Smoke Signals 5
JUNE 15, 2004
Regulation City: The Grand Ronde Gaming Commission
Our Tribe is one of only two in the country to achieve federal approval for self-regulation.
By Ron Karten
Although the Grand Ronde Gaming
Commission works with the casino
and casino staffers every day, it is an
arm of the Tribe, answerable to the
Tribe. Tribal Council mandated this
arrangement in the Gaming Ordi
nance passed in 1993.
"The Tribe had enough vision to say,
We need this," said Lynn Hillman,
Executive Director of the Commission
since the beginning of the year. The
alternative would have been for the
casino to answer to the Tribal Council
directly. That potentially would have
added a political dimension to running
the casino. That's just not good busi
ness," said Hillman.
The commission's job is to "ensure
the integrity of the system" for the
public, and simultaneously, to make
sure that the Tribe is getting its
money's worth from its largest invest
ment, said Hillman.
While granting the Grand Ronde
Gaming Commission authority to
regulate the casino, Tribal Council also
empowered the commission to develop
regulations and hand out disciplinary
actions. In turn, the Tribe approves
the agency's operating budget, funds
the commission and limits its input to
approving the five part-time commis
sioners (three Tribal, two non-Tribal)
selected for three-year terms by the
commission itself.
Currently, Tribal member Leonette
Galligher serves as Commission Chair.
Tribal member Gene Davidson serves
as Executive Secretary. Tom
McGowan serves as Vice Chair.
Tribal member Denise Harvey, Tribal
Mentorship Program Coordinator, re
cently was named to the remaining
Tribal position on the commission, and
the remaining non-Tribal position was
filled by Karl Nelson, a retired Oregon
State Police Lieutenant.
Although many industries health
care, nuclear energy, cattle, electric
utility, pharmaceuticals and banking
to name a few claim the title of be
ing the nation's most regulated indus
try, Indian gaming certainly is a com
petitor. The National Indian Gaming Com
mission (NIGC) is the federal arm that
oversees the operations of 257 Indian
casinos. The local commission works
with the feds to monitor and regulate
all Class 2 games, which in Grand
Ronde include bingo and poker. Some
sites have pull tab games that also fit
in this category.
On the state level, the local commis
sion works with the oversight of the
Oregon State Police that assigns two
detectives to the Spirit Mountain Ca
sino on a daily basis to monitor and
regulate Class 3 games that include
the VLTs, blackjack, roulette and
craps. The rules of this regulatory
structure are spelled out in the State
Tribal Gaming Compact. At this level,
regulators monitor dealers, randomly
check 30 machines a month for pos
sible tampering, and go into the cages
and look at cash reports, among their
duties.
Once a year, the casino opens its
books yet again, this time to an inde
pendent financial audit by an outside
CPA firm.
The casino operates under five lev
els of regulations. The first are the
NIGC regulations impacting all Indian
gaming Tribes in the country. These
require, for example, an online ac
counting system requiring every In
dian casino to validate by computer
every ticket before it is paid.
Next is the initial 1993 Gaming
Compact between Tribe and state. The
compact sets the rules allowing the
Tribe to operate Spirit Mountain Ca
sino, and specifies such things as dedi
cating six percent of profits to local
communities.
Third is a group of regulations pro
viding a broad framework that de
scribes how the casino will provide
games to the public, including casino
policies. Written by the commission,
these regulations also describe how
employees and vendors are licensed and
give license holders
the means to appeal
decisions by the
board and address li
censing issues.
Minimum Inter
nal Control Stan
dards (MICS) repre
sent the fourth level
of regulations, also
written by the com
mission. While the
NIGC has its own set
of MICS, it encour
ages individual casi
nos to tailor MICS to
local needs. These
include seemingly
small things like
what kind of cards
are used and how
long until they are
replaced. They deal
with the use of
"comps," or how the casino provides
complimentary gifts as promotional
tools.
A final level, called Policies and Pro
cedures, is written by casino person
nel. These provide specific operational
guidelines, including how money is to
be handled. There are enough Poli
cies and Procedures, Hillman said, "to
fill up this table." He referred to the
small conference table in his office.
All these rules and regulations help
the commission guarantee the public
a fair game and prevent theft. As with
any large company, Hillman said, "the
majority of crime" at the casino comes
at the hands of employees.
With an employee turnover rate of
25-30 percent (compare with 100 per
cent for the fast food industry and
about seven percent for government),
about average for this industry, the
job of protecting casino assets is for
midable, but according to Hillman,
very do-able when the many rules and
regulations are followed.
In fact, said Hillman, "We have not
suffered a significant loss to a crime
since we opened."
