Opinion ID: 778254
Heading Depth: 2
Heading Rank: 3

Heading: legality of the lottery

Text: 34 Because it found the Tribal Court decision erroneous, the district court considered the merits of AT & T's claims. After engaging in lengthy statutory interpretation, the district court concluded that the IGRA unambiguously requires that a purchaser of a chance in the Lottery be physically present on the Reservation in order for the gaming activity to fall within IGRA's preemptive reach. Based on its conclusions that lottery purchases initiated off-Reservation would thus be subject to state gambling laws, the district court granted summary judgment in favor of AT & T, holding that the § 1084(d) letters required AT & T to refrain from providing toll free service for off-Reservation, out-of-state would-be Lottery participants where such service would violate state law. AT & T Corp., 45 F.Supp.2d at 1005-1006. 35 We review the district court's grant of summary judgment de novo. Delta Savings Bank v. United States, 265 F.3d 1017, 1021 (9th Cir.2001). 36 In ruling as it did, the district court discounted the NIGC's approval of the Tribe's management contract with UNISTAR —a contract that made clear the Tribe's plans with respect to telephonic sales. The NIGC approval of both the management contract and the tribal resolution authorizing the Lottery were final agency decisions subject to review under the Administrative Procedures Act. 25 U.S.C. § 2714. 7 Moreover, the district court—apparently eager to provide AT & T and the various states breathing down the corporation's neck with a definitive answer regarding the Lottery's legality — completely sidestepped two crucial considerations: (1) the effect it should accord the NIGC approval made consistent with the requirements of the detailed regulatory scheme Congress provided when it enacted the IGRA; and (2) whether AT & T, a provider of telephonic services, is an appropriate challenger. 37 Although AT & T has taken the lead in the instant litigation, the thirty-plus states that have briefed this court as amici — most of which operate their own lotteries — have the biggest stake in challenging the validity of the Tribe's Lottery. Since providing toll-free service for the Lottery would hand AT & T a new revenue source, the company would likely provide service to the tribe for the Lottery in the absence of § 1084(d) pressure. But faced with a stack of letters warning the carrier that it might be liable for supporting gambling in violation of many states' laws, AT & T sought some sort of definitive declaration of its responsibilities under both the FCA and § 1084(d). 38 In fact, AT & T's responsibilities were decided long before the parties set foot in any of the various courts that have entertained this case. The NIGC's final agency actions approving both the management contract and the Tribe's resolution indicated that the Lottery is legal until and unless the NIGC's decision is overturned. 39 When it enacted the IGRA, Congress created a detailed regulatory structure for the approval of Class III gaming. The Tribe was successful in its effort to obtain approval for the lottery, doing so pursuant to the IGRA's regulatory scheme. First, the Tribe and the State of Idaho entered into a compact that provides, in relevant part, that gaming will occur only on Indian lands. 8 The compact specifies that Class III gaming must abide by the IGRA: The Tribe may enter into management contracts for the development and management of gaming authorized by and consistent with this Compact and in accord with regulations, [IGRA], and the Gaming Code. The NIGC and the Secretary of the Interior approved the compact in 1993. See 58 Fed.Reg. 8478 (Feb. 12, 1993). 40 In 1995, the Tribe adopted a resolution stating: 41 [R]esolved, that all Class III gaming authorized by the Compact by and between the Coeur d'Alene Tribe and the State of Idaho be conducted pursuant to tribal law. This specifically authorizes the conduct of the National Indian Lottery under the Management Agreement with Unistar Entertainment, Inc. which has been previously approved by the Chairman of the National Gaming Commission. 42 [F]urther resolved, that all Class III gaming herein authorized be conducted in accordance with all provisions of 25 U.S.C. § 2710(d) and 2710(b) made applicable to Class III gaming by 2710(d)(1)(A)(ii) all of which are incorporated herein by reference. 43 The NIGC approved the resolution under the IGRA. 9 Before doing so, the Commission had to determine that the resolution would comply with the Tribal-State compact, including the language requiring IGRA compliance. 10 44 Like resolutions, management contracts must meet IGRA requirements before they can win NIGC approval. 11 The Tribe's management agreement with UNISTAR — including the Tele-Lottery service — won the NIGC Chairman's approval in the summer of 1996 after a review process that lasted over one year. That approval constituted a final agency action subject to review pursuant to the Administrative Procedures Act. 25 U.S.C. § 2714. 45 Though the statutory framework suffices to demonstrate that the NIGC must consider the legality of Class III gaming before approving compacts, resolutions, ordinances, and management contracts, in this case documentary evidence also shows close NIGC consideration. As the district court noted, the NIGC approved the Tribe's management agreement and Lottery plan knowing that calls would be placed from other states. Although the dissent seems to entertain the view that the NIGC does not consider whether or not a particular gaming operation will comply with the IGRA, an affidavit submitted on the Tribe's behalf — and not contradicted by AT & T or the amici — tells us: 46 [t]he NIGC repeatedly informed the Tribe throughout the review process for the management agreement that it would not approve the agreement unless the NIGC were satisfied about the legality of the National Indian Lottery. After an exhaustive review that took more than one year, the NIGC approved the management agreement. 47 The district court also quoted the letter from then-NIGC Chairman Monteau to MCI clarifying that the IGRA did not prohibit the lottery — further evidence that the Commission did, in fact, consider the Lottery's legality as IGRA requires. 