AZ New Class 2 Casino

Usually when I write something on my blog, it is related in some way to gambling in California. Today our travels are taking us to Arizona instead. 

If you are a slot fanatic, you might have seen a thread on one their forums about a new Class 2 Native American casino opening this December in Arizona. If you haven’t heard about AZ’s West Valley Casino, check it out HERE. For another view, take a quick look HERE. You’ll find some bias in the presentation of the issue depending on which article you read. You might even need to visit a couple sites to see what all the fuss is about. It’s more than whether the games are Class 2 or Class 3.

The Tohono O’odham Nation has been trying to open a Class 3 Vegas style casino just west of Phoenix, near the borders of Glendale and Peoria for the past 6 years. They have offered, without success, to pay the State and Glendale to license Class 3 machines even though the Tribe could operate Class 2 machines much more cheaply. The State has rejected these offers. So now the tribe plans to bypass State licensing and open its West Valley Casino without State approval. That means it must operate all Class 2 gaming machines. 

We’ve talked a lot about Class 2 slots over the past year. I have four posts earlier in this blog about the difference between Class 2 and Class 3 games. Random $$ Slots has a YouTube channel where you can watch and learn about 25 of these Class 2 games if you are interested in seeing them played. You might know Class 2 and Class 3 games are not the same, but many people can’t tell the difference. 

The biggest difference to the tribe and to the state is a financial one. State compacts require large payments from the tribes to license Class 3 slots, but not Class 2 ones. The principal difference to the player is in how the machines play. Class 2 games are like electronic bingo games with a central server where there are at least two players competing for a jackpot. Class 3 Vegas style games have set odds and results determined by a random number generator with the players competing against the casinos. 

When completed, the new Arizona Class 2 casino will have 1,089 gaming machines, but no blackjack or other table games. Currently there are only 40 Class 2 machines in use in the entire state of Arizona, according to Andy Asselin, CEO of the tribe’s Desert Diamond Casinos and Entertainment. Ground was broken on West Valley on August 28, 2014. Construction is expected to be completed in early 2016. West Valley will be a 1.2 million square-foot casino located on 78-acres near the sports and entertainment district of western Maricopa County and will include a spa, hotel, events center, bars and restaurants, retail space and a convention center. It has the potential to generate a lot of income for the tribe and for the state. You would think they’d be anxious to come to an agreement.

The casino’s problems all stem from Indian Gaming Regulations, and how they are applied to Trust Lands. The property owned by West Valley was not part of the original reservation. It is replacement land held in trust for the Indians by the US government. 

Under the Indian Regulatory Act of 1934, tribes are allowed to obtain additional land and convert it into trust status. This is land held by the federal government for the benefit of tribal members. It must be contiguous to the existing reservation land or it must be from federal surplus lands. When approved by both the Department of the Interior and by Congress, this land legally becomes part of the tribe’s reservation and can become gaming-eligible under state and federal law.

IGRA prohibits gaming on lands acquired for Indians in trust after its enactment date October 27, 1988. There are exceptions, however. The exceptions include (1) land contiguous to the reservation, (2) land acquired in the best interest of the tribe and not detrimental to the local community which meets the governor’s approval, (3) land acquired for tribes that had no reservation when IGRA was enacted, (4) land acquired as part of a reservation for a newly recognized tribe or the restoration of lands for a restored tribe. Section 20(b)(1)(A) of IGRA allows gaming establishments of such land held in trust if a gaming establishment would be in the best interest of the tribe and not detrimental to the surrounding community, and the governor concurs. This is known as “Two Part Determination.” Once done, any land subject to the determination is essentially excised “out of state” and off the tax rolls without legislative consultation. Excising land off the state tax rolls is not something states want to do.

Here’s what happened to the Tohono O’odham Nation: 

During the 3 year period from 1957-1960, the United States Army Corp of Engineers constructed the Painted Rock Dam to help control seasonal floods on the lower reaches of the Gila River. Things did not go as planned, and water impounded by the Painted Rock Dam caused the flooding of about 10,000 acres of the Gila Bend Reservation. The flooding destroyed a 750-acre tribal farm and several communities. Residents were relocated to a 40-acre parcel called San Lucy Village, Arizona. 

In 1986, the federal government and the nation approved a settlement in which the nation agreed to give up its legal claims in exchange for $30,000,000 and the right to add up to 10,000 acres of newly purchased land to its reservation. This was authorized by the Gila Bend Indian Reservation Lands Replacement Act, Public Law 99-503. In 2003 the nation purchased 135 acres of unincorporated land near Glendale, AZ, for replacement land for the purposes of economic and community development. Some claim the tribe did not make its intentions clear when it acquired this replacement land.

The nation asked the Secretary of the Interior to take the land into trust allowing them to build a casino per IGRA. Lawsuits have challenged the qualifications of these 135 acres as replacement land. They have also accused the tribe of deceptive behavior and misrepresentations as to the nature of the planned casino.

The tribe has also sued state officials alleging the department of gaming has exceeded its authority interfering with its efforts to open the casino. AZ and rival gaming tribes claim the 2002 compacts prohibit additional casinos in metro Phoenix. Courts have ruled this is not true, and that ruling is now under appeal.

So, will Arizona have a new Class 2 casino for the new year? Maybe. Maybe not. The tribal chairman Edward Manuel says the tribe will operate as a Class 2 casino until its issues with the state are resolved and then will convert to Class 3 gaming. So, if you are planning a trip to Arizona for the Fiesta Bowl on New Year’s Day you may or may not be able to get in some gambling time at West Valley before or after the game. Or, as my son jokes, you can always visit the Grand Canyon and throw your money down that hole instead. Stay tuned. 

