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Let the Games Begin: Solving gaming problems in Oklahoma?

It is indeed a good thing to see federal and state officials working to improve Indian gaming, even if they're not necessarily working together. Regulators at the National Indian Gaming Commission and state officials in Oklahoma, are pursing different strategies toward a similar end - getting rid of the fuzzy boundary between gaming Classes II and III.

At the national level, NIGC wants to devise standard criteria so as to make the classification of electronic gaming machines easy and consistent. The commission is looking for help from its new Joint Federal-Tribal Class II Game Classification Standards Advisory Committee. The committee's mission will be to assist the regulator in determining definitive technical standards and regulations to properly classify electronic games in either Class II or Class III as defined by IGRA.

"The entire Indian gaming industry will be better served if clarity can be brought to this challenging area," said NIGC Chairman Philip Hogen in a Jan. 21 statement announcing the committee's formation. NIGC's call for nominations from Indian country ended in mid-February.

Briefly, what's most important in classifying an electronic gaming machine is whether or not that game is played in real time. "Real time" means that numbers or cards are drawn as the game progresses with players competing against each other, not the house. Games operating in this manner fall under Class II. If the game is already played inside a machine or computer before the player even puts down his or her wager, we're talking Class III.

The distinction between the classes, though not quite so simple as illustrated above, is critical. Tribes may operate Class II machines independent of state involvement, while Class III machines require a tribal-state compact. Over the last few years, the lack of a clear distinction delineating the classes has resulted in considerable litigation, causing headaches for gaming tribes, machine manufacturers, and state and federal regulators alike.

Tribal gaming in Oklahoma, a state in which Indian casinos are allowed to offer only Class II gaming, has been particularly hard hit by "class warfare." Several tribes faced regulatory sanctions for putting in play machines that were categorized under Class III, while manufacturers faced problems getting casinos to put certain other "suspect" machines into play. [For more on the gaming class disputes in Oklahoma, see "Let the Games Begin: Guidelines make Class II gaming more attractive" (Vol. 23 Iss. 25.)

As federal regulator, NIGC was correct in establishing the new advisory committee. With all the litigation surrounding other aspects of Indian gaming, at least some of the games themselves may soon be less controversial.

An Oklahoma remedy

At the state level, Oklahoma politicians are looking to clear up the murky area between the classes by legalizing specific electronic gaming machines over whom regulators, tribes and manufacturers argued vehemently as to the class in which each belonged.

On Feb. 18, the Oklahoma State Senate passed S. 553 by a 30 - 18 vote. The Oklahoma House, which had defeated a similar bill on the last day of its 2003 session, was to consider the measure during the week of Feb. 23. That body's vote is reportedly too close to call, but S. 553 has received broad support from Indian nations and horse racing advocates. The measure has the support of Democratic Gov. Brad Henry.

The proposed measure would permit Oklahoma's four private pari-mutuel horse tracks to offer electronic gaming machines similar to those in tribal casinos. Over the past couple of years, advocates for the Sooner State's struggling horseracing industry lobbied hard for permission to install gaming machines, which they say will help them compete with the state's Indian casinos.

Yes, Indian gaming in Oklahoma would remain Class II, which normally has no state involvement. However, the tribes will allow some state regulatory oversight in return for a 15-year compact. Under this compact, Oklahoma grants the tribes permission to operate several specific electronic games that straddle the oft-blurred line between classes, thus eliminating friction with federal regulators.

While the dispute over which machines belong to which class isn't really settled this way, the legalization of specific machines will allow for their use. The Indian Gaming Regulatory Act stipulates that tribes may conduct Class II gaming as long as the state in which that tribe is located allows such gaming for any purpose.

S. 553 specifically deems illegal conventional slot machines, roulette and dice games, so full-fledged Class III gaming will not happen in Oklahoma. But the four horse track racinos along with expanded offerings at Indian casinos are projected to net the state an estimated $71 million annually - funds already earmarked for education.

The Oklahoma Indian Gaming Association supports the initiative, as do many other groups and individuals. Indeed, it seems as if the tribes, the horsemen and state educational programs all come out ahead under this initiative.

According to a fact sheet posted on OIGA's Web site, gaming tribes in that state employ almost 15,000 people while the horse racing industry is responsible for another 50,000 jobs. Indian gaming contributes $7.8 billion dollars worth of activity into the state's economy. Oklahoma's 350,000 tribal members comprise 16 percent of the state's population.