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Washington State Gambling Commission
P.O. Box 42400
Olympia, WA 98504
360-486-3440
360-486-3629 (fax)
The History of Machine Gaming
I. HOW THE "FRIENDLY LAWSUIT" BEGAN
- The Indian Gaming Regulatory Act (IGRA), passed by Congress in 1988, permits Tribes to conduct certain types of gaming (Class III) only if they enter a compact with the state. IGRA requires states to negotiate in good faith with tribes regarding any form of gaming that is authorized in the state for any person or purpose.
- From the outset of Gaming Compact negotiations between the State of Washington and the Tribes, the two sides could not agree as to whether slot machines and other machine games were legal in Washington, and therefore a subject of negotiation under IGRA. The Tribes argued that failure to negotiate for machines was an act of bad faith by the state.
- As passed by Congress, IGRA provided for settlement of bad faith claims by filing suit in federal court. However, several states, including Washington, asserted that they were not subject to such law suits because of the state's sovereign immunity. The U.S. Supreme Court accepted this argument, effectively eliminating the intended dispute resolution process under IGRA where states assert immunity defenses.
- In 1994, to resolve the impasse over slot machines, several Tribes and former Governor Lowry and Attorney General Christine Gregoire on behalf of the State agreed to a limited waiver of immunity for the purpose of a consensual lawsuit (the "friendly lawsuit"). The parties agreed to present to the federal court the question of what types of gaming devices, if any, are permitted under Washington State Law and to be bound by the decision of the court.
II. THE COURT’S DECISION AND RESULTING NEGOTIATIONS
- September 26, 1997, the court issued its order and held that the state is not required to negotiate
slot machines, but that other gambling devices are subject to negotiation as long as they do not
constitute:
- 1) Mechanical or lottery devices activated by the insertion of a coin or by the insertion of any object purchased by any person taking a chance by gambling in respect to the device.
- 2) Electronic or mechanical devices or video terminals which allow for individual play against such devices or terminals.
- For a year, 12 Tribes that have tribal/state Compacts for gaming negotiated a Compact Amendment with the Gambling Commission staff and the Attorney General's office over machines that fit within the Court's order. An "Agreement in Principle" was reached in June 1998 on a gaming device modeled after the state lottery.
III. TERMS OF THE PROPOSED COMPACT AMENDMENT
- Types of Games: On-line Lottery & Electronic "Scratch" Tickets
- Games use an electronic "smart" card
- No cash in or out of the machines
- On-line lottery games
- Limited to 5 (consistent with the state’s lottery)
- Drawings may occur no more than every 30 minutes
- Electronic "Scratch" Ticket Games – finite number of tickets with pre-determined number of winners and losers
- Allows winnings (credits) to be replayed
- Minimum prize payout – 75%
- No handles; no spinning reels when the game is not being played
- Maximum $5.00 per wager
- 3 year moratorium on "machine" gambling negotiations
- Current standards for re-negotiations apply; for example, if the Legislature authorizes a new Class III activity, the Tribes could request re-negotiations
- Number of machines
- 425 for first year
- May increase to 675 after 12 months
- May "buy" machines from other Tribes; cap of 1,500 machines per Tribe
- Tribes paid all outstanding regulatory bills
- State will play a major role in regulation
- Tribes paid approximately $250,000 in "start up" regulatory costs
- Includes approximately 3 FTE’s: 2 technical staff and 1 Field Agent
- Basic test equipment
- Will provide a copy of the machine and software for the Commission, which can be retained for future testing, training, etc.
- Future regulatory costs
- If there are disputes about the state’s regulatory bills, the Tribes will pay the undisputed amount and put the disputed amount in an escrow account
IV. TIMELINES
- Standing committee of the Legislature (Commerce and Labor Committee) held a public hearing on November 6, 1998; no comments were forwarded to the Commission.
- Gambling Commission had 45 days to hold hearings and take a final vote on the amendments; was passed by a vote of 5:2 on November 12, 1998.
- The agreement was forwarded to Governor Locke who signed it on November 23, 1998.
Since the initial agreement was reached, all twenty of the other Tribes with Compacts have been approved to operate the same system.
V. NUMBER OF MACHINES INCREASED FOR SOME TRIBES
Since 1992, several of the tribes with larger casinos have negotiated for a maximum number of terminals higher than the initial 1500 machine cap (some tribes are now authorized to operate 2000 terminals). In addition, some tribes are now able to operate terminals at more than one gaming facility. The terms of the negotiated agreements vary from tribe to tribe.