NIGC FEES 25 CFR Part 514 title

1. NIGC FEES 25 CFR Part 514 title Portland Region March 19, 2014 Steve Brewer Field Auditor

2. History • In 1988 the Indian Gaming Regulatory Act (IGRA) was passed • 25 U.S.C. 2717 authorized the “Commission” to fund itself • Fees are a percentage of gross revenues

3. History Cont IGRA AICPA The Net win from gaming activities, which is the difference between gaming wins and losses before deducting cost and expenses or deducting incentives or adjusting for change in progressive JP liability accruals. • Gross revenues are defined in IGRA as the “total amount of money wagered, less any amounts paid out as prizes or paid for prizes awarded and less allowance for amortization of capital expenditures for structures”

4. Amendment to Fee Regulation On February 2, 2012 the NIGC announced the publication of the final rule for Fees, 25 CFR Part 514

5. Final Rule Part 514 • The rule was effective starting October 1, 2012 • The compliance date for quarterly submission of fees and worksheets was January 1, 2013

6. Fee rates published in Federal Register • Preliminary fee rate is set no later than March 1st • Final fee rate may be adjusted no later than June 1st • Fee Rate Bulletins posted on the nigc.gov website

7. Rates • IGRA limits the total amount of all fees imposed during any fiscal year to .08% (.0008) of the gross gaming revenues of all gaming operations subject to regulation under the Act. (amended by the Native American Technical Corrections Act, May 12, 2006) • Current (March 1, 2014) fee rate is .072% (.00072) • Prior to June 2013 the fee rate was .074% (.00074)

8. Worksheets • Fee worksheets submitted to Commission quarterly Note: Even if the fee has been prepaid or no fee is owed. • Calculation of fees based on revenues reported in the gaming operations prior fiscal year audited financial statement. Note: If audit is not available use “Book Revenue”

9. Transition from CY to FY

10. Transition from CY to FY

11. Transition from CY to FY

12. Transition from CY to FY

13. Transition from CY to FY

14. Transition from CY to FY

15. Fee Tier Structure • First tier is up to $1.5 million Assessable Gross Revenue (AGR) • Fee rate for the first tier is historically zero however, cannot exceed 2.5% • Second tier can be no more than 5% of amounts in excess of the first $1.5 million. Fee rate as of March 1, 2014 is .072%

16. Computing AGR • Add amount wagered on class II and III games plus admission fees (table and card fees) • What is included as “amount wagered”: • Pot/pool rakes and administrative fees * (including the player banked table games where rake and commission are received) • Match play and discounted wagers accepted • Pull-tabs match play and discount wagers that are accepted (only amount received)

17. Computing AGR • What is not included as “amount wagered”: • Table game and machine negotiable free play coupons and tickets that are wagered, if distinguishable in the drop • Non-negotiable table game and machine free play tickets and coupons • Counter game negotiable and non-negotiable coupons

18. Computing AGR • What is not included as “amount wagered” (cont’d): • Card game buy-in coupons ($25 for $20) • Shill winnings • Pull-tab negotiable and non-negotiable free play coupons • Uncollected baccarat commissions • Promotional machine pulls • Free machine pulls

19. Computing AGR • Less amounts paid out as prizes or paid for prizes awarded • Allowable deductions from GGR: • In-house progressive payouts to the extent of what has been paid • Wide area progressive payouts to the extent of the operation’s pro-rata share

20. Computing AGR • Allowable deductions from GGR: • Non-cash prizes awarded for winning wagers- deduct the cost to the casino • Payouts from free play on gaming machines • Payouts from wagering credits, both negotiable and non-negotiable

21. Computing AGR • Allowable deductions from GGR: • Payouts from tournaments/contests/drawings (only to the extent of the amount received) • Bonus payouts (if resulting from a winning wager) • Mystery jackpots (if selected by RNG and reflected in the payout schedule)

22. Computing AGR • Allowable deductions from GGR • Payouts from match play • Payouts from a free wager • Payouts from discount wagers • Keno payouts from free play, match play and discount wagers • Payouts from pull-tab free play, match play and discount wagers

23. Computing AGR • Allowable deductions from GGR: • The deduction of uncollected gaming credit subject to the following conditions: • Properly executed credit instrument • Reasonable credit worthiness decision • Reasonable collection effort

24. Computing AGR • Non-Allowable deductions from GGR: • Appeasement payments • Machine participation fees • Promotional expenses • Payouts from free pulls on promotional machines

25. Computing AGR • Non-Allowable deductions from GGR: • Card room prize payouts (high hand) • Card room pots and pools payouts • Shill losses

26. Amortization of Structures • 5% of the cost of structures in use throughout the year • 2.5% of the cost of structures in use during only a part of the year

27. Amortization of Structures What is a structure? Includes all structures used for operating purposes, as well as significant improvements made thereto. Includes all permanently attached fixtures, machinery and other components that cannot be removed without damage resulting to the structure

28. Amortization of Structures What should be capitalized? • All direct costs of construction • Significant structural alterations that increase the structure’s usefulness, efficiency or asset life • For example, the complete replacement of a roof would be capitalized if the cost exceeded the capitalization threshold

29. Amortization of Structures What should not be capitalized? • Cost of a structure should not be adjusted for repairs, maintenance or replacement of component parts that do not extend the structure’s original useful life or significantly enhance its net value, e.g. painting or repairs

30. Amortization of Structures Or An amount not to exceed 10% of the total amount of depreciation expenses for the year.

31. Reconciliation of Financial Statements to Fee Worksheets/Payments Gaming operations are required to reconcile quarterly fee worksheets to audited financial statements relevant to the same period. 25 CFR 571.14.

32. Reconciliation of Financial Statements to Fee Worksheets/Payments Reconciliations don’t have to be submitted with fee worksheet but must be made available to the NIGC upon request.

33. Late Fees or Statements • Commission Chair may issue a notice specifying: • Date statement and/or fee was due • Number of calendar days it or they were late • Federal law or rule that was or is being violated • The action being considered • Notice of rights of appeal

34. Assessments • Within 30 days of issuing the notice, the Chair may propose a late fee • If 1 to 30 calendar days late, not more than 10% of fee amount for that quarter, • If 31 to 60 calendar days late, not more than 15% of fee amount for that quarter, and • If 61 to 90 calendar days late, not more than 20% of fee amount for that quarter.

35. Assessments Over 90 calendar days late constitutes a failure to pay the annual fee • May issue NOV and/or a temporary closure order. • May result in revocation of approval of gaming ordinance.

36. Questions

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