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No. 03-762

In the Supreme Court of the United States

UNITED STATES OF AMERICA, PETITIONER

v.

SANTEE SIOUX TRIBE OF NEBRASKA,
A FEDERALLY RECOGNIZED INDIAN TRIBE

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

THEODORE B. OLSON
Solicitor General
Counsel of Record
CHRISTOPHER A. WRAY
THOMAS L. SANSONETTI
Assistant Attorneys General
EDWIN S. KNEEDLER
Deputy Solicitor General
BARBARA MCDOWELL
Assistant to the Solicitor
General
RICHARD A. FRIEDMAN
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

QUESTIONS PRESENTED

The Johnson Act, 15 U.S.C. 1171 et seq., prohibits, among other things, the possession or use of "any gambling device" within Indian country. The Johnson Act defines a gambling device to include "any * * * machine or mechanical device" that is "designed and manufactured primarily for use in connection with gambling, and * * * by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property." 15 U.S.C. 1171(a)(2).

The question presented in this case is whether the Lucky Tab II machine is excluded from that definition because a player becomes entitled to receive money as a result of the sequence of winning and losing pull-tabs on a pre-printed paper roll inserted into the machine.

In the Supreme Court of the United States

No. 03-762

UNITED STATES OF AMERICA, PETITIONER

v.

SANTEE SIOUX TRIBE OF NEBRASKA,
A FEDERALLY RECOGNIZED INDIAN TRIBE

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Solicitor General, on behalf of the United States, respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Eighth Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, 1a-17a) is reported at 324 F.3d 607. The opinion of the district court (App., infra, 18a-33a) is reported at 174 F. Supp. 2d 1001.

JURISDICTION

The judgment of the court of appeals was entered on March 20, 2003. A petition for rehearing was denied on June 25, 2003 (App., infra, 34a). On September 15, 2003, Justice Thomas extended the time within which to file a petition for a writ of certiorari to and including October 23, 2003, and, on October 13, 2003, Justice Thomas extended that time to and including November 22, 2003. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

The relevant provisions of Titles 15 and 25 of the United States Code are reproduced at App., infra, 35a-41a.

STATEMENT

This is one of two cases recently decided by the courts of appeals that concern the relationship between the Johnson Act, 15 U.S.C. 1171 et seq., which prohibits the use of "any gambling device" in Indian country, and the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. 2701 et seq., which authorizes the use of gambling devices in Indian country in accordance with a tribal- state compact approved by the Secretary of the Interior. In this case, the Eighth Circuit held, in conflict with the Tenth Circuit in Seneca-Cayuga Tribe of Oklahoma v. National Indian Gaming Commission, 327 F.3d 1019 (2003), that IGRA does not provide Tribes with any exemption from the Johnson Act when they use gambling devices in the absence of an approved tribal-state compact. The Eighth Circuit then held, in conflict with the Ninth Circuit in United States v. Wilson, 475 F.2d 108 (1973), that the machine at issue in this case does not satisfy the Johnson Act's definition of gambling device. That holding has significant ramifications for federal regulation of gambling devices inside and outside Indian country. The government is also filing a certiorari petition in Seneca-Cayuga Tribe, presenting the question on which the Eighth and Tenth Circuits are in conflict.

1. a. The Johnson Act prohibits, among other things, the manufacture, sale, transportation, possession, or use of "any gambling device" within the District of Columbia, federal enclaves and possessions, and, as relevant here, "Indian country." 15 U.S.C. 1175(a). The Johnson Act also prohibits the transportation of gambling devices in interstate commerce to or from any place in which their operation is unlawful. 15 U.S.C. 1172(a). The Johnson Act defines a "gambling device" to include not only traditional slot machines, see 15 U.S.C. 1171(a)(1), but also any other machine or mechanical device that is:

designed and manufactured primarily for use in connection with gambling, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property.

15 U.S.C. 1171(a)(2).

b. In 1987, this Court held in California v. Cabazon Band of Mission Indians, 480 U.S. 202, that a State cannot prohibit bingo and card games on Indian reservations if the State allows such games elsewhere. In the wake of that decision, Congress enacted IGRA in 1988 "to provide a statutory basis for the operation and regulation of gaming by Indian tribes." Seminole Tribe of Florida v. Florida, 517 U.S. 44, 48 (1996) (citing 25 U.S.C. 2702). The purposes of IGRA include enabling Tribes to conduct gaming to "promot[e] tribal economic development, self-sufficiency, and strong tribal governments," 25 U.S.C. 2702(1), and providing a regulatory structure adequate to "shield [tribal gaming] from organized crime and other corrupting influences * * * and to assure that gaming is conducted fairly and honestly by both the operator and players," 25 U.S.C. 2702(2).

IGRA establishes three classes of Indian gaming, each of which is subject to a distinct regulatory regime. Class I gaming consists of social games played solely for prizes of minimal value and traditional forms of Indian gaming. Tribes have exclusive jurisdiction to regulate such games. See 25 U.S.C. 2703(6), 2710(a)(1).

Class II consists, as relevant here, of "the game of chance commonly known as bingo (whether or not electronic, computer, or other technologic aids are used in connection therewith) * * * including (if played in the same location) pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo." 25 U.S.C. 2703(7)(A)(i)(I). Class II excludes "electronic or electromechanical facsimiles of any game of chance or slot machines of any kind." 25 U.S.C. 2703(7)(B)(ii). Class II gaming is permissible "within a State that permits such gaming for any purpose by any person, organization or entity," provided that "such gaming is not otherwise specifically prohibited on Indian lands by Federal law." 25 U.S.C. 2710(b)(1)(A). Class II gaming is subject to regulation by the National Indian Gaming Commission (NIGC), see 25 U.S.C. 2706, as well as by Tribes themselves.

Class III is defined as "all forms of gaming that are not class I gaming or class II gaming." 25 U.S.C. 2703(8). Such gaming is permissible only if it occurs in a State that permits it, is conducted in conformance with a tribal-state compact approved by the Secretary of the Interior, and is authorized by a tribal ordinance approved by the Chairman of the NIGC. 25 U.S.C. 2710(d). IGRA contains an express exception from the Johnson Act for gambling devices used in Class III gaming. IGRA states that "[t]he provisions of section 1175 of title 15 [the Johnson Act] shall not apply to any gaming conducted under a Tribal-State compact that- (A) is entered into under [25 U.S.C. 2710(d)(3)] by a State in which gambling devices are legal, and (B) is in effect." 25 U.S.C. 2710(d)(6). IGRA contains no comparable exemption for gambling devices used in Class II gaming.

2. Beginning in early 1993, respondent Santee Sioux Tribe of Nebraska attempted unsuccessfully to negotiate a Class III gaming compact with the State of Nebraska. In early 1996, notwithstanding the absence of any such compact, the Tribe opened a Class III gaming casino on its reservation. The casino offered video slot machines, video poker machines, and video blackjack machines. App., infra, 2a, 19a; Gov't C.A. Br. 3.

The NIGC ordered the Tribe to close the casino, because it was engaging in Class III gaming in violation of IGRA's requirement of a tribal-state compact. The Tribe refused to comply with the closure order. App., infra, 2a, 19a; Gov't C.A. Br. 3.

In response, the United States filed this suit against the Tribe to enforce the closure order. Although the district court dismissed the suit, the court of appeals reversed, holding that the Tribe was operating the casino in violation of IGRA and state law and that injunctive relief was warranted. App., infra, 2a, 20a; United States v. Santee Sioux Tribe of Nebraska, 135 F.3d 558 (8th Cir. 1998).

The Tribe continued to operate the casino. The district court issued an order enjoining the Tribe from doing so and imposed fines for contempt of the order. Although the district court ruled that tribal officials could not be held individually liable for the contempt fines, the court of appeals reversed that ruling. App., infra, 2a-3a, 20a; United States v. Santee Sioux Tribe of Nebraska, 254 F.3d 728 (8th Cir. 2001).

In May 2001, the Tribe removed the existing Class III gambling devices from its casino and replaced them with Lucky Tab II devices. The Tribe was encouraged to take such action by the NIGC's Acting Chief of Staff, who took the position that Lucky Tab II is a "technologic aid" to the game of pull-tabs, and thus is a Class II device that the Tribe could use without entering into a compact with the State. After the Lucky Tab II machines were installed, the NIGC dissolved its closure order. App., infra, 3a, 21a, 28a.

The Lucky Tab II machine has been designed to look, sound, and play much like a video slot machine. App., infra, 3a (observing that Lucky Tab II machines "look and sound very much like traditional slot machines"). Lucky Tab II, like a slot machine, is housed in an illuminated cabinet. The player deposits money into the machine, presses a button to activate the machine, and views a video display and hears a sound indicating whether or not he has won. As the Tenth Circuit observed with respect to the similar Magical Irish machine, playing such devices "can be a high-stakes, high-speed affair," as a player can complete a game "every seven seconds." Seneca-Cayuga Tribe, 327 F.3d at 1025.

Lucky Tab II differs in its design to some extent from the typical slot machine or other gambling device. Whether the player of Lucky Tab II wins or loses is determined by the sequence of bar codes on a pre-printed paper roll of pull-tabs that is inserted into the machine. (Similar paper rolls have been used to supply pull-tabs to be purchased by persons playing the traditional game of paper pull-tabs without a machine.) When the player presses a button, a machine reads the bar code on the next pull tab on the roll, which triggers the video display and accompanying sound, and then dispenses the pull-tab to the player. The video screen depicts a grid that is similar in appearance to that of a slot machine. If the screen indicates that the pull-tab is a winner, the player may obtain money for the winning pull-tab only by presenting it to a cashier at the casino. In addition to relying on the video screen, the player is free to open the pull-tab manually to see whether it is a winner. See App., infra, 3a-4a.

