[Federal Register: October 24, 2007 (Volume 72, Number 205)]
[Proposed Rules]               
[Page 60483-60495]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24oc07-30]                         

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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Parts 502 and 546

RIN 3141-AA31

 
Classification Standards for Bingo, Lotto, Other Games Similar to 
Bingo, Pull Tabs and Instant Bingo as Class II Gaming When Played 
Through an Electronic Medium Using ``Electronic, Computer, or Other 
Technologic Aids''

AGENCY: National Indian Gaming Commission (``NIGC'' or ``Commission'').

ACTION: Proposed rule.

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SUMMARY: The proposed rule clarifies the terms Congress used to define 
Class II gaming. First, the proposed rule further revises the 
definitions for ``electronic or electromechanical facsimile'' and 
``other games similar to bingo.'' The Commission defined these terms in 
1992, revised the definitions in 2002, and proposed further revisions 
to the term ``electronic or electromechanical facsimile'' separate from 
this proposed revision. The Commission adds a new Part to its 
regulations that explains the basis for determining whether a game of 
bingo or lotto, ``other game similar to bingo,'' or a game of pull-tabs 
or ``instant bingo,'' meets the IGRA statutory requirements for Class 
II gaming, when such games are played electronically, primarily through 
an ``electronic, computer or other technologic aid,'' while 
distinguishing them from Class III ``electronic or electromechanical 
facsimiles.'' This new part also establishes a process for assuring 
that such games are Class II before placement of the games in a Class 
II tribal gaming operation. This process contains information 
collection requirements. The Commission has submitted the information 
collection request to OMB for approval.

DATES: Submit comments on or before December 10, 2007.

ADDRESSES: Mail comments to ``Comments on Class II Classification 
Standards'' National Indian Gaming

[[Page 60484]]

Commission, Suite 9100, 1441 L Street, NW., Washington, DC 20005, Attn: 
Penny Coleman, Acting General Counsel. Comments may be transmitted by 
facsimile to 202-632-7066, or mailed or submitted to the above address. 
Comments may also be submitted electronically to 
classification_standards@nigc.gov.


FOR FURTHER INFORMATION CONTACT: Penny Coleman or John Hay, Office of 
General Counsel, Telephone 202-632-7003. This is not a toll free call.

SUPPLEMENTARY INFORMATION:

Preamble Table of Contents

    I. Introduction
    II. Background
    III. Development
    IV. New Proposal
    V. Changes

I. Introduction

    In writing and proposing this rule, the Commission has attempted to 
be mindful of the language of IGRA, Congress's intent, IGRA's 
legislative history, relevant court cases, and the essential need of 
the tribes for a broad, flexible and legally sustainable scope of Class 
II gaming. Class II was the basis on which Indian gaming was built. 
Since the enactment of IGRA in 1988, Indian gaming has grown into a $26 
billion business, perhaps far eclipsing any limits which Congress may 
have envisioned. Although an estimated 90% of this gross gaming revenue 
is generated by compacted Class III gaming, Class II remains 
significant to tribes throughout the country.
    For some tribes with Class III gaming compacts, Class II is a vital 
supplement, long patronized and preferred by some clientele. In other 
cases, sadly, some states fail and refuse to compact with their tribes 
for Class III play, notwithstanding their legal sanction of Class III 
gaming activities elsewhere within those states or their tolerance of 
widespread unsanctioned Class III activities. Tribes in that situation 
are left to make the most of Class II gaming and have operations that 
are, or were, places where the distinction between Class II and Class 
III has become the most blurred and where clarity is most needed. 
Further, as tribes negotiate with states for Class III compacts, they 
and the states need to know that there are viable Class II games that 
tribes may utilize if no agreement is reached.
    As observed below, the statutory language of IGRA lacks clarity 
when it makes ``computer and electronic and technologic aids'' Class II 
but places ``electronic facsimiles of games of chance'' in Class III. 
However, some of the Act's legislative history sheds light upon 
Congress's intended goal.
    In the House and Senate floor debates on IGRA, several proponents 
of the legislation described the distinction as that between ``bingo'' 
(Class II) and ``casino gaming'' (Class III). See 134 Cong. Rec. H8157. 
While ``casino gaming'' likewise lacks a crystal-clear definition, 
those who spoke associated the term with gambling halls filled with 
slot machines, venues separate and distinct from the bingo halls of the 
1980's.
    It further appears from the debates that a basis for making this 
the dividing line between Class II and Class III was the complexity and 
regulatory difficulties associated with slot machines and casino 
gaming. See 134 Cong. Rec. H8157, 134 Cong. Rec. S12643. Some argued 
that only states--then the only governments experienced with the 
conduct and regulation of such activity--were up to the task of 
regulating casino gaming, and thus casino gaming needed to be 
compacted.
    Much has changed, of course, since those debates in 1988, not the 
least of which is the sophistication and excellence of the tribes' own 
gaming regulation. Tribes spend hundreds of millions of dollars 
annually regulating their gaming, both directly, through their own 
commissions, and indirectly, by funding the regulation done by states 
and the NIGC. Nonetheless, the distinctions and classifications 
established in IGRA in 1988 still bind the Commission, and the proposed 
rule seeks to identify and clarify the place at which Congress intended 
to separate Class II from Class III.
    What is abundantly clear from a study of the Act's language and the 
Act's legislative history is that Congress intended to distinguish 
between uncompacted and compacted gaming. If that separating line is 
not clear and identifiable, Congress's intention will not be fulfilled.
    Since the Act's adoption in 1988, the world has changed, and 
computerization has transformed whole sectors of our economy and 
society, including gaming. Those advances challenge the legislative 
language that pre-dates them. Nevertheless, that language continues to 
govern these distinctions. Unless or until that language or the mission 
of the NIGC--in part to promulgate Federal standards for Indian 
gaming--is changed, the Commission's interpretations must be based on 
them.
    The other legislation, of course, which applies to the use of 
gambling equipment on Indian lands is the Johnson Act. See 15 U.S.C. 
1171. Since it was enacted in 1953, the Johnson Act has provided that 
there could be no ``gambling devices'' in Indian Country, and the term 
``gambling devices'' was thereafter broadly interpreted.
    The passage of IGRA in 1988 changed this in two ways. ``Gambling 
devices'' could be used on Indian lands if they were used pursuant to 
Class III tribal-state compacts, and tribes could use computers and 
electronic and technologic aids in the play of Class II bingo and 
similar games.
    As Indian gaming grew and the Indian gaming industry developed 
under IGRA's framework, tribes increasingly turned to technology. When 
electronic and technologic features were introduced in the absence of a 
tribal-state compact, some were viewed by Federal investigators and 
prosecutors as ``gambling devices.'' The Ninth Circuit held that an 
all-electronic form of pull tabs to be an electronic facsimile game of 
chance, notwithstanding the argument that players were playing against 
other players and not against the machine they were using. The 
electronic replication of the traditional Class II pull tab game was 
deemed a Class III electronic facsimile and hence prohibited on Indian 
lands in the absence of a compact. See Sycuan Band of Mission Indians 
v. Roach, 54 F.3d 535 (9th Cir. 1995).
    By contrast, in a series of decisions involving an electronic bingo 
game called MegaMania, courts considered electronic, computerized 
player stations, which interconnected a minimum of 12 players and 
displayed bingo cards and bingo balls to them. Each game took from two 
to three minutes to play. Again, those responsible for enforcement of 
the Johnson Act challenged the player stations as ``gambling devices'' 
requiring a compact for play. These challenges failed. Accordingly, the 
player stations were indeed only ``aids'' to the play of bingo, which 
Congress provided for in IGRA as Class II, and not electronic 
facsimiles of a game of chance. Those courts, however, were careful to 
note that their conclusions were limited to the facts of the cases 
presented. See U.S. v. 162 Megamania Gambling Devices, 231 F.3d 713, 
725 (10th Cir. 2000), U.S. v. 103 Electronic Gambling Devices, 223 F.3d 
1091 (9th Cir. 2000).
    Similarly, in a series of cases dealing with dispensers of paper 
pull tabs known as Lucky Tab II and Magical Irish, the enforcers of the 
Johnson Act became concerned when the manufacturers of these machines 
added video displays to the machines. The video displayed winning and 
losing pull tabs by depicting slot machine-type

