Bill Langley 

Chairman, Cherokee Nation Gaming Commission 

P.O. Box 627 

Tahlequah, OK 74464-0627 

Re: "Phone Card Sweepstakes Machines" 

Dear Chairman Langley: 

You request an opinion on whether the play of gaming devices known as "phone 

card sweepstakes machines," offered in several smokeshops regulated by the Cherokee 

Nation constitute Class I11 gaming as that term is defined by the Indian Gaming 

Regulatory Act (IGRA), 25 U.S.C. 5 2701, et seq., and regulations of the National Indian 

Gaming Commission (NIGC). Based on descriptions of the devices provided by your 

staff and reports from site visits to some of the facilities by NIGC field representatives, 

we conclude that play of the devices is a Class I11 gaming activity. 

Description 

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The devices are stand-alone units that offer a patron the opportunity to play a 

video gambling game. Each device contains a bill acceptor, and for each dollar paid, the 

patron receives credits to play the "phone-card sweepstakes," a spinning reel game on a 

video screen. Typically, the player receives 20 credits for each dollar paid. The devices 

have the ability to accept several bills and will issue game credits based on the amount of 

money inserted. The player can win or loose credits while playing the game. The player 

wins by aligning similar figures on a pay line; in some versions there are eight such pay 

lines available depending on how many credits are applied. Some maches offer 

progressive prizes and special bonus features. All of the devices have common features 

including buttons to operate the game being shown or played on the video screen. 

Winners are paid in one of two ways. Some machines dispense a ticket that is equal to a 

specified number of credits. In the version reviewed, the player can receive a ticket 

worth one dollar for every 20 credits, the same value paid for the credits. When the ticket 

is dispensed, the credits available to the player on the device are reduced corresponding 

to the value of the ticket. Other machines provide receipts that are printed at the request 

of the player when the player decides to "cash out." Players redeem the tickets or the 

receipt for cash with the store operator. 

In addition to the game-play opportunity, the patron will also receive either a 

separate horoscope card or a phone-card when the player inserts money into the machine. 

The horoscope card contains a phone number to call for a recorded horoscope reading. 

NATIONAL HEADQUARTERS 1441 L St. NW, Suite 9100. Washington. DC 20005 Tel: 202.632.7003 Fax: 202.632.7066 WWW.NlGC.GOV 

REGIONAL OFFICES Portland, OR; Sacramento. CA; Phoenix. AZ; St. Paul. MN;Tulsa, OK 
The phone-card contains a number for a patron to call to obtain a two-minute long 

distance phone call. 

Analysis 

These gaming devices appear to be similar to devices already considered by the 

NIGC andfor federal courts. They are equivalent to, or at least very similar to, those 

devices recently considered by the NIGC in its recent decisions on skill-amusement 

games.' These formal decisions of the NIGC, supported by federal case law, establish 

devices such as the machines described above as Class I11 gambling devices. Although 

there is a separate commodity received, the phone card or the horoscope card, the 

hndamental elements of a gambling transaction-consideration, chance, and prize--are 

present in the play of the devices. The devices offer an electronic facsimile of a game of 

chance, which by definition makes play of the devices Class I11 gaming. See 25 U.S.C. 

$8 2703(7) and (8) and 25 C.F.R. $ 502.4. 

The analysis found in the NIGC opinions and in the supporting federal case law 

on what constitutes a gambling device is relevant to our consideration of the "phone card 

sweepstakes machines." There is no serious dispute that these devices offer a gaming 

opportunity. The player will insert money into the device and receive the opportunity to 

play a game as a result of that payment of money. The patron will play a game in an 

electronic medium for a prize, the reward of which is determined solely by the element of 

chance. 

qw' That being said, the commercial vendors owning and placing these devices in the 

tribal smokeshops will often put forward two arguments that play on the devices is not 

gambling and is therefore exempt from IGRA coverage. First, a patron actually receives 

something of benefit in addition to the opportunity to play the sweepstakes video game. 

According to this argument the money placed in the machine-the consideration--is paid 

for the purchase of the phone card or the horoscope card and not to play the game. 

Second, a player can play the games offered on the devices without payment of 

consideration. According to this argument, the player can receive a fiee play of the game 

by sending in a letter request to the owner of the device, meaning that consideration is not 

required. We do not view either argument as controlling. 

The patron uses the device toplay a game of chance 

In playing these "phone cards" devices, the patron is actually paying with the 

intent to play the game of chance and does not buy the card for the long distance service 

or the horoscope. The facts bear this out. Compared to phone cards generally available, 

the charge for the long distance minutes is extremely high--$SO a minute. Unlike other 

phone cards, these cards have little use-the call can only last two minutes and there is 

' See in the Notice of Decision and Order in the Matter of Seminole Nation of Oklahoma, NOVICO 00-06, 

dated May 7,2002, and the Notice of Decision and Order in the Matter of Cherokee Nation of Oklahoma, 

'lhd Nov/CO 5-99, dated May 24,2002. Both decisions are available on the Commission's website: 

www.NIGC.gov. 
no opportunity to use a series of cards to lengthen the call without redialing. Patrons do 

14 not want the phone cards-patrons simply throw them away or let them fall to the floor 

as they come out of the device. The real value of the purchase is in the potential, 

determined by the element of chance, to play the "sweepstakes" game and win a prize. 

