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Tribal casinos dodge Class II bombshell

Jun 10, 2008 7:03 PM

By GT Staff | The National Indian Gaming Commission (NIGC) has dropped two proposed rule changes that, if enacted, could have virtually wiped out Class II gaming on tribal lands.

Class II gaming includes bingo, pull tabs and other non-casino games – as well as electronic devices that duplicate those games.

With recent advancements in technology, Class II gaming machines have come to look and perform like Class III slot machines, similar to machines in Las Vegas casinos.

Class III slot machines are only legal in tribal casinos that have negotiated a state compact. A tribe-state compact usually includes a profit-sharing provision for the state.

Class II gaming only requires federal oversight through the National Indian Gaming Commission, an agency of the U.S. Department of the Interior, with no sharing of profits required.

Last October, the NIGC proposed a set of regulations that would govern the use of Class II machines. Two provisions, the "classification standards" and "definitions" parts of the package drew fire from tribal casino leaders because it would have categorized all electronic versions of Class II games as Class III "facsimiles," thus requiring a state compact.

According to an independent study, if the proposed changes were enacted, tribal casinos could lose up to $2.8 billion in revenues a year, as well as thousands of jobs.

NIGC Chairman Phil Hogen announced last Thursday that the two proposed rule changes have been set aside. The commission will now only consider the proposed regulations for Technical Standards and Minimum Internal Control Standards for Class II gaming – regulations that more closely apply to manufacturers.

Hogen’s announcement, which took place at the Oklahoma Sovereignty Symposium, was met with warm approval, said tribal gaming attorney Judy Shapiro.

"After years urging the NIGC not to promulgate restrictive Class II regulations, those assembled in Oklahoma City applauded the chairman’s announcement that the commission has chosen to modify its approach," Shapiro said.

Shapiro, whose legal expertise includes Class II gaming, worked with the committees appointed by the NIGC to provide input into the formulation of the new rules.

"I am hopeful that the technical standards and minimum internal control standards can be finalized in a form that can add to the tribes’ tools for Class II regulation," Shapiro said. "Ultimately, I expect that a federal court, consistent with the statute and existing precedent, will uphold the tribes’ right to conduct the full range of Class II gaming authorized by Congress.

"That range includes technologic aids that broaden participation and assist play of a game whose criteria under the Indian Gaming Regulatory Act cannot be expanded by the NIGC."