The Iipay Nation of Santa Ysabel

Iipay Nation’s Appellate Defeat Spells Likely End of Independent Online-Gambling Efforts

The Iipay Nation of Santa Ysabel, a federally-recognized tribal nation less than an hour from San Diego, may be at the end of its four-year fight to offer online bingo or online poker after this week’s federal-court appellate decision affirming a lower court’s ruling that the Iipay Nation’s plans violate the US’s Unlawful Internet Gambling Enforcement Act (UIGEA).

The appellate ruling dashes, at least for the short term, any hope that the Santa Ysabel tribe could reopen its online Desert Rose Bingo offering. While the southern Californian tribal nation still has a couple of limited legal moves available to it, the writing appears to be on the wall, in that the US legal system is likely to look on maverick online tribal-gaming offerings as jurisdictional violations. In the absence of any compact-style agreement between a tribal nation and its resident state, it’s likely to be ruled as illegal, with all the Class II / Class III gaming stuff not the deciding element. The ruling also makes clearer the focus and scope of the 2006 UIGEA as interpreted within the US court system. That’s an important consideration, as the UIGEA remains on the books, despite its widespread recognition as being a poorly written and ill-advised law.

Iipay Nation of Santa YsabelThe decision in California v. Iipay Nation of Santa Ysabel reaffirms every previous ruling in the case, which dates back to late 2014 when the Santa Ysabels decided to bring the Desert Rose bingo site online. Originally, the tribe’s gaming execs had announced plans for an online poker site, PrivateTable.com, then switched over to online bingo as a likely larger revenue stream during the earliest period of launch… assuming that the site would be allowed to operate.

That didn’t happen. California state and federal authorities quickly sued to stop the site, and the authorities received a temporary restraining order (later made permanent) effectively barring the site from operating while the suit against the tribe was being heard. Later, the state and federal actions against the tribe and its gaming operations (including Santa Ysabel Interactive and several named individuals) were combined into a single legal entity.

A couple of key excerpts from the published summary of the appellate ruling make clear the logic behind the unanimous 3-0 ruling against the Iipay Nation. The appellate court saw it as a potential conflict between UIGEA and IGRA (the Indian Gaming Regulatory Act), which created all of the US’s tribal gaming back in the 1980s:

This case presents an issue of first impression regarding the interrelation between IGRA and the UIGEA. No other circuit has opined on whether an Indian tribe can offer online gaming to patrons located off Indian lands in jurisdictions where such gambling is illegal. The issue hinges on the interpretation of the key provisions of IGRA and the UIEGA. Thus, to analyze this issue, it is helpful to review the statutory framework of IGRA and the UIEGA.

And the key phrase turned out to be “on gaming lands” as defined within IGRA:

IGRA was passed to provide a regime for regulating gaming on Indian lands. It provides that “[a]ny class II gaming on Indian lands shall continue to be within the jurisdiction of the Indian tribes.” 25 U.S.C. § 2710(a)(2). As discussed above, DRB (like other forms of bingo, generally) is a Class II game. See discussion supra at 8 n.4. Thus, if DRB takes place on Indian lands, it is under Iipay’s jurisdiction, provided Iipay complies with certain regulatory requirements that are not at issue here.

All well and good. This means that the appellate court likely wold find the Iipay Nation well within its rights to off the online bingo to people physically within its borders or in other online “legal” jurisdictions. But the rest of California is not officially among those, and that’s where the UIGEA override factors in:

Thus, the UIGEA does not prohibit otherwise legal gambling. But the UIGEA does create a system in which a “bet or wager” must be legal both where it is “initiated” and where it is “received.” This requirement makes sense in light of how the internet operates. If a bet merely had to be legal where it was received, a bettor could place an illegal bet (on a game of poker, for instance) from anywhere in the United States, so long as the bet was legal in the jurisdiction hosting the servers for a game (Las Vegas or Atlantic City, for instance, in the case of online poker). In effect, the UIGEA prevents using the internet to circumvent existing state and federal gambling laws, but it does not create any additional substantive prohibitions.

Anyone familiar with the history of US-facing online poker understands exactly this distinction, and if the Santa Ysabels were the secret owners of, say, a Curacao-based site, they’d likely have little trouble with US authorities. Then again, they’d be unable to promote the site as an Iipay Nation offering, which would pie the whole thing anyway.

The Santa Isabels’ arguments that customers’ remote computers were just proxies for on-reservation gambling again fell on deaf ears. Referring to the district-court ruling, the appellate overview also offered this:

The district court found that it was uncontested that the act of clicking “Submit Request!” by a patron was a “bet or wager” within the meaning of the UIGEA. The district court based this finding on the fact that the patrons were staking something of value on the outcome of the bingo game, but the court could have just as easily found that the patrons were giving “instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or wagering.”

That appears succinct and well-defined, exposing the attempted exploiting of a legal loophole as a brick wall instead. And with this ruling, it appears the Santa Isabels will have to write this one off as a failed legal gambit.

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