In the July 2010 issue of Casino Enterprise Management magazine, John Wilson authored an article titled “Class II: In a Class by Itself.” This article has evoked criticism and high emotion from those that have an interest and understanding of Indian government gaming. This commentary is intended to put some perspective around the criticism and explain what has been misunderstood by many. At the outset in the subscript to the article, Wilson concedes he is a commercial gaming vendor and states, “He has designed several slot games in both Class II and Class III markets.” By federal law, Class II excludes slot machines.
Federal law in the Indian Gaming Regulatory Act (IGRA) of 1988, 25 U.S.C. §2701, et seq., clearly states that Class II games are not slot machines.
IGRA prohibits states from intruding on the sovereignty of Indian governments by extracting any fee or tax on Indian governmental gaming [25 U.S.C. §2710(d)(4)]. In 1988, state concerns, primarily from Nevada, were that the states did not want Indian governments regulating stand-alone slot machines. Also, because of the lack of accountability of stand-alone slot machines, IGRA addressed concerns over organized crime that could easily skim the stand-alone slot machines of the time and/or cheat patrons. Wilson incorrectly states that at initiation of IGRA, states were hunting money. States never envisioned the profitability of Indian government gaming. State interests in Indian government money came later. In 1987, just before IGRA, Indian governments won the Cabazon case, California v. Cabazon Band of Mission Indians, 480 U.S. 409 (1987), which held that Indian governments have the right to civilly regulate gaming conducted in 18 U.S.C. §1151 Indian country. Note, this case arose in California, a state wherein the federal government, through an act of Congress (Pub. L. 83-280, Aug. 15, 1953), gave California the right to exercise civil and criminal jurisdiction over Indian government land. The issue in Cabazon was about governmental power and authority, not money. Contrast the context of that case to the Indian government “power” situation in Oklahoma wherein the Enabling Act, 34 Stat. 267 (1906), for the state required it to disclaim jurisdiction over lands of Indian governments in its Constitution.1 At IGRA’s passage in 1988, state income from Indian lands was not a concern in California and certainly not in other jurisdictions where the lack of jurisdiction of state government is established.
While Class II gaming concepts were created and uniquely recognized for exclusive use by Indian government gaming in IGRA, the ease of audit, the level of accountability and the concept of server-based player-versus-player gaming made profitable in Class II gaming in the 1990s has caught on around the world. Many foreign governments require such play in gaming. In IGRA, Congress identified a list of games—bingo, pull-tabs, lotto, punch boards, tip jars, instant bingo and other games similar to bingo, as well as card games lawful in a state—as Class II. IGRA specifically allowed those games, including when they are played with technological aids, to be available to Indian governments without state government input. Class II authorization did not interfere with Nevada continuing regulation of stand-alone slot machine play. Class II authorization allowed players and technology to monitor game play and help avoid criminal influences.
Also in 1988, there were three major computer systems in existence that aided and tracked bingo play. The systems provided an audit trail to prevent “skimming” that was vastly superior to the cash drop and count of stand-alone slot machines. The official Senate record for IGRA states:
… that tribes have maximum flexibility to utilize games such as bingo and lotto for tribal economic development. The Committee specifically rejects any inference that tribes should restrict Class II games to existing games sizes, levels of participation or current technology.
At the end of the article, Wilson concedes that Indian governments are providing a Class II compliant game that plays bingo:
Through innovation and inspiration, it looks like more. It could be designed to look like a roulette game, a blackjack game or anything that could be imagined … Scrabble. The presentation provides entertainment.
Such concession, coupled with an understanding of IGRA, does not create the confusion implied in the first half of the article; rather, such concession coupled with IGRA, its history and the Senate record, identify why Congress, in the Senate record, described such Class II aided play as authorized with technological aids:
The Committee intends that tribes be given the opportunity to take advantage of modern methods of conducting Class II games and the language regarding technology is designed to provide maximum flexibility … In other words, such technology would merely broaden the potential participation levels and is readily distinguishable from the use of facsimiles in which a single participant plays a game with or against a machine rather than with or against other players.
