Statement of David Metheson Before the Subcommittee on Crime

IGN has begun to gather some of the testimony being offered to the House Subcommittee which is holding hearings today on the Internet Gambling Prohibition Act. We'll add others as they come in.

BEFORE THE
SUBCOMMITTEE ON CRIME
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES

Mr. Chairman, I am submitting this written testimony on behalf of the Coeur d'Alene Tribe and the National Indian Lottery and US Lottery.

My testimony will demonstrate that the Coeur d'Alene Lottery should not be prohibited under the Goodlatte Bill or its Senate counterpart, the Kyl Bill, because 1) our lottery is authorized and approved under existing federal law (the Indian Gaming Regulatory Act of 1988); 2) our Lottery is fully regulated by appropriate federal, state and tribal authorities; 3) our Lottery will share its profits with all non-gaming Indian tribes throughout the U.S (our commitment to do so was the first, and to our knowledge, still the only such commitment by any gaming tribe); and 4) our Lottery has made and will continue to make every reasonable effort to limit access to authorized players.

We recognize and share the concern of Congress and the American people about gambling offered to citizens of the U.S. by individuals and entities that are outside the U.S. and therefore not subject to the laws, regulation or jurisdiction of this country. But the Goodlatte Bill and its Senate counterpart reach well beyond that legitimate point of concern. Indeed, as drafted this bill will be in direct conflict with existing federal law. Law that was thoughtfully considered and specifically intended to permit the lawful gaming in which our Tribe is now engaged.

In 1987, the U.S. Supreme Court held in California v. Cabazon & Morongo Band of Mission Indians, that states are not authorized to regulate Indian gaming on Indian lands. States vehemently opposed this position and sought help from Congress. In response and after lengthy consideration and debate, Congress in 1988 enacted the Indian Gaming Regulatory Act (IGRA). One of the express purposes of IGRA is to provide a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency and strong tribal governments. In furtherance of that policy, IGRA established a detailed, comprehensive and exclusive statutory framework for the regulation and operation of Indian conducted gaming. Focusing on Class III gaming, which includes lotteries, Congress sought to balance the competing state and tribal interests by requiring a tribal-state compact - a requirement urged by the states. Thus, Class III gaming on tribal lands without a compact is illegal.

The Coeur d'Alene Tribe obtained such a compact with its home State of Idaho in 1992. We are operating within its terms today. Similarly, the other requirements imposed by IGRA on Class III gaming have been satisfied by the Tribe well before it began offering its National Indian Lottery and the US Lottery. By its specific terms and express legislative history IGRA exempted Indian gaming authorized under the Act from the federal anti-lottery statutes, the racketeering statute, 18 U.S.C. § 1084 that this House bill seeks to amend, and other federal statutes otherwise applicable to non-Indian gaming and lotteries. Moreover, as an exclusive legislative scheme, IGRA preempts state laws, making them totally inapplicable to Indian gaming. Such have been the rulings to date by federal trial and appellate courts directly addressing the issue. IGRA also authorizes the use of technologic aids, of which the telephone and the internet are two examples, to allow Indian gaming to be offered to those off the reservation so long as the gaming occurs on Indian land.

The lotteries offered by the Coeur d'Alene Tribe meet all of the tribal, state and federal requirements yet we remain unable to pursue our rights due to efforts by states who compete for lottery purchases. These efforts include lawsuits and strong lobbying efforts in support of legislation, such as this bill, that would go beyond its intended and appropriate purpose to reach into an area, Indian gaming, that already is exclusively and fully regulated by an existing federal statute - IGRA.

Importantly, the entity designated by Congress to have regulatory authority over Indian gaming - the National Indian Gaming Commission (NIGC) - acknowledged in a letter from the Chairman of the NIGC to legal counsel for MCI dated September 2, 1995, that:

In the view of NIGC, the tribe has complied with all the requirements of the IGRA and the regulations of the NIGC with respect to its lottery proposal. Because a lottery is a Class III game, the Tribe entered into the required compact with the State of Idaho, and that compact was approved by the Secretary of the Interior. In addition, the Chairman of the NIGC approved the Tribe's gaming ordinance as required by the IGRA. Finally, the Chairman approved a management contract between the Tribe and Unistar Entertainment, Inc. to conduct the tribal lottery.

In the opinion of the NIGC, the Tribe's lottery activity, which involves customers purchasing lottery tickets with a credit card both in person and by telephone from locations both inside and outside the State of Idaho, is not prohibited by IGRA.