G2E Preview - Part 4: Everi

If you don’t keep up on the business side of gambling, the mergers and acquisitions and the like, you might think the fourth manufacturer highlighted on these G2E write-ups, Everi, was a new company. And you’d be partly right. Everi, Inc debuted on the world’s stage by ringing the opening bell at the New York Stock Exchange on August 24, 2015. But while new in name, Everi blends two well-known companies that have been a part of the casino industry for decades — Global Cash Access Inc (GCA) and Multimedia Gaming (MGAM). This year’s G2E 2015 will be Everi’s launch party, and you’re all invited if you’ve signed up for G2E.

Everi

everi.com

G2E Booth #1116

The blending of these two companies, Multimedia and Global Cash Access, seems a strange marriage at first. One is a gaming business and the other is a payments business. As a gambler, you are undoubtedly more familiar with Multimedia. You might not know anything about GCA, so let’s talk a little first about what GCA brings to the union. 

This business part of Everi consists of three parts: payments processing, kiosks, and compliance. The first two ensure easy access to funds, the ability to redeem TITO tickets, a simplified way to break bills. A new term you might hear in connection with the new company is Everi Wallet which is a payment and monetization solution for real online gaming. 

The third part of what GCA provides is more interesting to me because of my tax background. You will have to bear with me…it’s my blog and tax talk is my thing.

Everi is offering the casinos a system called Compliance Manager to ease the reporting requirements imposed on them by the government, particularly reporting required by Title 31.  If you don’t know about Title 31, go back and read my earlier BANK SECRECY ACT blog entry. It’s the section of the Code dealing with money laundering and various reporting requirements usually for cash transactions over $10,000.

Part of the Compliance Manager program is a feature called Title 31 Manager that completes, files, and archives all required forms while tracking cash and check transactions at slots and 3rd party check cashing suppliers. It also consolidates all audits and creates CTRs (currency transaction reports), SARs (suspicious activity reports), W-9s and W-8 forms for electronic filing.The W-9 form is the one you fill out when you get your hand pay to provide your Social Security Number for the W2G form. The W-8 Form is one filed by foreign gamblers to claim exemption from withholding on their winnings or a reduced withholding rate due to treaty status. I won’t repeat what I’ve written before about these forms because you can read my earlier posts if you are interested. Suffice to say Everi is attempting to provide the help the casinos need to file all the forms the government requires.

Besides the Title 31 manager, Compliance Manager also contains a Tax Form Validator which completes, files, and archives W2G’s (for hand pays greater than $1200), 1099-Misc Forms (for prizes and for comps with over $600 value), and 1042-S (for covered expatriates subject to special tax rules.)

Compliance Manager also has a Patron Authenticator function which validates patron address and tax information against US Post Office and IRS databases. This is to reduce the problems caused by winners providing wrong or stolen information for the forms. It also checks various watch lists. You might want to review another earlier post about SELF BANNING from casinos and how these lists are checked before jackpots are payed out. There are other features: which are not as interesting to me: Form Creator, a Chip Log function, and Jackpot X-change Tax Form software.

I’ll bet you didn’t know all this goes on in your local casino, did you?

Now let’s look at the other half of Everi, the slot games you’re all anxious to learn about.  Unfortunately, I have not seen any news releases about new games being unveiled by Everi at G2E. I can list some popular Multimedia titles you have probably played and enjoyed recently, and I can give you a link to Everi where you can see these games and learn more about specific ones - but I don’t know what the next new game will be.

Here are some of my favorite Multimedia — I mean Everi — games. Anthony and Cleopatra, Artemis, Bonnie & Clyde, Carnival in Rio, Ghost in the Machine, Wild Pixies, Wild Tornado, Yard Birds. You’ve probably played a lot of Everi games. This list barely scratches the surface. You’ll find more on the Everi web site. What you’ll notice about them all is the imaginative concepts behind the games and the dynamic artwork. The artists and engineers at Everi’s creative center in Austin, TX, are dedicated to producing unique experiences based on original ideas. These games are usually a lot of fun.

Multimedia primarily produces Class III Vegas style games, but they have branched out and are now developing Class II games for the growing market. You can usually identify a Class II game by the bingo card somewhere on the screen. Multimedia - I mean Everi - has  designed its new Class II slots so the bingo card does not appear until money is fed into the machine. Random $$ Slots has just posted a new Class II game you can link to called Silver Fox. Pay close attention to the video and the explanation he provides. A new feature of the game is the option to play the game in slot mode or bingo mode. If you don’t know what bingo has to do with slots, read the earlier material about Tribal Gaming and Class II Slots.

Here’s your link to Silver Fox:

You probably know about the TournEvent that Multimedia sponsored this year, You may have even seen the big bus at your local casino during the qualifying events.  The million dollar prize will be paid out in 20 annual installments to one of the lucky 200 contestants. It will happen September 30 at XL Night Club. .

Everi (Multimedia) is also hosting the second annual TournEvent of Charities on September 29 during G2E. The event features 24 celebrities who play a TournEvent competition on behalf of their selected charity. Everi will be donating $40,000 total to the celebrity’s charities and another $40,000 to Save a Warrior, the company’s official charity. To watch, come to booth #1116. At 2:30 the celebrities will be introduced, play begins at 3:00, and winners will be announced between 3:30 and 4:30.

