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Tuesday, September 30, 2003

The Bush administration is asking the Supreme Court to step into a controversial area of the $14 billion Indian gaming industry.

In court papers filed this month, the Department of Justice said it would appeal two decisions favorable to tribal interests in Oklahoma, Nebraska and Wyoming. On September 15, Solicitor General Ted Olson sought, and received, extensions to submit formal petitions next month.

The cases affect casino game classification, an increasingly litigious segment of Indian gaming. Tribal, state and federal regulators are often at odds over what is considered legal in states where Class III games, such as slot machines, are not allowed.

Tribes in these states end up turning technologically advanced games that mimic the look and feel of slot machines yet are marketed as Class II games like bingo or pull tabs. Some casino companies cater exclusively to this market.

But the tribes run the risk of incurring fines or having their casinos shut down if the National Indian Gaming Commission (NIGC) says the machines are illegal unless operated pursuant to a tribal-state compact.

The Seneca-Cayuga Tribe and the Fort Sill Apache Tribe, both of Oklahoma, and the Northern Arapaho Tribe of Wyoming challenged NIGC's ruling on the "Magical Irish Instant Bingo Dispenser System." Federal officials threatened to prosecute the tribes if they offered the machine, saying it fell into Class III category of games.

But the 10th Circuit Court of Appeals said NIGC's determination was wrong. In an April 17 decision, a unanimous three-judge panel ruled the game is Class II.

The Santee Sioux Tribe of Nebraska was in a similar situation with the "Lucky Tab II" machine. In a March 20 decision, the 8th Circuit Court of Appeals ruled against NIGC and said the machine is Class II.

For the tribes, the stakes are high. The Santee Sioux Tribe was fined $4 million and its leaders were held in contempt of court because they had installed slot machines at their tiny casino. The tribe replaced the slots with Lucky Tab II machines and a reversal at the Supreme Court would deal another blow to a tribe whose bank accounts were once frozen in the dead of winter, forcing cancellation of services to tribal members.

Even though the Magical Irish game is no longer in play, tribes in Oklahoma have been under the watchful eye of NIGC chairman Phil Hogen, who has warned them repeatedly about offering other machines. Earlier this year, he settled a classification dispute with the Chickasaw Nation, which has the largest casino empire in the state, and a game manufacturer with close financial ties to Oklahoma tribes.

Although game classification is an area ripe for lawsuits, most of the cases have been resolved at the district court or appeals court. The Supreme Court has never ruled on the issue.

The Department of Justice has until October 23 to file petitions for writ of certiorari in U.S. v. Santee Sioux Tribe and Ashcroft v. Seneca-Cayuga Tribe. Only if the Supreme Court accepts the petition the would the cases be heard.

Lower Court Decisions:
U.S. v. Santee Sioux Tribe (March 20, 2003) | Seneca-Cayuga Tribe of Oklahoma v. National Indian Gaming Commission (April 17, 2003)

Relevant Links:
The Santee Sioux Tribe - http://www.santeedakota.org
National Indian Gaming Commission - http://www.nigc.gov

Related Stories:
NIGC resolves status of company's casino machine (09/24)
Hogen says Okla. tribes skirting federal gaming law (05/19)
Appeals court says game is legal Class II (04/21)
Appeals court upholds Santee casino games (3/20)
Casino company loses Indian gaming suit (09/11)
Santee Sioux leaders found in contempt of court (6/22)

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