[[Page 60485]]

reels and showing winning and losing combinations. These dispensers, it 
was said, were ``gambling devices'' and could only be played in a 
compacted Class III arrangement. The courts disagreed. Notwithstanding 
the use of the entertaining displays to show slot machine-like results, 
those displays were not essential to the game. The play of the game was 
``in the paper''--it was the pull tabs themselves, and only the pull 
tabs, that determined the outcome of the game. Thus, these courts 
concluded, the electronic dispensers were only aids to the play of the 
game of pull tabs and permissible without a Class III compact. Again, 
the courts limited their holdings to circumstances before them. See 
Diamond Game Enterprises v. Reno, 230 F.3d 365 (DC Cir. 2000), Seneca-
Cayuga Tribe of Okla. v. NIGC, 327 F.3d 1019, 1031 (10th Cir. 2003).
    Thereafter, these technologies--interconnected bingo player 
stations and slot machine-type video displays (not determinative of 
results)--were coupled, and currently most electronic bingo systems 
employ such technology. Most such systems display the results of the 
bingo game in an electronic bingo card on the equipment's video 
display.
    Such technological advances have greatly increased the speed with 
which bingo is played and have made the experience of playing very 
similar to the experience of playing conventional slot machines.
    In adopting IGRA, Congress observed that while computers, 
electronic and technologic aids may assist the play of Class II games, 
a Class III facsimile results if those electronic aids incorporate all 
of ``the fundamental characteristics'' of the Class II games. See S. 
Rep. No. 100-466, at 8 (1988). This, the Commission believes, is 
precisely the issue raised by the proliferation of so-called ``one 
touch games''--inter-connected electronic bingo player stations with 
which players initiate and complete play of a bingo game with the 
single touch of the screen or a button.
    In such instances, the equipment has ceased to be an ``aid'' to the 
play of the game, and has become one of those ``electronic facsimiles 
of games of chance'' which Congress placed in Class III. When the 
equipment automatically, electronically automates the play of the game 
and the players' participation in the game, the Commission believes 
that the play is no longer ``outside'' the equipment and that the 
electronic equipment can no longer be characterized as merely an aid. 
All player attention, discretion, and interface has been automated by 
the equipment.
    Beyond this, the full electronic automation of bingo creates 
distortions in the way bingo is played. There is considerable 
significance to being the first player to ``win'' the bingo game by 
getting a ``bingo'' or the game-ending pattern. Many current, fully 
electronic games, however, often place minimum significance on this 
important characteristic of bingo and rather award the principal prizes 
to interim or consolation patterns and winners. There is less 
competition among players--a fundamental characteristic of bingo--for 
these interim prizes than there is for the game-ending prize. If 
multiple players hit the game-ending prize simultaneously, the common 
practice is to split the prize among them. By contrast, it is often the 
case that players who hit interim prizes are awarded the full prize, 
without regard to the number of other players who have also hit it.

II. Background

    The Indian Gaming Regulatory Act, 25 U.S.C. 2701-21 (``IGRA'' or 
``Act''), enacted by the Congress in 1988, establishes the NIGC and 
sets out a comprehensive framework for the regulation of gaming on 
Indian lands. The Act establishes three classes of Indian gaming.
    ``Class I gaming'' means social games played solely for prizes of 
minimal value or traditional forms of Indian gaming played in 
connection with tribal ceremonies or celebrations. 25 U.S.C. 2703(6). 
Indian tribes are the exclusive regulators of Class I gaming. 25 U.S.C. 
2710(a)(1).
    ``Class II gaming'' means the game of chance commonly known as 
bingo, whether or not electronic, computer, or other technologic aids 
are used in connection therewith, including, if played in the same 
location, pull-tabs, lotto, punch boards, tip jars, instant bingo, and 
other games similar to bingo, and various card games so long as they 
are not house banking games. 25 U.S.C. 2703(7)(A). Specifically 
excluded from Class II gaming, however, are banking card games such as 
blackjack, electronic or electromechanical facsimiles of any game of 
chance, and slot machines of any kind. 25 U.S.C. 2703(7)(B). Indian 
tribes and the NIGC share regulatory authority over Class II gaming. 25 
U.S.C. 2710(a)(2). Indian tribes can engage in such gaming without any 
state involvement.
    ``Class III gaming'' includes all forms of gaming that are not 
Class I gaming or Class II gaming. 25 U.S.C. 2703(8). Class III gaming 
thus includes all other games of chance, including most forms of 
casino-type gaming such as slot machines of any kind, electronic or 
electromechanical facsimiles of any game of chance, roulette, banking 
card games such as blackjack, and pari-mutuel wagering. Class III 
gaming may be conducted lawfully only if the state in which the tribe 
is located and the tribe reach an agreement called a tribal-state 
compact. Alternatively, a tribe may operate Class III gaming under 
gaming procedures issued by the Secretary of the Interior if the tribe 
and the state have not reached agreement or if the state has refused to 
negotiate in good faith toward an agreement. The tribal-state compact 
or Secretarial procedures may contain provisions for concurrent state 
and tribal regulations of Class III gaming. In addition, the United 
States Department of Justice possesses exclusive criminal and certain 
civil jurisdiction over Class III gaming on Indian lands.
    As a legal matter, Congress defined the parameters for game 
classification when it enacted IGRA. As a practical matter, however, 
the Congressional definitions were general in nature and specific terms 
within the broad gaming classifications were not explicitly defined. 
The Commission adopted regulations in 1992 that included definitions 
for many terms used in the statutory classification scheme, including 
``electronic or electromechanical facsimile'' (25 CFR 502.7), 
``electronic computer or other technologic aid'' (25 CFR 502.8), and 
``other game similar to bingo'' (25 CFR 502.9). The Commission revised 
the definitions in 2002. See 67 FR 41166, Jun. 17, 2002, for an 
extensive discussion of the reasons for the Commission's decision to 
revise these key terms. However, the Commission did not define the many 
other terms used in conjunction with the various Class II games.
    A recurring question as to the proper scope of Class II gaming 
involves the use of electronics and other technology in conjunction 
with bingo and lotto as well as pull tabs, instant bingo, and other 
games similar to bingo that may be Class II if played in a location 
where Class II bingo is played. In IGRA, Congress recognized the right 
of tribes to use ``electronic, computer or other technologic aids'' in 
connection with these forms of Class II gaming. Congress provided, 
however, that ``electronic or electromechanical facsimiles of any game 
of chance or slot machines of any kind'' constitute Class III gaming. 
Because a tribe wishing to conduct Class III gaming may do so only in 
accordance with an approved tribal-state compact, it

[[Page 60486]]

is important to distinguish the two classes.
    Currently, the distinction between an electronic ``aid'' to a Class 
II game and an ``electronic facsimile'' of a game of chance, and 
therefore a Class III game, is often unclear. With advances in 
technology, the line between the two has blurred. When in IGRA, 
Congress defined ``the game of chance commonly known as bingo,'' 25 
U.S.C. 2703(7)(A), it could not have foreseen the technological changes 
that would affect all games of chance. Likewise, by allowing electronic 
aids to the game of bingo, Congress could not have foreseen that some 
vendors and gaming operators would be unable or unwilling to 
distinguish between Class II games, which tribes regulate, and Class 
III facsimiles, which require compacts between tribes and states. The 
Commission is concerned that the industry is dangerously close to 
obscuring the line between Class II and Class III. It believes that the 
future success of Indian gaming under IGRA depends upon tribes, states, 
and manufacturers being able to recognize when games fall within the 
ambit of tribal-state compacts and when they do not.
    Against this backdrop, the Commission has determined that it is in 
the best long term interest of Indian gaming to issue classification 
standards clarifying the distinction between ``electronic, computer, 
and other technologic aids'' used in the play of Class II games and 
other technologic devices that are ``electronic or electromechanical 
facsimiles of a game of chance'' or slot machines.
    As the Commission worked through a process to develop these 
classification standards, it became apparent that the revised 
definitions issued by a divided Commission in June 2002, See 67 FR 
41166, Jun. 17, 2002, did not provide the clarity that had been a goal 
in that rulemaking. Accordingly, the Commission proposes further 
revisions to the definitions for the terms ``electronic or 
electromechanical facsimile'' in a separate rulemaking.

III. Development

    On May 25, 2006, the NIGC published two Notices of Proposed 
Rulemaking in the Federal Register. The goal of these proposed rules 
was to clearly distinguish technologically-aided Class II games from 
Class III ``electronic or electromechanical facsimiles of any game of 
chance'' or ``slot machines of any kind.''
    The first notice, 71 FR 30232, May 25, 2006, detailed a proposed 
change to the definition for ``electronic or electromechanical 
facsimile'' that is contained in 25 CFR 502.8. The proposed change to 
the definition clarified that facsimiles of bingo are not permissible 
Class II games under the IGRA.
    The second notice, 71 FR 30238, May 25, 2006, likewise further 
revised the definitions for ``electronic or electromechanical 
facsimile'' and ``other games similar to bingo.'' The proposed revision 
to the definition for ``electronic or electromechanical facsimile'' 
clarified that games under this section that comply with 25 CFR 546 
would not be electronic or electromechanical facsimiles of any game of 
chance. The proposed revision to the definition for ``other games 
similar to bingo'' shifted the focus for the classification 
determination from whether the game is house-banked to whether the game 
had players competing against other players for the prizes. The 
proposed revision removed the requirement, not present in IGRA, that 
these games not be house-banked. The proposed revision also 
strengthened the requirement that the games involve players competing 
against other players for a common prize or prizes. Additionally, the 
proposed rule defined other terms used in Class II games that had not 
been previously defined. The proposed rule defined the following terms: 
Game, lotto, bonus prize, progressive prize, sleep, game of pull-tabs, 
electronic pull-tab, and instant bingo.
    The second notice also added a new part to the Commission's 
regulations (25 CFR 546) that explained the basis for determining 
whether a game of bingo or lotto, and ``other game similar to bingo,'' 
or a game of pull-tabs or ``instant bingo,'' meets the IGRA statutory 
requirements for Class II gaming, when these games are played 
electronically, primarily through an ``electronic, computer or other 
technologic aid,'' while distinguishing them from Class III 
``electronic or electromechanical facsimiles.''

