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Class II: In a Class by Itself

Article Author
John Wilson
Publish Date
July 1, 2010
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John Wilson

Class II gaming is a unique and rather strange gaming classification. It exists only in the U.S. and deals only with Native American gaming. I’m not particularly a fan of Class II gaming, and I think it’s one of the most technologically and operationally messed up entities there ever was. Class II gaming should not exist. But hear me out on this. It is important for you to know why I feel it should not exist. What I see are problems in the classification itself—it’s not for the obvious reasons or for the things you might suspect.

When you think of Class II gaming, you likely think of bingo, as that is its most common implementation. Thoughts of bingo likely also bring thoughts of bingo cards and a rather simple game. It can also include similar types of games, such as pull-tabs and punch cards.

The implementation of Class II gaming, however, is far from simple. It requires central determination and therefore an intricate and elaborate networked system. In fact, Class II gaming has led the way in networked gaming for some time. While there is currently a great deal of discussion of networked gaming in the Class III market, Class II has “been there, done that.”

In Class II gaming, players are competing against each other rather than against the house. Before a Class II “slot machine” game can be played, therefore, there must be at least two players who are playing at the same time. And it is far from a simple game. Bingo is incredibly complex, with permutations and probability that could rival some Class III games. It is not an area on which to tread lightly.

IGRA

The Indian Gaming Regulatory Act (IGRA), adopted by Congress in 1988, is a federal law that establishes and governs Indian gaming. It sets out the types of games that a tribe can have, those that are prohibited, and an all-encompassing set of rules governing a tribe’s operation of gaming. It has been controversial since its inception, however, and to this date it is still the focus of much debate, investigation, legal proceedings and confusion.

I picture the debate over the original act, involving state revenues and what the government was willing to give to the tribes, and can imagine the following statement being made:  “Bingo? Who cares about bingo? They can have all the bingo they want—we’re not interested in bingo.”

States generate gaming revenue from casinos and electronic gaming machines such as slot machines and video poker games, as well as table games such as blackjack, craps and roulette, which also come to mind when you think of casino games. Some casinos may have a bingo parlor, but unless you have a particular interest in bingo, it’s easy to discount bingo as a minor factor in a casino’s revenue-generating ability.

It is doubtful that anyone had envisioned how Class II gaming would progress and develop. It is due to some tremendously talented and innovative people in the tribes and various manufacturers that it has become the industry it is today.

Walking into a Class II casino today, you will likely be faced with banks upon banks of slot machines. There are familiar titles that you have seen in other casinos throughout the country. You can play a Bally Blazing 7s game, but you can also see some intriguing games that are strictly Class II, such as VGT’s Hot Red RubyTM. As you walk down the aisles, there are the standard configurations—the assortment of 3-reel and 5-reel stepper machines, 5-reel video games and various progressive jackpot machines are familiar. You think “slots.”

The truth, however, is far from “slots.” While externally they appear to be slot machines, and while the players sitting at the machines feel like they are playing a slot machine, the reality is far removed from a slot machine. And this has been a contentious point since the first Class II “slot machine” was placed on a casino floor.

State governments see these “slot machines” in Class II casinos as a huge loss of revenue. If it were a Class III implementation, then they would be receiving their tax component on the revenues from the machines. In a Class II environment, however, the tribes are receiving the revenues from their operations.

Aid or Facsimile?

In order to determine if a game is a Class II game or a Class III game, a standard benchmark has been used: aid or facsimile? The distinction is not always clear, but it is one of vital importance.

The IGRA allows a tribe to use a technological “aid.” In general, an aid makes a game more appealing, improving it overall. An electronic touch pad configured to be used as a bingo card, for example, would be an excellent aid to bingo. The player could play multiple cards and would not need to use an ink dauber, and the information could be automatically transmitted to a bingo server. It would make accounting and auditing the games much easier and more accurate. It would allow players to easily use numerous bingo cards each game. It would streamline operations and make the game more enjoyable for the players as well.

A facsimile, by definition, is an exact copy or a reproduction. A facsimile of a slot machine would be prohibited under a Class II arrangement. As you walk down the aisle of a Class II casino, looking at the slot machines with flashing LED toppers, ticket printers, bill validators, spinning stepper reels and payouts for combinations of symbols, you have to wonder if these machines are an aid to bingo or a facsimile.

The answer, however, is not in the presentation. If it looks like a slot machine and sounds like a slot machine, it may be far from a slot machine. No matter what the machine looks like, it’s what is under the hood that counts. Somewhere on the machine, on the reel glass, the top payout glass or on a video screen, will be a disclaimer that the spinning reels are for amusement only. In other words, you are being told that it’s just animation with no true link to what is really happening.

The question, and ongoing debate, is whether this disclaimer is valid. If I insert $20 into the bill validator, press the max bet button and watch the reels, it could be a slot machine. As each reel settles on a Red 7 symbol, and I am awarded a thousand credits, I relate this experience to a slot machine that I may have played on the Vegas Strip. Surely that would represent a facsimile of a real, honest-to-goodness Class III game?

The truth can only be found by digging deeper into the payout displays and the way the machine actually does pay and play.

