Tribes plead case before Boren, Cole
Tribes plead case before Boren, Cole

MIAMI, OK — U.S. Rep. Tom Cole erased any doubt Wednesday concerning his stance on proposed restrictions to America's $22 billion Indian gaming industry.

During a congressional field hearing on the issue, Cole, R-Moore, called the idea "not only destructive, but highly unjust.”

The National Indian Gaming Commission, which regulates the industry, wants to clarify the difference between Class II, or bingo-based electronic machines, and Class III slot machines such as those found in Las Vegas. Technology developed over the last two decades has blurred that distinction, regulators say.

Most experts agree the proposed changes would make existing Class II games illegal, forcing tribes to pay states a share of profits in return for the right to offer Class III games.

That's already happening in Oklahoma, thanks to voters' approval of tribal gaming compacts in late 2004. Since then, tribes have migrated further toward an exclusive Class III market. About half of the state's 50,000 electronic gambling machines are compacted machines, federal regulators say.

Oklahoma tribes want the right to keep attractive Class II games to satisfy gamblers who don't like the new games. They also fear the proposals would hurt their leverage when the current Oklahoma compacts expire in 2020.

Several tribe officials who testified at Tuesday's congressional field hearing said the proposal would infringe on tribal sovereignty.

The hearing, held at Northeastern Oklahoma A&M College, drew about 200 people, mainly tribal representatives and attorneys. It was scheduled by Rep. Dan Boren, D-Muskogee.

Both Cole and Boren sit on the House Natural Resources Committee, which oversees American Indian matters. They were the only House members present, although others sent staff.

The issue is especially important in Oklahoma, which had 59 percent of all the tribe-run Class II machines in the country as of December 2006.

Miami and Ottawa County, with 10 Indian gaming locations, stand to be affected by the proposed rules more than virtually any other Oklahoma community.

Cole, a Chickasaw Nation member, said he finds the planned regulations "deeply troubling” and unnecessary.

"The impact on Indian country would be devastating,” he said.

Some witnesses said the proposed rules would render Class II machines obsolete, because those fitting the proposed specifications would become so unappealing that few gamblers would use them.

During questioning of Norm DesRosiers, vice chairman of the National Indian Gaming Commission, Boren said tribes have spent "millions and millions of dollars investing in these machines.” He cited a recent impact study that said more than 3,000 jobs could be lost if the restrictions are imposed.

Cole called the proposal "a solution in search of a problem.”

Regulators and tribes disagree on how the proposal would affect Oklahoma. A recent study found Class III games make $145 a day, compared to $125 a day for Class II games. That suggests many Oklahoma tribes might actually be better off if the rules take effect.

Oklahoma tribes pay the state 4 to 6 percent of the revenue from Class III machines. In the first seven months of this fiscal year, that generated $37.2 million for the state.

Cole repeatedly asked DesRosiers why the changes are needed, when most Oklahoma tribes are migrating toward Class III on their own.

DesRosiers said the rule definitions are needed because tribes in several other states don't have Class III compacts.

Industry expects say this proposal is watered down compared to one regulators scrapped in early 2007 amid intense pressure from tribes and game makers.

Boren and Cole listened for more than four hours as tribe and local officials discussed the hardships they would endure if the proposals proceed.

Choctaw Nation Chief Greg Pyle said his tribe's casinos have migrated away from Class II — roughly 80 percent of the total 5,400 machines are compacted now. On average, the Choctaws' compacted machines outperform the Class II models. However, the tribe keeps some Class II machines to suit gambler preferences.

Nevertheless, Pyle said the proposed rules would hurt thousands of tribal members and casino employees and would be "devastating to the entire state of Oklahoma.”

Brian Campbell, who oversees the Chickasaw Nation's casinos, said he foresees a "catastrophe” if the proposals are imposed.

John P. Froman, chairman of the Miami-based Peoria Tribe, said the issue is about tribal sovereignty.

"If these rules are imposed on us, it infringes on the tribes' sovereign rights ... to operate our businesses as we see fit,” Froman said.

David Qualls, chairman of the Oklahoma Indian Gaming Association, likened the proposal to a restaurant that built its business on apple pie being forced suddenly to offer nothing but pear pie instead.

Cole asked several witnesses what they thought was driving the federal government's plan to restrict Class II.

Campbell said gambling has allowed his tribe to go from "a mere handful” of employees to 8,000.

"In my opinion, that's what this is about. It's about money. We've become too successful,” Campbell said.

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