In the first half of his article, Wilson proclaims confusion over what has come to be called the duck principle: If it walks like a duck and quacks like a duck, it must be a duck.” I once watched Elton John perform in a duck costume; that does not make Elton John a duck. Moreover, five federal court cases that started in 1997, with the last ending in 2004, agree even with the conclusion that an entertaining display does not prevent a game from being Class II. Indeed, the last sentence of Wilson’s article concludes, “The game is bingo.”2
In the 1980s, Indian governments struggled to reassess the ability of governments to address social needs of Indian people and ignored by state and federal governments. Indian government turned to governmental gaming just as some states have turned to state lotteries to provide the financial ability to address local and government needs. Indian gaming provided the governmental tax base to address those needs. In 1988, IGRA provided a federally recognized framework to conduct Class II gaming without state permission or input. In the late 1980s through the 1990s, Indian governments worked with vendors to create server-based gaming that broadened participation and profitability. Following IGRA’s outline in the act and Senate record, Indian governments overcame the “duck test” of the federal government in cases starting in 1997 and ending in 2004. Indian governments overcame federal regulatory efforts to expand and usurp Indian regulatory control in the CRIT case in 2006, Colorado River Indian Tribes v. National Indian Gaming Commission, 383 F.Supp.2d 23 (D.D.C. 2005), aff’d 466 F.3d 134 (D.C. Cir. 2006), and overcame federal regulatory efforts to destroy Class II gaming by overregulation of federal agencies.
Today, the Class II category of Indian gaming is primarily a well auditable, server-based, profitable group of games that commercial vendors have reviewed and modified to make profitable in a commercial format unburdened by IGRA’s requirements. The merger of appearance and operation of commercial vendors, slot machines and the server-based Class II player-versus-player games is as much the result of commercial operators copying proven and profitable Class II server-based play and accounting concepts as it is Class II providing an entertaining appearance that mimics slot display. While Class II games have requirements that the game must meet the description in IGRA, commercial vendors have no limitation in copying proven Class II concepts other than that the concept must make money. Commercial gaming companies have adopted player-versus-player formats to form huge progressive prizes. The concept has its basis in a bingo card blackout game wherein the blackout is required within 48 drawn numbers. As long as Class II gaming, through “innovation and inspiration,” makes Indian governments money, commercial gaming is free to copy the successful concepts. Wilson, as a commercial vendor, may plead confusion about Class II gaming he concedes he can readily identify, but the confusion is in part because the commercial industry is copying successful Class II concepts, and in part because many outside of Indian country fail to acknowledge that government gaming is a creature of statute with the technical requirements and legal history.
For Indian governments and people, however, the requirements and reasons are not forgotten. Like sovereignty and oral history, Indians cling to promises to protect what remains of Indian government authority, dignity and culture. Wilson’s article, despite a lack of malicious intent, has attacked the Class II tax base of Indian government by obfuscation of the truth that he concedes in his conclusion. Indian governments lawfully play Class II. Those of us with interest and understanding in the subject are therefore reasonably critical, and will continue to champion against misunderstanding as long as it is necessary.
Footnotes
1 See Oklahoma Constitution, Article I, Sec. 3.
2 See United States v. 162 MegaMania Gambling Devices, 231 F.3d 713 (10th Cir. 2000); United States v. 103 Electronic Gaming Devices, 223 F.3d 1091 (9th Cir. 2000); Diamond Games Enterprises, Inc., et al. v. Janet Reno, et al., 230 F.3d 365 (D.C. Cir. 2000); Seneca-Cayuga Tribe of Oklahoma, et al. v. National Indian Gaming Commission, et al., 327 F.3d 1019 (10th Cir. 2003), cert. denied, Ashcroft v. Seneca-Cayuga Tribe of Oklahoma, 540 U.S. 1218, 124 S.Ct. 1505, 158 L.Ed.2d 153 (2004); and United States v. Santee Sioux Tribe of Nebraska, 324 F.3d 607 (8th Cir. 2003); cert. denied U.S. v. Santee Sioux Tribe of Nebraska, 540 U.S. 1229, 124 S.Ct. 1506, 158 L.Ed.2d 172 (2004).