California’s Santa Ysabel Tribe Loses Online Bingo Appeal

California's Santa Ysabel Tribe Loses Online Bingo Appeal

The Iipay Nation of Santa Ysabel’s quest to become a go-it-alone tribal operator in the state of California appears to have run its course after the United States Court of Appeals for the Ninth Circuit upheld an earlier court’s decision that it had violated the Unlawful Internet Gambling Enforcement Act (UIGEA). The case stems back to November 2014 when the tribe launched a real-money online bingo site called Desert Rose Bingo, despite California having no regulatory framework in place.

According to the tribe, the Indian Gaming Regulatory Act (IGRA) gave it the sovereign right to offer Class II games, such as bingo and poker, from its reservation. Ultimately, however, the recent court ruling maintained that UIGEA law trumps IGRA, and as an extract from the three-judge panel’s summary states:

“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.”

Case Background

Weary of years of effort to legalize online poker in California, the Santa Ysabel tribe subsequently decided to take matters into its own hand, and in 2014 announced that it would soon launch an online poker site called PrivateTable.com. Under state law, bingo and poker are classed as Class II games, essentially meaning that they take place between the players themselves, and not the “house”. The tribe therefore asserted that by offering these games it was simply exercising rights afforded to it under a tribal-state gaming compact agreed in 2005.

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In November 2014, however, the Santa Ysabel tribe launched a real-money online bingo site called Desert Rose Bingo, instead, whilst also stating that it would soon follow suit with its proposed poker site, PrivateTable.com. Within a short while, both the state and federal government filed lawsuits demanding the site’s closure, arguing that the tribe was violating a range of laws, including IGRA, UIGEA, and the tribal-state gaming compact. They further said that the tribe’s actions constituted “an imminent threat to the public health, safety, and welfare.” An injunction was subsequently granted and enforced against Desert Rose Bingo, which shut down its operation just a couple days later.

Initial District Court Ruling

In December 2016, the case was heard by the US District Court for the Southern District of California, with Judge Anthony J. Battaglia finding that the Santa Ysabel tribe had indeed breached UIGEA by launching a real money online bingo site. As he pointed out at the time, IGRA and UIGEA are intended to be read together, while the phrase “on Indian lands” is meant to limit gambling to those people who take part in gaming activity while in Indian country.

“Were the Court to give IGRA the broad construction Tribal Defendants urge, under no circumstances would the United States be able to enforce UIGEA where some portion of the activity originates from servers located on Indian lands,” explained Battaglia.

Nevertheless, the judge tossed out claims that the tribe had violated its gaming compact with California. Sending out a conflicting message, however, he ruled that Class II games are permissible under IGRA, meaning the state cannot decide what the tribe does with such games. This then emboldened the Iipay Nation of Santa Ysabel to file an appeal in the US Court of Appeals for the Ninth Circuit, with its argument not heard until March 2018.

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Appeals Ruling

On August 2, the US Court of Appeals for the Ninth Circuit announced its decision, which once again siding with those views asserted by the state of California and the United States. In addition to violating UIGEA, the three-judge panel further ruled that even if the gaming activity taking place on Desert Rose Casino took place 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.”