California Suing a Cash-Strapped Tribe Over Online Bingo

The latest example of how insane online gambling laws are.

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Nov 21 2014, 4:40pm

In a move that will set a new precedent in the prohibition of online gambling, the government of California is taking a cash-strapped Native American tribe to court ​over a bin​go website.

Earlier this month, the ​Iipay Nation of Santa Ysabel launched ​DesertRoseBingo.com, a bingo gambling site. ​They kicked up a lot of publicity over the launch of the site, ostensibly thumbing their noses at the murky laws that prohibit online gambling. As the first Native American tribe to launch an internet gambling site (a move that lands in a legal grey area), the Iipay were sticking their necks out knowing full well they could wind up going to court.

On Wednesday, CaliforniaOnlinePoker.com ​brought the news that the State of California had filed a lawsuit claiming the website violates state and federal laws that ban online gambling, as well as a gambling agreement between the State and the Iipay.

The Iipay assert the site is legal because all the servers and equipment to run the site are located on their land, where the tribe's law applies, and only residents within the state can register to play.

California is seeking a restraining order to prevent the Iipay from operating the site, claiming in the suit that allowing millions of Californians to continue betting on online bingo is "inimical to the public health, safety, welfare, and good order" and will cause the State to "suffer irreparable harm."

The tribe has hired lawyer Cruz Bustamante, the former lieutenant governor of California, to represent them, and is currently reviewing the suit before issuing a statement.

Screengrab: DesertRoseBingo.com

Though the Government's swift action was expected, it's an important case to watch. For one, the ​laws that say you can't gamble online are muddy and old. There's been a gradual pushback over the last few years—states like Delaware, Nevada, and New Jersey have managed to legalize some online gambling in-state—and many international online gambling sites​ are eager to set up markets in the U.S. We will likely see big changes in the next few years when it comes to online gambling.

The stakes are high for the Iipay too. Many Native American tribes are struggling financially, with 28.4 per cent of Native Americans living in poverty (compared to 15.3 per cent for the general population), according to census results. Many tribes rely on revenue from their casinos and opening the door for online gambling could potentially be a lifeline for struggling tribes.

The Iipay are a stark example of this: they're $54 million in debt after their casino was denied bankruptcy and closed earlier this year. Desert Rose Bingo was a last ditch effort to get their heads above water, even at the risk of government litigation.

A district court will see the case on December 4.