Class II vs Class III Slot Machines: Why Some Tribal Slots Are Really Bingo

A Class II machine is legally a bingo game played among several players, with the spinning reels serving only as a display of the bingo result. A Class III machine is a true slot machine whose outcome is decided inside the machine. The difference comes from the Indian Gaming Regulatory Act of 1988 (IGRA), which lets a tribe offer bingo, including bingo played with electronic aids, without a compact with its state, while slot machines require one.

How federal law sorts tribal gaming into three classes

IGRA, codified at 25 U.S.C. § 2701 and following sections, divides all gaming on Indian lands into three classes in its definitions section, 25 U.S.C. § 2703. Which class a game falls into decides who regulates it and whether the state has any say.

Class I

Under § 2703(6), class I gaming means social games played solely for prizes of minimal value, or traditional forms of Indian gaming engaged in as part of, or in connection with, tribal ceremonies or celebrations. It is left to the tribes and plays no part in the slot question.

Class II

Section 2703(7)(A)(i) defines class II gaming as "the game of chance commonly known as bingo (whether or not electronic, computer, or other technologic aids are used in connection therewith)" that meets three conditions:

1. it is "played for prizes, including monetary prizes, with cards bearing numbers or other designations";
2. the holder of the card "covers such numbers or designations when objects, similarly numbered or designated, are drawn or electronically determined"; and
3. "the game is won by the first person covering a previously designated arrangement of numbers or designations on such cards."

The same paragraph adds pull-tabs, lotto, punch boards, tip jars, instant bingo "and other games similar to bingo" if played in the same location, and certain non-banked card games that state law allows.

Section 2703(7)(B) then sets out what class II does not include: banking card games such as baccarat, chemin de fer and blackjack, and "electronic or electromechanical facsimiles of any game of chance or slot machines of any kind."

Class III

Section 2703(8) defines class III gaming as "all forms of gaming that are not class I gaming or class II gaming." The National Indian Gaming Commission's (NIGC) definitions regulation, 25 CFR § 502.4, gives examples: house-banked card games, casino games such as roulette, craps and keno, "any slot machines as defined in 15 U.S.C. 1171(a)(1) and electronic or electromechanical facsimiles of any game of chance," sports betting and pari-mutuel wagering, and lotteries.

Where the line between an aid and a facsimile falls

The whole Class II slot business depends on two NIGC definitions in 25 CFR Part 502.

An electronic, computer or other technologic aid (25 CFR § 502.7) is a machine or device that assists a player or the playing of a game, is not an electronic or electromechanical facsimile, and is operated in accordance with federal communications law. The regulation says such aids include devices that "broaden the participation levels in a common game," facilitate communication between gaming sites, or "allow a player to play a game with or against other players rather than with or against a machine." Its examples include bingo blowers, electronic player stations and electronic cards for participants in bingo games.

An electronic or electromechanical facsimile (25 CFR § 502.8) is a game played in an electronic format "that replicates a game of chance by incorporating all of the characteristics of the game," except that for bingo, lotto and games similar to bingo, an electronic format that "broadens participation by allowing multiple players to play with or against each other rather than with or against a machine" is not a facsimile.

Read together, these rules give the test. A device on which one player plays against the machine is a facsimile and therefore Class III. A device that links players into a common bingo game, in which they compete with each other for a prize, is a technologic aid and stays in Class II. The reels, the sounds and the bonus animations do not change the class; what matters is where the result comes from.

Why tribes run Class II machines and who regulates each class

Class II needs no compact

Under 25 U.S.C. § 2710(b)(1), a tribe may conduct and regulate class II gaming on its lands if the gaming is located within a state that "permits such gaming for any purpose by any person, organization or entity" and the tribe's governing body adopts an ordinance approved by the NIGC Chairman. Where a state allows bingo in any form, such as charity bingo, that condition can be met. The state does not sign off, and class II is regulated by the tribe with NIGC oversight.

