NIGC Issues New Guidance on Financing Document Reviews and Declination Letters

The National Indian Gaming Commission (“ NIGC ”) issued guidance this week for tribes and tribal lenders who submit loan documents to the NIGC for a so-called “declination letter.” Bulletin No. 2021-4, “Submission of Loan Documents and Financing Documents for Review,” summarizes criteria the agency has developed in the last decade for determining whether loan documents constitute “management” contracts, which under federal law must be approved by the NIGC Chairman or they are void. The Bulletin states that while the Office of General Counsel will continue to review loan documents and issue opinions as to whether the documents provide the lender with the ability to manage the gaming operation, contracts that “adhere to the principles and analyses” outlined in the Bulletin would likely receive an opinion letter that the contract does not need to be submitted for approval as a management contract.[1]

The criteria and the agency’s conclusions are: Security interest in gross gaming revenues : the pledge of a security interest in the gross gaming revenue of a tribal gaming operation does not constitute control if (1) operating expenses are exempted from the security interest; or (2) the lender is expressly prohibited from exercising management controls using what has become standard “IGRA savings” language developed by the agency.

Appointment of a receiver : the appointment of a receiver over gross gaming revenue may give a third party substantial management control over a tribal gaming operation unless (1) the provision providing for appointment of a receiver includes express management […]

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