By Blaine I. Green, Emily Harwell, Allan C. Van Vliet, of Pillsbury
Takeaways
- The Supreme Court’s overturning of the Professional and Amateur Sports Protection Act in 2018 has led to renegotiations of tribal-state gaming compacts to allow tribes to offer sports betting.
- In February 2023, a federal court in Washington rejected a lawsuit challenging certain compact amendments between tribes and the State of Washington relating to sports betting, affirming tribal sovereignty.
- Differing results among courts now pose the question of whether tribes are indispensable in lawsuits challenging their contracts.
Over recent decades, tribal gaming has developed into a $32 billion industry, providing economic stability and tribal government funding for sovereign nation building. More recently, the U.S. Supreme Court’s decision (in 2018) to overturn the Professional and Amateur Sports Protection Act has sparked renegotiations of tribal-state gaming compacts across the country to allow tribes to enter the online sports betting arena.
Washington was one of the first states to enter into new compacts to allow sports betting at tribal casinos. On February 21, 2023, the U.S. District Court for the Western District of Washington at Tacoma rejected a lawsuit that challenged the Washington compact amendments for sports betting. The decision has important implications for the future of Indian gaming—specifically, tribal sports betting—and tribal sovereignty more generally.
The Indian Gaming Regulatory Act
The Indian Gaming Regulatory Act (IGRA) addresses the types of gaming activities which may be offered in Indian Country under federal law. Enacted for the purpose of “promoting tribal economic development, self-sufficiency, and strong tribal governments,” IGRA created a regulatory framework consisting of three tiers: Class I gaming (traditional and ceremonial games), Class II gaming (bingo and non-banked card games) and Class III gaming (all other games, including casino games such as slot machines, card tables and sports betting). IGRA requires states to negotiate class III gaming compacts with tribes in good faith, and prohibits states from using the compacting process to impose any tax, fee, charge or other assessment on tribal gaming operations.
Washington Sports Betting Legislation and Amended Tribal Gaming Compacts
In March 2020, the Washington legislature passed a bill allowing sports betting at tribal-owned casinos. In passing this new law, the legislature declared that “the policy of [Washington] to prohibit all forms and means of gambling except where carefully and specifically authorized and regulated …” is furthered “by authorizing sports wagering on a very limited basis by restricting it to tribal casinos.” House Bill 2638, signed by the governor on March 25, 2020, permits tribal casinos to accept wagers from mobile applications and the internet, but requires the customer placing the wager to be physically present on the premises of that tribe’s gaming facility. The legislation further limits sports betting to professional and collegiate sports outside the state of Washington.
Washington has since negotiated compact amendments with many tribes, including the Shoalwater Bay Tribe. Currently, 10 tribal casinos in Washington allow sports betting, and additional tribes are expected to seek similar compact amendments.
Maverick Lawsuit and Tribal Intervention
Maverick Gaming LLC (Maverick) operates card rooms in Washington. In January 2022, Maverick brought suit against various U.S. and Washington State officials and agencies, including the U.S. Department of Interior, seeking to invalidate the gaming compact amendments entered into by the state and various tribes. Maverick argued that the Secretary of Interior’s approval of these amendments violated IGRA and the equal protection clause of the Fifth Amendment to the U.S. Constitution.
The Shoalwater Bay Indian Tribe (Shoalwater), a federally recognized Indian tribe from the southwestern coast of what is now the State of Washington, filed a motion to intervene in Maverick’s lawsuit. The court granted intervention.
Shoalwater’s Motion to Dismiss
Rule 19(a) of the Federal Rules of Civil Procedure requires a third party to be joined in certain circumstances. A required party is any person in whose absence a court could not “accord complete relief among existing parties,” or who claims an interest in the subject of the action such that they may not be able to protect that interest without participating in the action. Under Rule 19(b), if it is not possible to join a required third party, then the court must decide to either allow the case to proceed without the required party or dismiss the action entirely.