More to come of G2E fun in a few days.

Video Poker Class II Machines

We’ve spent a lot of time in the past few days talking about the differences in Class II (Bingo type) and Class III (Vegas type) slot machines. But slots aren’t the only gaming devices people play in the casinos. There are also video poker (VP) machines, and these VP machines are also either Class II or Class III games under IGRA. The odds, the playing strategy, the outcomes are different for these two types of machines. I won’t repeat the prior information about Class II slots. You can take a look at Parts 1 - 4 of the series on Tribal Casinos if you haven’t already done so or if you want a review. Today we only play Poker, video poker. 

I always try to throw in a little history when I write so you can learn a little something in what you read. Today’s history lesson, class, is a review of the origins of video poker. Some of you might have read some of this when I originally wrote about video poker in May.

In the mid-70s, in the infancy of personal computers, a gaming distributor for Bally’s named Si Redd had an idea for a new game. The game he pitched to company executives in Chicago was video poker. Bally’s rejected his idea of an electronic version of draw poker. They decided they did not want to take a chance and branch out from slots to a whole new untested game. Si Redd had confidence the electronic version of the popular card game would be a success. He convinced Bally to let him take the patent on video poker, probably one of the biggest mistakes Bally Gaming ever made, and as they say, the rest is history.

Within months, Si had made a deal with Fortune Coin Company in Reno to form a new company known as Sircoma (Si Redds Coin Machines) and to mass produce the new video poker machines for him. By 1981 the new game was the most popular new addition to casinos everywhere. Just a year later, Sircoma went public with a name change instantly recognizable to casino players everywhere - IGT, International Game Technology. Soon after, IGT introduced video slot machines following the video poker machine’s success. 

Myriad variations of the popular VP games are found today on casino floors everywhere. Your machine may even let you play many, many games with the same spin. Video poker games are popular with players for two reasons. First, your money usually lasts longer playing video poker than it does playing slots. Second, and more importantly, players can actually beat the machine if they know the odds and make wise decisions about which machine to choose and about which cards to keep and which cards to throw away. 

What machine should you choose when you sit down to play video poker? If you don’t want to play Class II VP, make sure you don’t choose one with a tiny bingo card anywhere on the machine’s display! If you see a bingo card on your display, your odds of winning will not come from the odds of randomly drawing cards from a 52 card deck. They will be the odds of filling a certain pattern on a bingo card.

If you’ve picked a Class III - Vegas style VP game, take a look at the payable for the machine. You can determine the expected return (ER) of your machine from the figures there. There are 2,598,960 hands of 5 cards that can be produced with a 52-card deck. The random number generator in Class III video poker machines is set to simulate the probabilities of drawing any one of these hands. Because this is a fixed probability, the house gets its edge by adjusting the payable of the machines. By comparing payables you can choose the one with the best return. My thanks to slot fanatic Random $$ Slots who taught me how to do this. 

The key to the Jacks or Better game is in the payout for the Full House and for the Flush. The very best machine to play will be one that pays 9 for a Full House and 6 for a Flush, a 9/6 machine. This machine, according to blogger Bill Burton, has an expected return of 99.5%.

Casinos lower the payout and increase their hold by reducing the coins paid for the Full House and Flush. The average machine will pay an 8/5 return - 8 for a Full House and 5 for a Flush. When they do this, the expected return drops to 97.3%

When the payout for a full house and a flush are lowered to 6/5, the expected return will drop to 95%.  A quick rule of thumb is that the payout will be reduced by 1.1% for each 1 coin reduction from either hand. 

You will have no idea what the expected return for a Class II video poker machine is. The results are predetermined based on the bingo game. Mathematicians at IGT are able to calculate the odds for millions of different bingo patterns on a bingo card. Theoretically they can choose a bingo pattern that mimics the odds of getting any winning hand from a RNG in a Class III machine. But keep in mind when playing Class II video poker machines that Native American tribes are sovereign nations. Their casinos are not subject to state regulation or to public reporting of their machines’ return percentages. They could set their payouts to anything they want as long as they could stay competitive.

What should be your strategy playing these games? With a Class III machine, the skill of the player can determine the outcome of the game. The more you know, the better your choices, and the more you can win. You strategy is to learn as much as you can about the odds of achieving various results. There are a lot of sites on the internet that will help you do this. One good one is The Wizard of Odds written by Michael Schakelford. He’s got a lot to share — odds, calculators, analyses, anything you want or need to master the game. 

As the Gambler says: “You got to know when to hold, ‘em, know when to fold ‘em. Know when to walk away, and know when to run…”  The more you know, the better you’ll do. on a Class III game.

However, skill has nothing to do with the outcome in Class II video poker. The result is determined by the results of a ball draw, not by a machine’s random number generator. Poker knowledge and playing skill means nothing because the result of your hand is already predetermined by the pattern of the winning bingo game. Therefore, deciding what cards to hold and what cards to draw does nothing to improve your chances of winning. 

In fact, if you make a mistake, intentionally or accidentally, and throw away the wrong cards, if your display can not bring up the cards required by the ball draw, a strange thing happens. A “magic genie” will appear on the screen and change your choice to the one required by the bingo-ball draw.  If the bingo game determines you win a certain prize, you will get it with this special feature, regardless of what you do.

I guess this might be good for the novice player. Correcting a playing mistake and showing the player the optimum strategy might help him become better at the game.  Who knows, it might even improve my poker game. Maybe I should look for a Class II VP machine and see.  :)

But if you are actually skilled in the game, avoid these Class II games like the plague and stick to the Class III poker games with the best full house/flush returns. If you are really good, you might want to forget them both and switch to table games instead. 

