Great businesses see “uncharted” as open ocean: a new and uncontrolled market space that creates new wealth.
Electronic Class 1 Gaming under IGRA
By Kilma S. Lattin
Is it possible the entire Indian gaming industry is using only two of its three allowable economic engines?
Since 1988, the Indian Gaming Regulatory Act (IGRA) has authorized three distinct classes of gambling on Indian lands. Yet, the entire industry has been built on just two gaming classes: Class 2 and Class 3, wholly dismissing Class 1 gambling as—tribal tradition. Surely the intent of IGRA wasn’t to freeze Native American tradition in 1988.
If American Indian gambling traditions were not terminated by IGRA in 1988, then electronic Class 1 gambling for real money has a home alongside the other two classes of gambling—using the most modern technology available. And the tribe that grasps that concept and runs with it shall be—sovereign.
In 2014, Holland & Knight (H&K) was commissioned to investigate whether electronic forms of traditional Class 1 Indian tribal games would pass legal muster as legitimate/traditional Class 1 gambling games under IGRA, for real money. Zehava Zevit led the investigation and analysis, supported by colleagues Jerry Levine and Gregory Baldwin. The investigation focused on multiplayer versions of electronic Class 1 gambling games, and whether those games would be subject to the NIGC’s authority and its MICS. Also analyzed were payment processing, UIGEA, The Interstate Horseracing Act, The Wire Act, The Johnson Act, PASPA, BSA and how the games might be adjudicated in a court of law.
The Indian Canons of Construction and the Select Committee on Indian Affairs’ background explanations of IGRA’s provisions were consulted. Particular attention was paid to plausible interpretations of electronic Class 1 Gambling (i.e. the how, when and where of Class 1 Gambling). Definitions such as: “electronic aid,” “technological aid,” “social games,” “prizes of minimal value,” “traditional,” “individuals,” “tribal ceremonies and celebrations,” “game features,” “facsimile,” “games of chance” and “games of strategy,” were thoroughly considered.
Historically, the results are pivotal. Among one of the findings is that tribes are entitled to develop and evolve their gambling traditions when and how they see fit. If a tribe chooses to strategically build an electronic Class 1 gambling game, using technology not available in 1988 when IGRA was written, Zevit, et al., conclude that a court properly applying federal law should find, provided the provisions of the 39 page legal analysis are met, that the game should qualify as traditional Class 1 under IGRA, that is, available for real money gambling, when offered in electronic format on Indian lands. Moreover, the NIGC’s MICS should not apply, and the gambling should be legal under the necessary federal statues: UIGEA, IHA, Johnson Act, Wire Act, etc.
From a business perspective, electronic Class 1 gambling is intriguing for both the industry and consumers because it’s unbound and uncreated, like early Class 2. Virtual reality (VR), augmented reality (AR), and social are the “go-to” platforms for electronic Class 1 gambling experiences. We know that consumers are hungry for new gaming experiences. Fulfilling this concept for consumers would most certainly generate new patents, inventions and innovations in both hardware and software. It would also forge new alliances with tribal entities and deepen existing ones.
Immediate examples of electronic Class 1 games and their technological, “criteria,” and, “features,” can be found in the full legal analysis. But, there is no, “closed list,” of games and IGRA allows anyone to play.
While strong arguments favor the legality of electronic Class 1 gambling, this is uncharted legal territory. But, great businesses see “uncharted” as open ocean: a new and uncontrolled market space that creates new wealth. ♦