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The Iipay Nation of Santa Ysabel has been engaged in a multi-year court battle with the state of California thanks to the tribe’s launch of its the Desert Rose online bingo site in November 2014. In addition to bingo, Santa Ysabel also talked up an online poker launch (the launch never came to pass).
Last week, the US Court of Appeals for the Ninth Circuit upheld a district court’s judgment in favor of the state of California, leaving the small tribe with grand online gambling aspirations with very little runway to work with.
The tribe has been seen as a big underdog to prevail, but that doesn’t mean the case is uninteresting or unimportant. In fact, the case could provide some much-needed clarity to US gambling laws.
When it comes to gambling laws, there’s often a lot of gray involved, and this case — a case that intersects online gambling with the Indian Gaming Regulatory Act and state and federal gambling laws — is far from settled law.
In 2014 the tribe asserted:
Tribes are considered sovereign nations in the United States and inter-tribal gaming employing the Internet has been legal for several years. Class II gaming, such as poker, have been exclusively regulated by tribes in California since 1999. Absent a specific state prohibition on this type of gambling activity, which does not currently exist in California, tribes are free to engage in this activity as long as the activity is regulated by the tribe as described in the federal Indian Gaming Regulatory Act.
Thus far, the courts have disagreed.
In the latest opinion, Ninth Circuit Judge Carlos T. Bea wrote:
The panel held that Iipay Nation’s operation of Desert Rose Casino violated the Unlawful Internet Gambling Enforcement Act (“UIGEA”). The panel held that the Indian Gaming Regulatory Act protected gaming activity conducted on Indian lands, but the patrons’ act of placing a bet or wager on a game of Desert Rose Casino while located in California, violated the UIGEA, and was not protected by the Indian Gaming Regulatory Act.
The panel further held that even if all of the “gaming activity” associated with Desert Rose Casino occurred on Indian lands, the patrons’ act of placing bets or wagers over the internet while located in a jurisdiction where those bets or wagers were illegal made Iipay Nation’s decision to accept financial payments associated with those bets or wagers a violation of the UIGEA.
Because Iipay’s operation of DRB violates the UIGEA, the Court of Appeals for the 9th Circuit AFFIRMED the district court’s order granting summary judgment to the Government.
However, as gaming lawyers have pointed out, the case is only the first step in addressing the country’s convoluted gaming laws.
Attorney Ian Imrich drew attention to a specific footnote in the court’s opinion:
And California gaming lawyer David Fried posted the following on his website:
The Court was wise enough to recognize at least one undecided question, namely whether a tribal internet casino would violate the UIGEA by accepting bets or wagers from patrons located in places where the internet games are legal. But there are many such unanswered questions.
If a game can be operated over the internet in one state could a tribe located in a different state offer that internet game for patrons of the first state?
What about overseas operators?
What if the state that permits the game also requires that the game operators be located in state?
Does the Interstate Commerce Clause limit the ways in which a state can restrict participation by out of state operators?
Given the gradual state by state legalization of internet gambling, these questions are likely to be tested in future litigation.