Tribal Gaming & Class II Slots - Part 4

Whenever a new game appears in one of my local SoCal Native American casinos, like most of you, I try it a time or two. You never know when they’ll put in a good one. Recently both Harrah’s Resort Southern California (Rincon) and Pala have added some banks of Cadillac Jack slots to their floor. The games are colorful, the music is loud, some might say annoyingly so, and because you can’t stop the reels and go to the next spin when you have a win, it takes a long time to collect your credits. That makes the machines seem to be paying often and paying more. These new games are very popular with the casino patrons, and their seats are always full. The players are all watching the reels that pay both right to left and left to right to see if they have a hit. They generally pay no attention at all to the tiny bingo cards at the bottom of the screens. 

That little bingo card is what tells informed players that the machine is not really a slot machine at all. It is really a bingo game disguised to look like a slot machine. it’s a Class II slot.  Another annoying clue that these Cadillac Jack machines are Class II games is this. When you have a win, you can’t just push the button and go right to the next spin. You are forced to wait and listen to the music signaling your win play while virtual coins rain down onto your screen. You can’t play on until all the winners of the linked games are paid and the server is ready for the next game to start. 

If you’ve never played a Class II slot, a good way to get a feel for their characteristics is to watch one of the YouTube videos filmed by players such as Random $$ Slots. There’s a link to one of his channel devoted exclusively  to Class II Slots HERE. The channel originally had examples of Class II games by WMS, IGT, and Cadillac Jack. Games by other manufacturers are being added to the site as they are played and filmed. Nearly all the major slot manufacturers it seems are devoting much of their resources to developing these bingo games. There are Class II games shown on the internet manufactured by slot giants such as Bally and Multimedia in addition to WMS, IGT, and Cadillac Jack. There are some smaller companies developing games as well. I suspect more and more manufacturers will be focusing on these Indian Casino Class II slots in the future. 

People who play Class II slots often complain that they can tell by looking at the tiny bingo card on their screen whether they are going to have a winning spin. I guess they like to be surprised. Under IGRA (the Indian Regulatory Gaming Act), the games are required to have a draw of bingo balls that must result in a game winning pattern. When the machine draws the bingo balls, the first 30 numbers drawn are daubed red - you can watch them appear on your bingo card when you spin the reels. If there is no winner in the first 30 numbers generated, the machine will continue adding yellow balls to the display until it arrives at a game ending pattern. These yellow balls, however, do not contribute any pays. 

In the early days, if you had a win, you had to daub your card by pushing the spin button a second time; now cards are auto-daubed. You can even change your card before the next game if you don’t like it, just as you can trade your card in for a new one when you’re playing a paper bingo game. On the Class II machines, you change your card by touching the display until you get one you like. It won’t matter what card you pick because there are too many possibilities to predict the one that will have the random numbers you’ll need for a good win. You might as well keep the first one they gave you, but if it makes you feel like you have some control over the game, even though you don’t, go ahead. Change your card if you like.

Take a look at the first video Ishtar’s Oasis by WMS on this slot channel CLASS II SLOTS and see if you can predict whether a spin is a good one by looking at the red daubs on the bingo card. Often you can. Sometimes you can’t because there are many more arrays that award credits in the electronic game than there are winning arrays in a regular paper bingo game. 

When you play in the casino, you might also want to take a quick look at the pay-table equivalent for the bingo games that your information screen can show you. There’s no way to study it really. In fact the machine I tried looking at refused to go to the bingo information screens after a time, wanting me to play instead I guess. Nor can you learn anything from it to improve your wins as you sometimes can with slot pay tables. There is too much information. It will give you a feel for how complicated the mathematics behind the game is, however. 

While you are watching this game on the internet, pause the action and take time to read the comments by the creator. You can learn a lot from the comments he posts with his videos. Reading them and watching the games, I relearned a lot I had forgotten about Class II Bingo Slots from years ago, and I saw some things that have changed. Today’s games are much different and much better than the ones we played a decade ago when they first appeared in our NA casinos. Today it’s hard to tell them from Vegas-style slots. 

If you think you can predict how big your win might be from the tiny bingo card that usually comes up before the slot reel screen does, and you don’t like knowing, you are not alone. Many players don’t want an early display of the bingo card spoiling their surprise. Cadillac Jack has a new innovation, called by John Groshowski the “unscripted bonus event. “ (Mr. Grochowski writes about such things in the Chicago Sun Times as the Gaming Guru). Cadillac Jack’s unscripted bonus, he says, adds bingo draws within the bonus events. These draws have varied enough outcomes that players can’t predict what will happen. 

There are also machines where the bingo card is revealed after the slot screen rather than in advance. IGT does this. One place you can see this in Random $$ Slots’ video of 2x3x4x5x by IGT.  A comment there also tells us that MultiMedia is now manufacturing Class II machines that don’t show the bingo card when the machine is idle. There will be more and cleverer way to address the bingo-card issue in the months to come. One easy fix might be to design the display so that the bingo card was not shown on the computer screen at all unless you pushed a button to reveal it.

As you watch these games and others, focus on the tiny bingo card when a bonus comes up. Ask yourself if there is still a card to watch during the bonus spins. If the bingo card in the corner during the game is no longer there when you play your bonus, perhaps it’s because your bonus is predetermined by the arrangement that brought it up. If so there is nothing you can do to change your bonus. If your bonus begins with your making a choice of some kind, such as picking one of four cards, your bonus total will be dependent on your choice.

