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Wendy Knox and Richard Dotson v. United States Department of the Interior

December 27, 2010


The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge



The Court has before it motions to dismiss filed by the two defendants, Idaho's Governor and the United States, and a motion to amend filed by plaintiffs. The Court heard oral argument, and took the motions under advisement. The Court allowed further briefing on the motion to amend, which was completed on November 30, 2010. For the reasons stated below, the Court will grant the Governor's motion to dismiss but deny the Secretary's motion to dismiss. This action will proceed under the Administrative Procedures Act as a judicial review of the Secretary's decision to approve video gaming for the four Idaho Tribes.


Plaintiffs Knox & Dotson

Plaintiffs Wendy Knox and Richard Dotson live near the Fort Hall Casino operated by the Shoshone Bannock Tribes on their reservation lands. See Amended Complaint, Dkt. 4 at ¶ 28. Knox and Dotson allege that they both became "compulsive gamblers" after the Fort Hall Casino installed slot machines following the enactment of Idaho Code §§ 67-429B and 67-429C by the Idaho legislature. Id. Knox and Dotson gamble "almost exclusively" at Fort Hall Casino "because of its close proximity to their respective residences, compared to the next nearest casino gambling establishments located hundreds of miles away." Id. Of all the different types of gambling available at the Fort Hall Casino, Knox and Dotson played only the slot machines. Id. They allege that "[b]ecause of the slot machines at the Fort Hall Casino, [they] both developed clinical and devastating addictions to gambling at the Fort Hall Casino." Id.

Knox estimates her slot machine losses at Fort Hall Casino at about $50,000.00, and Dotson estimates his slot machine losses at Fort Hall Casino at about $30,000.00. Id. They also incurred additional debt they otherwise would not have incurred, "were subjected to intrusive and humiliating collection efforts, stress, anxiety and marital and family strife, and tremendous emotional distress." Id. Dotson lost his house and job, and was convicted of the crime of forgery in order to obtain gambling funds. Id. Both plaintiffs continue to receive treatment for their destructive gambling addictions through Gambler's Anonymous. Id. Dotson has also obtained counseling from a private licensed counselor for his gambling addiction. Id.

The plaintiffs allege that "[i]f the defendants had originally acted in accordance with [Indian Gaming Regulatory Act] and the Johnson Act, the slot machines would not have been installed at Fort Hall Casino, or would have been removed therefrom, and neither Plaintiff would have suffered the harm set forth above." Id. They allege that if the Court declares that the slot machines violate the law, "Fort Hall Casino will be forced to remove its slot machines, and such gambling would be much less readily available to Plaintiffs, dramatically speeding and increasing their recovery from gambling addiction and preventing or minimizing further harm to the Plaintiffs of the kind set forth above. Id.

Indian Gaming Regulatory Act & Johnson Act

In 1988, Congress passed the Indian Gaming Regulatory Act (IGRA) to create "a statutory basis for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments" and "to shield [tribal gaming] from organized crime and other corrupting influences to ensure that the Indian tribe is the primary beneficiary of the gaming operation." See 25 U.S.C. §§ 2702(1), (2). The IGRA was also intended "as a means of granting states some role in the regulation of Indian gaming." Artichoke Joe's Cal. Grand Casino v. Norton, 353 F.3d 712, 720 n.11 (9th Cir. 2003).

The IGRA creates three classes of gaming, each of which is subject to a different level of regulation. Class I and II gaming includes social games, bingo, and card games.

See 25 U.S.C. §§ 2703(6) & 2703(7)(A)(ii). Class III gaming includes the tribal video gaming machines at issue in this case. Id. § 2703(8). Class III gaming may be conducted on Indian lands if it is: (1) authorized by the tribe seeking to conduct the gaming; (2) located in a State that does not bar such gaming; and (3) "conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State. . . ." See 25 U.S.C. § 2710(d)(1).

The IGRA authorizes states to negotiate compacts with tribes that are located within their borders regarding aspects of Class III Indian gaming that might affect legitimate state interests. See 25 U.S.C. § 2710(d)(3)(C). This compacting process gives regulatory authority to states, while granting to tribes the ability to offer legal Class III gaming. Artichoke Joe's, 353 F.3d at 716.

