The evolution of Class II slot machines
If you are the primary slot manager at a tribal casino, I urge you to take another look into the feasibility of Class II games on your slot floor. Class II games allow a property to expand its offerings without the additional costs or limitations associated with the tribal-state compact. If you are unclear on the distinction between Class II and Class III games, here’s a quick refresher:
The Indian Gaming Regulatory Act defines Class II gaming as: bingo; when played in the same location as bingo — pull tabs, lotto, punch boards, tip jars, instant bingo, other games similar to bingo; and non-housed-banked card games authorized or not explicitly prohibited by the state in which the tribal operation is located. All other games are Class III, except for certain social or traditional forms of gaming. Class III games include, but are not limited to the following: baccarat, chemin de fer, blackjack, slot machines, and electronic or electromechanical facsimiles of any game of chance.
Class II is the game of bingo, which requires multiple players even if they are playing on an electronic machine. To ensure a player appreciates they are playing a bingo game, the machine displays a bingo card, which dictates the outcome of the game. The reels and graphics on the machine are merely aids to the game of bingo. The electronic aids utilized in most modern Class II machines rival, and in some cases exceed, that of Class III machines.
Over the years, the very bright people in the Class II field advanced game designs to provide a similar playing experience to Vegas-style (Class III) slot machines. While Class III games have generally performed better than Class II, it is partially due to the federal government limiting their evolution with strict standards. However, a recent move on the part of the National Indian Gaming Commission might help level the playing field.
One major drawback to playing Class II games is that they require a player to push the button to start the game, and then push the button a second time to accept the outcome of the game. This requirement was meant to ensure players didn’t “sleep” a win. Recently, the National Indian Gaming Commission (NIGC) proposed a rule that will classify one-touch bingo as Class II gaming, reversing its previous position. One-touch bingo is a networked electronic game in which the player must only press one button to wager and play. This rule confirms that Class II Indian gaming facilities, which do not require a tribal-state gaming compact, will be able to offer machines that even more closely resemble the experience of slot machines.
It’s important to note that there are no limits to the number of Class II games a tribal casino can have under most tribal-state compacts.
The states’ ability to enforce “exclusivity” payments from tribes is tied to the tribes need for a compact in order to conduct Class III gaming. If the playing field is leveled and as Class II gaming does not require a compact, it opens many new opportunities for the operator. Not only can you expand to the number of machines your property requires to meet the needs of your guests, every Class III game you replace with a Class II game on your floor is no longer subject to the fees associated to Class III games in your compact. That means significant savings now and a bargaining chip when it comes to the renegotiation of the compact.
While there are states that have limited the number of Class II games in their tribal-state compacts, the federal government is signaling that it is no longer going to accept these agreements. In January 2014, the Department of the Interior released a letter that should clarify intent going forward. Kevin K. Washburn, assistant secretary of Indian Affairs, wrote: “I want to take this opportunity to emphasize that IGRA does not permit the regulation of Class II gaming in tribal-state compacts.” In the future, states and tribes should avoid any language in a compact that could be construed as providing for the potential state regulation of Class II gaming.
In the past, many states took advantage of tribal governments’ desperation to secure casino gaming to help overcome poverty by extorting revenue sharing demands from them. The appropriate use of Class II games can provide a tribes options to limit the demands of revenue-strapped states.