If you watched Ishtar’s Oasis by WMS, you saw there was no bingo card on the screen during the bonus spins - the bonus spins were all for show, If you watch Spider Queen by Cadillac Jack, there is a small bingo card during the bonus rounds as well as during the base game so the amount of your bonus is not predictable from the triggering bingo card. The Cadillac Jack Power Stream series of games are the ones appearing recently in our California Casinos that used to have only Class III slot games. There are several films of these Power Stream games you could view. If you watch the Spider Queen video, you can see many of the Class II game characteristics illustrated: right to left and left to right pay, stacked symbols (that hardly ever seem to be part of your win), high volatility games, long waits while your credits pour into your bank if you have a hit, encouraging “messages” to read, and loud music to listen to while waiting for the payout to end. A lot of Razzle-Dazzle to entertain you while you wait for the next game to start - and no way to speed through it.

Class II game payouts are funded by other players. There is no random number generator in your individual machine, and you are not betting against the house. You are wagering for a share of the money other players are betting. For this reason there must be at least two players playing each game - though they can be on different themed machines. If there are not at least two players, the machine will cycle through the display waiting for the server to have a quorum. An excellent illustration of this is in the film of Queen of Wonderland by Cadillac Jack. Watch the start of this video and see how long it takes for the first spin to register. This is because there are not at least two active players to play the game. The hit frequency is always 50%, but the payout percentage is determined by how many prizes of various amounts are loaded into the program. This is a difficult concept to wrap my head around, and I have not been able to find in print if there are any restrictions on how low an indian casino can set this percentage. Logically you would expect a Class II casino to pay out about the same percentage as the one required for casinos having Class III games. Otherwise they could not remain competitive.

If you have a comment or know of a link to an explanation that could help us all better understand Class II pays, feel free to comment below - or better yet, send me an email to spin2win.jen@gmail.com.

HERE’S A LINK to an article written by Frank Legato who was discussing Class II slots with Casino Operations Senior VP, Charles Lombardo, formerly slot operations VP at Caesar’s Palace. Mr. Legato has worked with major slot manufacturers who have refined Class II technology to provide games that look and play like the Class III Vegas-type slots. The information in the paragraph above above comes from this article. It still leaves me with unanswered questions, perhaps the answers are trade secrets, but you may find the article helpful. 

The article also has some information on hit frequency on three reel slots which I have not seen anywhere else at this time, but which I want to share with you. I think it may explain an anomaly that appears on the film of the IGT three reel slot Double Diamond Stars. 

At around the 30 second mark of the video, a single credit is added to the total without any explanation. But Lombardo gives us a plausible one.

Lombardo says this: “Because traditional [three reel] games like Blazing 7’s or Red, White, & Blue generally have a hit frequency around 14% for the seven or eight winning combination in the pay schedule, a 50% hit frequency would be impossible and still have the game make money for the casino. To remedy this, Lombardo explains, we came up with a bonus feature. 14% of results in the pool will be actual reel combinations, and the other 36% will yield a bonus symbol on the reels that will accumulate. When you accumulate 25 of these symbols, you will win 1 bonus credit. Therefore you still have the 50% hit frequency, but your frequency of reel wins is similar to what it is in the traditional Class III versions of those games.” Did you watch this happen in the film of Double Diamond Stars?  Watch it HERE.

So, where are we going with all this? Nowhere I want to be! 

I think what we are going to see over the next few years is that a lot of our Native American casinos, and maybe even some of the traditional non-Indian casinos we play at, will be putting more and more of these Class II bingo-slots on the casino floors. The games will become increasingly harder to distinguish from the traditional Vegas Class III slots as the technology gets better and better.  Most people playing the games will not even realize there is a difference. 

I also suspect that, when this happens, State revenue from the tribes will drop. That revenue now comes from payments required by the compacts. If the Native American casinos have Class II rather than Class III machines, the tribes will not have to pay the State the large per-machine fees the compacts demand. When that happens, the State lawyers will undoubtedly find a new way to define Bingo that excludes these Class II slots from that definition. And then the State will once again force the Native American residents of California to give up what is rightly theirs to fill the State coffers. There is a term I would use here to describe this ravaging of other peoples if I were not a lady!  I’ll leave it to your imagination. You know how I feel about past atrocities and future fears. 

I will probably follow this with an article on Class II video poker in a few days.  We’ll see.

Special thanks once again to Random$$Slots for all his help with this and for permission to use his slot videos in preparing these four articles.  Please continue to visit his site as he makes more films of games from more manufacturers available to help us all understand how to play our favorite games.  And don’t forget to view, like, and subscribe.

CA Tribal Casinos and Class II Slots - Part 3

When my husband and I moved to California in 2002, we didn’t know much about playing slots and neither did the Indians running the casinos. Valley View was our favorite place to play at that time. Valley View had opened the previous year in 2001 with only 750 slot machines. The casino was in a tent and the Native Americans running it played all sorts of fun games with their visitors in addition to the ones on their Vegas-style machines. None of the SoCal casinos had penny machines yet, but it didn’t take too much money to play the old coin-fed machines since the choices on the nickel machines were 1,3,5,7,and 9 lines. I remember how daring it seemed raising our bet to 9 lines a spin when we first played. Wow, 45 cents a spin max bet! And how exciting it was hearing the cascade of coins drop into the machine’s hopper. Those were the days! Back when there were REAL coins involved. One could have a whole lot of fun on very little money. It’s no wonder we played so often.

