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NIGC to revise controversial Class II proposal

The National Indian Gaming Commission won't be making drastic changes to the Class II industry after hearing complaints from tribes, the agency's chairman said last Friday.

Last year, the agency proposed new definitions and standards in hopes of drawing a greater distinction between Class II machines like bingo and Class II slot machines. But tribes nationwide said the rules would wreck their $23 billion industry.

So rather than proceed with the changes, NIGC Chairman Phil Hogen said his agency will start all over again. Another set of drafts are to be made public soon, although no timeline has been set.

"We remain committed to bringing consideration of these important issues to an early conclusion but as it is likely that our finished product would depart in several areas from that published in the Federal Register in 2006, we are withdrawing those earlier proposals," Hogen said.

This week, a notice in the Federal Register will announce the withdrawal of the definitions and classification standards that were initially published on May 25, 2006. The technical standards that were published on August 11, 2006, are also being withdrawn.

"We have received an impressive amount of productive and thoughtful comment on these critically important issues," Hogan added. "The commission has listened and carefully considered this input, concluding that it must take another look at the form and substance of the proposed regulations."

At hearings throughout Indian Country, tribes said the proposed changes would force them to remove certain electronic machines from their casinos. Some said they would lose revenues and have to layoff employees and even close some of their gaming facilities.

"We estimate an 80 percent loss of revenue at our facility in Atmore, and the potential loss of 500 jobs at our facilities in Montgomery should the rules go into effect," said Buford Roiin, the chairman of the Poarch Band of Creek Indians of Alabama, a tribe that depends entirely on Class II gaming. "Clearly, some of our facilities will be forced to close."

Backing the tribal complaints was an economic study commissioned by the NIGC. The Analysis Group concluded that the rules would have a "significant negative impact" on the tribes that operate Class II gaming.

The $23 billion tribal casino industry started off with Class II games like bingo and pull tabs. After the passage of the Indian Gaming Regulatory Act in 1988, tribes began to sign compacts with states to allow more lucrative Class III games like slot machines, blackjack and poker.

But tribes in certain states rely heavily on Class II gaming because Class III gaming is illegal or the governor refuses to negotiate a compact.

Even in states with compacts, however, tribes use Class II games to supplement their Class III offerings, particularly since several states place limits on the number of Class III games that tribes can operate.

Relevant Documents:
Economic Analysis Report | Classification Analysis Report

Relevant Links:
National Indian Gaming Commission -