UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


DIAMOND GAME ENT INC

v.

RENO, JANET


98-5516a

D.C. Cir. 2000


*	*	*


Tatel, Circuit Judge: This case requires us to determine  whether a
gambling machine known as the Lucky Tab II, an  electromechanical
device that dispenses paper pull-tabs and  then displays their
contents on a video monitor, should be  classified under the Indian
Gaming Regulatory Act as a Class  II "aid" or a Class III "facsimile."
The Act prohibits Indian  tribes from operating Class III facsimiles
without first negoti- ating a compact with the state. Applying the
statute's plain  language, guided by our only relevant precedent,
Cabazon  Band of Mission Indians v. NIGC, 14 F.3d 633 (D.C. Cir. 
1994), and proceeding without any views from the agency  charged with
the Act's implementation, we conclude that the  Lucky Tab II is a


I


The Indian Gaming Regulatory Act of 1988 ("IGRA"), 25  U.S.C. s
2701-19, regulates gambling operations run by Indi- an tribes. The
Act's purpose is to "provide a statutory basis  for the operation of
gaming by Indian tribes as a means of 


promoting tribal economic development, self-sufficiency, and  strong
tribal governments." 25 U.S.C. s 2702(1).


The Act divides Indian gaming into three classes, each  requiring a
different level of authorization. Class I gaming  consists of social
games played solely for prizes of minimal  value as well as
traditional forms of Indian gaming. See 25  U.S.C. s 2703(6). Indian
tribes may operate Class I games  as they wish. See 25 U.S.C. s


Class II gaming includes bingo, and if conducted in the  same hall as
bingo, it also includes lotto, punch boards, and  tip jars, as well as
pull-tabs, the game at issue here. See 25  U.S.C. s 2703(7)(A). In
language central to the dispute in  this case, the Act allows the use
of "electronic, computer, or  other technologic aids" in connection
with Class II games, 25  U.S.C. s 2703 (7)(A)(i), but prohibits the
use of "[e]lectronic  or electromechanical facsimiles of any game of
chance." 25  U.S.C. s 2703 (7)(B)(ii). Tribes may conduct Class II
gaming  if the state in which they are located permits such forms of 
gambling and if the governing body of the tribe adopts a  gaming
ordinance that is then approved by the Chairman of  the National
Indian Gaming Commission, the agency created  by Congress to implement
IGRA. See 25 U.S.C. ss 2710(b),  2704.


Class III gaming includes all gambling not covered by  either Class I
or Class II, including "facsimiles" of Class II  devices. See 25
U.S.C. s 2703(8). In order to conduct Class  III operations, tribes
must obtain state approval through  negotiation of a tribal-state
compact. See 25 U.S.C.  s 2710(d)(1).


Commission regulations define Class II aids and Class III  facsimiles.
An aid is "a device ... that when used ... [i]s  not a game of chance
but merely assists a player or the  playing of a game [and] is readily
distinguishable from the  playing of a game of chance on an electronic
or electrome- chanical facsimile." 25 C.F.R. s 502.7. A facsimile is
"any  gambling device as defined in [the Johnson Act]." 25 C.F.R.  s
502.8. Predating IGRA by more than 30 years, the John- son Act
prohibits the use of gambling devices on federal land, 


in interstate commerce, and in "Indian country." See 15  U.S.C. ss
1171-78 (1953). Both the Commission's regula- tions and this Court
have interpreted IGRA as limiting 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. See Cabazon, 14
F.3d at  635, n.3 (noting that IGRA repealed the Johnson Act with 
regard to Class III devices subject to a tribal-state compact  but
that there is no other repeal of the Johnson Act in IGRA,  implying
that Class II aids, permitted under IGRA, do not  run afoul of the


This case concerns a game known as pull-tabs. A small,  two-ply paper
card, a pull-tab bears symbols and patterns  similar to tic-tac-toe
that appear when players peel off the  pull-tab's top layer. The
pattern of the symbols determines  whether the player wins a prize. In
the traditional pull-tabs  game, bingo hall clerks sell pull-tabs from
counters or mobile  carts, and winners present the tabs to either
clerks or cash- iers to collect prizes. Pull-tabs are sold from large
pools  known as "deals." Containing anywhere from 1200 to 100,000 
pull-tabs, deals have a fixed number of winners and losers.