Consultation/Comments

    The development of the proposed rule began formally with the March 
31, 2004, appointment of an advisory committee comprised of tribal 
government representatives with substantial experience in gaming 
regulation and operations. A detailed history of the advisory 
committee's work to that point is published in the preamble to the 
original proposed rule. 71 FR 30232, May 25, 2006. After publishing 
these notices the Commission embarked on an extensive consultation 
schedule, meeting with over 69 tribes in individual meetings. 
Additionally, the Commission held a day-long hearing and heard 
testimony from tribes, manufacturers, test labs, and state regulators.

IV. New Proposal

    Despite the withdrawal of the regulations the Commission still 
believed that regulations distinguishing technologically-aided Class II 
games from Class III ``electronic or electromechanical facsimiles of 
any game of chance'' or ``slot machines of any kind'' were still 
needed. The Commission gave much thought to the direction it needed to 
take and is now proposing regulations that take into account many of 
the concerns voiced during the previous consultation and comment 
period.

V. Changes from Original Proposal

    The new proposed regulations differ in some significant ways from 
the original proposal. When these regulations were first proposed there 
was considerable criticism that the proposed rules would result in 
great economic hardship to tribes and manufacturers. The economic 
impact study commissioned by the NIGC supported this proposition. The 
Commission withdrew the proposed regulations and after careful 
examination decided to make several changes. These changes, described 
below, have the added benefit of reducing the economic impact of 
compliance with the regulations.

Player Interaction/Speed of Game

    One of the defining characteristics of the game of bingo is that 
the winner is the first person to cover a previously designated 
arrangement of numbers or patterns. Implicit in this requirement is the 
notion that a player must make some overt action to win the game. It is 
for this reason that the Commission has required that players cover/
daub after the numbers or patterns have been released. Originally, the 
Commission felt it was necessary to have at least two releases of 
numbers or patterns to ensure that there was truly a competition among 
the players to be the first to cover. Further, the Commission felt that 
the release of numbers should be over a period of two seconds to ensure 
that players were fully engaged in the game. The Commission has given 
this great thought and has tentatively concluded that this goal may be 
achieved by requiring only that players press a button to start the 
game and then press at least one more time to cover and claim their 
prize. Therefore, the new proposed regulations eliminate a

[[Page 60487]]

required daub as well as the required time period for the release of 
objects.

Patterns

    As stated above, essential to the play of bingo is that individuals 
are competing against each other to be the first to obtain a previously 
designated arrangement of numbers or designations. The original 
proposal placed a restriction on the use of different patterns 
reasoning that players must be competing for the same winning pattern. 
The Commission extended this reasoning to include not only the game-
winning prize but also any prizes offered. Upon further consideration 
the Commission felt it could be less restrictive by allowing bonus 
patterns to differ and still achieve the goal that players play against 
each other for the game-winning pattern. Therefore the use of different 
patterns for bonus prizes is now permitted under the proposed 
regulations.

Appearance

    One of the primary goals of these classification standards is to 
enable tribes and regulators to distinguish Class II and Class III. The 
original proposal required that each machine display the message ``This 
is a Game of Bingo'' or ``This is a Game of Pull-Tabs'' in two inch 
letters. The Commission still believes that it is important to identify 
the game clearly but felt that a less intrusive method for doing so 
could accomplish this goal. The current proposed rule requires only 
that this message be prominently displayed giving manufacturers and 
tribal regulators more flexibility.

Lab Certification

    For these regulations to be effective there must be a method for 
determining compliance with them before technologic aids are placed on 
the gaming floors. The easiest way to accomplish this goal is to have 
certified testing laboratories test the devices and certify that they 
comply with the criteria established by these standards. In the 
Commission's original proposal it was the responsibility of the NIGC to 
determine which labs were suitable to conduct this testing. However, 
after further consideration the Commission has determined that tribal 
gaming regulatory authorities are better suited to this task and in 
many instances are already certifying labs as being suitable to conduct 
testing. These regulations place the responsibility for approving 
gaming laboratories on the tribal gaming regulatory authority with 
certain minimum criteria for determining suitability.

Grandfather Provision

    Absent from the original proposal were any provisions allowing for 
the continued use of games that were currently in operation. During 
consultations great concern was expressed that the immediate compliance 
with the proposed regulations would cause economic devastation to some 
tribes as well as to some manufacturers. The present proposal includes 
a grandfather provision that allows for the continued use of currently 
existing Class II games for a period of five years. Within a period of 
120 days after this rule is final each tribal gaming regulatory 
authority will submit a list to the Commission of the Class II game 
interfaces currently in use. These are the only game interfaces that 
will qualify under the grandfather provision. This requirement 
effectively freezes the number of grandfathered interfaces in use. This 
provision also allows for software changes that ensure the proper 
functioning, security, or integrity of the game. It also allows for 
changes to the software that do not detract from compliance with this 
part such as changes to pay tables or to game themes. The inclusion of 
a grandfather provision greatly mitigates the economic impact of these 
regulations. However, the proposed regulations make clear that this 
grandfather provision will not provide a safe harbor to those machines 
which could be considered Class III under any standards.
    To the extent that provisions are identical to the first proposed 
regulations, the Commission's thinking has not changed. Under the 
proposed rules, the following steps describe the play of bingo, lotto, 
or ``other games similar to bingo'' in an electronic medium as Class II 
gaming. First, there is a request for entry into the game. The game can 
proceed when there are six players or a minimum of two players after 
two seconds have elapsed. There is a release of a group of numbers, one 
at a time. Then there is a cover opportunity for all competing players.
    Permissible Class II game play for bingo, lotto, or other games 
similar to bingo utilizing linked player stations as ``electronic, 
computer or other technologic aids'' will proceed as follows: To enter 
and begin the game, each player selects the cards to be used by that 
player and requests entry into the game by selecting an amount to wager 
and touching a button. After the game begins, numbers must be randomly 
drawn or electronically determined. Numbers must be released one at a 
time and used immediately in real time by the competing players in the 
game. Selected numbers must be used in the sequence in which they are 
drawn in separate multiple rounds.
    Players may cover each card they have in play by touching the video 
screen at the player station or a button showing the word ``cover'' or 
other similar designation. A minimum time of two seconds, or a lesser 
time if all players have covered, must be available for each player to 
accomplish the cover action. Players must be notified that they should 
cover their cards when the numbers are revealed. For each cover 
opportunity, the game must wait until at least one player covers. A 
player wins the game by being the first player(s) in the game to cover 
a pre-designated game-winning pattern and claiming the win by touching 
the screen or a button within the time allowed by the rules of the 
game, which must be at least two seconds.
    A player who ``sleeps'' a potentially winning pattern forfeits the 
win based on that pattern. A player who fails to cover the numbers 
drawn within the time allowed may not later use those numbers in a 
prize-winning pattern other than the game-winning pattern. A bingo game 
cannot end until a player in the game wins the game-winning prize. The 
game may end at this point or other additional criteria for the end of 
the game may apply, such as the additional release(s) of numbers for a 
consolation prize(s).
    Each player in a game must take overt action to cover the player's 
card(s) during play of the game by touching the screen or a designated 
button one time after each set of numbers is released. Each released 
number does not have to be covered individually by the player, i.e., 
the player need not touch each specific space on the electronic bingo 
card where the called number or designation is located, but the player 
must overtly touch the screen or a designated button at least one time 
to cover the numbers.
    The proposed regulations will also impact how these games are 
viewed by the player. First, the proposed rules require a notice to 
appear on the game cabinet informing the player that they are playing 
the game of bingo or a game similar to bingo. Second, a two inch by two 
inch card must be displayed at all times.

Economic Impact

    It is likely that the proposed rule, considered separately and 
apart from the Commission's proposed 25 CFR part 547, ``Technical 
Standards for Electronic, Computer, or Other Technologic Aids used in 
the Play of Class II Games,'' is a major rule under

[[Page 60488]]

5 U.S.C. 804.2, the Small Business Regulatory Enforcement Fairness Act. 
In any event, the NIGC has commissioned an economic impact study of the 
two proposals taken together. The study makes clear that the cost to 
the Indian gaming industry of complying with the two proposed rules 
will have an annual effect on the economy of $100 million or more, at 
least for the first five years after adoption. Accordingly, the 
Commission treats the proposed rule as a major rule. The economic 
impact study is available for review at the Commission's Web site, 
http://www.nigc.gov, or by request using the addresses or telephone 

numbers above.

