licenses, if applicable. § Liability Insurance for the services provided, if applicable. § Tax filings, credit checks, to review financial stability. § Commercial reports, such as, Dun & B radstreet. § Public Records, such as, bankruptcy pro tection, foreclosures, civil judgments, tax liens. § Verification o f business address and services provided. § News media, blogs, and reviews about the company, are they,o r affiliated entities, the subject o f controversy, litigation, o r sanctions. § Invo lved in any regulatory issues or disciplinary actions by any state or federal agency.
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Principles
§ A company is only as good as the reputation and leadership o f its owners and principles. § Require every substantial owner w ith 5% or 10% ownership o f the company to apply for a principle license under the vendor. § Require that every person who has direct management and decision making capabilities fo r the vendo r to apply fo r a principle license under the vendo r. § Investigative these individuals in the same manner you would a PMO for the gam ing operations. § Ho ld these individuals to the same licensing standards you would a PMO for the gam ing operations, especially when dealing w ith gam ing vendo rs. § When registering a non-gam ing vendo r, investigate and ho ld these individuals to the same standards as a Key Employee o f the gam ing operations.
Vendor Employees
§ Require every on-site technician, o r technicians w ith remo te access to gam ing devices to apply for a license under the vendor. § Require every on-site service personnel w ith a vendo r to apply fo r a license under the vendor. § Investigate these individuals in the same manner you would a Key employee. § Ho ld these individuals to the same standards for licensure as you would a Key employee o f the gam ing operations. § Fo r all non-gam ing vendo rs, ensure that their employees meet the same criteria you would use to license all non-gam ing personnel o f the gam ing operations. § It is important that you ensure that vendor employees who have access to your gam ing facilities are o f good character, and do no t pose a threat to your gam ing operations or patrons.
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VENDOR ELIGIBILITY DETERMINATIONS
Licensing standards for vendors.
Purpose of Licensure
§ The Vendo r’s consent to the jurisdiction and autho rity o f the tribe and to abide by all the applicable laws o f the tribe. § The Vendo r’s consent to the civil regulato ry jurisdiction and autho rity o f the TGRA . § Enables the TGRA to closely monito r large transactions conducted by the gam ing operation. § Strengthens the TGRA ’s ability to pro tect the assets o f the tribe. § Enhances the TGRA ’s ability to monito r fo r undisclosed transactions. § Enables the TGRA to monito r fo r co llusion and o ther fraudulent activity between vendors and gam ing employees. § Enables the TGRA to enfo rce laws and regulations onto the vendo r.
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Eligibility Standards for Vendor Licensing
§ Review the investigative results for all principles o f a vendor to ensure they meet suitability criteria for licensure. § No t be owned, contro lled, directed, managed or associated w ith any person who does no t meet the suitability standards applicable to a key employee or PMO . § A large part o f a company's eligibility is determ ined by the eligibility o f its owners and operators. § Is the vendor in good standing w ith all governmental jurisdictions in which it conducts business. § Is the vendor fiscally sound and in good standing w ith all taxing jurisdictions. § Does the vendor have a good reputation in its industry, does it have ties or associations w ith known felons or persons o f dishonest or disreputable character.
Key Factors in Licensing Vendors
§ Assess the risk that a vendor poses to the gam ing operations. § Define the types o f licenses your jurisdiction w ill issue, create the standards and processes based upon the type o f license, or the risk assessment conducted fo r each type o f vendo r. § C reate processes and standards for licensure that are effective and can be quickly implemented. § Do no t create processes that inhibit the business o f the gam ing operations. § Be fair and consistent in the licensing o f vendors. § C reate fee schedules that are appropriate and affordable to vendors.
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“ There is nothing as deceptive as an obvious fact.” ~Arthur Conan Doyle
LICENSING GAMING FACILITIES
Presented By: Danielle Brashear
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Introduction
§ Governing Authority § Lawful requirements for licensing gaming facilities § The adoption of codes and standards § Facility Inspections § Inspecting Facilities § Contracting Professionals § Facility Licensing Determ inations § Eligibility requirements § Attestation Certification for the issuance of a facility license
GOVERNING AUTHORITY
Lawful requirements to license gaming facilities.
