California Tribe’s Online Poker Dreams Dashed By Federal Court

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A California tribe’s desire to provide online poker and bingo games has been dealt another blow last week.

The Iipay Country 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 website 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 little tribe with grand online gaming ambitions with very little runway to operate with.

The tribe’s argument isn’t convincing the courts

The tribe has been seen as a huge underdog to prevail, but it doesn’t mean the situation is uninteresting or unimportant. In fact, the case could provide some much-needed clarity to US gambling laws.

When it comes to gambling legislation, there is often a lot of gray involved, and this case — a case that intersects online gaming 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 world wide web has been legal for many years.  Class II gaming, for example poker, have been exclusively regulated by tribes in California since 1999.  Absent a specific state prohibition on this kind of gambling activity, which doesn’t currently exist in California, tribes are free to engage in this activity provided that the activity is governed by the tribe as described in the federal Indian Gaming Regulatory Act.

No dice for online poker

Thus far, the courts have disagreed.

In the latest opinion, Ninth Circuit Judge Carlos T. Bea wrote:

The panel held that Iipay Nation’s performance 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 bet on a game of Desert Rose Casino while located in California, violated the UIGEA, and wasn’t protected by the Indian Gaming Regulatory Act.

The panel further held that even if all the”gaming activity” associated with Desert Rose Casino happened on Indian lands, the patrons’ act of placing bets or wagers over the net while located in a jurisdiction where those bets or wagers were prohibited made Iipay Nation’s decision to accept monetary payments related to those bets or wagers a violation of the UIGEA.

Because Iipay’s performance 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.

A big unanswered question still looms

However, as gaming attorneys have pointed out, the situation is only the first step in addressing the nation’s convoluted gaming laws.

Attorney Ian Imrich drew attention to a Particular footnote in the court’s opinion:

However, the Court also noted the following: “[w]e take no position on whether Iipay would violate the UIGEA by accepting DRB bets or wagers exclusively from patrons located in jurisdictions where bingo is legal.” See, Footnote No. 15.

— Ian J. Imrich, Esq. (@ijiLaw) August 2, 2018

And California gaming lawyer David Fried posted the following on his site :

The Court was wise enough to recognize at least one undecided question, namely whether a tribal internet casino could violate the UIGEA by accepting bets or wagers from patrons located in areas where the net games are legal.  But there are lots of such unanswered questions.

If a game could 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 nation?

What about overseas operators?

What if the state that permits the sport also demands that the sport operators be located in state?

Does the Interstate Commerce Clause restrict the ways that a country can limit participation from state operators?

Given the slow state by state legalization of internet gambling, these questions are likely to be tested in future litigation.

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