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Real Estate Litigation
Federal Court Issues Permanent Injunction and Permanently Shuts Down Santa Ysabel’s Desert Rose Bingo
On December 12, 2016, Judge Battaglia of the United States District Court for the Southern District of California issued the Court’s long-awaited ruling on the State of California and Federal Government’s motions for summary judgment in the Iipay Nation of Santa Ysabel tribe’s (the “Tribe”) Desert Rose Bingo case. The State of California argued that the Tribe’s Internet bingo website, Desert Rose Bingo, offered a Class III game—as classified under the Indian Gaming Regulatory Act (“IGRA”)—to patrons in violation of the Tribe’s Tribal-State Compact with the State. Both the State and the Federal Government also argued that the Tribe’s Internet bingo operation violated the federal Unlawful Internet Gambling Enforcement Act (“UIGEA”) by allowing patrons to participate off-reservation. The Court denied the State’s breach of compact claim, determining that the Internet bingo games are Class II under IGRA, but granted both the State and Federal Government’s motions for summary judgment on the UIGEA claim after concluding that the online bingo games violate UIGEA.
With respect to the UIGEA claim asserted by both the State of California and the Federal Government, the Court’s order granting summary judgment definitively answered a lingering question on an issue that courts had yet to meaningfully address: Does the mere use of the Internet to offer gaming mean the gaming no longer occurs “on Indian lands,” especially when considered in the context of UIGEA’s prohibition on Internet gambling initiated or received within a state where such gambling is unlawful?
In deciding this question, the Court framed the inquiry as the meaning to be given to “on Indian lands,” as used in IGRA, in light of Congress’s later enactment of UIGEA, which prohibits Internet gambling initiated or received within a state where such gambling is unlawful. [Order Granting Plaintiffs’ Motions for Summary Judgment and Request for Permanent Injunction, Dkt. # 80, at 2, California v. Iipay Nation of Santa Ysabel, No. 14-cv-2724-AJB-NLS, United States of America v. Iipay Nation of Santa Ysabel, 14-cv-02855-AJB-NLS (Dec. 12, 2016) (citing 31 U.S.C. § 5362(10)(A)).] Based on a statutory rule of construction requiring the Court to give effect to both IGRA and the UIGEA, the Court found the only possible conclusion is that IGRA applies only to gaming activity that occurs solely on Indian lands. [Id. at 2.] This required the Court to construe the meaning of “gaming activity,” which the Court defined by reference to Justice Kagan’s instruction in Bay Mills, where the Supreme Court clarified that gaming activity is what goes on in a casino—“each roll of the dice and spin of the wheel”—“not the proceedings of the off-site administrative authority.” [Id. at 23 (citing Michigan v. Bay Mills Indian Cmty., 134 S. Ct. 2024, 2032–33 (2014)).] The gaming activity at issue, then, “is the patrons’ act of selecting the denomination to be wagered, the number of games to be played, and the number of cards to play per game.” [Id. at 23.] The import of this holding is that “patrons must be physically present on Indian lands when a bet is initiated for gaming to comply with both IGRA and UIGEA.” [Id. at 2.]
Having concluded that the Tribe’s Internet bingo website violated UIGEA, the Court entered the following Permanent Injunction:
The Tribal Defendants and all of their officers, agents, servants, employees, and attorneys, and all persons acting under any Tribal Defendant’s direction and control, are hereby PERMANENTLY ENJOINED AND RESTRAINED from the following:
1. Offering or conducting any gambling or game of chance played for money or anything of value over the Internet to any resident of or visitor to California who is not physically located on the Tribe’s Indian lands;
2. Accepting any credit, or the proceeds of credit, extended to or on behalf of any resident of or visitor to California who bets or wagers over the Internet in connection with any gambling or game of chance offered or conducted by Tribal Defendants. This includes credit extended through the use of a credit card;
3. Accepting any electronic fund transfer, funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service from or on behalf of any resident of or visitor to California who bets or wagers over the Internet in connection with any gambling or game of chance offered or conducted by Tribal Defendants; and
4. Accepting any check, draft, or similar instrument which is drawn by or on behalf of any resident of or visitor to California who bets or wagers over the Internet in connection with any gambling or game of chance offered or conducted by Tribal Defendants, and which is drawn on or payable at or through any financial institution. [Id. at 33.]