Tonkawa Tribal Gaming and Casino Information
 

Tribal Gaming Department

 

The following article is from the magazine "Casino Enterprise Management".
 
Rising Phoenix
Tonkawa Gaming Cleans Up
By Patrick B. Leens, Thomas C. Nelson, and Nelson W. Westrun
 
   Like many Native American Nations, the Tonkawa Tribe of Oklahoma embraced gaming after passage of the Indian Gaming Regulatory Act (IGRA) as a means of improving the overall conditions for its people while promoting Tribal economic development and self-sufficiency.
   In 1999, the Tribe opened a small casino and off-track betting operation (The Tonkawa Bingo and Casino) on reservation land at Fort Oakland near Tonkawa, Okla. The enterprise enjoyed a degree of success and the Tribe began to prosper for the first time since moving to the reservation from Texas in the mid-1880s.
   By the fall of 2005, the Tribe was anxiously awaiting the opening of a brand new facility - the Native Lights Casino - on tribal lands near the Kansas border, north of Newkirk, Okla.
   Unfortunately, the management company engaged by the Tribe to operate the Tonkawa Casino, which was headed by a prominent Tribal member, repeatedly failed to obtain approval of its management contract by the National Indian Gaming Commission (NIGC), as required by 1GRA.
   The NIGC finally took enforcement action in February 2006 by issuing a notice of violation and closure order, and later demanded strict adherence to a number of pre-opening conditions for resumption of gaming activity by the Tribe.
A further blow fell in March 2006 when the Financial Crimes Enforcement Network (FinCEN) cited the Tribe for numerous Bank Secrecy Act violations related primarily to operation of its off-track betting operation.
   FinCEN found that large cash transactions at the Tonkawa Bingo and Casino had routinely gone unreported and that there was evidence that East Coast mob figures had used the casino and OTB operation to launder money.
   FinCEN ordered remedial measures and imposed a $1 million fine on the Tribe and $1.5 million fine on its casino management contractor.
   The Tribe's situation and financial future at this point looked very bleak. Though they had brought in a new management company prior to the actions by the NIGC and FinCEN, the Tribe's primary source of revenue was now gone and its substantial investment in the new facility was at risk. There was little apparent prospect for any immediate relief.
   Chair of the NIGC, Phil Hogen, characterized the Tribe as "the poster child for how not to run a casino." Commissioner Chuck Choney also stated that it would be a long time before gaming would resume on Tonkawa land.
Rather than bemoan misfortune or embark on self-destructive defensive responses, the Tonkawa Tribe and its leaders reached into its ancient history and traditions to take decisive and courageous corrective action.
 
A Brief History
   The name Tonkawa is from the Waco Indian word "Tonkaweya" meaning "they all stay together."
   The Tonkawas called themselves "Tickanwa•tic," which means, "the Most Human of People." The Tonkawa people have a distinct language and culture. They were nomadic buffalo hunters and had a reputation as one of the most war-like Tribes on the Western Plains, battling other tribes, the Spanish, and later, American settlers in the Southwest.
   The Tonkawas, like other Native Americans, have faced and overcome adversity throughout their long history.
   There is folklore that the ancestral Tonkawa people were driven from settlements on the Mexico gulf coast by a huge tsunami and wandered north to what is now Texas. After centuries of battling for survival in the Southwest, the Tonkawas were finally moved from Texas to what is now the Kiowa reservation on the south bank of the Washita, just above Anadarko, Okla.
   However, in 1862, warriors from the Delaware, Shawnee, and Caddo Tribes, seeking to settle old scores, united to attack the Tonkawas, killing 133 out of the 309 Tonkawas then living on the reservation.
   At the conclusion of the Civil War, and with the increased need for open land in Oklahoma, the Tonkawa moved back to Texas where they served as scouts for the United States Army.
   Without open land to hunt and with few provisions for the tribe by the government, the Tonkawas became destitute.
   Hopelessly impoverished, alcoholism also presented a formidable challenge to the Tonkawa people. Finally, over the winter of 1884-85, the Tonkawas were moved from Texas to Oklahoma in a painful journey the Tonkawa refer to as a "Trail of Tears."
   They reached Oakland (near present-day Tonkawa) on June 30, 1885, a date commemorated by the Tonkawa annual powwow. The new reservation, though cited in public records as thousands of acres "of natural hunting land," was, in reality, less than 101) acres for the remaining 146 Tonkawas.
   Despite these hardships, the Tonkawa people endured and maintained their Tribal identity through persistence and an indomitable will to survive.
 
