In 2006 and 2007, the National Indian Gaming Commission (NIGC) proposed a series of Class II Indian gaming regulations. The proposed regulations, which included game classification standards and a revised definition of electronic or electromechanical facsimile, were intended to more clearly distinguish Class II gaming (e.g., electronic bingo and other games similar to bingo) from Class III gaming (e.g., slot machines).

Generally, the proposed regulations were expected to be more restrictive than existing practices and likely to limit the types of gaming machines classified as Class II devices and thus available for tribes restricted to operating only Class II gaming.

The NIGC commissioned Principal Economist Alan Meister to conduct independent studies of the potential economic impact of the proposed regulations on Indian tribes. Specifically, he was asked to identify the types of potential impacts and quantify them on an aggregate nationwide basis. To analyze the nationwide impacts, Dr. Meister conducted state-by-state market analyses.

In a 2006 report to the NIGC, Dr. Meister concluded that regulations proposed in May and October 2006 would have had a significant negative impact on Class II gaming and the tribes that operate Class II facilities. Subsequent to the completion of Dr. Meister’s report, the NIGC withdrew the first set of proposed regulations.

In October 2007, the NIGC proposed revised versions of the withdrawn regulations. In a 2008 study for the NIGC, Dr. Meister concluded that while the revised set of proposed regulations would be less restrictive than the withdrawn regulations, they would still have a significant negative impact on Class II gaming and the tribes that operate Class II facilities. Later in 2008, the NIGC withdrew the most detrimental of the revised regulations.

Both of Dr. Meister’s studies identified a variety of potential negative economic impacts, including decreases in gaming and nongaming revenue; a decrease in the variety and quality of Class II gaming machines; gaming facility closures; an increase in capital, deployment, compliance, regulatory, training, revenue sharing, and financing costs; a decrease in the number of tribal member jobs; and a decrease in innovation in the Class II gaming machine market.

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