Tahlequah Daily Press

February 12, 2013

Class 2 or 3: Explaining gaming

By TEDDYE SNELL
Staff Writer

TAHLEQUAH — Indian gaming has become in recent years one of the hottest growth industries not only in Tahlequah, but across in Indian Country. But tribal casinos operate under different standards than “mainstream” operations in certain states – and sometimes they’re different from tribe to tribe.

The United Keetoowah Band of Cherokee Indians in Oklahoma operates the oldest gaming operation in Cherokee County, and has developed a loyal customer base. The Keetoowah Cherokee Casino opened its doors in July 1986, only at that time it was a Bingo hall. Throughout its history, it has offered Bingo, table games and electronic gaming machines. Today, it is a Class 2 gaming facility, without about 500 machines at its South Muskogee Avenue location.

The tribe’s economic impact in Eastern Oklahoma is estimated at $130 million. While the UKB has no compact with the state at this time - meaning dividends on gaming revenue are not paid – an agreement was reached in July of last year among the tribe, state and federal authorities to pay a $2 million penalty for operating a gaming facility without trust land status.

In July, the U.S. Department of Interior Bureau of Indian Affairs granted the UKB’s application to place the property in trust, a process that is ongoing.

“We have no compact with the state as of yet,” said Rod Fourkiller, Keetoowah Cherokee Casino general manager. “Our attorneys are working with the state on the issue, and the land in trust is connected, to some degree.”

According to Fourkiller, the Keetoowah Cherokee Casino offers only Class 2 gaming machines, as opposed to Class 3. Class 3 machines, also known as “Vegas style” slots, work with a random number generator, or RNG. A RNG is a program that is supposed to come as humanly possible to choosing numbers randomly. Class 2 machines are preprogrammed, and according to progamblerslife.com, they are called Virtual Lottery Terminals.

“Think of [a Class 2 machine] like a scratch-off lottery ticket,” wrote Greg Elder for progamblerslife.com. “The tickets are sold and there are a certain number of winning tickets. The same holds true for Class 2 machines. They are programmed to pay off at certain times.”

According to Fourkiller, a “compact” with the state is required before an Indian casino can apply for Class 3 gaming status.

“Once the compact is signed, the property can then be evaluated for Class 3 gaming,” said Fourkiller. “The difference between the two is the technology, really. The video machines and graphics are exactly the same. In fact, a guest would not be able to tell the difference between a Class 2 or Class 3 machine.”

The Cherokee Nation operates a number of Class 3 gaming facilities, including the Cherokee Casino Tahlequah. According to Cherokee Nation Businesses Director of Communications Amanda Clinton, the tribe has had a compact with the state since 2004.

“The [payment] formula is based on the number of games offered and the type of games,” said Clinton. “[The amount the tribe pays the state] comes out to about 6 percent of casino revenue, based on this formula.”

Clinton said the difference between Class 2 and 3 gaming is skill vs. chance.

“If you’re a player, and you’re on a Class 2 machine, you’re playing a game similar to Bingo with all the other players, and it becomes a game of skill,” said Clinton. “With Class 3 gaming machines, you’re on your own with the machine, and it is a game of pure chance.”

To game at Keetoowah Cherokee Casino, a person must be 18 years old, and have a Social Security card and state-issued ID card in his or her possession.

“They need this to claim any winnings over $1,200 or a hot-seat drawing,” said Fourkiller. “We are required to issue an IRS Form 1099 on accumulated winnings over $600, as well, which is why the ID is required.”

Machines are inspected and tested regularly, according to Fourkiller.

“Indian gaming is one of the most heavily regulated systems in the country,” said Fourkiller. “We are subjected to audits and the machines are randomly tested twice a year. We recently went through a full-blown test of all the machines, including the mechanics and software.”

Fourkiller said inspections take place when machines are removed from the property or when new machines are brought in.

“Our machines are leased, and when they’re built, the software has to be tested and evaluated by an independent lab,” said Fourkiller. “There’s a lot of background testing just to make sure the integrity of the software is complete.”

The tribe’s gaming commission handles any disputes that may arise over winnings – when, for instance, a customer thinks he should have won more than he ultimately received.

“Everything is documented – the guest’s complaint, as well as a full review by casino personnel. All of that information is turned over to the UKB Gaming Commission, which reviews it and renders a decision,” said Fourkiller.

The UKB Gaming Commission is the final authority in such disputes, because the tribe doesn’t have a compact with the state. The State Attorney General’s Office could field complaints about winnings from tribes with a compact.

While the UKB may not compact with the state, Fourkiller said the tribe works hard for the community it serves.

“We want to be a part of the community,” said Fourkiller. “We make regular donations and sponsor things like the Red Fern Festival, the Snowflake ice skating rink, the THS Tiger Basketball Tournament, and all kinds of things.  We also help out with Cindy Farmer’s group, the Cherokee County Juvenile Drug Court Foundation.”