Regulatory Matters

Regulatory Flexibility Act

    This proposed rule will not have a significant economic effect on a 
substantial number of small entities as defined under the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq. Indian tribes are not considered 
to be small entities for the purposes of the Regulatory Flexibility 
Act.

Small Business Regulatory Enforcement Fairness Act

    It is likely that the proposed rule is a major rule under 5 U.S.C. 
804.2, the Small Business Regulatory Enforcement Fairness Act. The NIGC 
has commissioned an economic impact study of this proposed rule as well 
as a proposed rule for Technical Standards taken together. The study 
makes clear that the cost to the Indian gaming industry of complying 
with the two proposed rules will have an annual effect on the economy 
of $100 million or more, at least for the first 5 years after adoption. 
Accordingly, the Commission treats the proposed rule as a major rule.

Paperwork Reduction Act

    This proposed rule requires information collection under the 
Paperwork Reduction Act of 1995, 44 U.S.C. 3501, et seq., and is 
subject to review by the Office of Management and Budget. The title, 
description, and respondent categories are discussed below, together 
with an estimate of the annual information collection burden.
    With respect to the following collection of information, the 
Commission invites comments on: (1) Whether the proposed collection of 
information is necessary for proper performance of its functions, 
including whether the information would have practical utility; (2) the 
accuracy of the Commission's estimate of the burden of the proposed 
collection of information, including the validity of the methodology 
and assumptions used; (3) ways to enhance the quality, utility, and 
clarity of the information to be collected; and (4) ways to minimize 
the burden of the collection of information on respondents, including 
the use of automated collection techniques, when appropriate, and other 
forms of information technology.
    Title: Process for Certification of games and ``electronic, 
computer, and other technologic aids'' as meeting the Classification 
Standards, proposed 25 CFR 546.11.
    Summary of information and description of need: This provision in 
the proposed rule establishes a process for assuring that bingo, lotto, 
other games similar to bingo, pull tabs, and instant bingo, played 
through or using electronic aids, are in fact Class II before their 
placement on the casino floor in a Class II operation.
    This process requires a tribe's gaming regulatory authority to 
require that all such games or aids, or modifications of such games or 
aids, be submitted to a qualified, independent testing laboratory for 
review and analysis. That submission includes a working prototype of 
the game or aid and pertinent software, all with functions and 
components completely documented and described. In turn, the laboratory 
will certify that the game or aids do or do not meet the requirements 
of the proposed rule, and any additional requirements adopted by the 
tribe's gaming regulatory authority, for a Class II game. The 
laboratory will provide a written certification and report of its 
analysis and conclusions, both to the tribal gaming regulatory 
authority for its approval or disapproval of the game or aid, and to 
the Commission for its review. In the circumstance that a laboratory 
has misinterpreted the applicable regulations, the NIGC Chairman may 
object to a certifying laboratory report and require its withdrawal. 
This action may be reviewed by the full Commission on appeal from a 
tribe or manufacturer submitting the game for its certification. A 
Commission decision upholding the Chairman's objection will constitute 
a ``final agency action'' that may be appealed to federal court.
    This process is necessary because the distinction between an 
electronic ``aid'' to a Class II game and an ``electronic facsimile'' 
of a game of chance, and therefore a Class III game, is often unclear. 
With advances in technology, the line between the two has blurred. The 
Commission is concerned that the industry is dangerously close to 
obscuring the line between Class II and Class III and believes that the 
future success of Indian gaming under IGRA depends upon tribes, states, 
and manufacturers being able to recognize which games fall within the 
realm of tribal-state compacts and which do not. The information 
collection requirements are an essential component of the process. 
Laboratories cannot conduct meaningful evaluation and analyses of games 
without documentation from the manufacturers. Tribes cannot make 
meaningful classification determinations without reports from the 
laboratories. The Commission cannot meaningfully review the process 
and, if necessary, object to a laboratory's findings, without reports.
    Respondents: The respondents are developers and manufacturers of 
Class II games and independent testing laboratories. The Commission 
estimates that there are approximately 226 gaming tribes, 20 
manufacturers and developers and five laboratories. The frequency of 
responses to the information collection requirement will vary.
    Existing Class II games do not have to comply with this regulation 
for five years. After five years all existing games or aids in Class II 
operations that have not been classified and come within this rule must 
be submitted and reviewed if they are to continue in Class II 
operations. The useful life of such machines generally ranges between 
two to five years. Therefore, due to the five year grandfather 
provision, the Commission expects the implementation of these 
regulations to occur only as new Class II machines are developed and 
older machines replaced. The Commission expects that very few of the 
existing machines will be submitted to laboratories under these 
regulations. Consequently, the frequency of responses will be a 
function of the Class II market and the need or desire for new games or 
aids.
    All new Class II machines and platforms must go through this 
classification process. The Commission estimates a 20% turnover in 
machine games in most operations and that there are approximately 25 
Class II gaming systems presently in use. Consequently, there should be 
one to five new submissions each year with three to ten modifications. 
The Commission also estimates that the frequency of responses will be 
infrequent and occasional submissions during periods when there are a 
few games, aids, or modifications brought to market, punctuated by 
fairly steady periods of submissions when new games and aids are 
introduced. In any event, the Commission estimates that submissions 
will number approximately four to 15 in total.

[[Page 60489]]

    Modifications will not require the same level of employee hours to 
submit and review. The amount of documentation or size of a laboratory 
certification and report is a function of the complexity of the game, 
equipment, or software submitted for review. Minor modifications of 
software or hardware that a manufacturer has already submitted and that 
a laboratory has previously examined are a matter of little time both 
for manufacturer and laboratory, while the submission and review of an 
entirely new game platform can be more time consuming. Unless a tribe 
imposes additional standards, we expect that tribes will rely on 
classifications performed or requested by other tribes. This latter 
fact is borne out by tribes' present reliance on NIGC classification 
opinions.
    Information Collection Burden: The preparation and submission of 
documentation supporting submissions by developers and manufacturers 
(as opposed to the game or aid hardware and software per se) is an 
information collection burden under the Paperwork Reduction Act, as is 
the preparation of certifications and reports of analyses by the test 
laboratories. The amount of documentation or size of a laboratory 
certification and report is a function of the complexity of the game, 
equipment, or software submitted for review. Minor modifications of 
software or hardware that a manufacturer has already submitted and that 
a laboratory has previously examined are a matter of little time both 
for manufacturer and laboratory, while the submission and review of an 
entirely new game platform can be quite time consuming.
    The practice of submission and review set out in the proposed rule, 
however, is not new. It is already part of the regulatory requirements 
in tribal, state, and provincial gaming jurisdictions throughout North 
America and the world. Manufacturers already have significant 
compliance personnel and infrastructure in place, and the very 
existence of private, independent laboratories is due to these 
requirements.
    Accordingly, the Commission estimates that gathering and preparing 
documentation for a single submission requires, on average, eight hours 
of an employee's time for a requesting party and that following 
examination and analysis, writing a report and certification requires, 
on average, 10 hours of an employee's time for a laboratory. 
Modifications will take approximately half that time. Based on one to 
five new submissions each year and three to 10 modifications, the 
Commission estimates that the information collection requirements in 
the proposed rule will be a 20 to 80 hour burden on requesting parties. 
The Commission estimates that the information collection requirements 
in the proposed rule will be a 50 to 100 hour burden on laboratories.
    We estimate that the cost to requesting parties is approximately 
$50 per hour and to laboratories $100 per hour. Based on these 
estimates requesting parties would pay in total an estimated $1000 to 
$4000. The total estimate for laboratory costs would range from $5000 
to $10,000 per year.
    Comments: Pursuant to the Paperwork Reduction Act, 44 U.S.C. 
3507(d), the Commission has submitted a copy of this proposed rule to 
OMB for its review and approval of this information collection. 
Interested persons are requested to send comments regarding the burden, 
estimates, or any other aspect of the information collection, including 
suggestions for reducing the burden (1) directly to the Office of 
Information and Regulatory Affairs, OMB, Attention: Desk Officer for 
National Indian Gaming Commission, 725 17th St., NW., Washington DC, 
20503, and (2) to Penny J. Coleman, Acting General Counsel, National 
Indian Gaming Commission, 1441 L. Street, NW., Washington DC 20005. 
Comments must be provided by November 23, 2007.

Unfunded Mandates Reform Act

    The Commission, as an independent regulatory agency within the 
Department of the Interior, is exempt from compliance with the Unfunded 
Mandates Reform Act. 2 U.S.C. 1502(1); 2 U.S.C. 658(1).

Takings

    In accordance with Executive Order 12630, the Commission has 
determined that this proposed rule does not have significant takings 
implications. A takings implication assessment is not required.

Civil Justice Reform

    In accordance with Executive Order 12988, the Office of General 
Counsel has determined that the proposed rule does not unduly burden 
the judicial system and meets the requirements of sections 3(a) and 
3(b)(2) of the Order.

