Heavy-Hitters Hired To Challenge Washington Tribes' Sports-Betting Exclusivity

January 12, 2022
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A high-profile federal lawsuit filed on Tuesday claims Washington state officials unlawfully allowed Native American casinos to create monopolies on certain types of gaming, including sports betting, roulette and craps.

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A high-profile federal lawsuit filed on Tuesday claims Washington state officials unlawfully allowed Native American casinos to create monopolies on certain types of gaming, including sports betting, roulette and craps.

The lawsuit was filed in U.S. District Court in Washington, D.C. by Maverick Gaming, which owns and operates 19 of 44 licensed cardrooms in Washington state, as well as commercial casinos in Nevada and Colorado.

Eric Persson, owner of Maverick, has unsuccessfully lobbied state lawmakers over the last two years to expand sports betting beyond tribal casinos.

Last year, the company supported Senate Bill 5212 that would have expanded sports wagering to cardrooms and racetracks in the state, as well as to affiliated online platforms.

With the legislature now in the second year of its biennial budget, SB 5212 has been automatically re-introduced and remains in the Senate Labor, Commerce & Tribal Affairs Committee.

A second bill, House Bill 1674, has also been newly introduced and referred to the House Commerce and Gaming Committee.

Still, a Maverick spokesman told VIXIO GamblingCompliance on Tuesday that it was “our understanding … that the committee will not grant it a hearing, which is disappointing.”

In its 42-page lawsuit, Maverick claims the state’s application of the Indian Gaming Regulatory Act (IGRA), the 1988 federal law that governs tribal gaming, is being used “inappropriately to give tribes exclusive rights to certain types of gaming.”

Theodore Olson, a partner with Gibson Dunn who represents Maverick, alleges that the unlawful use of IGRA granted tribal casinos a “discriminatory tribal gaming monopoly” over sports betting and other types of gaming, such as roulette and craps.

“Contrary to IGRA’s own words, the law is being used to insulate tribes in Washington state from competition that exists in many other states with legal gaming marketplaces,” wrote Olson, one of the most prominent attorneys in the United States, with a recent track record of signature federal court victories in gaming cases.

Olson, who served as solicitor general of the United States from 2001-2004, was lead counsel for the state of New Jersey in the state's successful effort to have the U.S. Supreme Court in May 2018 overturn a federal law banning sports betting.

Olson and partner Matthew McGill, who is also representing Maverick, also represented NeoPollard Interactive in New Hampshire's successful challenge of the U.S. Department of Justice's recent reinterpretation of the federal Wire Act.

On behalf of Maverick, Olson cited his previous anti-commandeering argument from the Murphy v National Collegiate Athletic Association (NCAA) federal sports-betting case in the lawsuit, writing: “The legislative powers granted to Congress are sizable, but they are not unlimited.

“Conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the states.”

Olson argues that IGRA’s mandate for states to negotiate Class III gaming compacts with tribes involves a “direct order” to the states, which violates the constitution’s anti-commandeering principle and renders the process for entering into compact amendments unlawful.

“We look forward to resolving this matter so that IGRA’s intent and wording are reflected in Washington state’s regulated gaming marketplace for tribal and commercial businesses,” Olson said in a statement.

In March 2020, Democratic Governor Jay Inslee signed a bill allowing Washington to amend its compacts with tribes to permit them to offer on-reservation sports betting. So far, 16 of 29 tribes have amended their compacts to offer wagering on sports.

“At the same time, Washington’s criminal laws prohibit any non-tribal entities, such as Maverick, from offering most forms of Class III gaming in Washington, including roulette, craps, and sports betting,” the lawsuit reads.

The lawsuit asks the federal court to invalidate those compact amendments that allowed tribes to offer sports betting. If granted, tribal sports betting within Washington state would be put on hold.

The Washington Indian Gaming Association did not respond Tuesday to a request for comment.

Maverick alleges in its lawsuit that the tribal monopoly on sports wagering also “violates the [U.S.] constitution’s guarantee of equal protection of the laws by irrationally and impermissibly discriminating on the basis of race and ancestry.”

One former Washington gaming regulator and Indian law expert said the Maverick lawsuit was misguided.

Maverick's premise that IGRA was intended "to guarantee parity between tribal and non-tribal gaming" is a basic misunderstanding of IGRA, said Chris Stearns, former chairman of the Washington State Gambling Commission.

“IGRA was intended to foster strong regulation and enforcement of the law as well as to preserve tribal sovereignty,” Stearns said. “There is no requirement that IGRA promote commercial gaming.”

The lawsuit names U.S. Secretary of the Interior Deb Haaland, Washington Governor Jay Inslee, attorney general Bob Ferguson and every member of the Washington State Gambling Commission as defendants.

Stearns said he was somewhat surprised that Maverick chose to file its lawsuit against every single member of the gaming commission, as well as four members of the state legislature, including three who sit on gambling committees.

“I'd say this lawsuit is more than a longshot, as well as fundamentally antagonistic to tribal gaming, which has been a lifeline for indigenous people since IGRA's inception,” he added.

Maverick's Persson said the company does “support and respect tribal equality and sovereignty” but believes that access to “economic opportunity relies on a fair application of laws”, such as IGRA. Persson said he was hopeful the lawsuit will lead to tribal casinos and cardrooms being able to offer the “same types of legal gaming.”

Stearns told VIXIO GamblingCompliance that many states, such as Washington, are agnostic when it comes to the commercial success of cardrooms or any other form of gambling regulated by the state gambling commission.

“The rest of their argument about monopolies falls along with their premise,” Stearns said. “And Washington does allow charitable entities to offer games like roulette and craps — as part of so called ‘Reno nights’ — but just because none of the charities in Washington choose to offer those games does not convert tribal roulette or craps games into a monopoly."

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