At issue in this case is the proper classification of a  gambling
device known as the Lucky Tab II, an electrome- chanical dispenser of
paper pull-tabs. The machine dispenses  pull-tabs from a roll
containing approximately 7500 tabs.  About 100 rolls comprise a deal,
within which winning pull- tabs are randomly distributed. The machine
cuts the pull-tab  from the roll and drops it into a tray. A bar code
scanner  inside the machine automatically reads the tab and then 
displays its contents on a video screen. A placard on the  machine
informs players that "[v]ideo images may vary from  actual images on
pull tabs. Each tab must be opened to  verify." To collect prizes,
players must present the actual  winning tab to a clerk. In many bingo
halls, players pur- chase pull-tabs either from a Lucky Tab II or from
clerks; in  such cases, machines and clerks cut pull-tabs from rolls
that  are part of the same deal.


In 1994, the Kickapoo Traditional Tribe of Texas and  Diamond Game
Enterprises, the manufacturer of the Lucky  Tab II, asked the
Commission to classify the machine as a  Class II aid. Two years
passed without Commission action.  In August 1996, the Kickapoo Tribe
began operating approxi- mately 100 Lucky Tab II machines. At this
point, the record  becomes complicated and, to say the least,
confusing. As far  as we can tell, the following events of
significance to this case  transpired: The Commission's Director of
Enforcement ad- vised the Tribe that the machines were Class III
gambling  devices that could only be operated pursuant to a
tribal-state  compact. See Diamond Game Enterprises, Inc. v. Reno, 9
F.  Supp. 2d 13, 15 (D.D.C. 1998). Notwithstanding the Di- rector's
action, the members of the Commission were appar- ently divided over
the proper classification of the Lucky Tab  II, some thinking it an
aid and others a facsimile. Because of  this disagreement, the
Commission sought advice from the  Department of Justice, but DOJ
lawyers were themselves  divided over the proper classification of the
machine. See  Memorandum from Deputy Assistant Attorney General Rich-
ard Shiffrin to Associate Deputy Attorney General Seth P.  Waxman, at
1 (June 13, 1996) (noting that the Office of Tribal  Justice and the
Criminal Division had reached opposite con- clusions on the
appropriate classification of the Lucky Tab  II--the former concluding
that it falls under Class II and the  latter concluding that it
belongs in Class III). The Commis- sion never formally responded to


According to the Tribe and Diamond Game, certain mem- bers of the
Commission recommended that the Tribe and the  company file a
declaratory judgment action in federal court to  resolve the issue.
Acting on that advice, they filed this action  in the U.S. District
Court for the District of Columbia seek- ing, among other things, a
declaratory judgment that the  machine qualifies as a Class II aid.
The Cheyenne and  Arapaho Tribes of Oklahoma intervened as plaintiffs.
Ala- bama, California, and Florida intervened as defendants.


The parties filed cross motions for summary judgment.  Finding that the
Lucky Tab II "performs all the functions  that a player of the
traditional pull-tab game would have  performed," the district court
found the machine to be a Class  III facsimile and granted summary
judgment to the govern- ment. See Diamond Game, 9 F. Supp. 2d at 20.
Subse- quently, Diamond Game and the Tribes filed a Rule 60(b) 
motion, claiming that the company had made technical  changes to the
Lucky Tab II. Finding that the modifications  were not new evidence,
the district court denied the motion.