3. The Tribe moved the district court for relief from its earlier contempt orders based upon the Tribe's replacement of its video poker, video blackjack, and video slot machines with Lucky Tab II machines. The United States countered that the Tribe was not entitled to relief, because Lucky Tab II could not lawfully be used at its casino for either of two reasons: first, Lucky Tab II is a gambling device prohibited in Indian country by the Johnson Act, and, second, Lucky Tab II is a Class III device under IGRA that cannot be operated without a tribal-state compact.

The district court, after an evidentiary hearing, granted the Tribe's motion. App., infra, 18a-33a. The court held that "the Johnson Act is not applicable to Class II devices" as defined in IGRA. App., infra, 26a. The court then held that Lucky Tab II "is a technological aid to the game of pull-tabs, and thus is a Class II device." Id. at 32a. The court relied on findings that, inter alia, the machine, as distinguished from the pull-tab roll inserted into the machine, does not determine winners and losers, the machine does not dispense money, the machine "adds to the entertainment value" of pull-tabs, and the machine is "not an exact replica of pull-tabs." Ibid.

4. The court of appeals affirmed. App., infra, 1a-17a.

At the outset, the court of appeals held, contrary to the district court, that IGRA does not provide an implied exemption from the Johnson Act for gambling devices that are used by Tribes as technologic aids to Class II gaming. App., infra, 6a-8a. The court of appeals explained that IGRA, by confining Class II gaming to "gaming [that] is not otherwise specifically prohibited on Indian lands by Federal law," 25 U.S.C. 2710(b)(1)(A), "clearly states that class II devices may be regulated by another federal statute-obviously the Johnson Act." App., infra, 7a. Accordingly, the court held that, in order for a device to be used by a Tribe in Indian country in the absence of a tribal-state compact, the device both must not be a "gambling device" under the Johnson Act and must be a "technologic aid" under IGRA. Id. at 7a-8a.

With respect to the Johnson Act, the court of appeals did not dispute that Lucky Tab II is "manufactured primarily for use in connection with gambling," which is one of the elements for classification as a gambling device under Section 1171(a)(2). The court held, however, that Lucky Tab II does not meet the other requirements for classification as a gambling device under either clause (A) or clause (B) of Section 1171(a)(2). The court reasoned that Lucky Tab II is not a device "which when operated may deliver, as the result of the application of an element of chance, any money or property," 15 U.S.C. 1171(a)(2)(A), because "the machines do not deliver any money or property," but instead deliver a paper pull-tab that can be redeemed for money. App., infra, 8a. The court also reasoned that Lucky Tab II is not a device "by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property," 15 U.S.C. 1171(a)(2)(B), because "[t]he user of the machine does not become entitled to receive money or property as a result of the machine's application of an element of chance." App., infra, 9a. Instead, the court reasoned that whether a player wins or loses is determined by the sequence of paper pull-tabs on the pre-printed roll inserted into the Lucky Tab II machine. Ibid. The court acknowledged that, "[i]f, however, the Lucky Tab II machines were computer-generated versions of the game of pull-tabs itself, or perhaps, even if it randomly chose which pull-tabs from the roll it would dispense, it could fall within" the Johnson Act. Ibid.

With respect to IGRA, the court of appeals held that Lucky Tab II is a permissible "technologic aid" to the game of pull-tabs, and not a prohibited "electronic or electrotechnical facsimile[]" of that game. App., infra, 10a-17a. The court reasoned that "the machines do not replicate pull-tabs; rather, the player using the machine is playing pull-tabs." Id. at 15a. The court also noted that the NIGC had recently promulgated a regulation that defined permissible Class II technologic aids to include "pull tab dispensers and/or readers." 25 C.F.R. 502.7(c). The court viewed the regulation as "suggesting that the NIGC has now given its imprimatur to these types of machines." App., infra, 16a.

REASONS FOR GRANTING THE PETITION

The court of appeals held that the Lucky Tab II machine, although indisputably "designed and manufactured primarily for use in connection with gambling," 15 U.S.C. 1171(a)(2), is not a "gambling device" within the meaning of the Johnson Act. The court of appeals was mistaken. The Johnson Act defines the term "gambling device" in the most expansive terms possible, precisely to prevent ingenious manufacturers from slipping their devices through some linguistic loophole. Nothing in the Johnson Act provides any basis for excluding a device such as Lucky Tab II that looks like a slot machine, sounds like a slot machine, and plays like a slot machine-simply because whether players of the device win or lose is determined not by its permanent mechanical components operating in isolation, but through a paper roll printed with bar codes that are read by the device. The Ninth Circuit, contrary to the Eighth Circuit here, has held that the Johnson Act applies to similar devices. The Eighth Circuit's decision opens the door to circumvention of the Johnson Act's prohibitions on gambling devices, not only in Indian country, but in the other places in which the Act applies, such as federal enclaves and possessions. It also impairs the United States' ability under the Johnson Act to prosecute the shipment of gambling devices into States that prohibit them, and thereby to assist the States in their own gambling regulation.

I. THE JOHNSON ACT'S DEFINITION OF "GAMBLING DEVICE" DOES NOT TURN ON ARBITRARY DISTINCTIONS ABOUT WHETHER OR NOT WINNERS ARE DETERMINED BY THE MECHANICAL OPERATIONS OF THE DEVICE

The court of appeals held that Lucky Tab II does not satisfy the Johnson Act's definition of a "gambling device," reasoning that a player "does not become entitled to receive money or property as a result of the machine's application of an element of chance." App., infra, 9a. The court considered it dispositive that winners and losers are determined by the sequence of pull-tabs on the preprinted paper roll inserted into the machine. Ibid. The court acknowledged that, if winners and losers were instead determined by a computer inside the Lucky Tab II, an otherwise identical machine could qualify as a Johnson Act gambling device. Ibid. Contrary to the court of appeals' view, the reach of the Johnson Act does not turn on arbitrary distinctions as to whether winners and losers are determined by a fixed component of a device alone or instead through the operation of its fixed components with a removable component such as the paper roll here.

A. Lucky Tab II Satisfies The Statutory Requirements For Classification As A Gambling Device

As noted above, the Johnson Act defines a "gambling device" to include:

any * * * machine or mechanical device (including, but not limited to, roulette wheels and similar devices) designed and manufactured primarily for use in connection with gambling, and * * * (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property.

15 U.S.C. 1171(a)(2).

The Lucky Tab II machine falls squarely within that definition. Lucky Tab II is "designed and manufactured primarily for use in connection with gambling," and the court of appeals did not suggest otherwise. A player becomes "entitled to receive * * * money or property" when the machine dispenses a winning pull-tab, which the player can then redeem for money. Whether the machine dispenses a winning pull-tab to a given player turns on various "element[s] of chance," including the number and order of winning and losing pull-tabs on the paper roll within the machine, the number of times previous players have played the machine, and the number of times the current player chooses to play. Indeed, it is these characteristics that render the machine a gambling device from the player's perspective, as well as from the casino operator's perspective.

Section 1171(a)(2)(B) does not require that the "element of chance" be "appli[ed]" in any particular manner to determine whether a player wins or loses. It thus does not require, as the court of appeals perceived, that winners and losers be selected "as a result of the machine's application of an element of chance." App., infra, 9a. In particular, Section 1171(a)(2)(B) does not require that winners and losers be determined through the operation of a permanent component of the device (such as a computer) standing alone, rather than in conjunction with a removable component (such as a roll of paper pull-tabs).

Perhaps, if the phrase "as the result of the application of an element of chance" were rewritten and relocated so as to modify "machine" or "operation of [the machine]," Section 1171(a)(2)(B) might be understood as requiring the machine itself or its operation to apply the element of chance. Even then, however, the definition would be satisfied, because once the pull-tab roll is inserted into the Lucky Tab II machine, it is integral to both the machine and its operation. See App., infra, 5a ("Without a roll of paper pull-tabs in place, the [Lucky Tab II] machine cannot function-it will not accept money or display any symbols."). But whatever the proper interpretation of that hypothetical statute, the phrase "as the result of the application of an element of chance" in Section 1171(a)(2)(B), as written, modifies the phrase "may become entitled to receive," the clause that it immediately follows, not "machine" or "operation of [the machine]." See Barnhart v. Thomas, No. 02-763, slip op. 6-7 (Nov. 12, 2003) (discussing the rule of the last antecedent). As explained above, there is no question that there is an "element of chance" in whether a player of Lucky Tab II "become[s] entitled" to receive money.

Any requirement that winners and losers be determined solely by the mechanical features of the device would be inconsistent with the statutory example of "roulette wheels and similar devices." 15 U.S.C. 1171(a)(2). A roulette wheel, in and of itself, does not generate the numbers that determine whether a player has won or lost a game of roulette. Rather, those numbers are produced only with the addition of the external components of a roulette ball and an operator who spins the roulette wheel.

B. Construing The Johnson Act, Consistent With Its Broad Definition, To Encompass Devices Such as Lucky Tab II Advances The Act's Purposes

When Congress amended the Johnson Act in 1962 to add the definition of gambling device at issue here, Congress intended to reach all machines designed and manufactured for use in gambling that enabled players to win money or property through an element of chance, without drawing fine distinctions about how those devices operate.

As explained in the House Report, eleven years of experience under the Johnson Act had demonstrated the inadequacy of the existing gambling device definition, which was confined to traditional slot machines, "an essential part of which is a drum or reel," and to machines that "operate by means of insertion of a coin, token, or similar object." H.R. Rep. No. 1828, 87th Cong., 2d Sess. 5-6 (1962). The Committee noted that "[n]ew gambling machines have been developed which are controlled by syndicated crime, but which are not subject to the provisions of the Johnson Act because they are not coin-operated, do not pay off directly or indirectly, and do not have a drum or reel as in the conventional slot machine." Id. at 6. In particular, the Committee noted the introduction of a species of pinball machine, not covered by the existing definition, that enabled a player to earn numerous free games that could be redeemed for money. Ibid.

