The $19 billion Indian gaming industry is due for some dramatic changes under legislation the Bush administration unveiled on Wednesday.

Tribes will be subject to stricter limits on the types of games they can operate if the changes go into effect. They also face harsher penalties if they offer gaming devices that don't fit into the new standards laid out by the proposal.

The effort is aimed at clarifying the difference between Class II games like bingo and the more lucrative Class III games like slot machines. Government officials say technology has blurred the lines between the two types of games.

The proposal indeed addresses some of the advances the industry has seen on the technology side. It requires players to "actively participate" in the game rather than let the machine do most of the work as happens in the play of a slot machine.

But the legislation goes deeper. If a gaming device resembles a slot machine or gives off the appearance of a slot machine in "depictions or graphics" it will be considered illegal unless it is operated under a tribal-state compact.

That will make it harder for tribes to fend off pressure from states. Under tribal-state compacts, states can restrict the use of Class III games and can take a share of the revenues from such games.

Class II games, on the other hand, fall under the control of the tribe and can be operated free of state interference. They are also used as leverage in negotiations with states for Class III compacts.

The proposal was first announced last month at the Global Gaming Expo in Las Vegas. On September 15, U.S. Attorney Tom Heffelfinger, from the Department of Justice, said it would clear up years of debate over the definition of Class II and Class III devices.

But attendees of the conference warned that the legislation would only lead to more problems. "They're going to offer a whole lot more opportunities for litigation," said DesRosiers, the head of the gaming commission for the Viejas Band of Kumeyaay Indians in California. "I see troubled waters there."

"The Justice Department's new initiative is an attempt to terminate a significant portion of economic prosperity for tribes engaging in Class II gaming and subject such gaming to state control, revenue sharing and machine limits," D. Michael McBride, an attorney from Oklahoma, said in an opinion published in The Native American Times on September 20. "Such a change in the law likely will have a significant economic impact on tribes, especially those in Oklahoma that rely on Class II gaming to support their governmental operations and community services."

The Department of Justice and the National Indian Gaming Commission have often been at odds over the difference between the two classes of games. DOJ took tribes to court over machines that the NIGC determined to be Class II.

DOJ ended up losing every single case, prompting the NIGC to draft new regulations that would address the classification of games. But DOJ objected to the NIGC's proposal, prompting a considerable delay in the process.

And when Heffelfinger announced the legislation last month, he labeled it a "criminal" DOJ proposal as NIGC officials sat in the audience as spectators.

"Well, they seem to kind of do things their own way at the Department of Justice," said Phil Hogen, the chairman of the NIGC, when asked about the announcement during a September 21 hearing before the Senate Indian Affairs Committee.

Hogen nonetheless said the NIGC had plenty of input. "We went to many, many negotiating sessions," he told the committee. He indicated, however, that he had yet to see the version that was released to the public this week.

Despite the splits, DOJ and NIGC officials say they are united on the legislation and will hold joint consultation meetings with tribes. The consultations haven't been scheduled but the two agencies plan to present the proposal at the National Congress of American Indians conference in Tulsa, Oklahoma, on November 1, and again at the National Indian Gaming Association's meeting in Ft. Lauderdale, Florida, on November 15.

The proposed amendments can be found at DOJ's Office of Tribal Justice website at http://www.usdoj.gov/otj/johnson.html. The documents are currently only available in WordPerfect format.

An HTML version, converted by Indianz.Com, can be found at http://www.indianz.com/News/2005/010649.asp.

Relevant Links:
National Indian Gaming Commission - http://www.nigc.gov
National Indian Gaming Association - http://www.indiangaming.org