II


Unlike the legal issues presented in this case, the policy  questions
are both interesting and challenging. In determin- ing the proper
classification of the Lucky Tab II, how do we  further Congress'
objective of allowing Indian tribes to use  gaming as a means of
"promoting tribal economic develop- ment, self-sufficiency, and strong
tribal governments," 25  U.S.C. s 2702(1), while at the same time
"shield[ing] [Indian  tribes] from organized crime and other
corrupting influ- ences," 25 U.S.C. s 2702(2)? Will the Lucky Tab II
enable  tribes to "take advantage of modern methods of conducting 
class II games"? S. Rep. No. 100-446, at 9 (1988). Or does  the
machine increase the risk of corruption or excessive  gambling losses,
concerns that government counsel told us at  oral argument require its
classification as a Class III device?  To resolve such issues,
Congress created the National Indian  Gaming Commission, headed by a
Chair appointed by the  President and confirmed by the Senate
presumably for his or  her expertise on Indian gaming. Yet whether
because of  bureaucratic gridlock or, as the tribes allege, because of
 congressional interference, we have no idea what the Com- mission
thinks about the policy questions presented by the  Lucky Tab II. Not
only does this leave us with no agency  position to which we might
defer, see Chevron U.S.A. v.  Natural Resources Defense Council, Inc.,
467 U.S. 837, 844  (1984) ("[A] court may not substitute its own
construction of a  statutory provision for a reasonable interpretation
made by  the administrator of an agency"), but the Commission's IGRA


regulations provide no assistance in interpreting the statute.  Boiled
down to their essence, the regulations tell us little  more than that
a Class II aid is something that is not a Class  III facsimile. We
mention this not to escape our duty to  decide this case--to the
contrary, because we have jurisdic- tion, we must determine how the
Lucky Tab II should be  classified--but to highlight the fact that we
have no choice  but to proceed without the benefit of a Commission
position, a  situation we expect Congress neither anticipated nor
would  appreciate. That said, we turn to the parties' arguments  about
the classification of the Lucky Tab II. See Everett v.  United States,
158 F.3d 1364, 1367 (D.C. Cir. 1998) ("We  review a grant of summary
judgment de novo.").


Diamond Game and the Tribes contend that the Lucky Tab  II acts as a
permitted "electronic aid" to the Class II game of  pull-tabs. They
emphasize that the machine's operation de- pends entirely on
pre-printed paper pull-tabs that can be (and  in fact are) played
without the mechanical dispenser. The  Lucky Tab II, in other words,
cannot function without rolls of  paper pull-tabs. The Tribes also
emphasize that despite the  fact that the Lucky Tab II presents a
video image of the  contents of the pull-tabs it dispenses, the
machine does not  give the player the final word on the game; players
must still  peel off the top layer to verify its contents and present
it to a  clerk to receive their winnings. For all of these reasons,
they  argue, the Lucky Tab II cannot be considered a facsimile of  the


According to the government, because the machine mirrors  the
traditional game played by purchasing cards from clerks,  it is a
Class III facsimile, not a Class II aid. The government  embraces the
district court's description of the Lucky Tab II:  "When the
participant plays the Lucky Tab II, she is not  playing the pull-tabs
inside the machine; she is engaging the  machine that replicates the
functions of the traditional pull- tab game." Diamond Game, 9 F. Supp.
2d at 13, 20. As to  the possibility that the information on the video
screen might  be inaccurate, the government says mistakes are rare and
for  all practical purposes, the Lucky Tab II is a duplicate of the 


Both sides claim support from Cabazon Band of Mission  Indians v. NIGC,
14 F.3d 633 (D.C. Cir. 1994). There, we  held that a video pull-tabs
game was a "computerized ver- sion" of pull-tabs and therefore a Class
III facsimile. The  machine "randomly selects a card for the gambler,
pulls the  tab at the gambler's direction, and displays the result on
the  screen. The computer version, like the paper version, has a 
fixed number of winning cards in each deal." Cabazon, 14  F.3d at 635.
Finding that video pull-tabs "exactly repli- cate[s]" the game of
pull-tabs in computer form, Cabazon  concluded that it amounted to a
facsimile of the game. See  id.; see also Sycuan Band of Mission
Indians v. Roache, 54  F.3d 535, 541-42 (9th Cir. 1994) (holding that
a self-contained  unit containing a computer linked to a video monitor
and a  printer constitutes an electronic facsimile of pull-tabs).