The Secretary of the Interior must approve the compact, and it does not take effect until notice of that approval has been published by the Secretary in the Federal Register. See 25 U.S.C. § 2710(d)(8) & (3)(B). If the Secretary does not approve or disapprove the compact within 45 days after it has been submitted to the Secretary, it is considered approved, but only to the extent it is consistent with IGRA. See 25 U.S.C. § 2710(d)(8)(C).

Under a criminal law in place before the IGRA was enacted -- the Johnson Act -- slot machines are banned in Indian country. See 15 U.S.C. § 1171-78. However, the IGRA waives application of the Johnson Act if the slot-machine gaming is conducted under an effective Tribal-State compact that 'is entered into . . . by a State in which gambling devices are legal." Artichoke Joe's, 353 F.3d at 720 n.11. State-Tribal Compacts

Between 1992 and 2000, Idaho Governors entered into Class III gaming Compacts on the State's behalf with four of the five Idaho tribes: The Coeur d'Alene Tribe, the Kootenai Tribe, the Nez Perce Tribe, and, in 2000, the Shoshone Bannock Tribes. See, e.g., 65 Fed.Reg. 54541-03 (Sept. 8, 2000) (approval of the SBT Compact by the Assistant Secretary of the Interior for Indian Affairs). Each Compact was affirmatively approved by the Secretary. See 58 Fed. Reg. 8478 (Feb. 12, 1993) (Coeur d'Alene Tribe Compact);

58 Fed. Reg. 59,926 (Nov. 10, 1993) (Kootenai Tribe Compact); 60 Fed. Reg. 57,246 (Nov. 14, 1995) (Nez Perce Tribe compact); 65 Fed. Reg. 54,541 (Sept. 8, 2000) (SBT Compact).

Focusing on the Compact with the Shoshone Bannock Tribes, it was intended to "govern the licensing, regulation and operation of Class III gaming conducted by the Tribes on Indian Lands located within [Idaho]." See Compact § 3(k). The Compact authorizes the Tribes to conduct any Class III gaming activity "that the State of Idaho 'permits for any purpose by any person, organization, or entity,' as the phrase is interpreted in the [IGRA]." See Compact § 4(a).

When the Compact was negotiated, the Tribes and State could not agree on what types of Class III games Idaho allowed others to conduct. The State's position was that "the electronic gaming currently conducted by the Tribes in Idaho is an imitation of casino games and prohibited under Idaho and federal law." See Idaho v. Shoshone- Bannock Tribes, 465 F.3d 1095, 1097 (9th Cir. 2006). The Tribes' position was that "Idaho allowed all class III gaming except sports betting." Id. To settle their differences, the parties agreed to seek a declaratory judgment to determine which class III games the Compact authorized.

In 2001, the Tribes and State each filed suit in this Court seeking declaratory relief. See Shoshone-Bannock Tribes v. Idaho, Civil No. 4: Civ-01-52-BLW; Idaho v. Shoshone-Bannock Tribes, 4: Civ-01-171-BLW. The Court consolidated the cases into a single case.

Proposition One

About a year later, while the consolidated case was pending, the voters of Idaho adopted a ballot initiative called Proposition One, which purported to authorize Indian tribes to conduct gaming using "tribal video gaming machines." Shoshone-Bannock Tribes, 465 F.3d at 1097. Proposition One added two sections to the Idaho Code, 67-429B and 67-429C. Section 429B authorizes "Indian tribes . . . to conduct gaming using tribal video gaming machines pursuant to state-tribal gaming Compact which specifically permit their use." See I.C. § 67-429B(1). Section 429C authorizes tribes to amend their gaming Compact to permit the use of tribal video gaming machines. See I.C. § 67-429C. Once a Compact is so amended, the statute requires that the number of gaming machines be limited and that the Tribe contribute 5% of the net gaming income to local educational programs and schools. See I.C. § 67-429C(1)(c).

