Feds propose Class II rules

October 30, 2007 3:20 AM
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Aiming to rein in the booming Indian gambling industry, the government is trying to make sure Class II electronic bingo machines at tribal casinos can’t masquerade as Las Vegas-style slots.

Class III slot machines are more lucrative for tribes and more attractive to players, but they are subject to state approval and limits. Video bingo isn’t.

The basic difference between the two is that slot machines involve a gambler interacting only with a single machine, whereas Class II video bingo requires gamblers to play each other over a linked network.

As tribes increasingly supplement their slot machine allotments with video bingo, manufacturers have produced electronic bingo machines that are virtually indistinguishable from Las Vegas-style slots — spinning reels, blinking lights and all. That allows tribes to draw in more players and make more money.

But it’s caused the federal National Indian Gaming Commission to worry that tribes are effectively skirting the law’s limits on slot machines.

New rules the commission proposed last week aim to make it more clear to customers when they are playing bingo rather than a slot machine. Play at the bingo machines would be slowed, more players would have to participate and the machines would be required to be labeled as bingo rather than slots.

Commission Chairman Phil Hogen said the proposed regulations would clarify the distinction between Class II games and Class III games — slot machines and other Las Vegas-style games that require state-tribal agreements called compacts.

"With the bright line that will be drawn when these regulations are finalized, tribes may confidently invest in equipment, lenders’ concerns over challenges in this area will be allayed, and tribes will have a clearer basis from which to negotiate with states for Class III compacts," Hogen said.

The proposed rule, which will be open for comment through Dec. 10, comes as tribal gambling has exploded into a $25 billion a year industry and Indian tribes are looking for new ways to profit.

In states that don’t allow tribes to run traditional slot machines — or limit the number of slot machines tribes can have — video bingo has become a profitable alternative.

The rules proposed were significantly weaker than regulations for video bingo the commission proposed last year, which ran into fierce opposition from tribes warning of dire economic consequences.

The commission withdrew that earlier proposal in face of the criticism. But tribes weren’t happy with the reworked version either — and neither were Indian casino critics.

Ernie Stevens Jr., chairman of the National Indian Gaming Association, contended that the rules could cost tribes $1 billion annually.

"That’s devastating for the Class II industry and hurts rural tribal economies," Stevens said. "The most basic problem is that the new regulations arbitrarily slow down Class II games, making them less fun and less marketable."

Conor Lee, senior organizer of California’s East Bay Coalition Against Urban Casinos — which opposes a casino in the San Francisco Bay area that has only video bingo machines — said those machines would still look and feel like slots to players.

"The regulations that came out last year didn’t address the real issue at hand, which is whether or not these machines are slot machines at all, and the regulations that just came out do an even worse job," Lee said.