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Interior enters Class III debate in three states
Wednesday, November 15, 2006

The Interior Department is moving to authorize Class III gaming for tribes in three states where the governor refuses to negotiate a compact, a senior official said on Tuesday.

The Seminole Tribe of Florida, the Poarch Band of Creek Indians in Alabama and the Tigua Tribe of Texas are in line for Class III procedures, said Paula Hart of the Bureau of Indian Affairs. "The process was developed when compact negotiations broke down," the official told attendees of the Global Gaming Expo in Las Vegas.

Additionally, Interior has already approved Class III rules for the Northern Arapaho Tribe of Wyoming after the state lost a major lawsuit, Hart said. The tribe has begun constructing a $10 million casino on the Wind River Reservation.

Under the Indian Gaming Regulatory Act, the federal government can authorize tribes to engage in certain forms of Class III gaming, depending on what's legal in the state. In Florida, for example, the Seminoles will only be able to operate slot machines.

But by bypassing the state, the tribe won't have to make any concessions that might otherwise be contained in a compact. "We are willing to share revenues with the state of Florida, but what are they going to give us in return?" asked Jim Shore, an attorney for the Seminoles.

Teri Poust, a member of the Poarch Band and representing the tribe , said the move to Class III gaming is crucial for her tribe due to pending federal regulations that would restrict the Class II industry. Her tribe is meeting with federal and state officials later this week to discuss the procedures.

In Texas, the Tigua Tribe formerly operated a Class III facility until it was shut down by the state. Although the state has legalized certain forms of gaming, governors as far back as the 1990s have refused to negotiate a compact.

"I guess I'm just trying to figure out what Texas is complaining about," said former Sen. Ben Nighthorse Campbell (R-Colorado) at a June 2002 hearing on the issue.

Historically, it has been rare for Interior to issue Class III procedures because most tribes have been able to enter into compacts with states. According to Hart, tribes in 23 states have federally approved Class III compacts. Tribes in another state engage in Class III gaming pursuant to a court decision.

But as the stakes in the $23 billion Indian gaming industry rise, the compacting process is getting tougher. States are making more and more demands on tribes and usually have the upper hand in the negotiating process.

Some tribes, however, are using the threat of federal involvement to force the state to come to the table. Earlier this month, the Gun Lake Tribe of Michigan, where other tribes already have compacts, raised the possibility that its casino could open without state approval.

"A Class III compact would be best for the tribe, the state and the surrounding communities," said Gun Lake Chairman D.K. Sprague, citing a proposed compact to share 8 percent of slot revenues with the state and 2 percent with local governments.

Other states, like Nebraska, don't seem to feel threatened. Officials there have fought efforts by the Santee Sioux Tribe to offer a very limited number of Class III games under federal procedures.

Beyond Florida, Texas, Alabama and Nebraska, the number of states that refuse to negotiate compacts has dwindled. Voters in Oklahoma, a longtime holdout, finally approved Class III gaming in 2004 in exchange for revenue sharing, although the amount has not been as high as expected.

Class III Procedures Letter:
BIA to Seminole Tribe (September 26, 2006)