Attorney General Kennedy, in congressional testimony in support of the 1962 amendment to the Johnson Act, also emphasized the need for a comprehensive definition of gambling device that manufacturers could not circumvent:

If you specify according to how they are operating now, they will, in my judgment, within a year think of new ways to operate which would not be covered by the [Johnson Act]. I think the provision against machines made primarily for use in connection with gambling, with the burden of proof on the Government, will allow us to cover not only pinball machines, primarily used for gambling, but also to cover different kinds of machines that might be devised later.

Hearings on H.R. 3024, H.R. 8410 and S. 1658 Before the House Comm. on Interstate and Foreign Commerce, 87th Cong., 2d Sess. 22 (1962).

In response to such concerns, the House Report explained that the 1962 legislation would "broaden[] the definition of the term 'gambling device'" to reach pinball machines and other machines designed for gambling that "when operated may deliver as a result of the application of the element of chance any money or property, either directly or indirectly." H.R. Rep. No. 1828, supra, at 7. As the D.C. Circuit contemporaneously observed, therefore, Section 1171(a)(2)'s expansive definition of gambling device "proceeded from a conscious purpose on the part of Congress to anticipate the ingeniousness of gambling machine designers." Lion Mfg. Corp. v. Kennedy, 330 F.2d 833, 837 (D.C. Cir. 1964).

Consistent with that purpose, the language of Section 1171(a)(2) serves to ensure that the Johnson Act, while comprehensive in the field that it regulates, reaches only gambling devices, not other types of machines that accept or dispense money or property. The requirements that the machine be "designed and manufactured primarily for use in connection with gambling" and that a player receive, or become entitled to receive, money or property "as the result of the application of an element of chance" distinguish gambling devices subject to the Johnson Act from both (1) change-making or vending machines, in which the user enters into a transaction that entitles him to receive money or property of comparable value to that which he has deposited, and (2) machines that enable a person to receive money or property as a result not of chance, but of his skill in playing a game, such as "a coin-operated bowling alley, shuffleboard, marble machine (a so-called pinball machine), or mechanical gun," 15 U.S.C. 1178(2).

It would be inconsistent with the congressional purpose underlying Section 1171(a)(2) to conclude that Lucky Tab II machines are not gambling devices based on distinctions that are not suggested, much less compelled, by the statutory text. Those machines are indisputably designed and manufactured primarily for use in gambling, and they indisputably entitle a winning player to receive money as the result of the application of an element of chance. Nothing more is required to satisfy the definition of a gambling device under Section 1171(a)(2)(B).1

II. THE NINTH CIRCUIT HAS HELD, CONTRARY TO THE EIGHTH CIRCUIT HERE, THAT THE JOHNSON ACT APPLIES TO DEVICES SIMILAR TO LUCKY TAB II

The Eighth Circuit's holding that Lucky Tab II is not a Johnson Act gambling device cannot be reconciled with the Ninth Circuit's holding in United States v. Wilson, 475 F.2d 108 (1973) (per curiam), aff'g 355 F. Supp. 1394 (D. Mont. 1971). In Wilson, the court of appeals upheld the application of the Johnson Act to a device that was similar in relevant respects to Lucky Tab II.

The "Bonanza" machine in Wilson, much like the Lucky Tab II machine, incorporated into its design a removable roll of paper coupons of varying values. Before inserting a coin into the machine, the player could view the next coupon to be dispensed. After that coupon was dispensed, the next coupon was exposed, and the player could decide whether to insert another coin. A player could redeem a winning coupon at the establishment where the machine was located. See 355 F. Supp. at 1396.

The question on appeal was whether a winning player of the Bonanza machine became entitled to money or property through the operation of an "element of chance" even though he could see the coupon that would be dispensed to him. The Ninth Circuit answered that question in the affirmative. The court explained that "most players put their first 25 cents in the 'Bonanza' machine because of the 'element of chance' that the next coupon, thus exposed, would entitle them, for another 25 cents, to a guaranteed payment of 50 cents to $31.00." 475 F.2d at 109. It is thus evident in the Ninth Circuit's holding that the "element of chance" in the playing of the Bonanza machine could arise in significant part from the order of coupons on the paper roll.2

In the Ninth Circuit, therefore, the Johnson Act would apply to a machine, such as Bonanza or Lucky Tab II, that enables a player to gamble on whether the next item (e.g., coupon, ticket, or pull-tab) that a machine dispenses from a preprinted paper roll will be a winner. In the Eighth Circuit, the Johnson Act would not apply to such a machine. That disagreement warrants this Court's resolution.

III. THE QUESTION WHETHER THE JOHNSON ACT CAN BE CIRCUMVENTED BY DEVICES SUCH AS LUCKY TAB II IS IMPORTANT BOTH INSIDE AND OUTSIDE INDIAN COUNTRY

The question whether machines such as Lucky Tab II satisfy the Johnson Act's definition of "any gambling device" has important ramifications outside as well as inside Indian country. As noted above, the Johnson Act prohibits the manufacture, sale, transportation, possession, or use of gambling devices not only within Indian country, but also within the District of Columbia, federal enclaves, and federal possessions. See 15 U.S.C. 1175(a). It also prohibits the interstate shipment of gambling devices to and from places in which they are prohibited under local law. See 15 U.S.C. 1172(a).

If, therefore, the Johnson Act were understood not to apply to devices such as Lucky Tab II, such devices could be introduced not only into additional areas of Indian country, but also into the other areas of federal jurisdiction identified in Section 1175(a). Moreover, although the possession or use of such devices might be prohibited under a State's own laws, the United States would be unable to prosecute the shipment of the devices into the State under Section 1172(a). As a result, the important role that Congress intended for the Johnson Act in reinforcing state prohibitions of gambling devices would be thwarted. See H.R. Rep. No. 1828, supra, at 6 (noting the Johnson Act's purpose of "assist[ing] the States to enforce their laws and to combat organized crime").

The ramifications of the technical and narrow definition of a Johnson Act gambling device applied by the Eighth Circuit would not necessarily be confined to devices similar in design to Lucky Tab II. If, as the Eighth Circuit's reasoning suggests, a gambling device must deliver the element of chance through the operation of an internal electronic or mechanical component, "the ingeniousness of gambling machine designers," Lion Mfg. Corp., 330 F.2d at 837, could be expected to produce an array of devices that deliver the element of chance through other means. Plainly, then, the court of appeals' holding that the Johnson Act does not apply to devices such as Lucky Tab II threatens to undermine the effectiveness of the Johnson Act both inside and outside Indian country.3

CONCLUSION

The petition for a writ of certiorari should be granted and the case should be consolidated for argument with Ashcroft v. Seneca-Cayuga Tribe of Oklahoma, in which the government is also filing a petition for certiorari.

Respectfully submitted.

THEODORE B. OLSON
Solicitor General
CHRISTOPHER A. WRAY
THOMAS L. SANSONETTI
Assistant Attorneys General
EDWIN S. KNEEDLER
Deputy Solicitor General
BARBARA MCDOWELL
Assistant to the Solicitor
General
RICHARD A. FRIEDMAN
Attorney

NOVEMBER 2003

1 The Eighth Circuit also stated that Lucky Tab II could not qualify as a gambling device under Section 1171(a)(2)(A) because the device itself does not dispense money or property directly to a winning player. See App., infra, 8a; 15 U.S.C. 1171(a)(2)(A) (defining gambling device as, inter alia, a machine that "when operated may deliver, as the result of the application of an element of chance, any money or property"). The Eighth Circuit was mistaken, because a winning pull-tab, when dispensed by a Lucky Tab II machine, constitutes property. In any event, Section 1171(a)(2)(B), the provision discussed in the text, requires only that a winning player become "entitled to receive" money or property, not that the machine itself deliver that money or property. See H.R. Rep. No. 1828, supra, at 6 (observing that the expanded definition of gambling device in 15 U.S.C. 1171(a)(2) applies to devices that "deliver * * * any money or property, either directly or indirectly").

2 The Ninth Circuit in Wilson also affirmed the district court's determination that the Johnson Act's definition of gambling device was satisfied by a "bead ball" machine. See 475 F.2d at 109. That machine dispensed plastic beads, each of which contained a piece of paper bearing a combination of numbers. A player would insert a coin into the machine, turn a handle on the machine until a ball was dispensed, open the ball to retrieve the paper, and compare the number with a list of winning numbers posted on the machine. If the player received a winning number, he would be paid by the establishment where the machine was located. See 355 F. Supp. at 1395. Whether a player won or lost was determined not by the mechanical operation of the machine, but by preprinted paper inside each bead and by the order in which the beads were dispensed.

3 For the reasons stated in the government's certiorari petition in Seneca-Cayuga Tribe (at 21-22 n.7), there is no occasion in this case to decide whether the Lucky Tab II device could qualify as a "technologic aid" within IGRA's definition of Class II gaming in 25 U.S.C. 2703(7)(A) standing alone, because the use of that device is, in any event, prohibited by the Johnson Act.

 

APPENDIX A

 

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

No. 02-1503

UNITED STATES OF AMERICA, APPELLANT,

v.

SANTEE SIOUX TRIBE OF NEBRASKA, A FEDERALLY RECOGNIZED INDIAN TRIBE, APPELLEE.