We gamers might have been able to play without spending much money in the old days, but for the tribes it was a different story. There were tribal/state compacts required by IGRA for casinos that wanted to have Class III, Vegas-style machines. There were payments that had to be made to the State of California for the privilege of operating the casinos. These payments to California didn’t cost the San Pasqual Band of Mission Indians, who owned Valley View, nearly as much as what they pay today, but still it was a lot of money. If you haven't read PART 1 and PART  2 of this series, you might want to do so first.

Here’s what Valley View paid under the original 1999 compacts to operate their 750 machine Class III casino.

When gambling was first legalized in California, the tribes operating casinos paid into two special State Funds. One was the Revenue Sharing Trust Fund designed to assist tribes without casinos, or tribes with very small casinos with under 350 machines. The tribes who operated casinos shared their profits with the ones that didn’t through these payments. My figures are taken from the 2005-06 fiscal year and were published by the LAO in February 2007. The report is very long but very interesting if you like tribal history and you can read it HERE. 

Valley View paid $360,000 into this RSTF fund in each of the early years - nothing for the first 350 machines and $900 apiece for the next 400 machines. The LAO report says $33 million was paid by all the California tribes in total to the RSTF to share their revenue with other California tribes. 

Under their compacts these same tribes also paid $27 million in to the CA General Fund. Another $140 million was paid to cover the cost of gambling addiction programs, regulatory costs, grants to local governments affected by tribal casinos, etc, etc. $101 million was also paid into a designated account expected to be used to repay State transportation funds for loans to the General Fund in prior years. 

Mind boggling, isn’t it? And all this is before considering the costs to the casinos of construction and maintaining their facility, hiring their workforce, paying utilities, etc. — and before even considering the costs of purchasing or leasing the machines in it from the slot manufacturers. Under the 2004 compacts, the figures get even worse. We don’t dare think about what the State is trying to extract from our Native American friends under the 2006 proposed compacts!

Seeing the costs to have Class III - Vegas style games in the casinos with state compacts, I think you can understand why the Class II Bingo-type slots allowed under IGRA might appeal to the poor, cash-strapped Indians hoping to make a little money operating their gambling halls.

Class II - Bingo type gaming is MUCH less expensive for the tribes than Class III - Vegas style gaming. No compact with the State is necessary for a tribe to operate a Class II Gaming facility. None of the payments required of casinos with Tribal/State compacts have to be made.

Here’s a quote from the Republican Caucus California State Senate Briefing Report 2/12/2014:

“A tribe could open a Class II gaming facility without a compact on the land in question [reservation land] at any time. Class II gaming is defined as the game of chance commonly known as bingo (whether or electronic, computer, or other technological aids are used in connection with playing the game) and if played in the same location as the bingo, includes pull tabs, punch boards, tip jars, and other games similar to bingo…” 

You are really playing electronic Bingo disguised to look like slots, when you play a Class II machine. A Random Number Generator in your machine is not determining your win. You are not playing against the casino. You are playing against the other players linked to your machine, and it is all determined for you. Numbers are being drawn for whole banks of machines through a central processor (server) when you play. These are then translated into slot combinations to illustrate a win equal to what the the red balls you see on the little bingo card on the corner of your screen says you’ve won. And the razzle-dazzle display on your screen makes it all feel like a real slot machine win.

“…No compact with the State is necessary to operate a gaming facility with only Class II Slots. When the Legislature refused to ratify the compact between the State of California and the Lytton Band of Pomo Indians to operate a Class III casino in San Pablo, the tribe opened a Class II facility there using video bingo machines that resemble slot machines. Lytton, which has no tribal-state compact makes no payments to any state-managed fund, and is not regulated or audited by the CGCC, (the California Gambling Control Commission) has been very successful in this venture.” 

Valley View did not switch to Class II machines to try to save money or add Class II machines in order to have more machines than their compact allowed, but our local casino Pechanga did. In the early days, Pechanga was not the mega resort it is today. Today it is the largest casino in the West (Including Vegas casinos), and it is the casino resort ranked first by USA Today in their recent survey. In the early days of California Native American Casinos, Pechanga was trying to cut costs just like all the other casinos were. We didn’t often play there. We did not like playing at Pechanga in it’s early “Class II” days, and so we drove to Valley View in San Diego county to play real slots instead. 

There were two strange types of machines gamblers played at Pechanga. One room had games that resembled the Texas Eight-Liner machines I wrote about in an earlier article. The other had machines with the little Bingo Cards in the corner alerting players that the games they thought were slots were Class II Bingo machines instead. The machines appeared to play much like any Vegas-style slot on the casino floor in the early 2000’s, except that if you got a win, you had to daub your bingo card to claim your prize. You did this by pushing the play button a second time, and you had to do it before your time ran out. If you weren’t paying attention and were talking to your neighbor and missed the end of the countdown, you also missed your prize. 

I hated the Class II machines at Pechanga. The requirement to daub within the designated time was stressful, and so I always played the machines by pushing the play button twice instead of once whether I thought I had a winning card or not. I didn’t want to risk not getting my prize by not daubing in time. Daubing the card was the equivalent of shouting “Bingo” in a regular bingo hall to claim a win I guess. If you don't do that before the next ball is drawn you lose there too. Fortunately we are not required to daub our card to claim our win on Class II slots today. I don’t know what company made those old Class II slots. I was not so aware of the various manufacturers and the differences in machines at that time. I just knew I didn’t like them.