Shoalwater moved to dismiss Maverick’s lawsuit on the ground the Tribe was an indispensable party and, because of the Tribe’s sovereign immunity, the case could not proceed. Shoalwater argued it was a required party because it had “a federal right to conduct Class III gaming on its Reservation, rights in its compact with Washington State that federal law expressly recognizes, and the sovereign right to immunity from unconsented suit.” Shoalwater cited a D.C. Circuit opinion, Kickapoo Tribe of Indians of Kickapoo Reservation in Kan. v. Babbitt, 43 F.3d 1491, 1495 (D.C. Cir. 1995), to note that “a sovereign has an interest in the validity of a compact to which it is a party, and this interest would be directly affected by … relief that purports to affect the validity of the compact.”
Maverick opposed dismissal by arguing that Shoalwater was not a required party under Rule 19(a). According to Maverick, the U.S. government was in a position to adequately represent Shoalwater’s interests in the case because the U.S. government “shares the tribe’s position” that the compact amendments were valid under federal law, as per Dine Citizens Against Ruining Our Env’t v. Bureau of Indian Affs., 932 F.3d 843, 857 (9th Cir 2019). Maverick also argued that the relief it was requesting—restrictions on the ability of U.S. and state officials to prohibit Maverick from offering Class III games outside of Indian Country—could be accorded without the Tribe’s presence because such restrictions would have no impact on the Tribe’s ability to continue offering sports betting. Finally, Maverick asserted that under Rule 19(b), the Court should decline to dismiss the case “in equity and good conscience” because, if the case was dismissed, Maverick would be left with no forum in which to bring its claims.
Shoalwater acknowledged the U.S. government shared the Tribe’s position that the compact amendments were valid, but the mere alignment of preferences, the Tribe argued, did not mean the U.S. could or would adequately represent the Tribe. Furthermore, Shoalwater argued the case should not be allowed to proceed in the Tribe’s absence under Rule 19(b). Under that rule, courts consider four factors: (1) the prejudice to any party or to the absent party; (2) whether relief can be shaped to lessen prejudice; (3) whether an adequate remedy, even if not complete, can be awarded without the absent party; and (4) whether there exists an alternative forum. (Dine Citizens Against Ruining Our Env’t v. Bureau of Indian Affs.) Shoalwater urged the court to dismiss given the overriding importance of tribal sovereignty under the first factor.
Order and Significance
The Washington court sided with Shoalwater on all issues and dismissed the case. (Note that Maverick is appealing the dismissal to the Ninth Circuit.)
The court agreed that under Rule 19(a), Shoalwater had a legally protected interest in its ability to continue offering Class III gaming on its reservation, given that the impact of a successful suit by Maverick would be to impair rights already granted to the Tribe under its gaming compact. The court was also influenced by the “importance of [Shoalwater’s and other tribes’ similar] gaming compacts and the revenue that such compacts provide for Washington’s federally recognized tribes.” Furthermore, the court was skeptical that the U.S. government could or would adequately represent Shoalwater’s interests in this case, given differences in how the Tribe and the U.S. believed certain Ninth Circuit precedents applied, as well as the “documented history of the federal government acting as an adverse party to Shoalwater in the absence of a tribal compact with Washington that permits Class III gaming.”
The court also observed, in its Rule 19(b) analysis, that even if the litigation were allowed to proceed without Shoalwater, and even if Maverick won on the merits, Maverick would still not obtain the relief it truly desired—i.e., Maverick’s own ability to offer sports betting outside of Indian Country. That’s because even if the gaming compacts between Washington and Shoalwater (and other tribes) were invalidated under federal law, Washington State law would still ban sports betting—by Maverick and anyone else—across the state.