48 Furthermore, the NIGC Chairman had an opportunity to revisit the Lottery's legality. An amendment to the Unistar Management Agreement won approval (another final agency action) from the NIGC Chairman. The amendment included notice of the use of telephone and other off-reservation means of access: `Tele-Lottery' means Lottery Games or other Games authorized by the Compact and conducted using any voice, data or video networks. The NIGC Chairman's approval of the amendment reads, in relevant part: 49 The Indian Gaming Regulatory Act (IGRA) and the regulations of the National Indian Gaming Commission (NIGC) require that management contracts for class II and class III gaming operations be approved by the Chairman of the NIGC. Accordingly, you submitted the Amendment as required by 25 CFR Part 535 of the NIGC's regulations. 50 We have reviewed the Amendment and other information submitted and have determined that the standards of 25 CFR Parts 531 and 535 have been met. This letter, and my signature on the Amendment, constitute such approval. If the Chairman learns of any actions or conditions that violate the standards contained in 25 CFR Parts 531, 533, 535, or 537, the Chairman may require modifications of, or may void, the approved contract, after providing the parties with an opportunity for a hearing before the Chairman and a subsequent appeal to the NIGC as set forth in 25 CFR Part 577. 51 Title 25 CFR § 531 — cited by the NIGC Chairman as a regulation whose provisions must be met — requires provision that gaming will comply with IGRA. 52 What the district court failed to grasp was that the IGRA lays out a specific regulatory scheme whereby the NIGC's approval of a management contract is a final agency decision that may be appealed only directly and in an action initiated by a proper party in federal district court. Specifically, 25 U.S.C. § 2714 provides that NIGC approvals of management contracts and tribal ordinances are final agency decisions for purposes of appeal to the appropriate Federal district court pursuant to [the Administrative Procedures Act]. 53 The amicus brief of the United States, to which the current NIGC Chairman is a signatory, denies that the NIGC interpreted the IGRA to allow the Lottery's off-reservation features. The United States argues — and the dissent agrees — that Chairman Monteau's letter did not say the IGRA permits the Lottery's telephonic aspects, but rather that it does not prohibit the Lottery. 54 Such a reading of Chairman Monteau's letter is a stretch. The NIGC is statutorily obliged to reject any lottery proposal that does not conform to IGRA. See 25 U.S.C. § 2706(b)(10) (requiring the NIGC to promulgate regulations and guidelines to implement IGRA); and 25 C.F.R. § 531.1(a) ([A]ll gaming covered by the contract will be conducted in accordance with the Indian Gaming Regulatory Act.). In fact, the NIGC has previously refused to approve management agreements when it believed the proposed gaming activity will not be conducted on Indian lands for IGRA purposes. See, e.g., Miami Tribe of Oklahoma v. United States, 5 F.Supp.2d 1213, 1218 (D.Kansas, 1998). The record contains ample and undisputed evidence that the Commission was aware that the Tribe planned to accept telephone orders from individuals outside the Reservation. Read in the context of a detailed regulatory scheme and multiple final agency actions by the NIGC, the NIGC's approval of the Tribe's management contract evidences the NIGC's determination that IGRA permits operation of the Lottery even though it allows ticket sales via off-Reservation phone calls. 55 For their part, the amici states and the United States point to the opinion of a new NIGC Chairman, who believes that the Lottery is not protected by the IGRA insofar as it involves off Reservation ticket purchases. But even if the Chairman may undo the work of a predecessor under some circumstance, he may not do so here. 56 The United States and any of the amici states were free to challenge the NIGC's final agency decision directly in federal court under 25 U.S.C. § 2714. None did so. Unless and until the NIGC's decision is overturned by means of a proper challenge and appeal, the IGRA governs the Lottery. 57 Since IGRA applies, so too does 18 U.S.C. § 1166(d), which mandates that [t]he United States shall have exclusive jurisdiction over criminal prosecutions of violations of State gambling laws unless the tribe in question has consented to State criminal jurisdiction, which the Coeur d'Alene Tribe has not. Thus, where IGRA-governed Class III gaming is concerned, the federal government has the exclusive authority to prosecute any state gambling law violations applicable in Indian country. States, on the other hand, are without jurisdiction. See e.g., United States v. E.C. Investments, Inc., 77 F.3d 327, 330-331 (9th Cir.1996) (holding that California lacked jurisdiction to prosecute alleged violations of state gambling laws by means of Class III gaming conduct). 58 This brings us to the 18 U.S.C. § 1084(d) letters that ostensibly underlie the instant action. As explained, § 1084(d) permits a federal, state, or local law enforcement agency  acting within its jurisdiction  to demand that a common carrier refuse service where state gambling laws may be violated. If IGRA governs the Lottery — as it does until a proper plaintiff challenges the NIGC's approval of the management contract — then under 18 U.S.C. § 1166 the states and their various Attorneys General were not acting within their jurisdiction when they posted their § 1084(d) letters to AT & T. 59 For their part, the amici states are not without recourse to challenge the Lottery and to seek a determination as to what constitutes gaming activities on Indian land within the meaning of the IGRA. They must, however, rely on their own resources — and not AT & T's — to make their case. The states might have joined this litigation at its beginning in the district court to attack the NIGC's decision directly under 25 U.S.C. § 2714. They did not. Should they succeed at some future time in stripping the Lottery of its legitimacy under IGRA, they then will have the authority to issue § 1084(d) letters. 12 Until such time, both the Tribe and AT & T may continue their activities — and in AT & T's case meet its legal obligations — without fear of prosecution. 60 REVERSED AND REMANDED.