United States v. 103 Electronic Gambling Devices, Located at the Red Fox Casino, Laytonville Rancheria, Mendocino County, California, Cahto Tribe, Shodaki Coyotevalley Casino Genevieve Campbell Sharp Image Gaming, Inc., Multimedia Games, Inc., Claimant-Appellee. Office of the Circuit Executive
Docket: 1091
Court: Court of Appeals for the Ninth Circuit; August 29, 2000; Federal Appellate Court
The case involves the United States appealing a forfeiture action against electronic gambling devices at the Red Fox Casino, specifically questioning whether the electronic game MegaMania qualifies as "bingo" under the Indian Gaming Regulatory Act (IGRA). The Government contends that MegaMania is a "gambling device" under the Johnson Act, which prohibits such devices on Indian land without a tribal-state compact. Multimedia Games, Inc. argues that MegaMania is indeed a bingo game, permissible under IGRA. MegaMania allows players to compete via a network of terminals, where they can purchase up to four electronic game cards for 25 cents each. The game requires a minimum of twelve players and involves a pay-per-draw format known as "ante up" bingo, where players must cover numbers drawn from a set, making it distinct from traditional bingo. The court must ultimately decide whether MegaMania meets the legal definition of bingo.
In a straight-line bingo game, players achieve bingo by covering a line horizontally, vertically, or diagonally and pressing the daub button, which notifies all players nationwide. The game concludes once a player declares bingo, and monetary prizes are awarded based on the number of cards in play, the balls drawn, and the number of simultaneous winners, with a top jackpot of $5,000 for the first bingo achieved after four numbers are drawn. Additionally, there is a continuous "corners game" called "CornerMania," where players covering corners win prizes; if no corners prize is awarded by the end of the straight-line game, further numbers are drawn until at least one corner prize is given.
The Indian Gaming Regulatory Act (IGRA) categorizes gaming on Indian land into three classes: Class I includes traditional games with minimal value prizes; Class II encompasses bingo and similar games; and Class III includes all other games, which can only be played if a tribal-state compact exists. At the time of the forfeiture action, no compact existed between the Cahto Tribe and California, raising the question of whether MegaMania and its terminals qualify as Class II gaming under IGRA. Class II gaming is defined as bingo played for monetary prizes with numbered cards, won by the first to cover a designated arrangement. Importantly, Class II excludes electronic or electromechanical facsimiles of chance games or slot machines.
The National Indian Gaming Commission (NIGC) was established to oversee tribal gaming, with powers to inspect records, approve compacts, impose fines, and regulate games. The NIGC's regulations align closely with IGRA's definitions and include provisions for games similar to bingo that do not involve house banking, which is defined as any game where the house participates and can win against players.
The Government initiated two in rem civil forfeiture actions, with the second filed in May 1998 targeting 103 electronic game machines at the Red Fox Casino in California, including 20 MegaMania machines. The complaint asserted that these machines were illegal gambling devices under the Johnson Act. Multimedia responded by filing a claim for the MegaMania machines, leading both parties to file motions for summary judgment. The district court ruled in favor of Multimedia, determining that MegaMania is not a gambling device under the Johnson Act but rather a legal class II electronic aid to bingo under the Indian Gaming Regulatory Act (IGRA).
Upon reviewing the case, the appellate court agreed with the district court's interpretation, affirming that MegaMania qualifies as a legal class II bingo game. The Government argued that additional criteria beyond IGRA's three specified factors for class II bingo games should be considered, citing differences between MegaMania and traditional bingo, such as the ante-up feature and the game's pace. However, the court held that the three criteria outlined in IGRA are the exclusive legal requirements for a game to be classified as class II bingo. It emphasized that Congress's inclusion of these specific factors negated the relevance of any implicit criteria. The court further noted that IGRA's definition of bingo encompasses various formats that differ from traditional bingo, reinforcing that the statutory criteria are sufficient for classification.
S 2703(7)(A)(i) defines class II bingo to include "other games similar to bingo," indicating that the definition does not rely solely on traditional bingo attributes. The National Indian Gaming Commission's (NIGC) interpretation of the Indian Gaming Regulatory Act (IGRA) suggests that Congress did not intend to restrict bingo to its classic form. This interpretation is entitled to significant deference, as it reflects the agency's understanding of the statute during its implementation.
The Government argues that the "ante-up" feature of MegaMania differentiates it from traditional bingo, which typically requires a fixed price for a session pack. However, the statute and regulations do not mandate a single upfront payment, and the NIGC's broader definition of bingo allows for variations like the ante-up method.
Moreover, the Government's claim that the "continuous-win" feature of CornerMania does not comply with IGRA's requirements is misfocused, as the inquiry should center on whether MegaMania meets the statutory criteria as a whole. The law does not specify that the "previously designated arrangement" must be a straight line; any predesignated pattern qualifies. Therefore, MegaMania satisfies the requirements outlined in S 2703(7)(A)(i)(III), as various winning patterns can be recognized in traditional bingo, such as straight lines and four corners.