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IGRA – 25 U.S.C. § 2710
§ (b) (1) An Indian tribe may engage in, o r license and regulate, class II gam ing on Indian Lands w ithin such tribe’s jurisdiction if… .A separate license [is] issued by the Indian tribe… for each place, facility, or location on Indian Lands at which class II gam ing is conducted. § (b)(2)(E) The [N IGC ] Chairman shall approve any tribal o rdinance o r reso lution concerning the conduct, o r regulation o f class II gam ing on the Indian Lands w ithin the tribe’s jurisdiction if such ordinance or reso lution provides that… .the construction and maintenance o f the gam ing facility, and the operation o f that gam ing is conducted in a manner which adequately pro tects the environment and public health and safety.
NIGC – 25 C.F.R. § 559
§ (3) A Tribe must subm it to the [N IGC ] Chair a copy o f each new ly issued o r renewed facility license w ithin 30 days o f issuance. § (4) A tribe shall subm it to the [N IGC ] Chair w ith each facility license an attestation certifying that by issuing the facility license, the tribe has determ ined that the construction and maintenance o f the gam ing facility, and the operation o f that gam ing, is conducted in a manner which adequately pro tects the environment and the public health and safety.
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Gaming Ordinance
§ Your Gam ing O rdinance should grant the TGRA the authority to issue facility licenses fo r each location where gam ing takes place. § G rant the TGRA the authority to hire qualified inspectors as they deem necessary. § G rant the TGRA the authority to random ly inspect each facility for continued compliance w ith the issued facility license. § G rant the TGRA the authority to enforce and condition a facility license based upon remedial actions. § G rant the TGRA the authority to promulgate regulations regarding health and safety standards. § Require that gam ing operations prepare emergency preparedness plans and o ther po licy and procedures regarding public health and safety subject to TGRA approval.
The Adoption of Public Health and Safety Standards
§ The TGRA should create a comprehensive set o f regulations outlining the standards by which they inspect, hire pro fessional inspecto rs, enfo rce compliance w ith applicable standards, condition licenses based upon co rrective actions, license and renew gam ing facility licenses. § W ithin the regulations adopt standards for public health and safety, such as:
§ Electrical Standards; § Building Standards;
§ Mechanical safety standards; § Plumbing safety standards; § Fire safety standards; § Food service; § Water; and § Po isonous or toxic materials.
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FACILITY INSPECTIONS
Determining compliance with environment and public health and safety standards.
Gaming Operation Procedures
§ Ensure fo r every location where gam ing is conducted that the gam ing operations have TGRA approved procedures that address: § Emergency preparedness;
§ Fire Evacuation; § Food and water;
§ Construction and maintenance; § Hazardous and o ther materials; § Sanitation; § Medical emergencies;
§ Loss o f power; § Natural disaster; § Inclement weather; § Law enforcement and security response; and § Active shoo ter.
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Facility Inspections
§ The TGRA should conduct bo th announced and unannounced inspections o f the gam ing facility on a regular basis in o rder to monito r compliance w ith the term s and conditions o f the facility license. § The TGRA should document all inspections through the use o f checklists and reports. A ll instances o f non-compliance should be documented and repo rted to the gam ing operations, w ith recommendations, if applicable. § The gam ing operations should be required to respond to all no ted deficiencies in w riting along w ith the co rrective measures they intend to utilize to clear all deficiencies and the timeframe they expect the remedial actions to be complete. § The TGRA should fo llow up regarding any remedial actions to ensure the facility completed all co rrective measures when addressing deficiencies. § Regular inspections w ill ensure gam ing facilities are operating in a manner that pro tects the environment and public health and safety, and ensure that all deficiencies are addressed prior to the deadline for renewal o f a facilities license.
Inspection Checklists
§ Most codes and standards w ill have a checklist you can use to determ ine compliance. Develop checklists that can be utilized by your agents that address everyday concerns regarding: § Fire safety; § Public safety; § Construction and maintenance; § Sanitation; § Emergency medical services; § Food handling;
§ Portable water safety; § Hazardous materials; § Hazardous waste; § Waste water; § Above ground and underground storage tanks; and § Air quality.
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Professional Inspectors
§ Periodically hire or utilize the services o f certified pro fessionals to inspect and report on the facilities compliance w ith: § Building codes; § Fire codes;
§ Health/food codes; § Water quality; and § Air Quality.
§ Have inspectors prepare reports regarding the facility’s compliance w ith the adopted codes and standards, no ting any deficiencies and recommendations they have fo r co rrective actions. § Due diligence regarding building inspections for structural damage and the testing o f fire alarm system s is impo rtant in pro tecting public safety.
FACILITY LICENSING DETERMINATIONS
Determining the eligibility of a facility for licensure.
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