Hogen Fires Back In Tribal Regulation Row

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20 Aug, 2009 / GamblingCompliance Ltd. / Scott Van Voorhis

The chairman of the embattled National Indian Gaming Commission has given a vigorous response to calls for his ouster by a powerful tribal casino trade group.
Phil Hogen, chairman of the NIGC, contends the push for his “immediate’’ dismissal is based on a misunderstanding of a new regulation being considered by the federal board.

And Hogen, a holdover from the Bush Administration, says there is no need to push him out the door – he’s leaving as soon as he can.

Hogen’s comments, made to GamblingCompliance, come in response to a pointed letter by National Indian Gaming Association to President Obama calling for his resignation.

The battle is just the latest dustup between Hogen and his commission and the multibillion-dollar Indian gaming industry. The two sides clashed repeatedly during the Bush years  as the commission pushed tough new regulations that tribal casino executives argued would cost them billions in new business.

It was part of a larger struggle between the Indian casino industry and the Bush Administration, which was seen as intent on stopping any further expansion by tribal casinos.

That battle, however, may be finally ending with a victory for Indian Country, with President Obama already showing signs of greater sympathy for the industry and its desire to expand.

“I am eagerly awaiting the president’s appointment of my replacement,’’ Hogen said. “I sure hope I am long gone by the time these regulations ever become either proposed regulations or final regulations – and we are a long way from that.’’

At issue in the latest dispute is the commission’s push for a new rule requiring jackpot payments be validated by a backroom accounting system.

Tribal casino executives contend this would either require them to buy new systems from a manufacturer or pay royalty fees to use the software.

Such a move could cost tribal casinos $100m in Oklahoma alone, J.R. Mathews, NIGA’s treasurer, told Indian Country Today.

Tribal leaders are also angry over what they claim was a lack of consultation by the NIGC over the new rule. Such alleged lack of communication has been a long-standing complaint by tribes when it comes to dealing with the commission.

“The fact is that Phil Hogen refuses to acknowledge that the former president put out a presidential order that no new regulations were to be issued and President Obama’s chief of staff extended the order until the regulations could be reviewed by President Obama’s newly appointed administrators. Those guys (at NIGC) are out of control,” Mathews told the paper.

But Hogen, responding to the charges, offered a much different view. He argued the new rules were months away from being formal proposals, with no danger of enactment any time soon.

Nor would they require tribes to buy expensive new accounting systems.

Rather, the rules would require tribes to keep track of certain transactions, and, if they do so through an on-line accounting system, that system must work properly.

“We are not saying to anyone you have to buy any particular piece of equipment,’’ Hogen argued.

The clash follows a years-long, bitter feud between the NIGC and the Indian gaming industry over efforts to rein in Class II gaming machines at tribal casinos.

Arguing Class II “bingo-slot’’ machines had evolved to the point where they were hard to distinguish from full-fledged, Las Vegas-style slots, the commission plunged ahead with proposals for new regulations that would have slowed play on the machines.

As long as the technology advances it is going to be tougher and tougher to tell the difference,’’ warned Hogen at the time of Class II and Class III gambling machines.

But the move trigged a major backlash from the tribal casino industry. An economic impact study, commissioned by the NIGC, predicted a loss of as much as $1.8 bn in revenue and as many as 7,800 jobs.

Amid fierce outcry from tribal casinos, the NIGC dropped the proposal last year.

For his part, Hogen offered a terse comment when asked if he was surprised by the call by the Indian casino trade group for his ouster.

“Given the source, I am not surprised,’’ he said.
 
He ascribed the friction as part of the relationship between a regulator and the industry it oversees.

“We are the regulators. We represent the regulated community. There is always some dynamic tension between the two entities.’’