No UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT STATE OF CALIFORNIA; UNITED STATES OF AMERICA, Plaintiffs/Appellees,

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1 Case: , 05/17/2017, ID: , DktEntry: 11, Page 1 of 55 No UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT STATE OF CALIFORNIA; UNITED STATES OF AMERICA, Plaintiffs/Appellees, v. IIPAY NATION OF SANTA YSABEL ET AL. Defendants/Appellants. Appeal From a Decision of the United States District Court for the Southern District Of California, Nos. 3:14-cv AJB-NLS/3:14-cv AJB-NLS Honorable Anthony J. Battaglia APPELLANTS OPENING BRIEF LITTLE FAWN BOLAND Ceiba Legal, LLP 35 Madrone Park Circle Mill Valley, CA Tel: (415) ext. 101 Fax: (415) littlefawn@ceibalegal.com SCOTT D. CROWELL Crowell Law Office-Tribal Advocacy Group 1487 W. State Route 89A, Ste. 8 Sedona, AZ Tel: (425) Fax: (509) scottcrowell@hotmail.com KEVIN C. QUIGLEY Foley & Quigley PLC 213 East Fourth Street, Ste. 404 Saint Paul, MN Tel: (612) kevinquigley@foleyquigleylaw.com ATTORNEYS FOR TRIBAL APPELLANTS

2 Case: , 05/17/2017, ID: , DktEntry: 11, Page 2 of 55 CORPORATE DISCLOSURE STATEMENT Required by Rule 26.1 of Federal Rules of Appellate Procedure the undersigned, counsel of record for Appellants Iipay Nation of Santa Ysabel, aka Santa Ysabel Band of Diegueno Mission Indians, aka Santa Ysabel Band of Diegueno Mission Indians of the Santa Ysabel Reservation; Santa Ysabel Interactive; Santa Ysabel Gaming Commission; Santa Ysabel Tribal Development Corporation; David Chelette, David Vialpando, Anthony Bucaro, Michelle Maxcy, Virgil Perez, and Brandie Taylor ( Tribal Appellants ) each hereby certifies that neither the Tribal Appellants, nor any parent company, subsidiary, or affiliate thereof has issued any shares of capital stock to the pubic. Dated: May 17, 2017 s/ Kevin C. Quigley Kevin C. Quigley (MN No ) Foley & Quigley PLC 213 Fourth Street East Suite 404 Saint Paul, MN Telephone: (612) kevinquigley@foleyquigleylaw.com Attorney for Tribal Appellants i

3 Case: , 05/17/2017, ID: , DktEntry: 11, Page 3 of 55 TABLE OF CONTENTS I. JURISDICTIONAL STATEMENT...1 II. STATEMENT OF THE ISSUES...1 III. STATEMENT OF THE CASE...2 IV. SUMMARY OF ARGUMENT...4 V. STANDARD OF REVIEW...6 VI. ARGUMENT...7 A. Overview of Technologic Nature of Current Version of VPNAPS Gaming System Used for DRB Gaming....9 B. Legal IGRA Bingo Gaming Cannot be Subject to an Enforcement Action Under UIGEA C. The District Court Erred by Reading Together and Using Provisions of UIGEA to Construe the Meaning of Conducted on Indian Lands for Purposes of IGRA to Find That the Phrase was Not Ambiguous D. The Bingo Gaming Offered by DRB is Legally Conducted on Indian Lands in a Tribally-Regulated Gaming Facility for Purposes of IGRA ii

4 Case: , 05/17/2017, ID: , DktEntry: 11, Page 4 of 55 (1) There is no general prohibition under IGRA preventing tribes from using modern technology communication links like the Internet to promote participation among bingo players as a means to increasing tribal revenues for tribal needs (2) DRB s bingo game play originates and is conducted on the math and game management servers housed in DRB s gaming facility located on Iipay s sovereign Indian lands (3) The proxy play component aids of the VPNAPS gaming system used to conduct the DRB bingo gaming means the gaming is conducted on Indian lands (a) Use of a proxy play component with Class II gaming does not violate IGRA (b) Any communication via an Internet communication link between DRB patrons and their proxy agent located on a reservation regarding their proxy service relationship is a step removed from any actual gaming activity to be conducted (c) Unless and until the DRB patron s proxy initiates the play of the bingo game there is no participation in the Class II bingo game conducted on the VPNAPS gaming system (4) Use of the Internet is not relevant or dispositive to an IGRA interpretation concerning the conducted on Indian lands question VII. CONCLUSION...40 iii