Submitted: October 9, 2002
[Filed: March 20, 2003]

ORDER

Before: MURPHY, BEAM, and MELLOY, Circuit Judges.

BEAM, Circuit Judge.

The government appeals from the district court's1 order granting the Santee Sioux Tribe (the Tribe) relief from a prior order of contempt. We affirm.

I. BACKGROUND

This is our third review of this case, which has an extensive factual and procedural history. In early 1993, the Tribe attempted to negotiate a compact with the State of Nebraska that would have permitted class III gaming on tribal lands, pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. § 2701 et seq. (IGRA). No agreement was reached, but the Tribe nevertheless opened a class III gambling casino on the reservation in 1996. Thereafter, the Chairman of the National Indian Gaming Commission (NIGC) issued a closure order against the Tribe because the Tribe was illegally participating in class III gaming activities. The Chairman ordered the casino to close by May 5, 1996, and the Tribe complied with that order. However, on June 28, 1996, the Tribe reopened its casino.

The government then filed suit in federal court, alleging violations of federal and state law and requesting closure of the casino. The district court dismissed both the Tribe's and the government's request for injunctive relief. We reversed on appeal, holding that the Tribe had violated the IGRA by conducting class III gaming in contravention of Nebraska law and that injunctive relief was warranted. United States v. Santee Sioux Tribe of Neb., 135 F.3d 558, 564-65 (8th Cir. 1998) (Santee I ).

On remand, the district court ordered removal of all class III gaming devices. Soon after, the Tribe voted to continue operating the casino, including the class III devices, and the government sought an order of contempt. The district court found the Tribe in contempt, and by November 1999, the district court had reduced to judgment accrued fines totaling in excess of $1 million. However, the district court determined that members of the Tribal Council could not be individually liable for contempt fines and that certain bank accounts could not be garnished. On appeal, we reversed the district court's decision not to hold the individual members of the Council in contempt and also reversed the district court's determination that certain monies could not be garnished. United States v. Santee Sioux Tribe of Neb., 254 F.3d 728, 735-37 (8th Cir. 2001) (Santee II). Other findings by the district court relating to garnishment were affirmed, and the case was remanded. Id. at 735, 738.

In May 2001, the Tribe ceased operation of its class III gaming devices. It eventually replaced them with what is commonly known as "Lucky Tab II" machines, in part because the NIGC's Chief of Staff wrote a letter to the Tribe's legal counsel suggesting that the Tribe install and operate the Lucky Tab II dispensers. The NIGC thereafter dissolved its closure order because it took the position that the Lucky Tab II is not a class III gaming device. Accordingly, the Tribe brought this action, seeking relief from the prior order of contempt. The government, however, contends that the Lucky Tab II is a class III device, or, in the alternative, that even if it is a class II device, it is prohibited by the Johnson Act, 15 U.S.C. § 1171 et seq.

At trial, the following evidence was adduced regarding the Lucky Tab II machines. First, the instruments look and sound very much like traditional slot machines. Internally, the device is essentially a computer. It also has a manual feed for money, a roll of paper pull-tabs, a bar code reader to read the back of each pull-tab, a rubber roller to dispense the pull-tabs, a cutter which cuts the pull-tabs from the roll, and a cash drawer. The bar code reader reads the pull-tab as it passes through the machine to the player, and based on this reading, a video screen displays the contents of the pull-tab-whether it is a winner or loser. The machine also emits different sounds, depending on whether it has read a winning or losing ticket.

A player begins playing by feeding money into the machine, but the machine cannot give change. The player presses a start button and after approximately two and a half seconds an animated display appears, announcing winner or loser status. The machine then dispenses the paper pull-tab to the player. At this point, the player can either pull back the paper tab to verify the contents, or continue playing by feeding more money into the machine and pressing the start button again. If the pull-tab is a winner, the machine cannot pay the player or give credits for accumulated wins; instead, the machine tells the player to go to the cashier and present the pull-tab to redeem winnings.

The pull-tabs themselves are small, preprinted, two-ply paper cards. The player peels off the top layer to reveal symbols and patterns which indicate a winning or losing card. The pull-tabs also indicate the number manufactured, game type, and unique sequence number. The back of the pull-tab shows an encrypted bar code with fifteen characters. The bar code must be scanned with a laser light to determine if the card is a winner or a loser. Because the information is encrypted, the data on the bar code is unknowable without the proprietary software from the manufacturer, World Gaming Technologies. Also, anti-tampering devices ensure that a pull-tab that has already been scanned will be rejected and that the tabs will be dispensed in the correct sequence. Without a roll of paper pull-tabs in place, the machine cannot function - it will not accept money or display any symbols.

The evidence suggested that, as a practical matter, players often take the winning tickets, unopened, to the cashier for redemption. Furthermore, players frequently leave the losing tickets, unopened, in the dispenser drawer of the Lucky Tab II machines.

The district court found that the machines at issue were class II devices because: the machines do not determine the winner or loser, pull-tabs can be played without these machines, the player does not play against the machine, and no winnings are paid or accumulated by the machines. The district court followed the reasoning in Diamond Game Enters., Inc. v. Reno, 230 F.3d 365 (D.C. Cir. 2000), in coming to this conclusion. United States v. Santee Sioux Tribe of Neb., 174 F. Supp.2d 1001, 1008-09 (D. Neb. 2001).

II. DISCUSSION

In reviewing a district court's final judgment following a bench trial, we review factual findings for clear error and legal conclusions de novo. Fed. R. Civ. P. 52(a); Tadlock v. Powell, 291 F.3d 541, 546 (8th Cir. 2002). A district court's choice between two permissible views of evidence will not be clearly erroneous, and we must give weight to the district court's opportunity to judge the credibility of the witnesses. Estate of Davis v. Delo, 115 F.3d 1388, 1393-94 (8th Cir. 1997).

The first issue in this case necessitates our delving into the relationship between the IGRA and the Johnson Act. The government argues that if Lucky Tab II is construed to be a class II gaming device, it is still a "gambling device" within the parameters of the Johnson Act2 and therefore prohibited. If that is the case, the Tribe cannot be granted relief from the contempt order. The Tribe argues that the Johnson Act defines "gambling device" so expansively that it would include any device which is "electric" or "mechanical," including those which are allowable class II gaming devices. Because class II gaming is permitted under one federal law (the IGRA), but the machines which facilitate class II gaming are arguably prohibited under another (the Johnson Act), the Tribe argues that the IGRA has repealed the Johnson Act by implication.

The IGRA, in section 2710(b)(1)(A), states that an Indian tribe may engage in class II gaming where the state in which it is located permits similar games "and such gaming is not otherwise specifically prohibited on Indian lands by Federal law." 25 U.S.C. § 2710(b)(1)(A). This section, the government argues, shows that the two acts can be read together because the IGRA contemplated prohibition of certain class II games if the devices used to carry out the gaming are prohibited Johnson Act gambling devices.

We agree with the government that the two acts can be read together. First, it is well-established that repeals by implication are not favored. Morton v. Mancari, 417 U.S. 535, 549, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974). "In the absence of some affirmative showing of an intention to repeal, the only permissible justification for a repeal by implication is when the earlier and later statutes are irreconcilable." Id. at 550. The two statutes here are not irreconcilable. Section 2710(b)(1)(A) clearly states that class II devices may be regulated by another federal statute - obviously the Johnson Act. Thus, the argument that the IGRA implicitly repeals the Johnson Act with respect to class II devices is not well taken, even though some version of this view has been expressed by several courts. See, e.g., United States v. 162 MegaMania Gambling Devices, 231 F.3d 713, 725 (10th Cir. 2000) (noting that the IGRA indicates Congress did not intend to allow the Johnson Act to reach class II devices); Diamond Game, 230 F.3d at 367 (finding that the IGRA limits "the Johnson Act prohibition to devices that are neither Class II games approved by the commission nor Class III games covered by tribal-state compacts"). But see Cabazon Band of Mission Indians v. Nat'l Indian Gaming Comm'n, 14 F.3d 633, 635 n. 3 (D.C. Cir. 1994) (noting that besides express repeal of Johnson Act for class III gaming in IGRA section 2710(d)(6), "'[t]here is no other repeal of the Johnson Act, either expressed

or by implication,'" for class III gaming) (quoting Cabazon Band Mission Indians v. Nat'l Indian Gaming Comm'n, 827 F.Supp. 26, 31 (D.D.C. 1993)). We find that the IGRA and the Johnson Act can be read together, are not irreconcilable, and the Tribe must not violate either act if it is to gain relief from the prior order of contempt.

The government argues that if the Johnson Act applies, the Lucky Tab II machines are prohibited "gambling devices" under that act, and the Tribe is still operating gambling equipment in contravention of federal law. We disagree because we do not believe the Lucky Tab II machines are "gambling devices" within the meaning of the Johnson Act. Lucky Tab II machines are not slot machines as apparently contemplated by 15 U.S.C. § 1171(a)(1), because they do not randomly generate patterns displayed on a screen, pay out money or otherwise determine the outcome of a game of chance. Nor do these machines fall within the strictures of sections 1171(a)(2)(A) and (B), which state, as earlier indicated, that a gambling device includes any machine:

designed and manufactured primarily for use in connection with gambling, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property.

15 U.S.C. § 1171(a)(2)(A), (B).

Lucky Tab II machines clearly do not fall within subsection A because the machines do not deliver any money or property. Subsection B seems a more likely candidate to ensnare these machines, but upon close examination, we find it does not. This section states that the operation of a machine designed and manufactured primarily for gambling use is a gambling device if, "as the result of the application of an element of chance" a person can be entitled to receive money or property. 15 U.S.C. § 1171(a)(2)(B) (emphasis added). The key words are highlighted, and demonstrate why the Lucky Tab II devices do not fit within this definition. As the trial testimony indicates, these machines do not generate random patterns with an element of chance. They simply distribute the pull-tab tickets and display the contents of the tickets on a screen for the user. The user of the machine does not become entitled to receive money or property as a result of the machine's application of an element of chance, which is what the statute clearly contemplates. See id. ("by the operation of [the gambling device] a person may become entitled to receive, as the result of the application of an element of chance [by the machine], any money or property").

