Multimedia Games Challenging NIGC Regulations

Last week could end up being a turning point in the history of Multimedia Games.

The company, which specializes in designing and developing interactive Class II and Class III games and related electronic player stations for American Indian gaming tribes, received word from one of its biggest clients that the National Indian Gaming Commission told the tribe it was in violation of the Indian Gaming Regulatory Act for continuing to run MegaNanza, the company’s most popular product.

Multimedia Games issued a press release regarding the decision, but failed to mention what aspects of the game the commission found objectionable.

Numerous messages left with Multimedia Gaming representatives by IGN seeking further explanation went unreturned. A spokesman with the NIGC said he couldn’t comment due to possible pending legal action.

Although the initial news from the NIGC was a setback for Multimedia Games, the company responded by accelerating the rollout of its Reel Time Bingo game. The Reel Time game is expected to replace many of the MegaNanza games and doesn’t have the features that were found objectionable by the NIGC in its advisory opinion regarding MegaNanza. The NICG advisory opinion does not list the features it found objectionable.

Multimedia expects other tribes to receive similar notices in the near term and anticipates some of these tribes will also shut down MegaNanza.

Installations of Reel Time Bingo, which was scheduled to begin next week and continue for 30 days, began this week and will be compressed into a two-week period.

The NIGC notices came after Multimedia Games was given a warning in April that its product was in violation of the regulations. Since Multimedia is a supplier, though, the NIGC didn't have governing jurisdiction over the company. To enforce its codes, the NIGC went after the individual tribes.

The decision in April, that MegaNanza is a class III bingo game, was in response to a Multimedia Games request last year to have MegaNanza classified as Class II, which includes bingo and bingo-like games that can be legally played on Indian lands without state or local government approval.

Class III games can only be legally conducted on Indian lands if permitted under compacts between a state and an American Indian tribe.

While Multimedia Games was rolling out its new Reel Time Bingo, it also was taking steps to ensure the long-term success of MegaNanza.

As an offshoot to the NIGC warning, three tribes filed a motion to intervene in Multimedia's pending lawsuit against the NIGC requesting the courts to confirm the Class II status of MegaNanza.

In addition, Multimedia Games and the tribes filed a motion for a temporary restraining order and an injunction to prevent the government from taking further enforcement actions against them. Multimedia Games' current suit against the NIGC was filed in federal district court on April 18.

Multimedia Games Chairman and CEO Gordon T. Graves, in a statement released to the media, took issue with the way the tribes were notified by the NIGC that they were in violation of regulations.

"The procedure followed in this notice of violation was unusual and prejudicial to the tribes and MGAM (Multimedia Games)," he said. "You can be assured that we will be addressing this in our pending litigation against the NIGC. This is a very fluid situation and changes from day to day; as soon as we better understand the impact this will have on our earnings we will give further guidance."

Graves said officials with the NIGC failed to follow government-to-government protocol when issuing the warning.

"These threats came within hours after Chairman (Montie R.) Deer, an ex-Justice Department prosecutor, posted his objections to new rules regarding electronic bingo that were published by the NIGC in the Federal Register on Monday and passed by the commissioners by a two-to-one vote last week," he said.

"Out of respect for tribal sovereignty, former NIGC chairmen have extended the courtesy of allowing the tribes adequate time to give a good faith response to first verbal and then written requests to stop running games or gaming systems. It is surprising that Chairman Deer, who reportedly leaves office in August, would abandon normal protocol generally extended in government-to-government negotiations."