The long distance minutes contained on the card are made available in an effort to justify 

these machines as something other than what they are, devices that facilitate a gambling 

transaction. Like the "phone cards," the horoscope reading is not the reason a player 

utilizes the device. The reading is incidental to the transaction, at best. 

The patron pays consideration to play the game 

The argument that some players can play for free by requesting a voucher for a 

free play from the vendor may be useful to evaluating the individual transaction played 

with the free voucher but it does not serve to control the characterization of the device 

generally. Each transaction, or game, can be viewed independently. The free voucher 

method of play is seldom used, and may not be available for every device, depending on 

the vendor placing the device. When this free voucher is available, it is for a single game 

or for a limited number of credits, and must be obtained by sending a self-addressed 

stamped envelope to the gaming device vendor; the vendor will return only one voucher 

per request. Thus, it costs the patron two stamps ($.74) and two envelopes to obtain a 

$1 .OO voucher, hardly a savings. This alternative method for obtaining play of a single or 

a limited number of game plays is intended to be difficult for the patron so as to 

discourage its use. Common sense suggests that the alternative method is made available 

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merely to allow the argument that consideration is not required rather than to actually 

facilitate game play using the alternative method. We understand that virtually all of the 

games are played in the traditional way: a player pays by inserting a bill into the bill 

acceptor on each machine; the player seeks to win a prize; and the player wins through 

the application of an element of chance. 

An alternative method of entry for entry can be acceptable in certain situations 

thereby eliminating required consideration as an aspect of the gambling transaction. This 

oRen depends on the intent of the game. For example, in a fantasy sports league a 

participant will pay a fee to play in the game on a computer-even a computer located in 

a tribal gaming facility--with the understanding that a portion of the fee will be used in a 

prize pool. Although skill is an aspect involved in determining the winner of that prize, 

based on ability to make knowledgeable picks, chance is also an aspect. The elements of 

a gambling transaction are present--prize, chance, and consideration. However, an 

alternative method of entry will allow a participant to play for fiee by sending his picks 

through the mail to the game facilitator. So long as this potential method of play is 

readily available for all patrons, and so long as the non-paying player may compete on 

equal footing with the paying entrants, this fantasy sports league could be considered not 

gaming under the IGRA. 

The play of the sweepstakes phone-card machines is different. The availability of 

the free game play in made difficult by the vendor compared to the ease of play for the 

q~k# paying participant. It also costs almost as much to obtain a "free" game as it does to 
simply pay for play. The theory of the game is also different. In the phone-card 

qll ~wwl sweepstakes machine game, play is rapid and chance is the only factor used to determine 

the winner. 

Conclusion 

All of the classic elements of a gambling transaction are present in the play of the 

"Phone Card Sweepstakes Machines." They are subject to regulation under the IGRA if 

played on Indian lands and constitute Class I11 gaming, as discussed above. State law is 

not relevant to the analysis. The fbndamental question presented is whether the activity 

is gaming regulated by IGRA or whether it is exempt from IGRA, which is a matter of 

federal law. If this gaming activity were not offered on Indian lands over which the 

Cherokee Nation, or some other tribe, has jurisdiction, then state law would apply. 

Other issues are presented based on operation of gaming devices in smokeshops. 

A tribal regulatory authority must license each gaming facility operated by the 

tribe. If a facility offers any Class I1 or Class III gaming activity, it must be 

licensed. If these stores are not tribally owned, the tribe cannot issue a gaming 

license. We can provide a separate memorandum discussing the ability of a tribe 

in Oklahoma to license a gaming operation that is not owned by the tribe at your 

request. 

A tribe must ensure that gaming in each facility it operates is conducted in a 

manner that adequately protects the environment and the public health and safety. 

An annual outside audit must be conducted for each activity and the audit 

provided to NIGC. 

The tribe must have a background and licensing program such that the managers 

and key employees of these facilities, as those terms are defined in IGRA, are 

licensed. 

Internal controls must be in place for these facilities to the extent they are required 

under the standards adopted by the tribe that are as strict as those established by 

the NIGC MICS. 

Please call me, Senior Attorney William Grant in our Office of General Counsel, 

or Region Director Tim Harper in the NIGC Tulsa Office, if you have any questions 

about this advisory opinion. 

Sincerely yours, 

Penny J. cdleman 

Acting General Counsel