The Johnson Act does not bar this type of machine, because it is merely a high-tech dispenser of pull-tabs. If, however, the Lucky Tab II machines were computer-generated versions of the game of pull-tabs itself, or perhaps, even if it randomly chose which pull-tab from the roll it would dispense, it could fall within this subsection. However, it is clear the machines do neither of these things. Instead, they dispense, in identical order from the roll as physically placed in the machine, pull-tabs from that roll. The machines, as noted, have a cutting device which separate the tabs from the roll, and then feed the pull-tab to the player. This action does not describe the "application of the element of chance." Therefore, although we find that the IGRA does not repeal the Johnson Act, either explicitly or implicitly, we also find that the Tribe does not violate the Johnson Act by operating the Lucky Tab II machines.

However, this does not end the inquiry. Instead, the key question becomes whether Lucky Tab II is an IGRA-prohibited class III gaming device. We begin with the language of the law. The statute offers the following explanations of class II and class III gaming:

(7)(A) The term "class II gaming" means-(i) the game of chance commonly known as bingo (whether or not electronic, computer, or other technologic aids are used in connection therewith)-

(I) which is played for prizes, including monetary prizes, with cards bearing numbers or other designations,

(II) in which the holder of the card covers such numbers or designations when objects, similarly numbered or designated, are drawn or electronically determined, and

(III) in which the game is won by the first person covering a previously designated arrangement of numbers or designations on such cards,

including (if played in the same location) pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo . . . .

(B) The term "class II gaming" does not include - (i) any banking card games, including baccarat, chemin de fer, or blackjack (21), or (ii) electronic or electromechanical facsimiles of any game of chance or slot machines of any kind.

. . .

(8) The term "class III gaming" means all forms of gaming that are not class I gaming or class II gaming.

25 U.S.C. § 2703(7), (8).

According to the statute, then, pull-tabs is a class II game. However, "electronic or electromechanical facsimiles of any game of chance" are not class II games. Such facsimiles constitute class III gaming. Id. The government argues that Lucky Tab II machines are electromechanical facsimiles of the game of pull-tabs, making their use prohibited class III gaming. The Tribe argues that these machines are technological "aids" within the meaning of section 2703(7)(A), and therefore fall within the parameters of permitted class II gaming. We do not fully agree with either of these positions, and in that regard, we pause to clarify a terminology issue.

Other courts have construed this statute and concluded that the phrase "whether or not electronic, computer, or other technologic aids are used in connection therewith" modifies both the game of bingo and also other games mentioned later in the section, specifically "pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo." These courts thus have found that games other than bingo could be technologically aided. E.g., Diamond Game, 230 F.3d at 367 (noting that pull-tabs is a class II game by statute, and that the IGRA specifically allows use of technologic aids "in connection with class II games"). We disagree with this reading of the statute. Instead, we believe that the phrase "whether or not electronic, computer, or other technologic aids are used in connection therewith" applies only to bingo. See 25 U.S.C. § 2703(7)(A). However, we also note that nothing in the statute proscribes the use of technological aids for any games, so long as the resulting exercise falls short of being a facsimile. Therefore, while we quarrel somewhat with the posture in which the parties, and other cases, have placed the issues, we agree with the ultimate conclusion that if the devices are not facsimiles within the meaning of the statute, they are not prohibited, regardless of whether or not they are labeled technological "aids." With that caveat, we apply the "aids" and "facsimiles" terminology.

The District of Columbia Circuit recently considered whether the same Lucky Tab II machines at issue here were permitted class II gaming devices under the IGRA. The court distinguished the Lucky Tab II machines from the machines at issue in that circuit's earlier decision, Cabazon Band, 14 F.3d 633. In Cabazon Band, the court examined electronic pull-tab machines which randomly selected a card for the player, electronically "pulled" the tab off the card at the player's direction, and displayed the results onscreen. Because that game "exactly replicate[d]" the game of video pull-tabs in computer form, it was a facsimile and not a class II device. Id. at 636.

The Diamond Game court observed that the Lucky Tab II machines were "quite different" from the machines in Cabazon, 230 F.3d at 369. The court found that the presence of the video monitor did not render Lucky Tab II a computerized version of pull-tabs because the computer did not select the patterns; instead, the machines merely cut tabs from paper rolls, displayed and dispensed them. "In other words, the game is in the paper rolls, not, as in the case of the Cabazon machine, in a computer." Id. at 370. Furthermore, citing Webster's Dictionary for a definition of aid, the court found that the machines "'help[ed] or support[ed]' or 'assist[ed]' the paper game of pull-tabs." Id. (citing Webster's Third New International Dictionary 44 (1993)). Noting that a Lucky Tab II machine was "little more than a high-tech dealer," the Diamond Game court held that "Lucky Tab II is not a facsimile of paper pull-tabs, it is paper pull-tabs." 230 F.3d at 370 (emphasis in original).

The prior law of this case is also instructive on this question. In Santee I, the Tribe argued that the State of Nebraska, through its SLOTS keno reading system, was already conducting class III gaming. We rejected that argument and held that the SLOTS keno reading system was a class II gaming device because "[t]he 'SLOTS' device is only a means of allowing keno players to view keno results, and, unlike a slot machine, is not a means of conducting the game itself. See Opinion of Nebraska Attorney General at 11 (Sept. 18, 1995)." Santee I, 135 F.3d at 564 (emphasis added). The Nebraska Attorney General's opinion referred to by Santee I describes the SLOTS system as follows:

This device allows players to view game results by pressing one or more buttons on a video display terminal. The game results are displayed in slot- machine like fashion with the use of symbols (cherries, bars, etc.) rather than the typical number display. In approving use of the system, the Department . . . concluded that the device merely displays the results of the game in a novel way and does not directly affect the outcome of the game.

Neb. Op. Att'y Gen. No. 95074, 1995 WL 551980, at *7 (Sept. 18, 1995) (internal quotations omitted).

The Lucky Tab II machines, much like the SLOTS system described in Santee I, "display[ ] the results of the game in a novel way and do[ ] not directly affect the outcome of the game." Id. While the Lucky Tab II machines read the pull-tab card for the player and display the results on screen in a novel way, the paper pull-tab card itself is the player's only path to winning. The machines have nothing to do with the outcome of the game.

The Diamond Game court used a similar analysis to reach its conclusion about the Lucky Tab II machines. The government had offered a device called a "Tab Force Validation System" as an example of a class II aid. Under this system, a player buys a pull-tab from a clerk, and instead of peeling off the top layer, inserts the pull-tab into a scanner which reads a bar code and displays the results on a video screen. The Diamond Game court could find no discernable difference between the two systems:

Both devices electronically "read" paper pull-tabs and display their contents on a screen, and neither can "change the outcome of the game." Unlike the machine involved in Cabazon, neither contains an internal computer that generates the game. Rather, both machines facilitate the playing of paper pull-tabs. They are thus Class II aids.

230 F.3d at 370.

While this case presents a close call, we think the better view is that operation of the Lucky Tab II machines does not change the fundamental fact that the player receives a traditional paper pull-tab from a machine, and whether he or she decides to pull the tab or not, must present that card to the cashier to redeem winnings. We agree with the reasoning of the Diamond Game court that the machines do not replicate pull-tabs; rather, the player using the machines is playing pull-tabs.3

The most recent amendments to the NIGC-enacted regulations also support this conclusion. Prior to July 2002, the regulations defined facsimile with direct reference to the Johnson Act. The regulation in effect as of July 17, 2002, defines "facsimile" as

a game played in an electronic or electromechanical format that replicates a game of chance by incorporating all of the characteristics of the game, except when, for bingo, lotto, and other games similar to bingo, the electronic or electromechanical format broadens participation by allowing multiple players to play with or against each other rather than with or against a machine.

25 C.F.R. § 502.8 (July 17, 2002).4

Furthermore, the regulations effective July 17, 2002, define an "aid" as an electronic, computer, or other technologic device that assists the playing of a game. Id. § 502.7(a)(1). Significantly, the regulation gives the following examples of gaming aids, "pull tab dispensers and/or readers, telephones, cables, televisions, screens, satellites, bingo blowers, electronic player stations, or electronic cards for participants in bingo games." Id. § 502.7(c) (emphasis added).

The current regulations seem to expressly contemplate the use of Lucky Tab II pull-tab dispensers/ readers, suggesting that the NIGC has now given its imprimatur to these types of machines. Cf. Diamond Game, 230 F.3d at 369 (noting at that time that the NIGC took no official position on the Lucky Tab II's class of gaming). Based on our review of the record and of the case law, the NIGC's conclusion that Lucky Tab II is a permissible class II gaming device seems to be a reasonable interpretation of the IGRA. Cf. Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) (holding that agency interpretation which is reasonable is entitled to deference).

III. CONCLUSION

Because we conclude that the Lucky Tab II machines are not prohibited Johnson Act gambling devices and are not prohibited "facsimiles" within the meaning of 25 U.S.C. § 2703(7), the Tribe is not conducting class III gaming in contravention of the federal court's prior order. We therefore affirm the judgment of the district court.

 

1 The Honorable Joseph F. Bataillon, United States District Judge for the District of Nebraska.

2 The Johnson Act defines "gambling device" to include all slot machines with a drum or reel with insignia, 15 U.S.C. § 1171(a)(1),

and also: any other machine or mechanical device . . . designed and manufactured primarily for use in connection with gambling, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property.