5 Case: , 05/17/2017, ID: , DktEntry: 11, Page 5 of 55 TABLE OF AUTHORITIES CASES Alaska Wilderness League v. United States EPA, 727 F.3d (9th Cir. 2013)...12, 22 Arizona v. Tohono O'odham Nation, 818 F.3d 549 (9th Cir. 2016)...12, 22 AT&T Corporation v. Coeur d Alene Tribe, 295 F.3d 899 (9th Cir. 2002)...17, 39 Cabazon Band of Mission Indians v. NIGC, 14 F.3d 633 (D.C. Cir. 1994)...22 Cabazon Band of Mission Indians v. Wilson, 37 F.3d 430 (9th Cir. 1994)...23 California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987)...8 F.T.C. v. Payday Financial, LLC, 935 F. Supp. 2d 926 (D.S.D. 2013)...27, 30 iv

6 Case: , 05/17/2017, ID: , DktEntry: 11, Page 6 of 55 Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984)...23, 33 County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251 (1992)...6 Freeman v. DirecTV, Inc., 457 F.3d 1001 (9th Cir. 2006)...6 Lac Vieux Desert Band of Lake Superior v. Ashcroft, 360 F. Supp. 64 (D.D.C. 2004)...21 Mathews v. Chevron Corp., 362 F.3d 1172 (9th Cir. 2004)...6 Montana v. Blackfeet Tribe, 471 U.S. 759 (1985)...6 Montana v. United States, 450 U.S. 544 (1981)...29, 30 Plains Commence Bank v. Long Family Land & Cattle Co., 554 U.S. 316 (2008)...30 Putnam Family P ship v. City of Yucaipa, 673 F.3d 920 (9th Cir. 2012)...14 v

7 Case: , 05/17/2017, ID: , DktEntry: 11, Page 7 of 55 Rabkin v. Or. Health Scis. Univ., 350 F.3d 967 (9th Cir. 2003)...6 Rincon Band of Luiseno Mission Indians of the Rincon Reservation v. Schwarzenegger, 602 F.3d 1019 (9th Cir. 2010)...28 Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991)...6 Schleining v. Thomas, 642 F.3d 1242 (9th Cir. 2011)...6 Skidmore v. Swift & Co., 323 U.S. 134 (1944)...33 Williams v. Babbitt, 15 F.3d 657 (9th Cir. 1997)...7, 24 STATUTES 18 U.S.C. 1084(d)(1) C.F.R (b) U.S.C vi

8 Case: , 05/17/2017, ID: , DktEntry: 11, Page 8 of U.S.C U.S.C. 2701(3) U.S.C. 2703(7)(A) U.S.C. 2706(b)(4) U.S.C. 2710(b)(4)(A) U.S.C. 2706(b)(1) U.S.C U.S.C U.S.C. 5361(b)... passim 31 U.S.C. 5365(a)...1 Indian Gaming Regulatory Act, 25 U.S.C ( IGRA )... passim Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C ( UIGEA )... passim vii

9 Case: , 05/17/2017, ID: , DktEntry: 11, Page 9 of 55 OTHER AUTHORITIES Williston on Contracts, 6:62 (4th ed.)...31 Black s Law Dictionary, 10 th ed. (West Group 2014)...30, 35 Cohen s Handbook of Federal Indian Law, 2.02[1], at p. 113 (2012 ed. Lexis Nexis)...7 February 4, 2010 approval by NIGC Chairman of Coeur d Alene tribal gaming ordinance (Chapter permitting lottery) at NIGC website, available at OrdAppr.pdf...19 J. Perillo, Ed., Corbin on Contracts 3.25 (1993)...31 July 26, 1995 NIGC Chairman Declaration re: Proxy Play, available at 33 June 24, 2014 OGC Advisory Letter re: Bingo Nation Game, available at Kathryn R.L. Rand & Steven Andrew Light, Indian Gaming Law and Policy, Carolina Academic Press (2006)...8 viii