List of Subjects in 25 CFR Parts 502 and 546

    Gambling, Indian lands, Indian tribal government, Reporting and 
recordkeeping requirements.
    Accordingly, for the reasons described in the preamble, the 
Commission proposes to amend its regulations in 25 CFR 502 and add a 
new Part 546 as follows:

PART 502--DEFINITIONS OF THIS CHAPTER

    1. The authority citation for this for part 502 continues to read 
as follows:

    Authority: 25 U.S.C. 2701 et seq.

    2. Revise Sec.  502.9 to read as follows:


Sec.  502.9  Other games similar to bingo.

    Other games similar to bingo means any game played in the same 
location as bingo (as defined in 25 U.S.C. 2703(7) (A) (i)) that 
constitutes a variant on the game of bingo, provided that such game 
requires players to compete against each other for a common prize or 
prizes.
    3. Add a new part 546 to read as follows:

PART 546--CLASSIFICATION STANDARDS FOR BINGO, LOTTO, OTHER GAMES 
SIMILAR TO BINGO, PULL-TABS AND INSTANT BINGO AS CLASS II GAMING 
WHEN PLAYED THROUGH AN ELECTRONIC MEDIUM USING ELECTRONIC, 
COMPUTER, OR OTHER TECHNOLOGIC AIDS

Sec.
546.1 What is the purpose of this part?
546.2 What is the scope of this part?
546.3 What are the definitions for this part?
546.4 What are the criteria for meeting the first statutory 
requirement that the game of bingo, lotto, or other games similar to 
bingo be played for prizes, including monetary prizes, with cards 
bearing numbers or other designations?
546.5 What are the criteria for meeting the second statutory 
requirement that bingo, lotto, or other games similar to bingo be 
games in which the holder of the card covers such numbers or other 
designations when objects similarly numbered or designated are drawn 
or electronically determined?
546.6 What are the criteria for meeting the third statutory 
requirement that bingo, lotto, or other games similar to bingo be 
won by the first person covering a previously designated arrangement 
of numbers or designations on such cards?
546.7 What are the criteria for meeting the statutory requirement 
that Class II pull-tabs or instant bingo not be electronic or 
electromechanical facsimiles?
546.8 What is the process for approval, introduction, and 
verification of electronic, computer, or other technologic aids 
under the classification standards established by this part?
546.9 What are the steps for a compliance program administered by a 
tribal gaming regulatory authority to ensure that electronic, 
computer, or other technologic aids in play in tribal gaming 
facilities meet the Class II certification requirements?
546.10 When must a tribe comply with this part?

[[Page 60490]]

546.11 What is the effect on this part if a section is declared 
invalid?

     Authority: 25 U.S.C. 2701 et seq.


Sec.  546.1  What is the purpose of this part?

    This part clarifies the terms Congress used to define Class II 
gaming under the Indian Gaming Regulatory Act, 25 U.S.C. 2701, et seq. 
(``IGRA'' or ``Act''). Specifically, this part explains the criteria 
for determining whether a game of bingo or lotto, another game similar 
to bingo, or a game of pull-tabs or instant bingo, meets the statutory 
requirements when these games are played primarily through an 
electronic, computer or other technologic aid. This part also 
establishes a process for establishing Class II certification of 
electronic, computer, or other technologic aids and the games they 
facilitate. These standards for classification are intended to ensure 
that Class II gaming using electronic, computer, or other technologic 
aids can be distinguished from Class III electronic or 
electromechanical facsimiles. If the technologic aid meets the 
requirements of this part, then the fundamental characteristics of the 
game have not been incorporated and the aid is not an electronic or 
electromechanical facsimile.


Sec.  546.2  What is the scope of this part?

    This part is intended to address only games played solely with 
electronic, computer, or other technologic aids as defined in part 
502.7 of this chapter.


Sec.  546.3  What are the definitions for this part?

    (a) What is a game of bingo or other game similar to bingo? A game 
of the game of chance commonly known as bingo or another game similar 
to bingo consists of the random draw or electronic determination and 
release or announcement of numbers or other designations necessary to 
form the pre-designated game-winning pattern on a card held by the 
winning player and the participation of competing players to cover 
(daub) the numbers or other designations which appear on their card(s) 
when the selected numbers or other designations are released for play. 
A game ends when a participating player(s) claims the win after 
obtaining and covering (daubing) the pre-designated game-winning 
pattern and consolation prizes, if any, are awarded in the game.
    (b) What is lotto? The term lotto means a game of chance played in 
the same manner as the game of chance commonly known as bingo.
    (c) What is a bonus prize in the game commonly known as bingo or 
other game similar to bingo? A bonus prize is a prize awarded in a game 
in addition to the game-winning prize. The prize may be based on 
different pre-designated and pre-announced patterns from the game-
winning pattern, may be based on achieving a winning pattern in a 
specified quantity of numbers or designations drawn or electronically 
determined and released, or a combination of these conditions. A bonus 
prize may be awarded as an interim prize while players are competing 
for the game-winning prize or as a consolation prize after a player has 
won the game-winning prize.
    (d) What is a progressive prize in the game commonly known as 
bingo? A progressive prize is an established prize for a game, funded 
by a percentage of each player's purchase or wager, that is awarded to 
a player for obtaining a specified pre-designated and pre-announced 
pattern within a specified quantity of numbers or designations randomly 
drawn and released or electronically determined, or randomly drawn and 
released or electronically determined in a specified sequence. If the 
progressive prize is not won in a particular game, the prize must be 
rolled over to each subsequent game until it is won. The progressive 
prize is thus increased from one game to the next based on player buy-
in or wager contributions from each qualifying game played in which the 
prize is not won. All contributions to the progressive prize must be 
awarded to the players. A winning pattern for a progressive prize is 
not necessarily the same as the game-winning prize pattern.
    (e) What does it mean to sleep in the game of bingo or another game 
similar to bingo? To sleep or to sleep a bingo means that a player 
fails, within the time allowed by the game:
    (1) To cover (daub) the previously released numbers or other 
designations on that player's card(s) constituting a game-winning 
pattern or other pre-designated winning pattern; and
    (2) To claim any prize to which the player is entitled, having 
covered (daubed) a previously designated winning pattern, thereby 
resulting in the forfeiture of the prize to which the player would 
otherwise be entitled.
    (f) What is the game of pull-tabs? In the game of pull-tabs, 
players purchase cards from a set of cards known as the deal. Each deal 
contains a finite number of pull-tab cards that includes a pre-
determined number of winning cards. Each individual pull-tab within a 
deal is a paper or other tangible card with hidden or covered symbols. 
When those symbols are revealed, there is an arrangement of numbers or 
symbols indicating whether the player has won a prize. Winning cards 
with pre-established prizes are randomly spaced within the pre-arranged 
deal. One deal consists of all of the pull-tabs in a given game that 
could be purchased.
    (g) What is an electronic pull-tab? An electronic pull-tab is an 
electronic facsimile of a pull-tab that is displayed on a video screen.
    (h) What is instant bingo? In instant bingo, a player purchases a 
card containing a pre-selected group of numbers or designations; the 
winning cards are those in which the pre-selected group of numbers or 
designations on the card matches the preprinted winning arrangement 
indicated elsewhere on the card. The game is functionally the same as 
pull-tabs.


Sec.  546.4  What are the criteria for meeting the first statutory 
requirement that the game of bingo, lotto, or other games similar to 
bingo be played for prizes, including monetary prizes, with cards 
bearing numbers or other designations?

    (a) Each player in the game must play with one or more cards. Each 
player in the game must obtain the card or cards to be used by that 
player in the game before numbers or other designations for the game 
are randomly drawn or electronically determined. Players cannot change 
cards once play of a particular bingo game has commenced. Electronic 
cards are permissible.
    (b) Electronic cards in use by a player must be displayed 
prominently and must be clearly visible to that player during game 
play. If multiple electronic cards are used by a player, the game must 
offer the player the capability of seeing each one of his or her cards. 
At the conclusion of the game, each player must see his or her card 
with the highest value prize or, if no prize was won, the card closest 
to a bingo win. At no time shall an electronic card measure less than 
two inches by two inches or four square inches if other than a square 
card is used.
    (c) For a game of bingo, each card must contain a five by five grid 
of spaces. Each space will contain a unique number or other designation 
which may not appear twice on the same card. The card may contain one 
free space without a specified number or other designation, provided 
the free space is in the same location on every card in play or 
available to be played in the game.
    (d) Each game shall prominently display the following message: 
``THIS IS A GAME OF BINGO'' or ``THIS IS A GAME SIMILAR TO BINGO.''
    (e) As a variant of bingo, in another game similar to bingo, each 
card must

