California Sues Santa Ysabel Tribe Over Real-Money Online Gambling Site

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Friday, November 21st, 2014 | Written by Shane Larson

The Iipay Nation of Santa Ysabel launched its online bingo site on November 3rd, despite there being no regulatory framework in place in California. At the time, the tribe insisted it was breaking no laws and expressed optimism it was simply exercising its sovereign rights, but just a few weeks later and now the State of California’s Attorney General has filed a lawsuit against the entire Iipay Nation of Santa Ysabel claiming the online gambling site is in violation of several different laws, and its operation should be suspended pending further resolution of the case. As the Case Statement begins:

“This action seeks appropriate injunctive relief to prevent unlawful Internet gambling; Defendant Iipay Nation of Santa Ysabel, also known as Santa Ysabel Band of Diegueno Mission Indians (Tribe), has begun to offer a facsimile of bingo over the Internet to bettors, who are not located on the Tribe’s Indian lands. In addition to violating state and federal law, the Tribe’s conduct materially breaches the tribal-state class III gaming compact (Compact) between the Tribe. and the State.”

A Threat To Public Health, Safety, and Welfare

On Tuesday, the federal lawsuit was filed in the US District Court for the Southern District of California, and alleges that the Santa Ysabel operated site called DesertRoseBingo.com breaches a number of different laws, including the Indian Gaming Regulatory Act (IGRA) and the Unlawful Internet Gambling Enforcement Act (UIGEA).

In fact, the lawsuit mentions the UIGEA 15 times, and the IGRA 25 times, and warns that the tribe’s real money online bingo website posed “an imminent threat to the public health, safety, and welfare” of Californian residents, and so a temporarily restraining order should be granted in order to prevent a “far-reaching and immediate effects on million of Californians.”

Breaches Its Gaming Compact

According to the terms of the Indian Gaming Regulatory Act (IGRA) of 1988, both poker and bingo are defined as Class II games, which means the tribes have authority to license and regulate such games, provided the state permits such gambling. Class III gaming, on the other hand, includes slot machines, blackjack, craps, and roulette, and the Tribe’s authority is subsequently restricted unless a Tribal-State Gaming Compact has first been negotiated with the State.

Whilst the Santa Ysabel Tribe had argued that online bingo and poker are Class II games, the original IGRA definition does not take account of their online equivalents, and as so the lawsuit now claims the tribe has breached its gaming compact, stating:

“The Tribe’s self-proclaimed ‘groundbreaking’ efforts to make Internet gambling available to Californians ‘anytime & anywhere’ breach the tribal-state class III gaming compact between the Tribe and the State, do not comply with [IGRA], and violate [UIGEA].”

Tribe Had Refused To Meet Attorney General

In its filing, the state of California also mentions it had been aware of the tribes intention to offer real-money internet poker to California residents, following numerous details having been revealed in the gaming press and related blogs in July 2014. The tribe’s original proclamations even resulted in California’s Attorney General seeking to discuss the issue, but his call for a meeting was apparently rejected by the tribe. As the case file states”

“On July 14, 2014, the State sent a letter requesting that the parties meet and confer concerning whether the Tribe’s planned Internet gambling materially breached the Compact. That letter also referred to Internet bingo.. The Tribe rejected the State’s request to meet and confer.”

Santa Ysabel Doesn’t Have Much To Lose

The case is now scheduled to be heard on December 4th in the U.S. District Court for the Southern District of California by Judge Anthony J. Battaglia. In the meantime, the Santa Ysabel Tribe probably feel they have nothing to lose by pursuing the matter, because if they are proven to be at fault regarding the legality of its online bingo site the tribe has no significant business that can be harmed. On February 3, 2014, for instance, the Santa Ysabel Resort & Casino went out of business owing tens of millions of dollars in debt, and at a loss of 115 staff jobs.

By the same token, the state of California is viewed as the potential jewel in the crown of US online poker, and could prove a gold mine for any operator that manages to successfully set up a site. Therefore, the Santa Ysabel Tribe is uniquely placed to test the ground, while other tribes adopt a wait and see approach to how the whole controversy plays out.