Gaming attorney Cory Aronovitz explains the implications of the Ninth U.S. Circuit Court of Appeals' decision:
This case deals with jurisdiction: jurisdiction of the tribal courts, U.S. district courts, state attorneys generals and federal governmental agencies.
The Ninth Circuit ruled that the tribal court lacked jurisdiction over the tribe's lawsuit against AT&T because the tribe's claim that AT&T violated the Federal Communications Act may only be brought in a U.S. District court. Also, because the NIGC is a federal governmental agency, the state attorneys general lacked jurisdiction over AT&T regarding service to the tribe. Because the NIGC approved the tribe's lottery concept, until that decision is challenged in accordance with the administrative procedure act, state attorneys general are unable to invoke the Wire Act's cease-and-desist provision.
The practical application of this decision as it relates to Internet gambling is that a tribe that has a tribal-state compact for Class III gaming (Las Vegas-style games) may be able to operate an Internet casino from its reservation. To do so, the tribe would have to offer games consistent with its approved compact and submit a detailed description of how it would offer an internet casino including how accounts are opened and games are played to the NIGC. If the NIGC approves the submission, then the Tribe would be able to operate an internet casino from its reservation.
The NIGC would have to determine that the request is consistent with the compact and is not illegal. It is possible that the NIGC would look at the In Re: MasterCard case for guidance. That case, although on appeal, held that the Wire Act does not apply to casino-style games. The case, however, also has language that directs potential liability to Internet casino operators and players--not on a federal crime level, but as a potential violation of various state gambling law, which could lead into or elevate into a federal crime. Notwithstanding that portion of the holding, the NIGC could find that the Wire Act does not render casino-style games illegal and, as such, does not violate any federal law or the Indian Gaming Regulatory Act, and ultimately approve a tribe's request to conduct Internet gaming.
Such a determination by the NIGC, as well as its decision regarding lotteries, is likely to be challenged by state attorneys general. The outcome is uncertain, but the door has been opened. The Ninth Circuit's ruling allows the tribe to conduct a lottery from its reservation until the NIGC's approval is challenged and (possibly) reversed.
Of note is that the lottery concept required players to open an account in person at the reservation. However, after the account was opened, the player could monitor the game results, play additional lottery games and received credit for winnings into the established account or request that a check be mailed from off-reservation.
Similar to the lottery concept is an NIGC-approved proxy-play bingo concept that is currently in use and gaining popularity. The game, developed by Multimedia Games, Inc., enables players to establish an account in person on the reservation and then nominate (direct) the tribe to play the bingo games purchased by the player. Thus, a player can go to a reservation, purchase a number of bingo games and then leave the playing to the tribe. If the player is a winner, he or she is notified and must return to the reservation for payment. That is different from the lottery concept which enables the player to direct the play of winnings over the telephone.
It is likely that this case will generate submission for Internet casino from a reservation.
Cory Aronovitz is an attorney with the Casino Law Group in Chicago, Illinois
and is a professor of gaming law at the John Marshall Law School in Chicago.