[[Page 60491]]

contain at least three equally sized spaces. Each space will contain a 
unique number or other designation which may not appear twice on the 
same card. One space may be designated a free space provided the card 
has at least three other spaces.
    (f) When a number or other designation is covered, the covering 
must be indicated on the card by a change in the color of the space, a 
strike-out through the space, or some other readily apparent visual 
means.
    (g) All prizes in the game, except for progressive prizes, must be 
fixed in amount or established by formula and disclosed to all 
participating players in the game. Random or unpredictable prizes are 
not permitted.
    (h) Each game must have a winning player and a game-winning prize 
must be awarded in every game. The pattern designated as the game-
winning pattern does not need to pay the highest prize available in the 
game. A game-winning prize may be less than the amount wagered, 
provided that the prize is no less than one cent.
    (i) Other patterns may be designated for the award of bonus prizes 
in addition to the prize to be awarded based on the game-winning 
pattern. Each such designated pattern or arrangement must also be 
disclosed to the players upon request before the game begins.
    (j) The designated winning patterns and the prizes available must 
be explained in the rules of the game, which must be made available to 
the players upon request.
    (k) A bonus prize in a game that is designated as an interim prize 
must be awarded in a random draw or electronic determination and 
release of numbers or other designations that is no more than the exact 
quantity of numbers or designations that are needed for the game-
winning player to achieve the game-winning pattern.
    (l) A bonus prize in a game that is designated as a consolation 
prize may be awarded after the game-winning pattern is achieved and 
claimed by a player but only after a subsequent release of randomly 
drawn or electronically determined numbers or other designations has 
been made.
    (m) A progressive prize may be awarded only if the game also 
provides a game-winning prize as described elsewhere in this part.
    (n) All prizes in a game, including progressive prizes, must be 
awarded based on the outcome of the game of bingo and may not be based 
on events outside the selection and covering of numbers or other 
designations used to determine the winner in the game and the action of 
the competing players to cover the pre-designated winning patterns. The 
prize structure must not rely on an additional element of chance other 
than the play of bingo.
    (o) Bingo and other games similar to bingo may offer an alternative 
display of the results of the game in addition to the display of the 
game results on the electronic bingo card, provided that the player has 
the option to disable the alternative display and play using only the 
electronic card display. An alternative display may include game theme 
graphics, spinning reels, or other imagery. The results may also be 
displayed on mechanical reels.


Sec.  546.5  What are the criteria for meeting the second statutory 
requirement that bingo, lotto, or other games similar to bingo be one 
in which the holder of the card covers such numbers or other 
designations when objects similarly numbered or designated are drawn or 
electronically determined?

    (a) In a game of bingo, the numbers or other designations used in 
the game must be randomly drawn or determined electronically from a 
non-replaceable pool containing 75 such numbers or other designations 
and used in the sequence in which they are drawn. Each game will permit 
the random draw and release or electronic determination of all numbers 
or designations in the pool. A common draw or electronic determination 
of numbers or designations may be utilized for separate games that are 
played simultaneously.
    (b) As a variant of bingo, in another game similar to bingo, the 
numbers or other designations used in the game must be randomly drawn 
or determined electronically from a non-replaceable pool of such 
numbers or other designations greater in number than the number of 
spaces on the card used in the game.
    (c) All numbers or other designations used in the game must be 
randomly drawn or electronically determined after the cards to be used 
in the game have been assigned to or selected by the players in the 
game. The cards cannot have pre-covered numbers or other designations.
    (d) The numbers or other designations randomly drawn or 
electronically determined must be used in real time and not stored for 
later use. The numbers or other designations must be used in the 
sequence in which they are drawn.
    (e) To cover (daub), a player in a game must take overt action 
after numbers or designations are released by touching the screen or a 
designated button. A player must cover (daub) at least one time after a 
set of numbers or other designations are released. The overt action of 
covering (daubing) may be done simultaneously with claiming.
    (f) Each released number or designation does not have to be covered 
(daubed) individually by the player, i.e., the player need not touch 
each specific space on the electronic bingo card where the called 
number or designation is located. However, the player must have the 
opportunity to cover (daub) by touching the screen or a designated 
button at least one time when those numbers or other designations are 
released, if those numbers or other designations appear on the player's 
card. Following this action by a player, the video screen at that 
player interface will display a different color on the number or 
designation on that player's card, a strike-out through the space, or 
some other readily apparent visible characteristic if that number or 
designation has been properly covered (daubed) by the player. Players 
must be notified that they should cover (daub) their cards and claim 
their prize when the numbers or designations are revealed.
    (g) Games may not include a feature whereby covering (daubing) 
after a release occurs automatically or without overt action taken by 
the player following the release.
    (h) All players in a game, and not just a winning player, must be 
required by the rules of the game to cover (daub) the selected numbers 
or other designations that appear on their card when those numbers or 
other designations are released as an indication of their participation 
in a common game.
    (i) Players must cover (daub) after numbers or designations are 
released in order to achieve any winning pattern. In the event of 
multiple releases of numbers, a player may later cover (daub) numbers 
or designations slept following a previous release (catch up) for use 
in obtaining the game-winning pattern. Failure to cover (daub) after 
each release results in the player forfeiting use of those numbers or 
other designations in any other pattern in the game. For bonus prizes 
and progressive prizes, if a player fails to cover (daub) one or more 
numbers or other designations, that player cannot be awarded such prize 
based on a winning pattern which contains one or more of the numbers or 
other designations not covered (daubed) by the player. For game-winning 
prizes, if a player fails to cover the player may later cover (daub) 
the number(s) or other designations and win such prize if that player 
is the first player to cover all other numbers or

[[Page 60492]]

designations making up the game-winning pattern and claim the prize.
    (j) If a player sleeps the game-winning pattern, the game must 
continue until a player subsequently obtains and covers (daubs) and 
claims the game-winning pattern.
    (k) All numbers or other designations not covered (daubed) by a 
player must be clearly and uniquely identified as such by displaying 
them in a unique color, by drawing a strikeout through them, or by 
other readily visible means. A player who sleeps a winning pattern or a 
pattern yielding bonus or progressive prizes must be notified by 
visible message on the video screen that the pattern was slept.
    (l) After all available numbers or designations that could lead to 
a game-winning prize have been randomly drawn or electronically 
determined and released (i.e. no more objects could be drawn that would 
assist in the formation of a game-winning prize), the game may allow an 
unlimited length of time to complete the last required cover (daub) and 
claim of the prize, or it may be declared void and wagers returned to 
players and prizes canceled.
    (m) The gaming operation or its employees may not play as a 
substitute for a player.


Sec.  546.6  What are the criteria for meeting the third statutory 
requirement that bingo, lotto, or other games similar to bingo be won 
by the first person covering a previously designated arrangement of 
numbers or designations on such cards?

    (a) Because the game must be won by the first person, each game 
must be played by multiple players. Players in an electronic game must 
be linked through a networked system. The system must require a minimum 
of two players for each game, but not limit participation to two 
players, and must be designed to broaden participation in each common 
game by providing reasonable and sufficient opportunity for at least 
six players to enter the game. Games cannot begin until two seconds 
have elapsed from the time that the first player elects to play, unless 
six players enter. Nothing in this section is intended to limit games 
to six players.
    (b) To establish the game as a contest in which players play 
against one another, the game must provide for one or more releases of 
selected numbers or other designations. Each release will provide one 
or more numbers or other designations randomly selected or 
electronically determined. The game may end after the first release or 
after subsequent releases, when the game-winning pattern is covered 
(daubed) and claimed. After the game-winning pattern is covered and 
claimed, there may be additional releases of randomly drawn or 
electronically determined numbers or other designations for a 
consolation prize(s).
    (c) Each game must have one game-winning pattern or arrangement, 
which must be common to all players and may be won by multiple players 
simultaneously. Each game-winning pattern or arrangement must consist 
of at least three spaces, not counting any free spaces used. The game-
winning pattern or arrangement must be available to players before the 
game begins.
    (d) Other patterns or arrangements consisting of at least two 
spaces each, not counting free spaces, may be used for the award of 
bonus or progressive prizes, if the patterns or arrangements are 
designated and made available to players before the game begins.
    (e) Events outside the play of bingo may not be used to determine 
the eligibility for a prize award or the value of a prize.
    (f) The set of selected numbers or other designations in the first 
release may contain all of the numbers or other designations necessary 
to form the game-winning pattern on a card in play in the game. The set 
may contain the numbers or other designations necessary to form other 
winning patterns for bonus or progressive prizes. The quantity of 
numbers or designations in the second or subsequent releases may not 
extend beyond the quantity of numbers or other designations necessary 
to form the first available eligible game-winning pattern on a card in 
play in the game. There may be additional releases to allow for 
additional bonus prizes.
    (g) Prizes can be claimed simultaneously when a player covers 
(daubs) to end the game.
    (h) Bonus or progressive prizes may be awarded based on pre-
designated patterns provided that the award of these prizes is based on 
the play of bingo in the same manner as for the game-winning prize. 
Bonus or progressive prizes may be based on different pre-designated 
and pre-announced patterns, on achieving a winning pattern in a 
specified quantity of numbers or other designations drawn or 
electronically determined and released, on the order in which numbers 
or other designations are drawn or electronically determined and 
released, or on a combination of these criteria. Bonus or progressive 
prizes may be awarded as interim prizes, before or as the game-winning 
prize is awarded, or as consolation prizes after the game-winning prize 
is awarded.
    (i) In order for players to participate in a common game, the 
probability of achieving the game-winning prize pattern or progressive 
prize pattern, if any, may not vary.
    (j) Prizes in a common game may be increased, or progressive prizes 
offered, based upon different entry wagers.
    (k) The use of a pay table is permitted. The order of, or quantity 
of, numbers or other designations randomly drawn or electronically 
determined may affect the prize awarded for completing any pre-
designated winning pattern in a game. A multiplier to the prize based 
on a winning pattern containing a specified number or other designation 
is permitted.
    (l) A game-winning prize must be awarded in every game. If the 
first player or a subsequent player obtaining the pre-designated game-
winning prize pattern sleeps that pattern, the game must continue until 
a player achieves the game-winning pattern. The same value prize must 
be awarded to a subsequent game-winning player in the game.
    (m) Alternative result display options may only be utilized for 
entertainment or amusement purposes and may not be used independently 
to determine a winner of the game or the prizes awarded or change the 
results of the bingo game in any way.
    (n) An ante-up format, in which a player is required to wager 
before each release as a condition of remaining in the game, is 
permissible, provided the game maintains at least two participating 
players. If only one player remains after one or more releases, that 
player will be declared the winner of the game-winning prize, and the 
game will end, provided that player obtains, covers (daubs), and claims 
the game-winning pattern. If all players leave the game before a game-
winning pattern is obtained, covered (daubed), and claimed by a player, 
the game will be declared void and wagers returned to players.