The Coeur d'Alene Tribe has complied with IGRA and all other applicable rules, regulations and laws. We have now spent over 5 years satisfying these requirements and have spent $12 million in cash to build a state of the art computer system that permits the operation of our lottery in compliance with IGRA. Every step of the way we have faced roadblocks. Although we are authorized by federal law, we have been subject to constant harassment by various states who object to our lottery. They have interfered with our ability to obtain from the long distance carriers 1-800 service. In response to this groundless interference, we sought and obtained rulings from the Tribal Court and Tribal Appellate Court validating the legality of our lottery and our entitlement to 1-800 service. Those decisions are now on appeal to the federal district court in Idaho. Actions also have been brought by the Attorney Generals of Missouri and Wisconsin -- two states that offer lotteries and scratch off games to their own citizens, as do the other 31 states and District of Columbia where the Tribe's games are available. By choice, the Tribe has elected to offer its gaming only to those persons who live in a jurisdiction where lotteries are lawful. These states are opposing our lawful gaming not because they oppose gambling in their states, but because they fear competition to their individual lotteries in their states. We have recently started a weekly lottery with customers being able to participate by using their telephones and dialing using their own long distance carrier to reach the computers on the Indian reservation as well as using the internet to access and participate in gaming on the reservation.

Misinformation about our lottery is widespread. Here is the truth. We are a lottery run by a sovereign nation in accordance with our laws and the laws of the federal government and the State of Idaho. We are no different than any of the state lotteries.

Our opponents claim we are not regulated. This is not true. We are regulated by the federal government through IGRA, the NIGC and the Department of Interior; by the state government through our compact with the State of Idaho, and by the Tribal Government through the Coeur d'Alene Charitable Gaming Board. The employees of the lottery undergo extensive background checks, including fingerprinting which is sent to the FBI. Our operation and financial information are audited and reviewed routinely and reports are submitted at least annually. Although it is not required, the Tribe has hired Arthur Andersen, one of the big six accounting firms, to conduct an annual audit of our financial results. We have also hired Arthur Andersen to be on site for each of our weekly drawings to ensure compliance with all of the procedures that have been put in place to establish a fair and honest lottery.

Mr. Chairman, a specifically stated goal of IGRA is "to promote tribal economic development, tribal self-sufficiency, and strong tribal government." The Tribe takes its responsibilities to its members seriously and has established the lottery to accomplish self-sufficiency just like the government of any state. Already, the lottery is bringing new jobs and better education to the reservation. Our people are moving into a new era and for the first time with the aid of technology we are able to participate even though our reservation is not located near any of the population centers of this country. For the first time we have an opportunity to use our creativity and commitment to work hard to help ourselves and build a future for our children. We have committed to provide economic help to non-gaming tribes. We do not seek relief from regulation. It is undisputed that the Coeur d'Alene Tribe's gaming is regulated fully. The legitimate fears and concerns raised by gaming that occurs beyond U.S. shores and outside the jurisdiction of the federal, state or local governments of this country simply have no application to the lawful and fully regulated gaming activities of our Tribe. We agree that disreputable, fraudulent and unregulated gambling cannot be tolerated and this body must take reasonable steps to protect the American public, but we urge you not to penalize those who by federal law are authorized to engage in gaming and who have done so responsibly and in compliance with all federal, state and local requirements. The bill now exempts horse racing, dog racing, off-track betting facilities and state lotteries, The prohibitions and penalties prescribed by this bill may not even be enforceable against the off shore and foreign operations that are the purported targets of the bill. As we see it, the only gaming activities that this bill will reach are those offered by Native Americans acting in conformance with federal, state and tribal law. Such a result cannot be defended.

The Goodlatte Bill in its current form goes well beyond the off-shore and unregulated gambling problem it seeks to address. This is equally true of the Kyl Bill now before the Senate. Indeed, these bills if passed would create an irreconcilable conflict with existing federal law that would then result in protracted and expensive litigation. This cannot be the intent of the sponsors of this bill who genuinely want to address the legitimate concerns about off-shore and unregulated gambling. We stand ready, willing and able to cooperate with you and any federal or state agency to work together to fashion a regulatory framework that satisfies the legitimate concerns presented by unregulated gaming, while preserving the rights of Indian Tribes under IGRA.

Mr. Chairman, we have suffered long and hard on our reservation. The Congress of the United States in passing IGRA has provided Indian Tribes the means and opportunity to pull themselves out of the cycle of poverty and despair. We want to be independent and productive. We want our children to be educated, healthy, and contributing members of our society. We are a proud people with a strong heritage. We ask that you do nothing that will deny us the rights and opportunities now provided by existing law. We ask once more that the U.S. Government honor its commitment to us as we have honored your laws by complying fully with all its requirements. We come here as citizens of the United States and as citizens of Indian country. We are a law abiding people and wish to be treated with the dignity and respect we deserve. We ask your help today. We encourage the adoption by this Committee of an amendment identical to that offered on the Senate side by Senator Craig that simply recognizes an existing and controlling federal statute (IGRA) and excepts gaming activities within the purview of IGRA from the operation of the Goodlatte Bill.

Thank you for the opportunity to present our position to you.