A Strong Regulatory Response
   The Tribal Council, which had replaced the previous administration while the NIGC and FinCEN investigations were pending, realized that an aggressive, positive response was necessary.
   Under the strong leadership of President Anthony E. Street, the council embarked on an effort to create a model regulatory structure while at the same time distancing the Tribe from past mistakes.
   As a crucial first step, council members essentially fired themselves as gaming commissioners. The council next adopted a resolution amending the tribal gaming ordinance to establish a truly independent gaming commission.
   After a nationwide recruitment effort, the council then brought in a trio of highly respected former gaming regulators to serve one-year terms on the new commission to oversee development of a solid Tribal regulatory structure.
   In addition, they engaged Nelson Westrin, former vice-chair of the NIGC, to serve as general counsel to the commission. In addition to developing a strong regulatory structure, the commission and its counsel were charged to identify and mentor able 'Tribal members to effectively take on the responsibilities of commissioners and commission staff after one year.
   The new commission, made up of former Michigan Gaming Control Board regulators Tom Nelson and Pat Leen, and long-time Oklahoma tribal gaming regulator, Les Cusher, hit the proverbial ground running.
   Within eight weeks of their May 1, 2006 appointment, the commission had adopted new gaming regulations that effectively implemented the commission's licensing and regulatory powers and duties contained in the amended ordinance, and also provided detailed requirements for suitable conduct and operation by licensees.
   The new commission also adopted Tribal Internal Control Standards (TICS) based on the latest NIGC requirements; identified and arranged for secure office space; and developed position descriptions for an adequate staff of licensing specialists, compliance inspectors, game device technicians, and auditors, along with necessary support staff.
   Tribal council strongly supported each step of the new commission by approving the commission's proposed annual budget and establishing a separately funded Tribal bank account for the approved budget under the commission's control.
   Early on, the commission, with the Tribal Council's unwavering support, made it clear that the closed Tonkawa casino would not reopen until issues related to the underlying causes for its closure were fully investigated and resolved. The focus, therefore, turned to inspections and assessment of the proposed new Native Lights Casino.
   Pat Leen, vice-chair of the commission and acting executive director, embarked on a series of detailed inspections of the proposed new casino.
   Using a detailed 20-page checklist specifically developed by the commission to assess the proposed new gaming operation, he conducted three separate on-site inspections over a six-week period and reported his findings in detailed reports covering all aspects of casino operations, including cash handling controls, surveillance, security, staffing, training, gaming device compliance, NIGC mandated pre-opening issues, and state-tribal compact
issues.
    As the operational inspections took place, the commission also proceeded to develop new licensing forms for employees and vendors. Casino management was instructed that all employees and vendors that were required to hold gaming licenses had to submit complete applications, undergo preliminary background checks, and be licensed before the casino could open.
   The commission and its general counsel approached the NIGC and its Tulsa regional office early in this process to ensure that all requirements for resumption of gaming activities at Tonkawa would be met or exceeded.
   Representatives of the NIGC attended all commission meetings (the first ever public commission meeting held by the Tonkawa Tribe), received copies of all commission inspection reports, and were kept up to date regarding all commission actions and activities.
   Three critical issues emerged from the various inspections and reviews that required resolution prior to any resumption of gaming activities.
   First, the NIGC mandated as pre-opening condition that the Tribe's prior management contractor and close associates had to be disassociated from any future gaining activity on tribal lands.
   Second, a questionable existing contract with a gaming device distributor had to be thoroughly investigated to ensure that the contractor was suitable and that the terms of the contract were lawful and commercially reasonable.
   Third, since the Oklahoma state-tribal compact allowed for certain types of Class III games in addition to Class II devices, proposed devices for the new casino had to be thoroughly reviewed for correct classification.1
   The first issue was resolved by the Tribe's formal pre-opening agreement with the NIGC and the entry of a formal exclusion order by the commission at its June 30, 2006 public meeting, ensuring that the prior management contractor and several close associates would not be involved in any fashion in the new gaming operation.
