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February 1,2005

The Honorable John McCain.,Chairman The Honorable Byron Dorgan, Vice-Chairman The Honorable Daniel Inouye, Member Committee on I n l a n Affairs United States Senate 836 Hart Office Bullding Washington, DC 20510


Contract review and IGRA's sole proprietary interest requirement

Dear Senators:

This is in response to the December 15,2004, letter of Senators Campbell and Inouye, then the Chairman and Vice-Chainan, respectively, of the Committee on Indian Affairs. The letter expresses concerns about the National Indian Gaming Commission's review of gam- ing-related contracts for violations of the sole proprietary interest requirement of the In&an Gaming Regulatory Act ("IGIU"). Senator McCain has previously expressed interest in this issue in the context .of the Mohegan Sun Management contract. We appreciate the concerns of the Committee. Consequen.tly,we thought it might be helpful if we provided our thoughts on the issue.

Reduced to its essentials, the December 15 letter is concerned that the Commission's con- tract review has discouraged otherwise-wilhg contractors from workmg with Tn&an tribes, and thus has deprived the tribes of opportunities to develop or expand casinos. The letter is further concerned that the Commission brought about that state of affairs by the ad hoc ap- plication of a new standard fca violations of IGRA's sole proprietary interest requitement, without notice or guidance to the tribes or their contractors in a manner that is not subject to review, thus depriving all concerned of their statutory and constitutional protections under the A h s t r a t i v e Procedure Act.

We wish to assure you, Senators, that this is not the case. We believe that we have helped the tribes and that we have saved them tens of millions of dollars by providing p d a n c e on ths issue. In a nutshell:

The Commission's review of gaming-related contracts is intended to assure that the Indian ttibes are the primary beneficiaries of their gaming operations, as IGRA re- quires. Our review has identified for tribes casino development contracts that were not only dlegal but also unconscionable. Proposed under the guise of mutually- beneficialventures, some were so one-sided that the tribes would reahe nearly noth- ing Erom the gaming operation.

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