Iipay Nation of Santa Ysabel

Santa Ysabel Tribe Seeks Dismissal of California Lawsuit

The Iipay Nation of Santa Ysabel has filed a motion to dismiss a lawsuit brought against it last month by California authorities.  Attorney Little Fawn Boland, representing the Santa Ysabel tribe, filed the action on Dec. 31st in the US District Court for the Southern District of California, where the state originally filed its action.

The Santa Ysabel tribe response again invokes claims of tribal sovereignty regarding the Santa Ysabel’s Desert Rose Bingo offering.  The online-bingo site operated briefly in November and December, accepting real-money wagers before state prosecutors were successful last month in obtaining a temporary restraining order against the site, barring further play from continuing.

iipay-nation-santa-ysabel-gaming-commission-logoState officials were subsequently joined by federal authorities, who launched a parallel action in the same southern California US District Court last month.  The federal and state cases are in the process of being legally joined, though the Iipay Nation motion seeks the dismissal of all of the state’s charges, for lack of subject-matter jurisdiction.

The motion for dismissal by Boland, the Santa Ysabel tribe attorney, invokes the tribal sovereignty card as its primary defense.  According to the complaint:

This Motion is made upon the grounds that the tribal sovereign immunity of Defendants bars the State’s claims and, in any event, the State has failed to comply with the procedural requirements of [two sections] of the Tribal-State Compact upon which the State purportedly relies for its claims. The State is obliged to follow these mandatory procedures before the State can commence a declaratory action in federal court. Accordingly, the State failed to meet its burden of proving that subject-matter jurisdiction exists.

The detail of the 19-page filing, which is supported by several secondary submissions, asserts that the gaming activity — the online bingo wagering — is conducted solely on Indian lands, and that the state has not adhered to its contractual agreements with the tribe in attempting to curtail the online offering.

The Santa Ysabel filing includes, for the first time, a mention of the parallel federal case.  The tribe itself asserts that the federal action is the one that will ultimately determine the legality of the Desert Rose Bingo operation, with the tribe also planning to launch a real-money online poker site at some point.

Wrote Boland, on behalf of the Santa Ysbael tribe: “Whether the Tribe may continue with its VPN Aided Class II Gaming under federal law will be determined in any event on the merits as part of the federal government’s lawsuit concerning an alleged violation of the Unlawful Internet Gambling Enforcement Act.”

The use of the phrase “VPN Aided Class II Gaming” repeatedly in the motion to dismiss is itself a bit of politicking, as it focuses on one of the key points of the dispute.  California authorities allege that the online bingo being offered through the Desert Rose Bingo site is not Class II, but is enhanced to Class III, because the online bingo is a facsimile offering not entirely matching to live poker as offered in a visible gaming hall.

Presiding US District Judge Anthony J. Battaglia sided with the state’s rationale in issuing the temporary restraining order against the tribe.

The Santa Ysabels disagree strongly.  In their rendition of circumstances, the “VPN-Aided” (VPN is short for Virtual Private Network) is simply the electronic means through which gaming results are communicated to participants.  The gaming, the tribe alleges, occurs wholly on the reservation, and the remote players are participating by “proxy”.

The tribe also alleges that the state of California takes “great pains” to construct a description of circumstances where the Desert Rose bingo play takes place outside of tribal lands, but even if true, it would be a moot argument: Such off-reservation gaming, the tribe asserts, wouldn’t even be covered by the 1980’s-vintage Indian Gaming Regulatory Act (IGRA), the federal statutory mechanism through which all American tribal gaming is offered.

IGRA, as with many pre-Internet laws, may turn out to be sorely deficient when it comes to dealing with matters whose fundamental nature has changed with the advent of the Internet.

The shield supposedly provided by tribes’ sovereign immunity claims has emboldened American tribal nations to find new ways to extend their reach in the digital age.  That has led, wholly and predictably, to some consequences harmful to consumers, a huge warning flag for anyone actively advocating tribal-controlled online poker.

For example, usurious agreements and profiting by the American payday-loan industry, using tribal sovereignty claims as a legal shield, has led to dozens of arrangements between tribes and high-interest lenders, who evade state and national usury statutes.  (This Bloomberg BusinessWeek report is but one good glimpse of dozens that are available on the problem, which often leaves consumers with no legal recourse.)

Other tribes have been exploring ways to use the tribal-sovereignty assertions to generate income in the online-gambling sphere; the Santa Ysabel situation is not the first.  In 2013, for example, Oklahoma’s Cheyenne-and-Arapaho tribe attempted to launch an online site catering only to international players, one of several such instances.

Online gambling has even flirted with US tribal connections in the payment-processing sphere.  James Leighton’s “Alligator Blood,” about the rise and fall of Australian payment processor Daniel Tzvetkoff, includes a secondary story line about how major US-facing online poker sites nearly became part of a deal that would have involved black-box processing through a Montana tribe.  The shielding possibly provided by that tribe’s planned sovereign immunity claims might have made the entire “Black Friday” chain of events roll out differently, though the primary defendants in that case had already committed many of the the acts for which they were later charged by US authorities.

The Santa Ysabel situation, however, plays directly against ongoing legislative efforts in California to legalize intrastate online poker.  Those Cali efforts are funded primarily by other, larger tribes, but if the Iipay Nation successfully defends itself with its tribal-sovereignty claims, the entire legislative process going on in Sacramento might become moot.

There would be no need, as the Iipay Nation asserts, to strike any sort of compact deal with California politicians, nor would the state be in line for any share of revenue derived from such online sites.

That in turn imperils the planned claims of sovereign immunity which the tribes have inserted into all versions of California online-poker legislation to be introduced to date.  If the tribes really do have a valid sovereignty claim regarding online poker services provided to off-reservation, in-state players, then the Iipay Nation has a much stronger case as well.  Otherwise, such assertions are nothing but a preemptive ploy designed to strip would-be consumers of their expected rights, ranking somewhere between disgraceful and unconstitutional.

California’s tribal gaming interests are likely monitoring the Santa Ysabel situation closely.  If the tribe succeeds in large part in defending its arguments, the ultimate effects will be felt far beyond California’s borders.  A majority of US states are homes to tribal nations offering gaming, and all of them would have the freedom to enter the online sphere if the Santa Ysabel effort succeeds.


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