Santa Ysabel Believes Companion Lawsuit Ruling Paves Way For Online Poker

Santa Ysabel Tribe Loses Court Battle, But Remains Hopeful In War For California Online Poker And Bingo

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A North San Diego County American Indian tribe remains optimistic that it will someday be hosting online poker and bingo in California.

And that “someday” might come long before a dozen more lucrative casino tribes and card rooms get a bill through the state Legislature.

Court ruling a mixed bag for Santa Ysabel

The federal government, in a Dec. 12 US District Court ruling, won an injunction closing an online bingo website launched some two years ago by the Iipay Nation of Santa Ysabel, an economically disadvantaged tribe of some 700 indigenous citizens.

Judge Anthony Battaglia said it was a violation of the Unlawful Internet Gambling Enforcement Act (UIGEA) for Santa Ysabel to accept wagers from off Indian lands.

But Battaglia in a companion lawsuit dismissed a state claim that the Desert Rose Bingo (DRB) website violated a tribal-state regulatory agreement, ruling that as a Class II game under the Indian Gaming Regulatory Act (IGRA) the state has no authority over online bingo.

Poker is also a Class II game under IGRA. Santa Ysabel says it may launch its Private Table poker website if it is successful in an anticipated appeal of Battaglia’s ruling to the 9th Circuit Court of Appeals.

“The legal issues are the same, whether it’s Class II poker or Class II bingo,” Dave Vialpando, chairman of the Santa Ysabel Tribal Gaming Commission, told Online Poker Report. “With a favorable ruling from the 9th Circuit we will not only be able to launch DRB but Private Table.”

“We would definitely launch our bingo and dust off our poker and decide whether it’s good business sense to launch. We would not see any legal barriers.”

“Once tribes can go on the internet with bingo, that’s huge,” said Norm DesRosiers, a tribal regulator and consultant. “That ruling is bigger than what people realize. That opens the door to poker.”

Battaglia’s dismissal of the state’s claim is viewed by the tribe as a major victory despite the judge’s ruling on the federal UIGEA claim.

“A lot of people read the headlines but haven’t read the case,” said Joe Valandra, CEO of Great Luck Gaming and the tribe’s partner in the bingo website.

Tribes, card rooms continue pursuit of statewide poker bill

From a dozen to as many as 16 tribes – many in partnership with card rooms – have for nearly a decade been lobbying California lawmakers to legalize online poker. But the efforts have been stymied by the inability of politically powerful tribes to reach consensus on bill language.

The industry under a statewide poker bill would be taxed and regulated by the state.

Meanwhile, Santa Ysabel has been seeking to launch online bingo and poker under IGRA, which would enable them to operate outside the state’s tax and regulatory jurisdiction.

IGRA requires that tribes seeking to operate Class III casino-style gambling – Las Vegas-style slot machines and table games – to enter into regulatory agreements, or compacts. These give states regulatory oversight over the gambling operations.

But tribes are allowed under IGRA to operate Class II gambling outside of state oversight. Battaglia rejected state arguments that technological enhancements to bingo, poker and other Class II games made them “facsimiles” of Class III devices subject to tribal-state compacts.

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Wagers off tribal lands a tough legal hill to climb

The issue on appeal will be the ability of Santa Ysabel to accept wagers from persons not on tribal lands.

Santa Ysabel contends with servers on Indian land and the use of “proxy” players the wagers technically occur within tribal jurisdiction.

Many legal experts believe that will be a tough legal hill to climb.

“If the notion succeeds legally that you can specify that the gambling is taking place on Indian land, either through proxy or some other means, it will throw the door open for tribes,” said tribal attorney John Tahsuda of Navigators Global.

“I have a hard time believing a federal court is going to accept that.”

Battaglia’s ruling gives tribes cause to rejoice

Santa Ysabel officials believe the dismissal of California’s case against the bingo website reinforced Indian sovereignty and placed significant legal deference to tribal government regulation of online Class II gambling.

“It’s the first federal court ruling that recognizes what I would call the modern architecture of online gaming deemed to be Class II,” Valandra said.

“And he [Battaglia] gave deterrence to the tribal regulatory authority to make that decision. Those are two incredibly significant findings. If I were the tribes in California I would be rethinking my legal approach to iPoker.”

“It definitely puts tribes in the driver’s seat with regard to self-determination and economic opportunities and the ability to regulate gaming,” Vialpando said of Battaglia’s decision.

“This ruling basically says tribal governments and state governments operate on the same, level playing field when it comes to regulating their business enterprises.”

Social gaming may open door to online poker

The Pala Band of Mission Indians recently became the latest California tribe to enter the social gaming market, launching the stand-alone MyPalaCasino website. Pala is also the majority shareholder of Pala Interactive, which operates a real-money New Jersey online casino.

Pala joins the Pechanga Band of Luiseño Indians, the Morongo and San Manuel bands of mission Indians, and a handful of other California tribes in offering free-play opportunities online.

Some believe the social gaming trend is evidence California tribes may be more receptive to reaching consensus on an online poker bill. The effort has been stalled recently by opposition to participation by Amaya/PokerStars.

Others contend tribes in California and elsewhere are simply catching up to commercial casino industry awareness that social gaming is a means of more efficiently marketing customers and generating revenue.

“I think it’s dawning on tribes that they need to engage the customer in other ways,” said Gene Johnson, executive vice president of Victor-Strategies. “And waiting for real-money online gaming could take forever.”

Santa Ysabel appeal is on the horizon

A decision to appeal the Battaglia ruling has yet to be made, Vialpando said. Tribal officials and their legal staff will debate the issue next month.

But they remain optimistic, he said. And they have already invested a heavy chunk of cash in the legal battle.

“The decision will not be based on the merits of the case. It’s basically a financial decision,” Vialpando said. “We have a lot of money invested in the case. We’re actually pretty pleased with the court’s decision.”

“I think the decision will be that we move forward,” Vialpando continued. “We’ve come too far not to drive home the point.”

- Dave Palermo is an award-winning metropolitan newspaper reporter. He has written about American Indian governments for more than 20 years, working as an advocate for several tribes and tribal associations. He also has co-authored books on gambling and gambling law.
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