Here's a good explanation of the three classes of Indian gaming you'll find in the US. This article by Anthony Curtis is from the current issue of Strictly Slots. I subscribe to this magazine mainly to read the articles by Curtis and Dancer. You might like it too.
----------------------------------------------
As Far as I'm Concerned
by Anthony Curtis

Class Doesn’t Matter
Understanding what games can and can’t be offered

Sometimes this column serves as a conduit for me-a catalyst for learning about something new. There’s a lot going on in this industry, and often, I can’t justify the time to dig into it. But then column time rolls around, and I get a chance to kill two birds with one stone. I do a little research and, presto! I have both a column and a new understanding. This is one of those times.

For years, I’ve muddled through interviews and articles, not fully comprehending the difference in official gaming classifications as they’re applied to Native American (and other) operations. That is, the difference between Class I, II, and III gaming. These distinctions are important-they determine what a tribe can offer in the way of gambling games-but they don’t have much consequence for players. In fact, the only ones who really need to understand the subtleties are the tribes, who have to stay on the right side of state laws, and the game manufacturers, who sell the tribes their gambling devices. (It also helps if the states understand them so they can properly enforce the laws.) Still, if you play, it’s always good to know as much as possible about what’s going on, so here’s a quickie explanation.

The three classes were established by the Indian Gaming Regulatory Act of 1988 as a framework for governing Indian gaming. Essentially, they define what tribes in a given jurisdiction can and can’t offer in the casinos on their reservations. The distinctions have also been adopted to describe gaming outside the tribes, such as in card rooms.

Class I
When you think about it, you’ll realize that you hardly ever see references to Class I gaming. That’s because it describes situations that haven’t changed since Native American gambling went public. Class I gaming is defined as “traditional Indian gaming and social gaming for minimal prizes.” Native Americans have been gambling for hundreds of years, and playing for stakes of all sorts is a big part of their culture. Class I is the type of social or semi-private gambling that many groups in society partake of. Since it’s not commercial, it’s essentially ignored.

Class II
At its heart, Class II gaming means bingo. Bingo was the first big commercial gambling breakthrough for the tribes, as the Indians elevated this exceedingly popular gambling game to new levels of participation and payouts. In addition to traditional bingo, Class II gaming includes spin-offs, such as instant bingo, lotto, punch boards, tip jars, and pull tabs. It also includes card games that aren’t house-banked. The most common is poker, where a card room makes money by charging “time” (a per-hour fee) or taking a “rake.” Today, Class II also includes slots, though there’s a distinction in the way Class II slots operate (see below).

Class III
This is full-scale gambling, the kind you’re used to seeing in Nevada or Atlantic City casinos. It includes blackjack, craps, roulette, and the types of slots and video poker machines that I normally write about. Tribes must negotiate compacts with the states to conduct Class III gaming-and many have.
So it breaks down to social gambling, bingo and poker, and casino-style gambling. Fairly straightforward, right? Then why does it remain such a source of confusion? The problem arises in Class II, whose definition the casinos and manufacturers have found clever ways to broaden to suit their needs. Step into a casino in a Class II-gaming state, such as Florida or Oklahoma, and you’ll see slots that appear to be the same machines you play in your favorite Las Vegas casinos. For the most part, they are the same. Subject to market conditions and competition, payoffs will be in line with what you’d get if they were normal Class III machines. The difference is in how outcomes are determined.

Due to the key word in the definition of Class II gaming-bingo-the Class II slots have to be bingo games in disguise. And as strange as it sounds, that’s exactly what they are. Each time you spin, the system plays a game of bingo, and the results of that game determine which symbols line up on the reels.

Slot machines that play bingo with your bets? Are you freaking out? Don’t. Believe it or not, this isn’t really important in your decision as to whether or not to play these slots. Just as a bingo game can be rendered as loose or tight as the operators want it to be, based on what percentage of the collected player fees they return in prize money, so, too, can Class II slot returns be programmed. And, similar to most gambling situations, the level of competition more than anything else determines what those returns wind up being. If you play games in noncompetitive jurisdictions, the returns will be tighter, regardless of how they’re determined. So class really doesn’t matter-at least when it comes to the slots.

Anthony Curtis is the publisher of the Las Vegas Advisor. For ordering information, call 800/244-2224 or log onto www.LasVegasAdvisor.com.