15 U.S.C. § 1171(a)(2).

3 We have considered, and rejected, the government's argument that the Lucky Tab II machines are facsimiles of slot machines. These machines may look and sound like slot machines, but they cannot make change, accumulate credits, or pay out winnings. Thus, they are not exact copies (the commonly understood definition of a facsimile, see Cabazon Band, 14 F.3d at 636) of a slot machine.

4 Citation to these newly-amended regulations begs the question of whether they can be applied in this case, as application would arguably impose an impermissible retroactive effect. See Criger v. Becton, 902 F.2d 1348, 1351 (8th Cir. 1990) (stating general rule of non-retroactive application for administrative regulations without indications to the contrary). However, the regulations were merely amended, not newly promulgated, and do not operate retroactively because they do not attach "new legal consequences to events completed before . . . enactment," Landgraf v. USI Film Prods., 511 U.S. 244, 270, 114 S. Ct. 1483, 128 L.Ed.2d 229 (1994). Instead, the current regulations merely clarify the relevant terms. In fact, it appears the regulations were amended to conform with the reasoning in the four cases that analyzed this issue prior to promulgation of the amended regulations - 162 MegaMania Gambling Devices, 231 F.3d 713, Diamond Game, 230 F.3d 365; United States v. 103 Elec. Gambling Devices, 223 F.3d 1091 (9th Cir.2000), and Cabazon Band, 14 F.3d 633.

APPENDIX B

 

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA

No. 8:96CV367

UNITED STATES OF AMERICA, PLAINTIFF,

v.

SANTEE SIOUX TRIBE OF NEBRASKA,
A FEDERALLY RECOGNIZED INDIAN TRIBE, DEFENDANT

Dec. 7, 2001

MEMORANDUM AND ORDER

BATAILLON, District Judge.

INTRODUCTION

This matter is before the court following a hearing on the Santee Sioux Tribe's ("Tribe") request that this court lift the sanctions of civil contempt entered imposing fines on the Tribe for failure to comply with the court orders dated November 28, 1998, and June 25, 1999. The Tribe contends that because it has ceased operating all Class III gaming activities, it should no longer be held in contempt. The United States ("Government") opposes the motion contending that the Tribe is still operating Class III gaming devices. The court received evidence from both parties, including testimony from expert witnesses. After careful consideration of the arguments of each party, review of the exhibits and testimony, and thoroughly researching the relevant case law, I conclude that the Tribe's motion for relief, Fling No. 271, should be granted.

BACKGROUND

This action has a long history. I will summarize those parts that are relevant and important to my decision here. In early 1993, the Tribe attempted to negotiate with the State of Nebraska to create a compact with the State that would permit Class III gaming on tribal lands, pursuant to the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701-2721 ("IGRA") and 18 U.S.C. §§ 1166-1168. No compact was reached, but the Tribe nevertheless opened a Class III gaming casino on the reservation in early 1996. Thereafter, the Chairman of the National Indian Gaming Commission ("NIGC") issued a closure order against the Tribe for the reason that the Tribe was participating in Class III gaming activities in violation of the IGRA. The Chairman ordered that the casino be closed by May 5, 1996. The Tribe complied with that order.

The Tribe appealed the Chairman's order to the full Commission. On June 28, 1996, the Tribe reopened its casino. The Government then filed suit against the Tribe asking the court to declare that the Tribe was operating an illegal Class III gaming casino, alleging violations of federal and state law, and requesting closure of the casino.

The court initially dismissed both the Tribe's request for injunctive relief and the Government's request for injunctive relief. On appeal the Eighth Circuit reversed. United States v. Santee Sioux Tribe of Nebraska, 135 F.3d 558 (8th Cir. 1998). The court concluded that the Tribe had violated the IGRA by conducting a Class III gaming operation and further concluded that the district court erred in not issuing an injunction to prohibit the gambling operation.

On remand in November 1998, the district court ordered closure of all of the Class III gaming devices. The Tribe voted to continue operating the casino, and the Government moved for an order of contempt. Following a show cause hearing, the court found the Tribe in contempt and fined it $3,000.00 per day. In June 1999 the court increased the fines to $6,000.00 per day and entered judgment in the amount of $432,000.00, representing fines that had accrued to that date. In August 1999 and November 1999 the court determined that the individual members of the Tribe would not be held in contempt and that certain bank accounts could not be garnished. Thereafter, the Government garnished approximately $178,000.00 of the Tribe's money toward the judgment.

On appeal, the Eighth Circuit reversed the district court's decision not to hold the individual members of the Tribe in contempt and also reversed the district court's determination that certain monies in the bank account could not be garnished. United States v. Santee Sioux Tribe of Nebraska, 254 F.3d 728 (8th Cir. 2001). Other findings by the district court relating to garnishment were affirmed by the Eighth Circuit. Id. The action was remanded. On September 20, 2000, this case was transferred to my docket. Filing No. 252.

On or about May 15, 2001, the Tribe ceased operation of its previous Class III gaming devices. It replaced the gaming devices with what is commonly known as "Lucky Tab II," in part because the evidence shows the NIGC's Chief of Staff wrote a letter to the Tribe's legal counsel suggesting that the Tribe install and operate the Lucky Tab II electronic pull-tab dispensers. Exhibit I. The NIGC thereafter dissolved its closure order. The NIGC takes the position that the Lucky Tab II is not a Class III gaming device. The Government, however, contends that the Lucky Tab II is a Class III gaming device.

On October 31, 2001, I held a hearing on the Tribe's motion. I received evidence and testimony, including testimony from expert witnesses. Thereafter, I allowed post-trial briefing by the Tribe concerning the patents set forth in Exhibits 112 and 113.1

ANALYSIS

A. Statutes

1. IGRA

Congress enacted the IGRA in 1988 to regulate gambling activities on Indian lands. 25 U.S.C. § 2702. The IGRA divides gaming into three separate categories: Class I, Class II, and Class III. Class I gaming activities are regulated by Indian tribes and are social games for minimal prizes. 25 U.S.C. § 2703(6) and § 2710(a)(1). Class I gaming activities are not at issue in this action. Class II gaming is defined as "the game of chance commonly known as bingo (whether or not electronic, computer, or other technologic aids are used in connection therewith) . . . including (if played in the same location) pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo. . . ." 25 U.S.C. § 2703(7)(A). "Electronic or electromechanical facsimiles of any game of chance or slot machines of any kind" are excluded from the definition of Class II gaming devices. 25 U.S.C. § 2703(7)(B). The Government admits that the statute allows for use of an "electronic aid" in connection with a pull-tab machine. Class III gaming consists of "all forms of gaming that are not Class I or Class II gaming." 25 U.S.C. § 2703(8). The use of Class III gaming devices would require the Tribe to have a compact with the State of Nebraska. 25 U.S.C. § 2710(d)(1). Both the Government and the Tribe agree that no such compact exists.

The IGRA created the NIGC to establish rules and regulations in accordance with the statutory requirements. 25 U.S.C. §§ 2704, 2706(b)(10). The NIGC defines a permissible aid to a Class II device as "electronic, computer or other technologic aid" to Class II gaming as "a device such as computer, telephone, cable, television, satellite or bingo blower," that, when used: (a) "[i]s not a game of chance but merely assists a player or the playing of a game," and (b) "[i]s readily distinguishable from the playing of a game of chance on an electronic or electromechanical facsimile." 25 C.F.R. § 502.7.

The Government relies on the IGRA for its proposition that federal and state laws pertaining to gambling activities apply to Indian country to the same extent as they do elsewhere in a state. However, Class II gaming is expressly exempted from those provisions, unless there is a complete ban on gaming. 18 U.S.C. § 1166(c).

The Tribe contends that legislative history supports the use of technologic aids. The Senate Report accompanying the IGRA stated that "such technology would merely broaden the potential participation levels [in Class II gaming] and is readily distinguishable from the use of electronic facsimiles in which a single participant plays a game with or against a machine rather than with or against other players." Sen. Rep. No. 100-446 at 9, reprinted in 1988 U.S.C.C.A.N. 3079. The Senate Report further states:

The Committee specifically rejects any inference that tribes should restrict Class II games to existing game sizes, levels of participation, or current technology. The Committee intends that tribes be given the opportunity to take advantage of modern methods of conducting Class II games and the language regarding technology is designed to provide maximum flexibility.

Id.

2 The Johnson Act

The Johnson Act governs the manufacture, sale, distribution and use of "gambling devices" on federal lands. 15 U.S.C. § 1171 et seq. The Johnson Act makes it unlawful to use gambling devices in Indian country. 15 U.S.C. § 1175(a). The Government contends that the Act applies here because the Tribe is operating a gambling device. The Tribe argues that the Act does not apply because the Lucky Tab II is a Class II device, and therefore, not subject to the Johnson Act.

The Government relies on Shoshone Bannock Tribes v. United States, No. CV95-0153-E-BLW (D.Idaho September 10, 1996), for its position that the Lucky Tab II is a Class III device and an illegal Johnson Act gambling device. In this case the magistrate determined the Lucky Tab II game was a Johnson Act device, a facsimile of the traditional game of pull-tab, and, consequently, a Class III gaming device. The district court affirmed these findings. However, a majority of cases have concluded that the Johnson Act is inapplicable to these types of devices, and similar findings have been made in both the Ninth and Tenth Circuits. United States v. 162 MegaMania Gambling Devices, 231 F.3d 713, 725 (10th Cir. 2000) (Johnson Act does not prohibit Class II video bingo games); and United States v. 103 Electronic Gambling Devices, 223 F.3d 1091, 1101-02 (9th Cir. 2000) (same); Cabazon Band of Mission Indians v. National Indian Gaming Comm'n, 827 F.Supp. 26, 31-32 (D.D.C. 1993) ("Cabazon I"), aff'd, 14 F.3d 633 (D.C. Cir. 1994) ( "Cabazon II" ) (Johnson Act not applicable to aids to gambling).