I still don’t. But as I learn more about Class II slots and how they work, and as the manufacturers get increasingly better at the mathematics and technology that makes these Class II Bingo machines look and act more like real Class III Vegas-type Slot machines, I find it easier to ignore the tiny bingo card in the corner, and I sometimes wager a little money in the Class II machines. 

The biggest difference between the two classes of machine, and the most important thing to remember when you play, is this:  With Class III - Vegas style machines,  you are playing against the house and wins are determined by the computer’s random number generator. With Class II - Bingo machines, you are playing against other players, there is no random number generator in your individual machine,  and you can only win prizes that haven’t already been paid out.

There will be at least one more entry (and maybe two) about Tribal gaming and Class II machines over the next few days. I’ll share part of an article by Frank Legato containing an interview with a VP of Casino Operations, Charles Lombardo, about how these Class II machines work. I’ll also refer you to a YouTube channel posted by Random $$ Slots. You’ll be able to watch 20 videos of various Class II slots found in our casinos today and read his commentary on them. His films will illustrate a lot of what to look for if you play these machines. The best is yet to come.

California Tribes & Gaming - Part 2

California Tribes & Gambling - Part 2

Have you noticed when you play slots at Indian Casinos, that many of the machines have a small Bingo card somewhere on your screen’s display? Did you ever wonder why? Are we playing slots or are we playing Bingo when we play these machines? Are we playing both? Is there a connection between these games and IGRA (the Indian Gaming Regulatory Act)? What is it? Will we win more or less money playing these slots, and is our win figured the same way? We’ll try to answer some of these questions in Part 3, but first we have a little more history to cover. We need to know why we even have these machines.

Under IGRA, all tribal gaming falls into one of three categories, or classes, with varying levels of tribal, state, and federal regulation.

Class I Games: These are social games or traditional Indian games usually related to tribal ceremonies or celebrations. There is a description of several tribal games of the Chumash people at santa ynez chumash. if you are curious about this tribe’s traditional games of skill or chance. These games are subject to regulation only by the tribes themselves.

Class II Games: These are games of Bingo, whether or not electronic, computer, or other technological aids are used in playing the game. If played in the same location as the Bingo game, Class II games also include pull tabs, punch boards, tip jars, instant bingo, and other similar games. They also includes non-banked card games like poker. (Non-banked games are card games that are played exclusively against other players rather than the house). IGRA provides for regulation of these games by both tribal ordinance that must meet federal guidelines and by the approval of the National Indian Gaming Commission (NIGC).

Class III Games: These are sometimes called Nevada-style games or Vegas-style gaming. They include all other forms of gambling, including slot machines, blackjack, craps, roulette, and dice games not prohibited under state constitution and laws. These games are regulated by the tribes and states pursuant to tribal ordinances and tribal-state compacts.

Gaming Compacts. 

Federal law (IGRA) requires that all tribes who want to engage in Class III gaming (Vegas-type slots) must enter into a compact of agreement with the state in which the tribe is located before gaming can occur. On September 10, 1999, 56 tribes led by the Pala Band of Mission indians entered into Tribal-State Gaming Compacts permitting Class III video gaming devices on tribal lands. These compacts were subject to approval by California voters on Proposition 1A - the Indian Self-Reliance Initiative - which appeared on the March 2000 state ballot. With 64.5 percent of California voters casting a “yes” vote, the initiative amended the State Constitution’s ban on casinos to allow gaming on tribal lands subject to the terms of the compacts. 

I am always hesitant to quote statistics in what I write because they are so quickly outdated. The figures here come from the California Legislative Analyst’s Office and were published in LAO Tribal Gaming, May 20, 2015. The LAO office is the one that writes the analysis of voting propositions for CA each election. Much of the information in this post comes directly from that source.

A tribe can open a casino with Class III games only if (1) the Governor and the tribe reach an agreement on a tribal-state compact, (2) the CA Legislature approves the compact, and (3) the federal government approves the compact. According to the LAO, the Legislature has ratified tribal-state gaming compacts with 73 of California’s 110 federally recognized tribes. Of these tribes, 58 currently operate 60 casinos in 26 counties. The industry generates about $7 billion in revenue after paying winnings.

Financially, it is in the State’s interest to enter into compacts with the tribes. In accordance with the terms of various tribal-state compacts, the General Fund is projected to receive $330 million in revenue in 2014-15. An additional $30 million in revenue will support state regulatory and problem gaming costs. (Where does this money come from? Take a look in the mirror. Where else but from its players would a casino get the money to pay the state of California the share it demands?)

(My source comparing the old (1999) compacts and the newer (2004) compacts that have been ratified also comes from the LAO  2/02/07 )

Under the 1999 compacts, casinos were each authorized to have up to 2,000 machines with a statewide limit of 61,957. Payments were made to the state Revenue Sharing Fund on a per machine basis. These payments were a way to share revenue with the 73 tribes that did not operate casinos. Tribes with casinos paid nothing to the State for their first 350 slot machines. They paid $900 per machine for machines 351-750 , $1,950 for machines 751-1250, and $4,350 for machines 1250-2000. There were other payment made to the State under these compacts as well which we will touch on next time.

Today under the revised 2004 compacts the State takes an even bigger cut of casino profits. Each casino could have an unlimited number of machines, but payments of $8,000 to $25,000 per machine to the General Fund were required. 2006 compacts have been proposed according to LAO allowing tribes to operate over 2000 machines at one, two, or three facilities on tribal lands after negotiating payments for road improvements and repairs, increased fire and police protection, etc. And, yes, after paying more per machine. We’re just skimming the surface with these figures. Read the LAO report to learn more.