   The exclusion order, which banned the former management contractor from even entering the new casino, received full support from the "tribal council even though the order affected an influential tribal member.
   The Tribal president resolved the second issue by negotiating a mutual rescission of the questionable distributor contract.
   Finally, casino management eliminated the electronic game classification question by agreeing to open the casino as a wholly Class III compacted game facility, even though it required revenue payments to the state that might not have been necessary if certain games had been classified as Class II.
   The combination of the above regulatory actions culminated in the issuance of a gaming facility license by the commission on June 29, 2006.
   Issuance of a license by the 'tribal commission, however, did not end the Tribe's odyssey. It still needed the approval of NIGC Chair, Phil Hogen, to open the new casino. This finally came on July 6, 2006, after a thorough, independent final inspection of the new casino and its operations by the NIGC's Tulsa Regional Office, which found that the Tribe had satisfactorily met all agreed pre-opening conditions.
   What was clear to the commission from its early meetings with NIGC staff was that the NIGC had been initially skeptical about the Tribe's commitment to a fresh start and the efficacy of the new gaming commission.
   At the conclusion of the process, the staff and Chair Hogen were all pleasantly surprised by the success of the Tribe's rapid turnaround. At the end of the day, Chair Hogen stated that he was "cautiously optimistic" that the regulatory framework the Tonkawa Tribe had put in place would ensure continued future compliance with IGRA and NIGC regulations.
   This statement by Chair Hogen summarized in very straightforward terms the ongoing regulatory challenge that the Tonkawa Tribe, like every other gaming Tribe in America, must continually meet to ensure the success of their tribal gaming operations.
The Future is Now
   The Native Lights Casino opened to the public on July 6, 2006 and has been operating smoothly.
   New automated records systems and intense training have ensured Bank Secrecy Act compliance. A respected contract accounting firm reviews all financial activity on a daily basis.
   The commission is in the process of hiring and training additional staff and continues to conduct periodic inspections of gaming operations.
   The rapid turnaround in the fortunes of the Tonkawa Tribe is attributed to the swift, decisive, and forceful actions of its leadership. Their efforts ensured that the tribe, through its independent gaming commission, regained its role as primary regulators of its gaming activity.
   It has also laid the groundwork for transfer of knowledge from the current commissioners to mentored tribal members so that the regulatory structure now in place will achieve institutional status and continuity in the years to come.     
   Cooperation with NIGC and state officials, adoption of generally accepted industry standard rules and internal controls, instead of compromising tribal sovereignty, has strengthened it. The serious commitment by the Tribal leadership to self-regulation will not only ensure that the violations of the past do not reoccur, but will also go far to ensure that assets and revenues generated by the Tribe's gaming operations are protected and flow without interruption to the maximum benefit of the Tribal community.
   This latest battle for survival is one of the most important and decisive battles this Tribal nation has ever waged to ensure its long-term existence and the continuance of its Tribal heritage. Thus far, the Tribe's strong leadership and tradition of courageous confrontation has served it well.
   Going forward, the Tribe will need the same superior leadership and vigilance to ensure that its newly-opened gaming operations remain well regulated and capable of promoting economic development and adequately funding vitally-needed Tribal governmental programs and services for the Long-term benefit of the Tribe and its members.
 
1 The commission took a strong position that game classification would follow the current NIGC criteria anti developed its own inspection checklist that detailed these requirements.
  
Pat Leen, co-owner of
Gaming Regulatory
Consultants, was an initial
member
of the Michigan
Gaming Control Board
(MGCB). You may contact
Pat at 517-256-8619 or
pleen@grcgaming.com.
Tom Nelson, co-owner of
Gaming Regulatory
Consultants, was the
first
Director of Licensing and
Enforcement for the MGCB
and served for 22 years as
Michigan's Assistant
Attorney General. You may
contact Tom at
719-440-6611
or tnelson@grcgaming.com.
Nelson Westrin practices
in Lansing, Mich. He is a
former vice chair
of the
National Indian Gaming
Commission and also
served as the first Executive
Director of the Michigan
Gaming Control Board.
     

Website Maintained by: The Tonkawa Tribe of Oklahoma
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Mailing Address:
     Tonkawa Tribe of Oklahoma
     1 Rush Buffalo Road
     Tonkawa OK. 74653
Phone:
     (580) 628 - 2561
Fax:
     (580) 628 - 3375

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