Further, the legislative history supports the Tribe's argument.

The phrase "not otherwise prohibited by federal law" refers to gaming that utilizes mechanical devices as defined in 15 U.S.C. § 1175. That Section prohibits gambling devices on Indian lands but does not apply to devices used in connection with bingo and lotto. It is the Committee's intent that with the passage of this act no other federal statute, such as those listed below, will preclude the use of otherwise legal devices used solely in aid of or in conjunction with bingo or lotto or other such gaming on or off Indian lands. The committee specifically notes the following sections in connection with this paragraph: . . . . 15 U.S.C. § 1171-1178 [the Johnson Act].

Sen. Rep. No. 100-446 at 12, reprinted in 1988 U.S.C.C.A.N. at 3082.

I conclude that the Johnson Act is not applicable to Class II devices. It is clear that Congress intended to permit technological aids. Although the Government argues to the contrary, the clear weight of the case law shows that such argument has been rejected by a number of federal courts. See United States v. 162 MegaMania Gambling Devices, 231 F.3d at 725; United States v. 103 Electronic Gambling Devices, 223 F.3d at 1101-02; Diamond Game v. Reno, 230 F.3d 365, 367 (D.C. Cir. 2000) (Diamond Game II); Cabazon II, 14 F.3d at 635; United States v. Burns, 725 F.Supp. 116, 124 (N.D.N.Y. 1989); Seneca Cayuga Tribe v. NIGC, Case No. 00-CV-609 (N.D.Okla. Feb. 20, 2001). I too conclude that the Johnson Act applies to Class III devices but not to Class II devices. Any other construction would nullify the IGRA. The essential determination, then, is whether the Lucky Tab II is a Class II or Class III device.

B. Caselaw-Class II and Class III Gaming

The Tribe relies on the decision of the D.C. Circuit in Diamond Game II to support its argument that the Lucky Tab II is a Class II aid, rather than a Class III device. The Government argued in that case that the Lucky Tab II device was a Class III gaming device. The court specifically found that Lucky Tab II aids in the game of pull-tabs. It further found that Lucky Tab II is not a "computerized version" of pull-tabs, but instead "the screen merely displays the contents of the paper pull-tab." Diamond Game II, 230 F.3d at 370. "It is, in other words, an aid to the game of pull-tabs." Id.2

The Government now argues that the Diamond Game II analysis is wrong, relying on cases that have determined that a pull-tab machine is a facsimile of a game of chance, and thus, a Class III gaming device. See Cabazon I, 827 F. Supp. at 32; Sycuan Band of Mission Indians v. Roache, 788 F.Supp. 1498 (S.D. Cal. 1992), aff'd, 54 F.3d 535 (9th Cir. 1994). The United States asserts that the test set forth in Cabazon II if applied to the Lucky Tab II shows it " 'preserves the fundamental characteristics' "of the traditional paper pull-tab game, and therefore, it is a Class III device under IGRA. Cabazon II, 14 F.3d at 636 (quoting Sycuan Band of Mission Indians v. Roache, 788 F.Supp. at 1498). The court further held in Cabazon II that the game was a video version that "falls within the core meaning of electronic facsimile." 14 F.3d at 636 (quoting Cabazon I, 827 F.Supp. at 32). Likewise, the court in Sycuan Band held that "the machines present the player with 'electronic facsimiles' of the pull-tab game." Sycuan Band of Mission Indians v. Roaches, 54 F.3d at 542. However, because none of the cases relied on by the Government addresses the Lucky Tab II device, the Tribe argues that they are not squarely on point.

The Tribe also contends that in a meeting on February 13, 2001, with the Tribe and legal counsel for the Tribe and the United States Attorney present, the Chairman of the NIGC advised and encouraged the Tribe to use the Lucky Tab II device. Further, on April 2, 2001, NIGC Richard Schiff, acting Chief of Staff, sent a letter to Conly J. Schulte, counsel for the Tribe, stating: "We encourage the Tribe to take advantage of the judicial sanction given to Lucky Tab II or to seek out other machines that are identical to the Lucky Tab II in all material respects." Roger Trudell, Chairman of Tribe, Decl., Ex. A. Since the NIGC is the federal agency charged with implementing the IGRA, the Tribe contends that this endorsement should have legal effect. In addition, Donald Louden, a previous vice-president of sales and marketing at Worldwide Game Technology, the manufacturer of Lucky Tab II, through his declaration testified that the Chairman of the NIGC considers Lucky Tab II to be Class II gaming devices, and that at least twelve Indian tribes in several states use these electronic pull-tab devices. Ex. B.

C. Evidence-Expert Testimony

The crucial issue in this case is whether the Lucky Tab II is a technological aid to the game of pull-tabs (Class II) or whether it is a facsimile of the game of pull-tabs (Class III). The Government argues in essence that putting a Class II pull-tab into a machine makes it a facsimile of a game of chance. Based on the case law I have reviewed and the evidence submitted to me, I disagree. The evidence shows that the Lucky Tab II is not a completely self-contained game or a facsimile of a game of chance.

Barbara Ann Frederiksen testified as an expert for the Tribe. Ms. Frederiksen is a forensic software analyst. She has had significant specialized training, education, and experience in software analysis. She has had additional training and experience in bar coding scanning systems, and in particular worked on debugging, remediation, and programming. She is an expert in forensics, bar coding, and electromechanical devices.

Ms. Frederiksen testified at length about how the game of pull-tabs worked in this case. I will summarize her testimony because it weighs heavily in my decision in this case. Ms. Frederiksen testified that a player feeds money into the machine. No change is received. A start button is pressed and for approximately 2 _ seconds an animated display appears. A pull-tab then comes out, is read by a bar code reader, and the video screen shows the money won by the player. There is no way for the machine to pay the player or to give credits. The player must go to the cashier to redeem the ticket. The machine only displays the winnings. A player cannot accumulate wins. The participant must present each pull-tab to get his or her winnings. The machine tells the player that he must go to the cashier for winnings. A machine dispenser cannot function without the pull-tabs in it. It will not accept money, nor will it display any symbols.

In terms of the machine's internal operations, there is a manual feed, a roll of paper pull-tabs, a bar code reader, a rubber roller, a cutter, and a cash drawer. The bar code reader reads the ticket as it passes through the machine. The machine gets a still image based on the bar code information. The computer chips do not determine win or loss. Only the back of the ticket determines the win or loss status. As the pull-tab leaves the machine, the bar code is read and an "image" is displayed on the screen. The image displayed depends on what is programmed into the bar code.

The pull-tabs themselves are preprinted. The pull-tabs indicate winners or losers, number manufactured, game type, and unique sequence number. The back of the pull-tab shows bar code information, which is an encrypted bar code with fifteen characters. The bar code must be scanned with a laser light to determine if there is a winner or a loser. The information is encrypted, so no one could figure out the result without the proprietary software from the manufacturer, World Gaming Technologies. Also, an anti-tampering device will reject a pull-tab that has already been read. In addition, the tabs must be dispensed in the correct sequence. The ticket always controls whether the player wins or loses, and the cashier is required to evaluate and read the pull-tab.

After describing the Lucky Tab II, Ms. Frederiksen offered her opinion that these devices are not facsimiles of a game of pull-tab. She further testified that these devices are, in her opinion, technological "aids" for the game.

On cross-examination Ms. Frederiksen testified that the sounds are different for a winning ticket versus a losing ticket. She further testified that each roll contained about 7,000 tickets and in a deal (defined as the total tickets in a particular batch) there would be approximately 540,000, with a predetermined number of winners.

Jerome L. Simpson, Jr., testified as an expert for the Government. Mr. Simpson had worked for 25 years for the FBI and then went into the accounting field. While with the FBI, he worked in the racketeering and records analysis division, and in particular examined evidence relating to gambling. A number of his investigations involved video gambling machines and gaming casinos. He stated that he testified about the Lucky Tab II device in Diamond Game Enterprises, Inc. v. Reno, 9 F.Supp.2d 13 (D.D.C. 1998) (Diamond Game I) case, which was reversed by the Circuit in Diamond Game II. He has further testified that the Lucky Tab II is a Johnson Act device. However, he testified that he had never seen paper pull-tabs with bar-coded information before, and that he did no work with bar-code technology. Mr. Simpson testified that he observed players take the winning tickets, unopened, to the cashier for redemption. These players left the losing tickets, unopened, in the dispenser drawer.

He testified that these Lucky Tab II machines are very similar to slot machines. First, according to Mr. Simpson, the machines look alike in terms of size, video, lights, buttons, and illuminated buttons. They accept bills, have grids with similar symbols, make noises, and have similar payoffs. Players in both games can look at video screens to determine if they have won. Mr. Simpson thus concludes that the Lucky Tab II is a facsimile of a traditional slot machine.

On cross-examination Mr. Simpson admitted that he had no computer degree or training, was not published, and that his qualifications on some issues were called into question by Judge Michael Burrage in the Seneca-Cayuga Tribe case, at least with respect to the Johnson Act testimony.