Compacts are required for Class III gaming. What happens if the Tribe and State negotiate an agreement, but the Legislature fails to ratify their compact? There are several options. (a) The tribe could request renegotiation with the governor, (b) It could sue in Federal Court claiming the state acted in “bad faith,” (c) A compact could be imposed on the state by the federal government. 

When working on “Spin to Win”, I learned that Harrah’s Rincon (now called Harrah’s Resort Southern California) had this problem. Feeling that the State was taking advantage of the economic desperation of the tribes trying to climb out of poverty, Rincon sued Governor Schwarzenegger for “illegal taxation” and “bad faith” in 2004 renegotiations. The tribe finally prevailed after 7 years of litigation, and theirs became the first California compact agreement negotiated with oversight of the federal courts.

So now we have a little understanding of how much money the casinos must pay to the State to operate their machines. This is in addition to all the other expenses of operating their gambling houses. We know why they are looking to cut costs wherever they can.  We know why we are winning less and doing it less often.

In the next section, we’ll look at the differences between Class II and Class III machines, and see how the casinos save money buying or leasing these Class II Bingo slots instead of paying for Vegas-style Class III machines. We’ll look at the difference in how they play and how they pay. And we’ll answer many of your questions about why we are seeing so many of these Class II “Bingo” slot machines in our local Native American gambling venues. More to come in Part 3.

California's Tribal Casinos - Part 1

When most people think of gambling, they think of Las Vegas. And it’s no wonder. There are a lot of places to lose your money in Vegas. There are 75 legitimate casinos (those with 15 or more slots or table games) in Sin City alone if you include the 45 on the Strip and the ones on the Boulder Strip. 

Here’s a fun fact. The Strip is not actually located in the city of Las Vegas. The 4.2 mile stretch of hotels and casinos south of Las Vegas city limits is actually located in the unincorporated towns of Paradise and Winchester. The famous Las Vegas sign is not in Las Vegas either. It was constructed in 1959 exactly 4.5 miles outside the city limits.

Las Vegas is located in Clark County, which encompasses all of Southern Nevada. Clark County has 176 casinos, and last year those 176 businesses took in $9.5 billion in gaming revenue. If you like numbers Steve Beauregard has extracted figures for you from the NV State Gaming Control Board’s report. If you are interested, take a look at them here at gamboool.com

As for me, I’m more interested in the 479 Native American Casinos that 500 Nations tells me are owned by 244 of the nation’s 565 federally recognized tribes and operate in 28 of our 50 states. I’m especially interested in the twenty-one located in Riverside and San Diego counties in Southern California, just a short drive from where I live. 

Did you ever wonder why California has so many Native American casinos — and NONE that aren’t owned by the tribes? Here’s a little history lesson to help us understand.

California law banned all gambling from the time CA became a state. There were games of chance in the Golden State - just not legal ones. Over the years voters gradually modified the law, authorizing various types of wagering. Horse racing in 1933. Bingo games for charitable purposes in 1976. The California Lottery through the passage of Prop 37 in 1984. Importantly, Proposition 37 also amended the State constitution to specifically prohibit “casinos of the type currently operating in Nevada and New Jersey.”

So how did gambling become the mega-industry it is today in CA, when the state constitution was amended to specifically forbid it? Look no further than the passage of the federal Indian Gaming Regulatory Act (IGRA) four years later.

To understand the history of Indian casinos in CA, you need to understand a little about how tribes and tribal rights are viewed in the United States. Indian tribes possess a special status under US law, known as Tribal Sovereignty. According to the US Constitution, the federal government reserved the power to regulate commerce with three groups: with foreign nations, among the various states, and with Indian tribes. Two Supreme Court decisions in 1831 and 1832 determined that the tribes were independent political communities with original natural rights that preceded European colonization — rights with which no state could interfere.

In the early 1980’s the Cabazon Band of Mission Indians, like many other tribes, was seeking a way to lift itself out of extreme poverty. The tribe turned to operating bingo games and poker halls as a way of earning revenue. A short time later, the Indio police and the Riverside County sheriff raided and shut down the ventures. The tribe sued in federal court in 1987 and won. 

The court said that if state law criminally prohibits a form of gambling, then the tribe within the state cannot engage in that activity. However, if state law civilly regulates a form of gambling, then the tribes within the state may engage in that gaming free of state control. In essence the court formally recognized the right to conduct gaming operations on tribal lands as long as such games were not criminally prohibited by the state. (CA approved Bingo games ten years earlier - Hmm, I wonder… Could there be a connection between the little bingo cards you frequently see on Class II NA slots and that fact? Perhaps so. We’ll talk about Class II slots next time.)

After the Cabazon ruling was handed down in 1987, state governments, frustrated by their lack of authority over tribal activities, appealed to Congress to give them more power over tribal gaming.  The result was the Indian Gaming Regulatory Act of 1988 (IGRA). States lobbied vigorously for IGRA and for the compacting provisions of the law over tribal objections. Contrary to popular perception, IGRA did not expand the power of tribal governments. In fact it curtailed tribal power by giving state government unprecedented authority over tribal gaming activities, requiring the tribes to negotiate agreements with states in order to engage in casino-style gaming activities.

So does any of this have anything to do with the games we play today? If you gamble at any of the 479 Native American casinos in the US, it does. We will be discussing more about tribal gaming and the three classifications of slot games under IGRA in the next section. Stay tuned.