Sec.  546.7  What are the criteria for meeting the statutory 
requirement that pull-tabs or instant bingo not be an electronic or 
electromechanical facsimile?

    (a) Every pull-tab card or instant bingo ticket must exist in a 
tangible medium such as paper. Hereafter, the term pull-tabs also 
includes the term instant bingo. A pre-printed pull-tab must be 
distributed to the player as paper, plastic, or other tangible medium 
at the time the pull-tab is purchased. The pull-tab presented to the 
player must contain the information necessary for the player to 
determine if that player has won a prize in the game. The

[[Page 60493]]

information must be presented to the player in a readable format.
    (b) A pull-tab card may contain more than one arrangement of 
numbers or symbols, but each arrangement must comport with the 
requirements of this section. The player must pay for all of the 
arrangements on that pull-tab card in advance of dispensing it.
    (c) Pull-tabs that exist in a tangible medium may also be sold to 
players with assistance of a technologic aid that assists in the sale. 
The technologic aid may also read and display the contents of the pull-
tab as it is distributed to the player. The results of the pull-tab may 
be shown on a video screen that is part of or adjacent to the 
technologic aid assisting in the sale of the pull-tab.
    (d) The player may also purchase a pull-tab from a person or from a 
vending unit and place the pull-tab in a separate technologic aid that 
reads and displays the contents of the pull-tab.
    (e) If pull-tabs contain multiple arrangements of numbers or 
symbols, the rules for game play must indicate the disposition of a 
pull-tab in a technologic aid that is only partially played, i.e. all 
arrangements have not been viewed in the technologic aid.
    (f) A technologic aid may also show pull-tab results on a video 
screen using alternative displays, including game-theme graphics, 
spinning reels, or other imagery. The results may also be displayed on 
mechanical reels. Options for players found in this alternative display 
may not determine a winner of the game or the prizes awarded or change 
the results of the pull-tab game in any way.
    (g) If the pull-tab is a winning card, it must be redeemable for a 
prize when presented at the location in the gaming facility designated 
by the gaming operator.
    (h) A pull-tab may not be generated or printed at the player 
station.
    (i) For technologic aids that are larger than the pull-tab, the 
machine shall prominently display the following message: ``THIS IS THE 
GAME OF PULL-TABS.''
    (j) The results on the pull-tab shall be no smaller than an eight 
point font.
    (k) A pull-tab game is an electronic facsimile if the pull-tab does 
not exist in paper, plastic, or other tangible medium at the point of 
sale and is displayed only electronically.
    (l) Pull-tabs that exist in a tangible medium but that are 
electronically or optically read and transformed into an electronic 
medium and made available to the player only as depictions on a video 
screen (and not presented directly to the player in the tangible 
medium) are electronic facsimiles.


Sec.  546.8  What is the process for approval, introduction, and 
verification of electronic, computer, or other technologic aids under 
the classification standards established by this part?

    (a) An Indian tribe or a supplier, manufacturer, or game developer 
sponsored by a tribe (hereafter, the ``requesting party'') wishing to 
have games and associated electronic, computer, or other technologic 
aids certified as meeting the classification standards established by 
this part must submit the games and equipment to a testing laboratory 
recognized by the tribal gaming regulatory authority under this part. 
The requesting party must support the submission with materials and 
software sufficient to establish that the game and equipment meets 
classification standards, any other applicable regulations of the 
Commission, and provide any other information requested by the testing 
laboratory.
    (b) For an electronic, computer, or other technologic aid to be 
certified as meeting the classification standards under this part, the 
tribe shall require the following:
    (1) The testing laboratory will evaluate and test the submission to 
the standards established by this part and any other applicable 
regulations of the Commission. Issues that concern an interpretation of 
the standards or the certification procedure identified during the 
evaluation or testing process, if any, will initially be discussed 
between the testing laboratory and the requesting party. In the event 
of impasse, the requesting party and the testing laboratory may jointly 
submit questions concerning the issue to the Chairman, who may decide 
the issue. Questions regarding additional tribal standards will be 
addressed to the appropriate tribal gaming regulatory authority.
    (2) At the completion of the evaluation and testing process, the 
testing laboratory will provide a formal written report to the 
requesting party setting forth its findings and conclusions. The 
testing laboratory will also forward a copy of its report to the 
Commission. The report may be made available upon request to any 
interested tribal gaming regulatory authority by the requesting party 
or by the testing laboratory. Each testing laboratory will maintain a 
detailed listing of the electronic, computer or other technologic aids 
it certifies.
    (3) Each report from a testing laboratory must state the name of 
the requesting party; the type of game evaluated; name(s) and 
version(s) of the game played with the electronic, computer, or other 
technologic aid being evaluated; all associated game themes under which 
the game will be played on the technologic aid being evaluated; 
findings regarding game features and manner of play; a checklist of the 
standards established by this part and any other applicable regulations 
of the Commission together with an indication of the results of testing 
and evaluation to each particular standard; and, a summary conclusion 
as to whether the gaming conducted with the aid meets the requirements 
of this part and any other applicable regulations of the Commission. A 
supplemental report addressing additional game themes or other non-play 
features may follow as necessary, and will contain a statement 
verifying that gaming conducted with the aid continues to meet the 
requirements of this part and any other applicable regulations of the 
Commission.
    (4) Each report will also include one or more unique signatures or 
checksum values for the operating programs used with the electronic, 
computer, or other technologic aid.
    (5) In certifying a game or an electronic, computer, or other 
technologic aid for Class II play, a requesting party or a tribe may 
not rely on a report from a testing laboratory owned or operated by 
that requesting party or that tribe.
    (c) The Commission will maintain a generalized listing of games and 
electronic, computer, or other technologic aids certified by recognized 
testing laboratories as meeting the classification standards 
established by this part and any other applicable regulations of the 
Commission. The Commission will make its listing available to the 
public. The Commission will only make available for public review 
records or portions of records subject to release under the Freedom of 
Information Act, 5 U.S.C. 552; the Privacy Act of 1974, 5 U.S.C. 552a; 
or the Indian Gaming Regulatory Act, 25 U.S.C. 2716(a).
    (d) Additional requirements established by a tribal gaming 
regulatory authority.
    (1) A tribal gaming regulatory authority may establish additional 
classification standards that extend and exceed the standards 
established by this part and any other applicable regulations of the 
Commission. It may require additional testing and certification to its 
own extended standards as a condition to operation of the game and 
associated electronic, computer, or other technologic aid in a gaming 
facility it regulates.
    (2) A tribal gaming regulatory authority may elect to provide its