Some Class II “slot machines” allow you to turn off the video representation of the spinning reels and watch the bingo card being filled as numbers are drawn. All of the games will show you bingo balls being drawn, the numbers displayed, and the bingo card that you are playing. Without the spinning reels, slot-like symbols and everything else that is part of a familiar “slot machine,” the Class II game will function perfectly. You see, it’s all a charade.

Inside the machine is a game connected to the central server, which is working on a central-determination game. You cannot take a Class II slot machine off the floor, place it in your den, plug it in and have it function. You can do this with a Class III game (assuming, of course, it would be legal to own a slot machine and keep it at your residence). The missing part is the server. The Class II box is for show. It is only making the game look and feel more like a slot machine. It makes the players enjoy the game more and helps them gain entertainment value. This is the same way that electronic bingo cards help the players to enjoy the game in a casino’s bingo parlor. In essence, it’s nothing more than smoke and mirrors.

The game does function on a Class II principle—almost exclusively bingo. The machine has a bingo card and the central server is drawing balls in a virtual bingo game. If your called numbers match a particular pattern, you win. There are full-cards, single lines, four corners and an impressive array of patterns that would be too complicated for the average human player to follow. Yet it is still bingo, plain and simple.

A combination of two double-bar symbols and a triple-bar symbol has a certain probability on a Class III game, depending on the reel configuration, stops, etc. The manufacturers know the probability of this symbol combination occurring and how much they can pay when the combination hits.

Class II manufacturers know the same thing. A funny-looking pattern on a regular bingo card has a precise probability based on how the game is set up—number of balls drawn, etc. All in all, it’s incredibly more complicated than Class III slot math. Bingo is not a simple game.

Since this game is truly bingo, using virtual cards, virtual balls and virtual drawings, then everything electronic is simply to aid the player and the presentation of the game. It essentially functions the same as a bingo card in a bingo parlor with someone drawing balls and announcing the results one after the other.

I doubt that many people had envisioned exactly what could be done with bingo. The fact that a bingo game can be made to look, sound and feel like a real slot machine is a testament to the technology, inspiration and vision by tribes and manufacturers. But it is still bingo.

Why Not Class II?

So why would I think that Class II should not exist? Why would I ever make the statement that it’s a complicated mess?

I believe that tribes should have the right for self-regulation and self-government. I believe that they should be allowed to operate casinos autonomously. There must, however, be some form of regulation and checks and balances put into place. The games must be fair and operate as stated. If they have a large jackpot award stated, then it must be available. I don’t think that has ever been the issue.

The problem, in my opinion, lies in the fact that these games are truly technological aids to the underlying bingo game. They are unnecessarily complicated. The back-end technology is not simple. The servers, technology and game software are incredibly complex. The games themselves have to be engineered to look and feel like a slot machine, even when they operate in a manner completely unrelated to slot machines. The players are given an aid that increases their recognition of the game, satisfaction and entertainment value. Yet in the end, they are playing bingo. The game is playing bingo. And it can be a mathematical nightmare. It’s far more complex than I feel it needs to be.

That complexity is no way related to a fault of the manufacturers or the tribes. They are providing a Class II-compliant game that plays bingo. Through innovation and inspiration, it looks like more. It could be designed to look like a roulette game, a blackjack table, or anything that can be imagined. You could feel that you are playing Scrabble or an online social networking game completely unrelated to casino gaming. The presentation provides the entertainment. The game is bingo.

In future installments of this series, we’ll examine Class II gaming in more detail. We’ll talk to some operators, manufacturers, regulators and look at the government-side of the issue as well. It is going to be an interesting journey.


John Wilson is the Technology Editor for Casino Enterprise Management and Owner of ICS Gaming, providing slot consulting services and game design. He has designed several slot games in both Class II and Class III markets. He can be reached at jwilson[at]icsgaming.com.

Comments

random number generators

If random number generators were really used to determine payouts then the owners would have no way whatsoever to determine how much they would keep of the amount played. Since this is not the case any numbers randomly generated must be manipulated by the machine to reduce the randomness of generated numbers and provide the owners with the 20%, 10%, 5% cut that they receive from players.
I don't think I have ever played $100 in a slot and received $90 back during that play period. Legalized stealing is all Indian Gaming can claim to be no matter how often they tell you that you are having fun and that is the object of the game.

Complexity is Elsewhere in the Slot Gaming Equation

I see no significant difference between the mechanisms used to drive class II and III slot machines. In both cases wins are table determined, as well as what is displayed, and a random number generator is used to implement each specific instance of a button-push wager. In the case if a class II machine the table to be matched is selected by and shown to the player as well. What is far more complicated, is not the details of game implementation, but rather the management of collections and payouts part of slot gaming. Here the control of money flow in the form of cash and printed player credit vouchers must be accomplished in a secure manner. To prevent counterfeiting each voucher must be tracked in and out of a database in real time. Cash receipt images must be verified for authenticity as well. The technology to perform these functions is far more complicated than that used to perform the game function alone. Coin operated slot machine are not addressed here, as they represent antiquated technologies that predate Indian Gaming.

W.H. Geiger,
Pensacola, Florida

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