We think the Lucky Tab II is quite different from the  machine at issue
in Cabazon. To begin with, the Lucky Tab  II is not a "computerized
version" of pull-tabs. Although the  Lucky Tab II has a video screen,
the screen merely displays  the contents of a paper pull-tab. Instead
of using a computer  to select patterns, the Lucky Tab II actually
cuts tabs from  paper rolls and dispenses them to players. In other
words,  the game is in the paper rolls, not, as in the case of the 
Cabazon machine, in a computer. Indeed, players using the  Lucky Tab
II often play a deal simultaneously with other  players in the same
hall who have chosen to purchase pull- tabs from clerks. For players
using the Lucky Tab II, the  machine functions as an aid--it "helps or
supports," or "as- sists" the paper game of pull-tabs. Webster's Third
New  International Dictionary 44 (1993). Without the paper rolls,  the
machine has no gaming function at all. It is, in essence,  little more
than a high-tech dealer. Viewed this way, the  game played with the
Lucky Tab II is not a facsimile of paper  pull-tabs, it is paper


Another difference between the Lucky Tab II and the video  machine at
issue in Cabazon reinforces our belief that the  Lucky Tab II should
be classified as a Class II aid. The 


Cabazon machine plays the game of pull-tabs in its entirety, 
dispensing receipts for players to redeem winnings. By  contrast, the
Lucky Tab II dispenses actual paper pull-tabs  that players must peel
and display to a clerk before they can  obtain prizes. Although the
machine's scanner apparently  commits few errors when reading paper
pull-tabs, the fact  remains that unlike the Cabazon machine, the
Lucky Tab II  is technically not final. It is, in other words, an aid
to the  game of pull-tabs.


Notwithstanding the differences between the Lucky Tab II  and the
machine at issue in Cabazon, the government insists  that the Lucky
Tab II is a Class III device. At oral  argument, the government even
asserted that removing the  video screen would not convert the Lucky
Tab II into a Class  II aid. Asked what in the government's view would
be an  aid, counsel pointed us to an electronic scanner called the 
"Tab Force Validation System." As we understand this  device, after a
clerk dispenses a paper pull-tab, instead of  peeling off the top
layer, the player inserts the pull-tab into  the machine, which scans
the bar code and displays the  results on a video screen. The
Commission has issued advi- sory opinions classifying the Tab Force
and other similar  machines as Class II aids, concluding that the
systems "sim- ply read the pull-tabs and display whether or not they
are  winners.... [They] cannot change the outcome of the  game." See
NIGC Advisory Opinion, at 2 (June 8, 1998).


We see no principled difference between the Tab Force and  the Lucky
Tab II. 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


The government makes two additional arguments in sup- port of its
position that the Lucky Tab II is a Class III  facsimile. First, like
the district court, it relies on language  from a Senate Indian
Affairs Committee report describing a  Class II aid as a device that
enables tribes to "take advantage  of modern methods of conducting
class II games" by, for 


example, "join[ing] with other tribes to coordinate their class  II
operations and thereby enhance the potential of increasing  revenues."
S. Rep. No. 100-446, at 9 (1988). Class II aids  are thus limited to
devices that "merely broaden the potential  participation levels and
[are] readily distinguishable from ...  electronic facsimiles in which
a single participant plays a  game with or against a machine rather
than with or against  other players." Id. Unlike computers, cables, or
telephone  lines that connect bingo games on different reservations--
examples the Senate Report gives of aids that expand partic-
ipation--the Lucky Tab II, the government argues, neither  increases
participation levels nor enhances competition among  players. Second,
the government claims that the Lucky Tab  II makes it easier for
players to play pull-tabs, thus increas- ing the potential for players
to "lose the rent money."


These statutory interpretations, resting as they do on the  policy
underlying IGRA, are interesting and might even be  worthy of Chevron
two deference had they been offered by  the Commission. But they come
only from appellate coun- sel--indeed the "lose-the-rent" argument
surfaced for the  first time at oral argument. Moreover, nothing in
the Senate  Report suggests that an electronic device must link
players  on different reservations to qualify as a Class II aid.
Accord- ingly, because of the similarities between the Lucky Tab II 
and the Tab Force Validation System, which the Commission  has found
to be a Class II aid, and because of the differences  between the
Lucky Tab II and the Class III device at issue in  Cabazon, we reverse
the district court and remand with  instructions to enter summary
judgment for appellants. In  view of this disposition, we have no need
to address the  district court's denial of the Rule 60(b) motion.


So ordered.