[[Page 60494]]

extended testing standards to the testing laboratories and require 
additional tests and certification reports applicable to its own 
certification of a game or electronic, computer or other technologic 
aid. A requesting party wishing to meet the specific tribal 
requirements will submit additional supporting materials and 
documentation to the testing laboratory as may be necessary to meet the 
specific tribal requirements. A testing laboratory evaluating a game 
and associated equipment will include in its report to the requesting 
party information relevant to the specific additional tribal 
requirements and provide a copy of the report to that tribal gaming 
regulatory authority and the Commission.
    (e) Objections to a testing laboratory certification.
    (1) (i) Within 30 days of receipt of the certification, a tribe may 
object to the certification by submitting a notice of objection to the 
Chairman. The objection shall specify the reasons why the certification 
is erroneous and shall include supporting documentation, if any. If a 
tribe timely objects, the Chairman or his or her designee shall have 60 
days from receipt of the objection to concur with the tribe's 
objection. The Chairman or his or her designee will notify the testing 
laboratory, the requesting party and the sponsoring tribe of his 
concurrence or objection.
    (ii) If no objection is submitted by a tribe, the Chairman or his 
or her designee will review the certifications and accompanying reports 
received from testing laboratories and may object to any certification 
issued by a testing laboratory by notification to the testing 
laboratory, the requesting party, and the sponsoring tribe within 60 
days of receipt of the certification and report.
    (iii) If the Chairman receives no objection and does not object on 
his or her own, the requesting party or sponsoring tribe may assume the 
Chairman does not object to the certification. The Chairman may object 
to a testing laboratory certification subsequent to the 60-day period 
upon good cause shown. If the Chairman finds good cause to object to 
the certification subsequent to the 60-day period, he or she shall do 
so only after providing notice to the testing laboratory, the 
requesting party, and the sponsoring tribe and an opportunity for a 
hearing.
    (2) The Chairman or his or her designee will conduct additional 
discussions with the testing laboratory, the requesting party, and the 
sponsoring tribe on any game or electronic, computer, or other 
technologic aid to which the Chairman has objection and attempt to 
resolve the dispute within 30 days after receiving notice of the 
Chairman's objection. The Chairman and the requesting party and 
sponsoring tribe may agree to the appointment of a mediator or other 
third party to review the laboratory's certification and the Chairman's 
objection and provide a recommendation on the matter within this 30-day 
period. Following the discussions and receipt of the recommendation of 
the mediator or other third party, if any, the Chairman will decide the 
issue and inform the testing laboratory, the requesting party, and the 
sponsoring tribe of his or her determination.
    (3) Within 30 days after receiving notice of the Chairman's 
determination, the requesting party or the sponsoring tribe may appeal 
the Chairman's determination to the full Commission by providing 
written notice of appeal along with documents and other information in 
support of the appeal. The appeal will be decided by the Commission 
based on the record developed by the Chairman or his or her designee 
and on written submissions by the testing laboratory, the requesting 
party, and the sponsoring tribe, unless the Commission requests 
additional information. The appeal will not include a hearing under 
Part 577 of this chapter unless directed by the Commission.
    (4) If the requesting party or the sponsoring tribe does not appeal 
the Chairman's determination, or if the objection is upheld after 
review by the Commission following an appeal, the testing laboratory 
and the requesting party will notify any tribal gaming regulatory 
authority to which it has provided a certification and report on the 
game and associated equipment that the Chairman has objected to the 
certification and that the certification is no longer valid.
    (5) An objection by the Chairman or his or her designee, upheld 
after review by the Commission, will be a final agency action for 
purposes of suit by the requesting party under the Administrative 
Procedures Act.
    (f) Recognition of Testing Laboratories. (1) A testing laboratory 
may provide the examination, testing, evaluating and reporting 
functions required by this section provided that:
    (i) The testing laboratory demonstrates its integrity, independence 
and financial stability to the tribal gaming regulatory authority;
    (ii) The testing laboratory demonstrates its relevant technical 
skill and capability to the tribal gaming regulatory authority;
    (iii) The testing laboratory is not owned or operated by the tribe 
or tribal gaming regulatory authority; and
    (iv) The tribal gaming regulatory authority:
    (A) Makes a suitability determination of the testing laboratory 
based on requirements no less stringent than required by Sec.  
533.6(b)(1)(ii)--(v) and Sec.  533.6(c) of this chapter and based upon 
no less information than that required by Sec.  537.1 of this chapter, 
or
    (B) Accepts, in its discretion, a determination of suitability for 
the testing laboratory made by any other gaming regulatory jurisdiction 
in the United States.
    (v) After reviewing the information provided by the testing 
laboratory, the tribal gaming regulatory authority may, in its 
discretion, determine that the testing laboratory is qualified to 
perform testing and evaluation for games played using electronic, 
computer, or other technologic aids that are offered for use in Class 
II gaming.
    (2) The tribal gaming regulatory authority shall:
    (i) Maintain a record of all determinations made pursuant to 
paragraphs (f)(1)(iv) and (f)(1)(v) of this section for a minimum of 
three years and shall make the records available to the Commission upon 
request. The Commission will only make available for public review 
records or portions of records subject to release under the Freedom of 
Information Act, 5 U.S.C. 552; the Privacy Act of 1974, 5 U.S.C. 552a; 
or the Indian Gaming Regulatory Act, 25 U.S.C. 2716(a).
    (ii) Place the testing laboratory under a continuing obligation to 
notify it of any adverse regulatory action in any jurisdiction where 
the testing laboratory conducts business.
    (ii) Require the testing laboratory to provide notice of any 
material changes to the information provided to the tribal gaming 
regulatory authority.


Sec.  546.9  What are the steps for a compliance program administered 
by a tribal gaming regulatory authority to ensure that electronic, 
computer, or other technologic aids in play in tribal gaming facilities 
meet Class II certification requirements?

    (a) In regulating Class II gaming, a tribal gaming regulatory 
authority will institute a compliance program that ensures bingo, 
lotto, and other games similar to bingo and pull-tabs and instant bingo 
in use in its gaming facilities, which are operated and played with 
electronic, computer, or other technologic aids required to be 
certified by this part, meet the requirements of this part, any other

[[Page 60495]]

applicable regulations of the Commission, and any additional tribal 
standards adopted by the tribal gaming regulatory authority. The 
program must include the following elements:
    (1) Determination by the tribal gaming regulatory authority that 
electronic, computer, or other technologic aids, along with the games 
played thereon, required to be certified as meeting the standards 
established by this part, have been tested and certified by a 
laboratory recognized under Sec.  546.8(f) of this part as meeting all 
applicable Class II standards before the equipment is placed for use in 
the gaming operation.
    (2) Internal controls that prevent unauthorized access to game 
control software to preclude modifications that would cause the 
electronic, computer, or other technologic aid and the games played 
therewith to potentially fail to meet the required standards.
    (3) Periodic testing of all of the servers and a random sample of 
the electronic components and software to validate that the equipment 
and software continue to meet the required standards and are identical 
to that tested and certified by the testing laboratories.
    (b) In authorizing particular Class II gaming within a gaming 
facility it licenses, a tribal gaming regulatory authority shall, at a 
minimum, require a finding and certification by an independent gaming 
testing laboratory, recognized by the tribal gaming regulatory 
authority under this part, that each electronic, computer, or other 
technologic aid used in connection with such gaming meets the standards 
of this part. If the tribe's gaming regulatory authority has 
established classification standards that apply additional criteria, 
the tribe shall require additional findings consistent with the 
additional standards as a condition to authorizing a technologic aid 
for use and play in the gaming facilities it regulates.
    (c) The tribal gaming regulatory authority shall maintain a current 
listing of each electronic, computer, or other technologic aid 
including servers, player interfaces, and each game program it has 
authorized for play under the classification standards governed by this 
part, indicating that all such games meet the classification standards 
established by this part and any additional standards established by 
the tribe. The listing will show the asset identification number(s) of 
each electronic, computer, or other technologic aid including servers 
and player interfaces and the manufacturer's name; version number(s), 
game theme titles and other unique identifier(s), of the game operating 
software, for the games authorized for play as documented in a 
certification report(s) issued by a testing laboratory.


Sec.  546.10  When must a tribe comply with this part?

    (a) Tribes must comply with this part when placing Class II 
electronic, computer, or other technologic aids governed by this part 
in operation after [Insert 120 days after effective date].
    (b) Tribes using Class II technologic aids governed by this part on 
or before [Insert 120 days from the effective date], may continue to 
operate those electronic, computer or other technologic aids for a 
period of five years from the same date. During this period technologic 
aids may be sold, leased, or otherwise transferred to another tribe.
    (c) Individual hardware components of technologic aids governed by 
this part and in use on or before [Insert 120 days from effective date] 
may be repaired or replaced to ensure the proper functioning, security, 
or integrity of the game. All new software versions must be certified 
under this part except for changes made to ensure the proper 
functioning, security, or integrity of the game and changes that will 
not detract from the games overall compliance with the requirements of 
this part.
    (d) On or before [Insert 120 days from the effective date], each 
tribal gaming regulatory authority shall submit to the Commission the 
list required by Sec.  546.9(c) of this part.
    (e) Nothing in this section is intended to authorize the continued 
operation of uncompacted Class III machines that allow a player to play 
against the machine.


Sec.  546.11  What is the effect on this part if a section is declared 
invalid?

    If any provision of this part be declared invalid by a court of 
competent jurisdiction, such decision shall not affect the remainder of 
this part.


    Dated: October 17, 2007.
Philip N. Hogen,
Chairman.
Cloyce V. Choney,
Commissioner.
Norman H. DesRosiers,
Commissioner.
 [FR Doc. E7-20776 Filed 10-23-07; 8:45 am]

BILLING CODE 7565-01-P