IGRA and the Tribes: Legal Battles & the Fate of Online Poker
In 2014, apparently exasperated by California’s failed efforts to legalize online poker, one local tribe decided to go it alone. The Iipay Nation of Santa Ysabel launched its own online bingo site offering games to players throughout California, DesertRoseBingo.com, and announced that an online poker site, PrivateTable.com, would follow.
The tribe was taking a big risk. But it argued that the Indian Gaming Regulatory Act (IGRA) permitted it to offer class II gaming, such as poker and bingo, on its sovereign land.
This is true, but IGRA pre-dates the internet, and so the crux of the matter was about where an online bet takes place. The Iipay argued that everything went down on its reservation because that’s where the servers were based.
Goes to Court
State and federal authorities disagreed and sued the Iipay in a case that did not go well for the tribe.
The court ultimately determined that interplay between IGRA and the Unlawful Internet Gaming Enforcement Act (UIGEA) was crucial in the case. The 2006 federal law UIGEA prohibits banks and other financial institutions from processing online gambling transactions where the gambling is not authorized by the state.
In its ruling, the appellate panel noted that UIGEA specifically establishes a system in which a bet must be legal both where it originates and where it is received.
“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,” the judges wrote.
Florida Cases
A similar-but-different case is currently playing out in Florida, this time with sports betting – but it could have big consequences for tribal online poker, too.
In April 2021, Florida Gov. Ron DeSantis signed a new compact with the powerful Seminole tribe, owner of the Hard Rock Casino brand. The deal essentially gave the Seminoles the statewide monopoly on mobile sports betting in return for $2.5 billion in casino revenue-share payments in the first five years.
But West Flagler Associates, former owner of the Magic City Casino and operator of the Bonita Springs Poker room, sued Florida and the US Department of Interior. Among other things, it argued that the compact violated IGRA’s prohibition of off-reservation gambling and that the federal government should not have approved it.
The lower court initially agreed with West Flagler, forcing the Seminoles to pull their fledgling online sports betting operations. But an appeals court ruled for Florida and the DOI, and the Seminoles were back in action.
West Flagler is now asking the US Supreme Court to hear the case and declare the compact null and avoid.
SCOTUS
SCOTUS’ decision on this is crucial. Should the court decide not to take the case, it would amount to a tacit acceptance of off-reservation gaming, which could grease the skids on online poker for California.
Since the SCOTUS determination that the federal prohibition of sports betting (PASPA) amounted to unconstitutional federal overreach, there has been a natural reluctance for federal authorities to interfere with state laws on gambling.
For example, in its ruling on PASPA, SCOTUS noted that the Wire Act,
“which outlaws the interstate transmission of information that assists in the placing of a bet on a sporting event, appl[ies] only if the underlying gambling is illegal under state law.”
In the past, opponents to online gambling regulation have used the Wire Act to claim that state-by-state legalization of online gambling was unlawful on a federal level, although this interpretation of the act hasn’t always been the case. It’s the clearest indication yet that the highest court in the land wants to leave this stuff to the states to figure out.
Back in California, a big part of the reason the tribes have been willing to back any legislative effort to legalize statewide online poker and sports betting, is that they are concerned they are hamstrung by IGRA. Doubts about the legality of offering bets beyond their reservations means that such legislation would benefit commercial gaming interests and not their own.
But what if they aren’t hamstring by IGRA? This would at least remove a major obstacle to the legalization of online poker and sports betting.
Should California Legalize Online Poker?
Should California legalize online poker and join the multistate pool-sharing compact (MSiGA), it would have a transformative effect on the game in the US.
With the population of a medium-sized country, California’s presence would inject huge liquidity into the online poker market, and may even produce a domino effect, as more states see regulation as an economically viable prospect.
Of course, the case in Florida is about more than just IGRA, it’s also about state and federal competition laws and state laws about voter approval of gambling expansion. It should also be noted that while state laws on gambling may override federal laws in the current legal climate, state laws cannot override IGRA, which is about protecting tribal sovereign rights from state interference.
Regardless, what SCOTUS does or doesn’t do in the coming months could have huge ramifications for the future online gambling in the US.