The determination of whether MegaMania is "won" by the first player to cover a designated arrangement hinges on the interpretation of "win." The term can imply either achieving victory over others or merely receiving a prize, as defined by Webster's II New College Dictionary. This ambiguity suggests that multiple players can "win" simultaneously without negating each other's victories. Evidence indicates that, similar to traditional bingo games where interim prizes are awarded for covering corners, players in MegaMania likely consider themselves winners even if the overall game is ongoing. The Indian Gaming Regulatory Act (IGRA) does not explicitly require that the game ends when a player wins, which implies that interim prizes, such as those awarded in CornerMania, are permissible during a game.
Moreover, IGRA categorizes games based on whether they include the house as a participant. The government argues that MegaMania qualifies as a class III game because CornerMania's payouts are based on a formula that benefits the house. However, MegaMania differs from house banking games like blackjack, as the house does not compete against players in the same manner. The fact that the house retains a portion of players' fees does not inherently classify MegaMania as a house banking game, as even traditional bingo games operate similarly, without the house competing directly against players.
The house earns a fixed percentage of players' antes in MegaMania, but this does not classify it as a house banking game under S 502.11. The definition of a participant in such a game does not simply include profit from player deposits. Under the Indian Gaming Regulatory Act (IGRA), class II gaming encompasses bingo and similar games but excludes electronic or electromechanical facsimiles of games of chance or slot machines. The Government argues that the MegaMania terminal is an "electronic facsimile," while Multimedia is considered an "electronic aid." Previous litigation, notably Spokane Indian Tribe v. United States, differentiated between electronic "aids," which facilitate multiple players, and "facsimiles," where a single player competes against a machine. The Senate Report on IGRA supports the use of technology that enhances player participation without altering the fundamental nature of the game. The court ruled that the Pick 6 game was a facsimile since it involved individual play against a machine. Conversely, the MegaMania terminal connects players across various reservations, enhancing participation and functioning as an electronic aid rather than a facsimile. The terminal is not a slot machine; it operates on a network requiring multiple players to function effectively. The Government's claim about CornerMania suggests that players compete against machines; however, they actually compete against each other for prizes.
The Government contends that the MegaMania terminal, while authorized under the Indian Gaming Regulatory Act (IGRA), constitutes an illegal "gambling device" under the Johnson Act. The Johnson Act defines a "gambling device" as any machine primarily designed for gambling that delivers money or property based on chance. Typically, the Johnson Act prohibits gambling devices on federal land and in Indian country. However, IGRA repealed the Johnson Act's application to class III gaming devices under tribal-state compacts, leaving unclear its relation to class II gaming. The analysis emphasizes that IGRA explicitly categorizes bingo using electronic aids as class II gaming, indicating that Congress did not intend for the Johnson Act to apply to such aids. The court concludes that while complete electronic or mechanical versions of gambling games may be prohibited by the Johnson Act, technological aids like the MegaMania terminal are permissible if they comply with IGRA's class II provisions. This interpretation respects the principles of statutory construction, allowing both statutes to coexist and prioritizing specific provisions over general ones.
Courts must enforce all congressional statutes capable of co-existence unless explicitly stated otherwise by Congress. When two laws address the same matter, both should be upheld if feasible. The most recent congressional directive regarding gaming states that aids to bingo are permissible in Indian territories. Section 2703 of the Indian Gaming Regulatory Act (IGRA) is applicable in this context. The ruling aligns with Congress's intent to enable Indian tribes to operate gaming for economic development and self-sufficiency. The MegaMania game qualifies as class II bingo, and since its terminal acts as an aid to bingo, it is not classified as an illegal gambling device under the Johnson Act. Consequently, Multimedia's operation of MegaMania is affirmed.
Additional details include that the game utilizes randomly generated cards, with players able to maintain or change their cards before the game's start, but not after it begins. The draw involves a machine that selects numbered ping pong balls, with numbers transmitted to gaming facilities through a computer system. Players must open an account to track their funds, with transactions automatically recorded. The definition of class II gaming includes bingo or lotto, with specific criteria outlined in Section 502.3, which encompasses various forms of bingo-like games. The Commission clarified that Congress did not intend to restrict bingo to its traditional format, rejecting suggestions that would complicate the statutory criteria. There are no material factual disputes between the parties involved.
Congress intended the definition of class II gaming to encompass games similar to bingo, extending beyond traditional bingo formats. The Commission established criteria for such games, which must not be classified as house banking games. The Government acknowledges that MegaMania meets the first two criteria but does not challenge its multiplayer aspect. Evidence indicates that MegaMania is not merely a facade for another game, as its payouts are generally lower than traditional bingo.
Under IGRA regulations, keno is classified as class III gaming, with the NIGC's classification entitled to Chevron deference. While there isn't enough comparative data between keno and MegaMania, it is noted that keno can result in no winners, whereas MegaMania ensures a winner. Consequently, MegaMania does not fall under the house banking game definition.
The determination that MegaMania is class II gaming negates the need to explore whether the Government should be estopped from claiming it is a class III game. The Government previously classified MegaMania as class II in related litigation. Multimedia argued for judicial estoppel based on this inconsistent positioning but the court ruled on substantive grounds that MegaMania is class II, making estoppel unnecessary.
Additionally, some Congressional members believed that the Johnson Act does not apply to bingo aids, a view supported by multiple court rulings. The Government acknowledged this interpretation during oral arguments, asserting that bingo aids do not fall under the Johnson Act's provisions.
