Tribal gaming highly regulated with or without state, tribe says

29 January 2012

The Shakopee Mdewakanton Sioux Community has responded to a recent story in the Minneapolis Star Tribune claiming that lax state regulation means its casinos have been unregulated. Here is the complete text of the tribe’s response.

Tribal gaming at the Shakopee Mdewakanton Sioux Community:
A heavily regulated game

Recent print news articles suggest the biggest tribal casinos in the state, including Mystic Lake Casino Hotel operated by the Shakopee Mdewakanton Sioux Community, have gone years without inspections to validate the integrity of slots and table games. Unfortunately, this information is factually incorrect and misleading.

These misleading stories report that the Minnesota Department of Public Safety, the state regulator with the authority to inspect tribal casinos under the Tribal-State Compacts, is lagging in its responsibility to inspect casinos. The stories are misleading because they imply that tribal casinos aren’t regulated. Such an implication misrepresents the high level of regulatory compliance that tribal casinos are subject to on a continuing basis, regardless of the activity of state regulators.

The fact is that the Mystic Lake and Little Six Casino properties of the Shakopee Mdewakanton Sioux Community are two of the most highly regulated operations in Minnesota and across the United States. For these regulatory efforts, Mystic Lake and Little Six Casinos are recognized as the gold standard for regulatory compliance throughout Indian Country.

Mystic Lake Casino, Little Six Casino and other Indian casinos in Minnesota are regulated by multiple entities other than the State of Minnesota. This includes the National Indian Gaming Commission, their respective tribal gaming commissions, internal compliance departments, and independent testing laboratories. The State of Minnesota does not have the primary regulatory authority over these federally authorized gaming operations.

Through the National Indian Gaming Commission (NIGC), an independent federal regulatory agency within the Department of Interior, Minimum Internal Control Standards have been promulgated setting forth the regulatory standards to be complied with by all Tribes in the conduct of gaming. The NIGC conducts independent regulatory inspections; Mystic Lake Casino and Little Six Casino were subject to three on-site inspections in 2011 by the NIGC, with no problems or exceptions noted.

In addition to NIGC regulatory oversight, the Tribal governments have their own gaming commissions, responsible for regulatory oversight. Mystic Lake Casino and Little Six Casino are subject to the regulatory oversight of the Shakopee Mdewakanton Sioux Community Gaming Commission, an independent gaming regulatory entity of the tribal government that employs 27 experienced regulators.

The sole responsibility of the Gaming Commission and its staff is to regulate and inspect gaming operations to ensure the integrity of slots and table games, and compliance with all federal, state and tribal regulatory standards. At Mystic Lake and Little Six Casinos, various Gaming Commission staff are on-site daily performing inspections of all gaming operations.

At Tribal casinos, the game program software in all slot machines is required to be certified by an independent gaming test laboratory. It is through such testing and certification that there are assurances the slot machines comply with the standards of the Tribal/State Compacts and other promulgated regulatory standards regarding operations and payout percentages.

The Gaming Commission staff regulating Mystic Lake and Little Six Casinos randomly inspects 30 percent of all slot machines yearly to verify the validity and integrity of the game software programs. Furthermore, with any new game or a program change to an existing game, prior to such games being placed into play, the Gaming Commission inspects the games and verifies the software.

In addition to the role of the Gaming Commission, within the operations of Mystic Lake Casino and Little Six Casino is the existence of a Compliance division that operates independently of management and reports directly to the Board of Directors. Within Compliance, the departments of Internal Audit, Surveillance, and Security are entrusted to monitor and enforce regulations and operating standards as they pertain to the conduct of gaming.

Internal Audit with a staff of 10, comprising over 90 years of Internal Audit experience and nearly 140 years of gaming experience, independently examines and verifies slot and table game procedures to ensure on-going regulatory compliance. This regulatory review includes the independent inspection of 10 percent of all slot machines yearly. Additionally, Internal Audit conducts monthly inventory inspections of game program chips.

Between the Gaming Commission and Internal Audit, 40 percent of slot machines are inspected yearly; in addition to on-going inspections of table games. In contrast, the Star Tribune article mentions the State of Wisconsin’s Division of Gaming uses 15 staff members to inspect 10 percent of machines and observe table games activities for five days at each Indian casino in Wisconsin every 18 months.

To further complement the compliance regulatory activities of the operations at Mystic Lake Casino and Little Six Casino is the Surveillance department. With more than 50 trained specialists, the Surveillance Department monitors slot and table gaming activity with the latest technology; 24 hours per day, seven days per week, 365 days per year.

Surveillance staff do not just watch cameras; they are highly skilled and trained in all casino operations and procedures to identify incidents of wrongdoing and ensure compliance with regulations. Such specialized skills include being certified card counters, in an effort to detect cheat and scam attempts regarding the play of blackjack.

The regulatory efforts in place at Mystic Lake Casino and Little Six Casino have been successful in identifying and apprehending individuals, which have attempted to perpetrate actions to defraud or cheat gaming operations. In these instances, actions are taken to prosecute these individuals to the fullest extent of the law. Any efforts to adversely affect the integrity of gaming will not be tolerated.

The Shakopee Mdewakanton Sioux Community, as do other Tribal governments, recognizes that gaming is the economic engine that allows for the funding of the goods, services, and other activities supporting their members and communities. It is further recognized that for gaming to prosper, the highest standards of integrity must be maintained by the Tribes.

To maintain integrity, and to perpetuate public trust and confidence in Tribal gaming, the Tribes comply with, and have invested in resources, enacted regulatory standards and developed compliance programs that far exceed any state regulatory program. While the State of Minnesota may need to re-focus its regulatory authority under the Tribal-State compacts, the fact is that the Mystic Lake and Little Six Casinos operated by the Shakopee Mdewakanton Sioux Community are highly regulated. The Shakopee Mdewakanton Sioux Community is recognized throughout the gaming industry for its commitment to regulatory compliance and operating gaming within the highest standards of integrity. Any suggestion to the contrary is not based in fact.