25 Aug, 2014
Dave Palermo, GamblingCompliance
The planned launch of real-money poker and bingo websites by a handful of American Indian tribes will force the National Indian Gaming Commission (NIGC) to make long-awaited legal decisions that could impact the future of online gambling in Indian country, tribal officials said.
Tribes have been awaiting NIGC direction on regulatory criteria for what are defined as Class II games, as well as a legal opinion on their ability to accept off-reservation wagers.
NIGC’s silence on the issue may end as early as this week, when the Ipay Nation of Santa Ysabel in San Diego County, California plans to begin taking off-reservation, real-money wagers on its privatetable.com poker website.
“One way or another, the NIGC won’t be able to bury its head in the sand any longer,” said Norm DesRosiers, a regulatory consultant and former NIGC commissioner. “They’re going to have to take a position on this.”
“I would agree with Norm that we are somewhat forcing their hands to reach some conclusions and provide some direction,” said David Vialpando, chairman of the Santa Ysabel gambling commission.
On the other hand, the federal agency could rule the proposed online operations do not fall under NIGC jurisdiction and pass the legal baton to state courts and the U.S. Department of Justice.
Most Indian law experts believe that will be NIGC’s position. NIGC commissioners and staff refused interview requests.
Santa Ysabel, the Alturas Rancheria and a handful of other tribes in California and elsewhere believe Internet poker and bingo fit the definition of Class II gambling under the Indian Gaming Regulatory Act (IGRA). Such a designation would leave regulatory primacy to tribal commissions with oversight by the NIGC.
Their strategy is contrary to that of more than a dozen California tribes and twice as many card rooms seeking legislative approval of intrastate poker websites licensed, taxed and regulated by the state. The websites under proposed California legislation would be operated as commercial ventures outside the jurisdiction of IGRA and NIGC.
Santa Ysabel, Alturas and the other tribes believe they can legally offer online poker, bingo and other Class II games without state approval and regardless of what the legislature does, or doesn’t, do.
“We’re definitely moving the needle,” Vialpando said.
Santa Ysabel plans to “flip the switch” on its for-play website and begin collecting real money wagers later this week, he said.
Meanwhile, the Alturas Indian Rancheria and the Intertribal Online Gambling Alliance (ITOGA) – a coalition of seven tribes in California and elsewhere – are hoping to launch bingo websites. They, too, plan to accept off-reservation wagers.
NIGC opinions on off-reservation gambling and whether online poker and bingo fits the definition of Class II gambling under IGRA could have far-reaching implications on the ability of tribes throughout the country to launch gambling websites without state approval.
“The NIGC is clearly going to have to face the issue,” said Joe Valandra, CEO of Great Luck LLC, partners with Alturas in the Desert Rose Bingo website.
Many tribal regulators believe IGRA allows Internet poker and bingo as a permissible technological enhancement to Class II gambling.
Some tribal regulators also believe off-reservation wagers legally take place on Indian lands if that is where the Internet servers are located.
The theory wagers occur at location of the server is held in New Jersey and Nevada, where online gambling is legal.
But off-reservation wagers may prove problematic.
The NIGC in a 2000 opinion involving a proposed lottery by the Coeur d’Alene Tribe in Idaho turned thumbs down on off-reservation wagers.
The opinion authored by then-counsel Kevin Washburn, now the Obama administration’s assistant secretary of Indian affairs, said “a tribal gaming operation is not authorized … under IGRA if all or part of the gaming occurs at locations that do not fall within the definition of Indian lands.”
Tribes believe the opinion is not relevant to online gambling and needs to be revisited.
Regardless of NIGC views on off-reservation wagers and whether online poker and bingo fits IGRA’s definition of permissible technological enhancements for Class II gaming, the issues may eventually be left to state and federal courts.
“Once there’s some legal certainty to the question of off-reservation wagers, more tribes will jump in” and launch websites, Great Luck attorney Kevin Quigley told gambling conference delegates earlier this year.
“If the courts hold the gambling is, indeed, Class II with technological aids, which is permissible under IGRA, that’s the end of the story,” DesRosiers said. “That will open the floodgates for tribes.”
The NIGC can issue closure orders for any gambling in violation of IGRA, but the agency has historically refrained from taking enforcement action against tribes.
Tribal groups criticized NIGC earlier this year for refusing to act when the Bay Mills Indian Community opened a casino on non-trust lands without approval from the U.S. Department of Interior, contending the operation was outside its jurisdiction.
“The NIGC always takes a very narrow view of their jurisdiction,” said Jeffrey Nelson, a former attorney with the NIGC and Interior’s solicitor’s office.
“If it’s not on Indian lands they don’t want anything to do with it.”
“I’m sure NIGC would just as soon arrive at the conclusion none of the activity we’re involved in falls under IGRA,” Vialpando said.
“If they determine because the activity is generated off the reservation it is not covered by IGRA … we’re prepared to go to court and argue our case that it would be an incorrect conclusion.
“We’ve been working on this enterprise for two years. We’ve done our homework. We have a very solid regulatory framework.”
Tribes seeking Class II poker and bingo sites propose different operating systems.
Alturas plans to offer “proxy” wagering on a browser-enabled VPN (virtual private network) from a reservation server. Santa Ysabel is leasing Winning Poker Network software through a server overseen by the Kahnawake Mohawks of Quebec, Canada.
“Because of the different ideas on how to approach Internet wagering … the NIGC to their credit may be just sitting back, thinking, ‘Let’s see how this shakes out,’” said Valandra, a former NIGC chief of staff.
The NIGC has been criticized by some tribal officials for not developing a strategy for Internet gambling, some believe because it assumed online wagering would be conducted not as Class II under IGRA, but as commercial gambling outside their jurisdiction.
“They have been so sure this wasn’t going to happen, they’ve pooh-poohed it,” DesRosiers said. “Now they’re thinking, ‘Maybe we’d better be prepared.’”
While tribes have regulatory primacy, NIGC approves gambling ordinances and regulatory structures intended to ensure protection of tribal government resources.
“The NIGC has got to be all over this, looking at technical specifications, internal controls, segregation of funds, payment processing and making sure the tribe gets the lion’s share of the revenues,” DesRosiers said.
“There are a whole lot of issues.”