Class III is different. Under § 2710(d)(1), class III gaming is lawful on Indian lands only if it is authorized by an approved tribal ordinance, located in a state that permits such gaming, and "conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State" that is in effect. Without a compact, a tribe cannot lawfully offer Class III slot machines.

When the compact does not come

IGRA requires a state to negotiate a compact in good faith once a tribe asks and, as enacted, allowed the tribe to sue the state in federal court to enforce that duty. In Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996), the US Supreme Court held that Congress lacked the power under the Indian Commerce Clause to strip states of their Eleventh Amendment immunity from such suits. A state that declines to be sued can therefore stall compact negotiations, and a tribe facing that outcome has one machine-gaming option left that requires no state consent: Class II.

Class II machines can also operate in states where a tribe does have a compact, on the same floor as Class III machines. Because class II gaming does not depend on a compact under § 2710(b), how a particular compact treats those machines, if at all, depends on its own text rather than on federal law.

Technical standards for Class II systems

The NIGC's 25 CFR Part 547 sets minimum technical standards for Class II gaming systems and equipment. Its stated purpose, in § 547.1, is to govern the use of the "electronic, computer, or other technologic aids" that 25 U.S.C. § 2703(7)(A)(i) permits. Part 547 covers hardware, software, accounting meters, money handling, random number generation and game recall. Tribal gaming regulatory authorities apply these standards and may add stricter ones of their own.

Class III machines are not covered by Part 547. Their standards are set through the tribal-state compact and the tribe's own regulations.

How to tell the two apart on the floor, and what it means for each spin

The signs required by federal rules

The most reliable signal is a disclaimer that Part 547 requires. Under 25 CFR § 547.16(b), the player interface of a Class II game must continually display:

• "Malfunctions void all prizes and plays" or equivalent; and
• "Actual Prizes Determined by Bingo (or other applicable Class II game) Play. Other Displays for Entertainment Only" or equivalent.

A machine showing the second message is a Class II game. Many also display a small bingo card, sometimes in a corner of the screen, along with the numbers drawn and the pattern that was hit. The game recall rules in § 547.8(d) require the system to be able to show, for bingo games and games similar to bingo, the cards used, the bingo game identifier, the numbers drawn in order, and the patterns and prizes won for the current game and the previous four.

Section 547.16(c) adds an odds notice: if the odds of winning any advertised top prize exceed 100 million to one, the player interface must say so.

A machine with no such disclaimer and no bingo display is most likely a Class III slot machine operating under a compact. When in doubt, the game's help screens must show the game name, rules and prize schedule under § 547.16(a) if it is a Class II game, and a request to floor staff or the tribal gaming regulatory authority can settle the question.

What the classification changes about the odds

On a Class III slot machine, the machine's random number generator decides each result in isolation, and the pay table maps that result to a prize. On a Class II machine, the prize is decided by a bingo game. Each player's device buys a card in a game that links several players; numbers are drawn electronically; the first card to cover a designated pattern wins, and the reel display is chosen to match the prize that bingo outcome produced. The reels are, in the words of the required disclaimer, "for entertainment only."

That structure has three consequences for a player.

First, the result depends partly on other players. Under § 2703(7)(A)(i), the game is won by "the first person covering a previously designated arrangement." Whether a given card wins a game-ending prize depends on which other cards are in the same game, so the odds of a particular spin are not a fixed property of one machine in the way a Class III machine's are.

Second, federal law sets no minimum payback for Class II. Part 547 sets technical standards for the systems but does not specify a minimum return percentage. Any payback requirement comes from tribal regulation or, where one exists, the compact. Players cannot assume that a state's commercial-casino payback floor applies to a Class II machine on tribal land.

Third, the displayed reels are not the odds. Because the reel outcome is chosen to illustrate a bingo prize, the frequency of symbols on screen tells a player nothing reliable about the frequency of prizes. The prize schedule that § 547.16(a) requires the game to display or make available is the source to check, because it must be sufficient for a player to determine whether each prize awarded is correct.

None of this makes a Class II machine better or worse for the player as a matter of law. It means the game is a different legal object from a slot machine, and the reels are a display of a bingo result rather than the source of it.