Shoalwater Bay Tribe Prevails in Federal Court Against Maverick Gaming Challenge

On Feb. 21, federal Chief Judge David Estudillo dismissed Maverick Gaming’s challenge to Washington State’s sports betting law. It’s a significant win for tribal gaming in the US, as the suit had the potential to upend the Indian Gaming Regulatory Act (IGRA) of 1988. Maverick had named multiple state officials as defendants in the case. However, the Shoalwater Bay Tribe intervened, using its sovereign immunity to derail the case before it could get fully underway.

Maverick, a gaming operator based in Washington, wanted to offer sports betting. However, the state’s approach to legalization had granted tribal casinos exclusivity over the new gambling product.

Maverick filed the suit in January 2022 in the District of Columbia. It argued that cutting out the private sector in favor of a tribal monopoly violates federal law. Such monopolies currently exist in numerous states, so it was a case with far-reaching implications.

The case was transferred in May 2022 to the U.S. District Court for the Western District of Washington.

That change of venue was important, as Washington falls within the Ninth Circuit. There, precedent rendered two of Maverick’s three legal strategies moot, as the Circuit rejected similar arguments in the 2003 case Artichoke Joe California Grand Casino v. Norton.

The third pillar of Maverick’s case was an important one, however. The company argued that the IGRA’s requirement for states to negotiate gaming compacts in good faith violated the anti-commandeering principle of the US Constitution’s Tenth Amendment.

John Holden, an expert on gaming law, wrote for Bonus that this argument amounted to opening Pandora’s Box. Had the Court agreed with Maverick, it could have brought tribal gaming crashing down across the US.

Ninth Circuit Precedent Favors Tribal Rights

As it turns out, however, the Court never had a chance to consider that argument. The Shoalwater Bay Tribe successfully intervened and persuaded Judge Estudillo to deem the case invalid.

Under the US Constitution, federally recognized tribes are sovereign governments. This grants them certain rights, including sovereign immunity from lawsuits. At the same time, civil law prevents lawsuits from proceeding if they directly impact the interests of a third party who isn’t among the plaintiffs or defendants.

This can create the situation that a lawsuit can’t proceed without a particular tribe among the defendants, while the tribe in question can’t be named as a defendant due to its sovereign immunity. It’s precisely that Catch-22 that Shoalwater Bay invoked against Maverick.

Maverick’s counter-argument was that the federal government, in fighting to uphold the IGRA, would adequately represent the Tribe’s interests.

Judge Estudillo disagreed, citing a previous Ninth Circuit case, Dine Citizens Against Ruining Our Env’t v. Bureau of Indian Affs. That case involved environmental groups suing the federal government over its decision to allow Navajo Nation to continue operating a mine and power plant.

There, the Ninth Circuit found that the tribe and federal government sharing the same opinion on a court case was not the same as sharing the same interests. Judge Estudillo’s decision cites the Dine ruling as follows:

Although Federal Defendants have an interest in defending their decisions, their overriding interest must be in complying with environmental laws such as NEPA and the ESA. This interest differs in a meaningful sense from NTEC’s and the Navajo Nation’s sovereign interest in ensuring that the Mine and Power Plant continue to operate and provide profits to the Navajo Nation.

By the same logic, the federal government’s interest in defending the IGRA is not the same as the Shoalwater Bay Tribe’s in continuing to profit from sports betting.

Implications and Next Steps

The Court agreed with both halves of the Shoalwater Bay Tribe’s argument:

  • Because the federal government cannot adequately represent the Tribe’s interests, the Tribe is a necessary party to the case.
  • However, due to sovereign immunity, the Tribe cannot be named as a defendant without its consent.

That leaves the case with no way to proceed, so Judge Estudillo ordered it dismissed.

However, that doesn’t mean this is the end of the road for Maverick Gaming. The company’s CEO, Eric Persson, has said he intends to appeal the decision to the Supreme Court. Hypothetically, if the Supreme Court agrees to hear the case and to proceed without the Shoalwater Bay Tribe as a defendant, the future of the IGRA could end up back in play.

Failing that, Maverick could also try to devise a different legal argument altogether. Judge Estudillo dismissed the case without prejudice, meaning that Maverick can still file a new suit on the same matter. It’s not clear, however, what sort of argument it could make that would avoid impacting tribal economic interests and therefore running into the same problem again.

 

About the Author

Alex Weldon

Alex Weldon

Alex Weldon is an online gambling industry analyst with nearly ten years of experience. He currently serves as Casino News Managing Editor for Bonus.com, part of the Catena Media Network. Other gambling news sites he has contributed to include PlayUSA and Online Poker Report, and his writing has been cited in The Atlantic.
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