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State of California v. Iipay Nation of Santa Ysabel

United States Court of Appeals, Ninth Circuit

August 2, 2018

State of California; United States of America, Plaintiffs-Appellees,
v.
Iipay Nation of Santa Ysabel, AKA Santa Ysabel Band of Diegueno Mission Indians, AKA Santa Ysabel Band of Diegueno Mission Indians of the Santa Ysabel Reservation; Santa Ysabel Interactive, a tribal economic development entity; Santa Ysabel Gaming Commission; Santa Ysabel Tribal Development Corporation; Anthony Bucaro; David Chelette; Michelle Maxcy; Virgil Perez; Brandie Taylor; David Vialpando, Defendants-Appellants.

          Argued and Submitted March 16, 2018 San Francisco, California

          Appeal from the United States District Court for the Southern District of California D.C. Nos. 3:14-cv-02724-AJB-NLS, 3:14-cv-02855-AJB-NLS Anthony J. Battaglia, District Judge, Presiding

          Scott D. Crowell (argued), Crowell Law Office-Tribal Advocacy Group, Sedona, Arizona; Little Fawn Boland, Ceiba Legal LLP, Mill Valley, California; Kevin C. Quigley, Foley & Quigley PLC, Saint Paul, Minnesota; for Defendants-Appellants.

          Glen F. Dorgan (argued), Assistant United States Attorney, United States Attorney; United States Attorney's Office, San Diego, California; William P. Torngren, Deputy Attorney General; Sarah J. Drake, Senior Assistant Attorney General; Xavier Becerra, Attorney General; Office of the Attorney General, Sacramento, California; for Plaintiffs-Appellees.

          Before: M. Margaret McKeown, Julio M. Fuentes, [*] and Carlos T. Bea, Circuit Judges.

         SUMMARY[**]

         Tribal Gaming

         The panel affirmed the district court's summary judgment in favor of the State of California and the United States in their action seeking injunctive relief prohibiting Iipay Nation of Santa Ysabel from continuing to operate Desert Rose Casino.

         Desert Rose Casino is exclusively a server-based bingo game that allows patrons to play computerized bingo over the internet. Iipay Nation is a federally recognized Indian tribe with tribal lands located in San Diego County, California.

         The panel held that Iipay Nation's operation of Desert Rose Casino violated the Unlawful Internet Gambling Enforcement Act ("UIGEA"). 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 panel further held that even if all of the "gaming activity" associated with Desert Rose Casino occurred on Indian lands, the patrons' act of placing bets or wagers over the internet while located in a jurisdiction where those bets or wagers were illegal made Iipay Nation's decision to accept financial payments associated with those bets or wagers a violation of the UIGEA.

          OPINION

          BEA, CIRCUIT JUDGE.

         This case presents an issue of first impression: Does the Indian Gaming Regulatory Act, 25 U.S.C. § 2701, et seq., permit an Indian tribe to offer online gaming to patrons located off Indian lands in jurisdictions where gambling is illegal? Because we conclude that the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. § 5361, et seq., bars the activity at issue in this case, we affirm the district court's order granting summary judgment to the State of California and the United States.

         I

         The Iipay Nation of Santa Ysabel ("Iipay") is a federally recognized Indian tribe. Iipay's tribal lands are located in San Diego County, California. Iipay operated a traditional, brick-and-mortar casino on its tribal lands, but the casino failed and Iipay no longer conducts traditional gambling activity at the casino.

         In an effort to revitalize its gaming revenue stream, Iipay launched Desert Rose Bingo ("DRB"). DRB is a server-based bingo game that allows patrons to play computerized bingo over the internet. Like traditional bingo, participants in DRB purchase cards labeled with a grid of numbers. Numbers are then drawn and, if the numbers drawn correspond with the numbers on the player's card, the numbers on the card are covered or "daubed." A player wins by daubing numbers on the card in a pre-determined pattern.

         Iipay operated DRB through its wholly owned subsidiary, Santa Ysabel Interactive ("SYI"), on a set of servers that are located in Iipay's now-defunct casino on tribal lands. Unlike other computerized bingo games, Iipay does not provide any physical computer terminals located on Iipay's tribal lands at which patrons can play DRB. Instead, Iipay offered DRB to all California residents over 18 years of age exclusively through the internet.[1]

         A patron must access DRB by navigating to desertrosebingo.com using a web browser on a computer or other internet-enabled device, such as a tablet or cell phone. The patron must then register, create an account, and fund the account (either via a credit card or an electronic funds transfer).

         After a patron has funded his account, he can select a bingo game in which to participate, ranging in value from $.01 to $1.00. Once the patron selects a denomination of game in which to participate, the patron is presented with a "Request Form" popup window. In the Request Form window, the patron selects the number of games he would like to participate in (up to five games), the number of cards per game the patron would like to play (up to 500 cards per game), and the "playback theme" the patron would like the post-game video to appear.[2]

         After the patron is satisfied with his selection of denomination of game, number of games, and number of cards, the patron clicks the "Submit Request!" button on the Request Form. The patron is then presented with a "System Message" stating that the request has been submitted and "accepted" by DRB. After the Request Form is submitted, the patron's account is debited for an amount equal to the denomination of game the patron chose, multiplied by the number of games and cards per game the patron selected.

         After the patron's request is accepted, the patron can view the request under the "Requested" tab on DRB's main page. The Requested tab shows the information from the Request Form-denomination of game, number of games, number of cards per game, and playback theme. The Requested tab also displays the number of "proxies," which corresponds with the number of patrons registered to participate in the game, and a timer. Once the number of patrons participating ...


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