"Throughout the years, we have
learned a lot pertaining to how to regu
late the casino," said Leonette
Galligher, who along with Hillman and
Gene Davidson, have been on the com
mission since the beginning. "We feel
very proud of the job we have done,
and the casino has prospered, I feel,
because of the good work we do."
With a staff of 11, the commission
watches employees on the job and au
dits casino books on a daily basis.
Staffers watch to see that employees
follow procedures. They're available
to settle gaming disputes. And they
evaluate, using background checks, all
applications for gaming licenses.
Since the casino opened, about 9,000
potential employees have sought gam
ing licenses from the commission.
That amounts to 15-25 new applica
tions a month. Commission staffers
help potential employees fill out the
complicated 30-page application, and
a small number, about 10-12 a month,
meet individually at monthly commis
sion meetings to further evaluate ques
tionable background issues. The com
mission also reviews all licensees when
their three-year license is up for re
newal. In addition, the commission
handles the background checks of
"well over 100" gaming vendor appli
cations that have been submitted
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Lynn Hillman, Executive Director of the Commission
since the casino opened, said Hillman.
Staffers also install and change the
computer chips that are the brains of
every video lottery terminal (VLT) in
the casino. And then secure the ma
chines, guaranteeing them to be
tamper-free.
"We ensure the integrity of the sys
tem," said Hillman. "The casino en
sures that it's a great game to play."
Current concerns for the commis
sion include "fraud in the back of the
house," said Hillman. These might
include vendors supplying or charging
for non-gaming goods either delivered
but not ordered, or ordered but not
delivered.
In addition, the commission is over
seeing the casino's current effort to
ward "ticket out, ticket in" gaming.
Current technology allows for tickets
to be used in machines, and then re
charged by cashiers before being used
again in another machine. With
"ticket out, ticket in," players will take
their tickets right to the next machine.
In 2001, the Tribe received approval
for self-regulation from the National
Indian Gaming Commission. Along
with the Menominees in Wisconsin, the
Grand Ronde Tribe is the only other one
in the country to earn this recognition.
Ten consecutive eight hour days of
"extremely intense" auditing plus im
peccable record keeping in all areas of
service were required to earn this rec
ognition, said Hillman.
The honor reduces the fees charged
by NIGC, but more important, "You
can't put a price tag on that kind of
recognition," said Hillman.
"A lot of Tribes have called us to
structure their commissions like
ours," said Galligher. "We have a won
derful reputation."
Annual commission reports to
NIGC, reaffirming the initial audits,
keep self-regulation alive in Grand
Ronde.
Hillman served as commissioner for
nine years before being named Execu
tive Director. His first appointment
coincided with the start of the commis
sion in 1995. Hillman previously served
30 years with the Oregon State Police,
ending as the number three position in
the department, overseeing the
department's 900-member field force.
As Executive Director for one of the
least understood and most successful
arms of Tribal government, Hillman
has everything under control except
the public perception of the commis
sion, as a result,
he is determined to
get the news out
there: the Gaming
Commission does
not hire and fire ca
sino employees. "We
get calls every day
asking why we fired
an employee," he
said.
In fact, the com
mission awards li
censes to all appli
cants seeking to do
business with the
casino, whether as
employees or ven
dors, but it is casino
personnel who de
cide whom to hire
from the pool of li
censed applicants
and whom to fire.
Some licenses are granted on a con
ditional basis, however. A license
might be granted, for example, on the
condition that the applicant avoid fur
ther brushes with the law. If that ap
plicant does run into trouble, the com
mission could revoke the individual's
gaming license which would effectively
eliminate the employee's right to work
in the casino.
Grand Ronde is the only Tribe in the
state that awards conditional licenses
to staffers "to give the casino the op
portunity to hire the best there is,"
said Hillman. "It has resulted in such
a benefit over the last nine years."
"We had a woman, a single parent,"
said Galligher, "and she was so thank
ful that we were able to get her a license
and she was able to work. We did give
her a conditional license," and she ful
filled the requirements to earn a full,
three-year license from the commission.
Hillman's wife, Judy, is a "quilter
extraordinaire," and a "landscape art
ist," who turned their home into an
English garden, said Hillman.
His daughter, Sarah, attended the
Seattle Art Institute on scholarship.
(The school gives only one a year, said
Hillman.) Today, she is a photogra
pher for the Dallas newspaper, the
Polk County Itemizer-Observer. His
daughter, Jennifer, is married to a
captain in the Air Force who was re
cently assigned as a general's Staff As
sistant in Washington, D.C.
In his spare time, Hillman employs
his knack for remodeling. He recently
added a sewing room to the family
house in Salem. And he is eagerly
anticipating a golf course as part of
the future growth of the casino (al
though no plans have yet been an
nounced). "I do love that silly game,"
he said.