Shortly after Proposition One became law, three of the Idaho tribes -- the Coeur d'Alenes, Kootenais, and Nez Perce -- used the amendment procedure in § 67-429C to amend their Compacts with Idaho. Shoshone-Bannock Tribes, 465 F.3d at 1098. Again, the Secretary affirmatively approved each of the amendments. See 68 Fed. Reg. 1068 (Jan. 8, 2003) (Coeur d'Alene Tribe Compact addendum); 68 Fed. Reg. 1068 (Jan. 8, 2003) (Kootenai Tribe Compact amendment); 68 Fed. Reg. 1068 (Jan. 8, 2003) (Nez Perce Tribe Compact addendum approval). The amendments granted these three Tribes the right to operate tribal video gaming machines, subject to the statute's limitations of numbers and requirements of school payments. Id. The Shoshone Bannock Tribes did not follow this course but continued with their litigation in this Court.

Further Litigation In This Court

In the litigation before this Court, the State had originally taken the position that video gaming machines were banned by the Idaho Constitution. See Idaho Const. Art. III, § 20(2). That constitutional provision prohibits, among other things, "slot machines" and "any electronic or electromechanical imitation or simulation of any form of casino gambling." Id. To give effect to this constitutional provision, the Idaho Legislature enacted Idaho Code § 18-3810 to make it a misdemeanor to use or keep a "slot machine." The Idaho Supreme Court has held that the term "slot machine" was sufficiently definite, without further definition, to include video gaming machines. See MDS Investments, L.L.C. v State, 65 P.3d 197 (Id.Sup.Ct. 2003).

However, after the passage of Proposition One -- and the amendment of the Compacts for the other three tribes to allow video gaming -- the State dropped its argument that video gaming violated the Idaho Constitution. In an apparent shift of strategy that sought to regulate rather than ban video gaming, the State now sought to compel the Tribes to renegotiate the Compact. See Shoshone Bannock Tribes v State of Idaho, Case No. 4:CV-01-52-BLW (Memorandum Decision filed April 12, 2004) at 8. The Tribes objected, pointing out that the Compact's "most favored nation" provision required that the Compact "shall be amended" whenever any other tribe is permitted to conduct any Class III games in Idaho. Id. This provision, the Tribes argued, entitled them to an amendment without renegotiation.

The Court agreed, and held that the "most favored nation" provision entitled the Tribes -- without renegotiation -- to "a brief written amendment" clarifying that they were authorized to operate "tribal video gaming machines" as that term in defined in Idaho Code § 67-429B. Because the State had dropped its argument that video gaming violated Idaho's constitution, and had agreed that the "most favored nation" provision allowed the Tribes to operate video gaming, the Court did not address the issue whether the video gaming violated Idaho's constitution.

Ninth Circuit Appeal

On appeal, the Ninth Circuit affirmed this Court. Shoshone-Bannock Tribes, 465 F.3d at 1095. The Circuit held that "[t]he Tribes are entitled to a mandatory amendment of the Compact stating that they are authorized to conduct tribal video gaming, as the other tribes have been permitted to do." Id. at 1102. The Circuit further held that the limitations on numbers of machines and the requirement of educational payments did not apply to the Tribes. Id. The Circuit likewise never addressed the issue whether the Tribes' video gaming violated the Idaho constitution.

The Tribes have never submitted a proposed Compact amendment to the Secretary approving video gaming, and no amendment has been issued by the Secretary.

Idaho Litigation

In 2008, Knox and Dotson sued the State of Idaho and Governor Otter in state district court, alleging that Idaho Code §§ 67-429B and 67-429C violated the Idaho constitution. The district court granted the defendants' motion to dismiss, finding that it was speculative whether the relief requested by plaintiffs (invalidation of the two statutes) would redress their claimed injuries by having the video gaming machines removed from the Fort Hall Casino. The Idaho Supreme Court agreed, finding that the Ninth Circuit decision in Shoshone-Bannock Tribes, 465 F.3d at 1095, "would preclude further litigation between the State and the Tribes as to whether tribal video gaming was permissible under the Compact and whether the Compact is valid under IGRA." See Knox v. State ex.rel. Otter, 223 P.3d 266, 280 (Id.Sup.Ct. 2009). Furthermore, the court held, "there is not a substantial likelihood that [law enforcement] authorities would ...

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