After reviewing all of the evidence and relevant law in this case, I find that the Lucky Tab II machine is a technological aid to the game of pull- tabs, and thus is a Class II device. I base this conclusion on the following findings. First, the video does not determine the winner or loser. The player must pull the tab and take it to the cashier for validation. Second, theoretically, the game could be played without the machine. Third, no cash prizes are dispensed by the machine. Fourth, no credits are accumulated or prizes awarded by the machine. Fifth, the machine only dispenses paper pull- tabs. Sixth, there is no random generation performed by the machine. Seventh, the aid adds to the entertainment value. Eighth, the use of the machines in theory facilitates greater participation, since more participants are able to play at the same time. Ninth, these machines do not determine chance, and the player is not playing against the machine. Tenth, the machines are not an exact replica of pull-tabs. I found the testimony of Ms. Frederiksen and the Diamond Game II decision to be very persuasive in this regard.3

CONCLUSION

I find that Lucky Tab II is not an exact replica of the game of pull-tabs, and thus is not a facsimile of pull-tabs nor a Johnson Act device. I further find that Lucky Tab II is a Class II gaming device. In making this finding, I adopt the rationale set forth by the court in Diamond Game II. That court stated: "[T]he game played with the Lucky Tab II is not a facsimile of paper pull-tabs, it is paper pull-tabs." Diamond Game II, 230 F.3d at 370.

IT IS THEREFORE, ORDERED, ADJUDGED AND DECREED THAT:

1. The Tribe's motion for relief, Filing No. 271, should be and hereby is granted; and

2. All fines against the Tribe are hereby permanently suspended effective May 15, 2001.

 

1 The Government offered Exhibit 112, a certified copy of a patent allegedly relating to the devices in this case, and Exhibit 113, an internet copy of a patent allegedly related to the devices in this case. Both exhibits were received into evidence. However, since Exhibits 112 and 113 were not shared with counsel for the Tribe prior to this hearing, I allowed the Tribe to file a post-trial brief addressing the patent issues raised at the hearing. The Government argues that the language in both patents bolsters its contention that the Lucky Tab II is a game of chance intended to look like and to be a Class III gaming device. I am not convinced that Exhibit 112 is the correct patent for the Lucky Tab II in this case, nor am I sure that Exhibit 113 is a final copy of the patent in question. However, a thorough review of both Exhibits 112 and 113, if anything, supports the Tribe's view that the Lucky Tab II dispenser was considered to be a technologic aid to Class II gaming. The language in the exhibit, relied on by the Government, actually states that the device enables a play of a Class II game, "since the player does not rely upon the apparatus to determine the outcome of any particular play." Exhibit 113 at 18. Further, the patent states: [E]ach player of the gaming apparatus, which [sic] playing this pull-tab game, will play against each other player, as opposed to the gaming apparatus itself. In a true Class III gaming apparatus, the player effectively plays against the apparatus in that some means associated with that apparatus will determine whether or not the player receives winning indicia. . . . In the present invention, the apparatus is actually passive, as opposed to active, and does not determine the fate or outcome of a particular game or play. Ex. 113 at 17. The patent also states that the Lucky Tab II dispenser does not actually control the outcome of the game. Id. at 18. Likewise, in Exhibit 112, the patent describes the invention as a Class II game with the entertainment and enjoyment of a Class III game. Exhibit 112 at 2 and 5. The summary of the invention describes the device as an "electronic dispenser" much like that of an electronic ticket dispenser. Id. at 3. Although some language in the patents discusses games of "chance" and the look of a Class III gaming device, my reading of Exhibits 112 and 113 indicates that the inventor intended that the Lucky Tab II device be a Class II gaming device. I agree with the Tribe that the Government relies on isolated comments from the exhibits to support its claims. Accordingly, I find that the patent Exhibits 112 and 113, even if relevant to this action, do not provide support for the Government's position.

2 The Government did not appeal those findings to the Supreme Court.

3 The Tribe argues that the Diamond Game II case requires the application of collateral estoppel in this case. The Government argues that collateral estoppel is not applicable, because this is a different tribe than the one in Diamond Game II. I need not decide this issue in view of my findings herein. I do note, however, that nonmutual collateral estoppel is not generally applied to the United States. See United States v. Mendoza, 464 U.S. 154, 158, 1

APPENDIX C

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

No. 02-1503

UNITED STATES OF AMERICA, APPELLANT

v.

SANTEE SIOUX TRIBE OF NEBRASKA, APPELLEE

June 25, 2003

ORDER DENYING PETITION FOR REHEARING
AND FOR REHEARING EN BANC

The petition for rehearing en banc is denied. The petition for rehearing by the panel is also denied.

Judge Theodore McMillian took no part in the consideration or decision of this matter.

 

APPENDIX D

1. Section 1171(a) of Title 15 provides:

As used in this chapter-

(a) The term "gambling device" means-

(1) any so-called "slot machine" or any other machine or mechanical device an essential part of which is a drum or reel with insignia thereon, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or

(2) any other machine or mechanical device (including, but not limited to, roulette wheels and similar devices) designed and manufactured primarily for use in connection with gambling, and (A) which when operated may deliver, as the result of the application of an element of chance, any money or property, or (B) by the operation of which a person may become entitled to receive, as the result of the application of an element of chance, any money or property; or

(3) any subassembly or essential part intended to be used in connection with any such machine or mechanical device, but which is not attached to any such machine or mechanical device as a constituent part.

* * * * *

2. Section 1172(a) of Title 15 provides:

It shall be unlawful knowingly to transport any gambling device to any place in a State or a possession of the United States from any place outside of such State or possession: Provided, That this section shall not apply to transportation of any gambling device to a place in any State which has enacted a law providing for the exemption of such State from the provisions of this section, or to a place in any subdivision of a State if the State in which such subdivision is located has enacted a law providing for the exemption of such subdivision from the provisions of this section, nor shall this section apply to any gambling device used or designed for use at and transported to licensed gambling establishments where betting is legal under applicable State laws: Provided, further, That it shall not be unlawful to transport in interstate or foreign commerce any gambling device into any State in which the transported gambling device is specifically enumerated as lawful in a statute of that State.

3. Section 1175(a) of Title 15 provides:

It shall be unlawful to manufacture, recondition, repair, sell, transport, possess, or use any gambling device in the District of Columbia, in any possession of the United States, within Indian country as defined in section 1151 of title 18 or within the special maritime and territorial jurisdiction of the United States as defined in section 7 of title 18, including on a vessel documented under chapter 121 of title 46 or documented under the laws of a foreign county.

4. Section 1178 of Title 15 provides:

None of the provisions of this chapter shall be construed to apply-

(1) to any machine or mechanical device designed and manufactured primarily for use at a racetrack in connection with parimutuel betting,

(2) to any machine or mechanical device, such as a coin-operated bowling alley, shuffleboard, marble machine (a so-called pinball machine), or mechanical gun, which is not designed and manufactured primarily for use in connection with gambling, and (A) which when operated does not deliver, as a result of the application of an element of chance, any money or property, or (B) by the operation of which a person may not become entitled to receive, as the result of the application of an element of chance, any money or property, or

(3) to any so-called claw, crane, or digger machine and similar devices which are not operated by coin, are actuated by a crank, and are designed and manufactured primarily for use at carnivals or county or State fairs.

5. Section 2703 of Title 25 provides, in pertinent part:

For purposes of this chapter-

* * * * *

(6) The term "class I gaming" means social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as a part of, or in connection with, tribal ceremonies or celebrations.

(7)(A) The term "class II gaming" means-

(i) the game of chance commonly known as bingo (whether or not electronic, computer, or other technologic aids are used in connection therewith)-

(I) which is played for prizes, including monetary prizes, with cards bearing numbers or other designations,

(II) in which the holder of the card covers such numbers or designations when objects, similarly numbered or designated, are drawn or electronically determined, and

(III) in which the game is won by the first person covering a previously designated arrangement of numbers or designations on such cards,

including (if played in the same location) pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo, and

(ii) card games that-

(I) are explicitly authorized by the laws of the State, or

(II) are not explicitly prohibited by the laws of the State and are played at any location in the State,

but only if such card games are played in conformity with those laws and regulations (if any) of the State regarding hours or periods of operation of such card games or limitations on wagers or pot sizes in such card games.

(B) The term "class II gaming" does not include-

(i) any banking card games, including baccarat, chemin de fer, or blackjack (21), or

(ii) electronic or electromechanical facsimiles of any game of chance or slot machines of any kind.

* * * * *

(8) The term "class III gaming" means all forms of gaming that are not class I gaming or class II gaming.

6. Section 2710 of Title 25 provides, is pertinent part:

(a) Jurisdiction over class I and class II gaming activity

(1) Class I gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes and shall not be subject to the provisions of this chapter.

(2) Any class II gaming on Indian lands shall continue to be within the jurisdiction of the Indian tribes, but shall be subject to the provisions of this chapter.

(b) Regulation of class II gaming activity; net revenue allocation; audits; contracts

(1) An Indian tribe may engage in, or license and regulate, class II gaming on Indian lands within such tribe's jurisdiction, if-

(A) such Indian gaming is located within a State that permits such gaming for any purpose by any person, organization or entity (and such gaming is not otherwise specifically prohibited on Indian lands by Federal law), and

(B) the governing body of the Indian tribe adopts an ordinance or resolution which is approved by the Chairman.

A separate license issued by the Indian tribe shall be required for each place, facility, or location on Indian lands at which class II gaming is conducted.

* * * * *

(d) Class III gaming activities; authorization; revocation; Tribal-State compact

(1) Class III gaming activities shall be lawful on Indian lands only if such activities are-

(A) authorized by an ordinance or resolution that-

(i) is adopted by the governing body of the Indian tribe having jurisdiction over such lands,

(ii) meets the requirements of subsection (b) of this section, and

(iii) is approved by the Chairman,

(B) located in a State that permits such gaming for any purpose by any person, organization, or entity, and

(C) conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State under paragraph (3) that is in effect.

* * * * *