The Maverick decision is a resounding affirmation of tribal sovereignty for Washington tribes that should influence future decisions within the Ninth Circuit and may be persuasive for other courts (outside the Ninth Circuit), too. The decision presents a few noteworthy takeaways for tribes and other parties with an interest in sports betting and Indian gaming:
- Tribal sovereign immunity is of critical importance to Rule 19 motions, even if the result is that litigation ends up being dismissed rather than resolved on the merits. The Washington court recognized the interplay between successful tribal gaming operations and tribal sovereignty. The court held that given the “long history of tribal gaming and the associated employment benefits for the tribes and the surrounding community,” as well as the “economic and sovereign rights implicated by Maverick’s suit,” the Tribe’s interest in the case was sufficient to make it a necessary party. The court thus confirmed that sovereignty—including a sovereign interest in gaming and sovereign immunity from litigation that would impair rights to gaming—is a fundamental barrier to lawsuits challenging gaming compacts.
- There is no bright line rule to determine if a party has a sufficient “legally protected interest” to invoke Rule 19 in the first place. Mere financial interests or impacts may not be enough to make a tribe a necessary party under Rule 19(a). Other Ninth Circuit cases have previously held that a tribe cannot claim legally protected interests in the future outcomes of administrative proceedings (i.e., such outcomes are not rights that have already been granted), but the interest of a tribe need not be a property or contract right for Rule 19 to apply.
- Even when a federal agency and a tribe are aligned in their preferred outcome, the agency may not adequately represent the tribe’s interests. Historical tension between tribes and the U.S. government is relevant to the adequacy-of-representation issue for purposes of Rule 19. In cases where a tribe’s sovereignty is not at risk, the federal agency may be able to represent the tribe’s interest. But the existence of the trust relationship between the U.S. government and tribes is insufficient, on its own, to determine that a tribe’s interests are adequately represented by the federal government.
Potential Disagreement Between Circuits
Not all federal courts see these issues in the same way that the District Court in Washington did. Prior to the Maverick decision, in West Flagler et al. v. Haaland, 573 F.Supp.3d 260 (D.D.C. 2021), the D.C. District Court held that the Seminole Tribe of Florida was not an indispensable party to litigation brought by Florida casinos challenging a new Florida-Seminole Tribe sports betting compact under IGRA.
In West Flagler, the D.C. District Court found the Seminole Tribe was a “required party” under Rule 19(a), because “it has an interest in the validity of its compact …, and its interest would be directly affected by the relief that West Flagler seeks.”
However, the court held the Seminole Tribe was not indispensable under the four-factor analysis of Rule 19(b). On the first factor, while acknowledging the Seminole’s financial interest in the compact, the court found the Seminole would not be prejudiced if a judgment was rendered in its absence because the Secretary of the Interior and the State of Florida were defending the compact, just as the Seminole Tribe sought to do. The court gave little consideration to the second factor, noting the “ability to minimize prejudice … bears on indispensability only where there is prejudice to be minimized.” The third factor—the public interest in settling disputes in whole and avoiding “multiple litigation”—weighed against the Tribe, the court reasoned, because the Tribe was not a party and would likely not be a party to any future litigation due to sovereign immunity. Last, “because [West Flagler] would have no ’adequate remedy if the action were dismissed for nonjoinder,” the final factor was found to weigh against the Tribe, too.
In its refusal to recognize the Seminole Tribe as a dispensable party, the court suggested that ruling otherwise would require the same treatment for all tribes in every case challenging the Secretary’s approval of a gaming compact—a stance that the court was not prepared to take because an earlier case within the D.C. Circuit, Amador County v. Salazar, 640 F.3d 373, 378-384 (D.C. Cir. 2011), had reached the opposite result. The Seminole Tribe’s appeal is pending, and the Tribe’s motion to stay pending appeal was denied.
The contrary results in Maverick and West Flagler boil down to whether the state and federal governments, particularly the Secretary of the Department of Interior, can adequately represent a tribe’s interest in sports betting compact litigation. The appellate courts (D.C. Circuit and Ninth Circuit) now have the opportunity to refine and potentially reconcile their approaches to whether tribes are indispensable in lawsuits challenging their compacts—or, on the other hand, widen an emerging circuit split.
