United States Wins Permanent Injunction Against Santa Ysabel Interactive Sites

The United States of America has emerged victorious in its legal battle against California’s Iipay Nation of Santa Ysabel in a case that is likely to serve as a damper for US-based tribal nations considering online-gaming operations without federal-level approval.  In an opinion released last week, US District Court for the Southern District of California Judge Anthony J. Battaglia ruled that the Iipay Nation of Santa Ysabel, the Santa Ysabel Gaming Commission, Santa Ysabel Interactive, and other defendants had violated provisions of the US’s 2006 UIGEA [Unlawful Internet Gambling Enforcement Act] in opening a real-money online bingo site in November of 2014.

desert-rose-bingo-logoBoth federal and state (California) authorities acted quickly to shut down the Santa Ysabel’s Desert Rose Bingo offering, filing separate lawsuits and gaining temporary injunctions against the tribe and its various gaming operations.  The federal and state cases targeting the online bingo site were combined a year ago, and this week, following arguments from both sides, Judge Battaglia made the federal-level injunction permanent.

The Santa Ysabel tribal nation did receive one minor victory in the decision, although it won’t be much solace.  Battaglia dismissed the State of California’s claim for summary judgment on grounds that the tribe had breached its existing gambling compact with the state.  In that portion of the case, the Santa Ysabel prevailed in its argument that the online bingo offered at Desert Rose was rightly categorized as Class II (as opposed to Class III) tribal gaming, and as such, was legal under the US’s IGRA [Indian Gaming Regulatory Act].

However, the Santa Ysabel may have prevailed on the IGRA argument, but not so much when the feds brought the UIGEA ban into play.  As Battaglia wrote:

The United States argues summary judgment in its favor is appropriate because there is no genuine dispute concerning the following material facts:

(1) patrons place bets or wagers using means involving the Internet;

(2) patrons are off tribal lands, but within California—a state where gambling is unlawful—at the time the bets or wagers are placed; 

(3) Tribal Defendants are “person[s] engaged in the business of betting or wagering” who accept transactions restricted by UIGEA;

(4) Tribal Defendants are engaged in a gambling business and accepted restricted transactions;

(5) Tribal Defendants will continue to violate UIGEA absent injunctive relief;

(6) such application of UIGEA will not alter, supersede, or otherwise affect IGRA.

That conditional framework is likely to define the legal argument over various forms of online gambling in other US jurisdictions as well.

privatetableFor what it’s worth, the Santa Ysabel officials had largely conceded the legal fight some time ago, taking offline both the Desert Rose Bingo domain and that for a sister online-poker offering, PrivateTable.com.  The PrivateTable site offered limited play-money poker for a short time, but never progressed to real-money offerings.  The tribe’s bingo site did offer minuscule real-money prizes, but was forced offline by the initial injunction after only a few days of live operation.

The key point in Battaglia’s ruling, supporting UIGEA, was his finding that the Santa Ysabel nation could not use IGRA as a tool to get around UIGEA, and thus offer its games to US citizens who were not already on tribal lands.

Wrote Battaglia:

When IGRA and UIGEA are read together, it is evident that the phrase “on Indian lands” was intended to limit gaming to those patrons who participate in the 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.

As a result of the decision, the Santa Ysabel tribal defendants are permanently enjoined from all of the following, which writes finis for the tribe’s online-gaming plans… pending changes in federal law:

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.

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