10 Case: , 05/17/2017, ID: , DktEntry: 11, Page 10 of 55 Mashpee Wampanoag Tribe and the State of Arizona s compacts with various tribes, available at IA/OIG/Compacts/index.htm...21 National Gambling Impact Study Commission, June 18, 1999 Final Report, available at New Jersey P.L. 2013, c27 (5: (1)(J)), available at NIGC June 2013 One Touch Bingo Pronouncement, 78 Fed. Reg , (June 25, 2013)...15 NIGC s Public Hearing Notice, 62 Fed. Reg (Oct. 15, 1997) November 14, 2000 OGC Advisory Letter re: National Indian Bingo, available at 34 Walter T. Champion, Jr. & I. Nelson Rose, Gaming Law in a Nutshell, Thomson Reuters (2012)...35 ix

11 Case: , 05/17/2017, ID: , DktEntry: 11, Page 11 of 55 REGULATIONS 67 Fed. Reg (June 17, 2002) LEGISLATIVE HISTORY Indian Affairs Comm., Indian Gaming Regulatory Act, Statement of Raymond C. Sheppach, U.S. Senate, Oct. 29, 1997, available at gov/hearings/1029_nga.htm...25 Indian Affairs Committee Report, S. Rep. No. 446, 100 th Cong. 2d Sess., reprinted in U.S. Code Cong. & Admin. News (1988)....2 S. 474, 105th Cong., 1st Sess. (1997)...25 S. 474, 105th Cong., 2nd Sess. (1998)...25 S. Rep. No , at 13-14, reprinted in 1988 U.S.C.C.A.N. at , 24, 28 x

12 Case: , 05/17/2017, ID: , DktEntry: 11, Page 12 of 55 I. JURISDICTIONAL STATEMENT The District Court had subject-matter jurisdiction under 28 U.S.C and 31 U.S.C. 5365(a). The District Court granted motions for summary judgment and injunctive relief of Appellees United States ( USA ) and State of California ( California ) on their Unlawful Internet Gambling Enforcement Act, 31 U.S.C ( UIGEA ) claim on December 12, (ER Vol. I/4). It entered final judgment in this consolidated action on January 4, (ER Vol. I/1). This Court has appellate jurisdiction based on 28 U.S.C and Appellants filing of a timely notice of appeal on February 6, (ER Vol. II/59). II. STATEMENT OF THE ISSUES 1. Did the District Court err in ignoring 31 U.S.C. 5361(b) and the maximum flexibility technology policy that Congress enshrined in the Indian Gaming Regulatory Act ( IGRA ) when concluding that legal IGRA Class II bingo gaming activity can be subject to an enforcement action under the Unlawful Internet Gambling Enforcement Act ( UIGEA )? 2. Did the District Court err by reading together IGRA and UIGEA to construe the meaning of conducted on Indian lands for purposes of IGRA to find that the IGRA phrase was not ambiguous thereby limiting IGRA gaming by 1

13 Case: , 05/17/2017, ID: , DktEntry: 11, Page 13 of 55 requiring patrons to be physically located on Indian lands at the time IGRA bingo gaming is conducted? 3. Is tribally-regulated server-based bingo gaming, conducted via proxy play that is remotely accessed by patrons using a browser-based Internet link, permitted under IGRA and applicable tribal law? III. STATEMENT OF THE CASE This is a case of first impression for statutory interpretation regarding (1) the interplay of IGRA and UIGEA, and (2) whether IGRA permits tribes to take advantage of modern methods of conducting class II games and the language regarding technology... designed to provide maximum flexibility by using modern technology communication links like the Internet to promote participation among bingo players. Indian Affairs Committee Report, S. Rep. No. 446, 100 th Cong. 2d Sess., reprinted in U.S. Code Cong. & Admin. News at 3079 (1988). In this consolidated action, USA and California seek to stop the operation of a particular version 1 of a Class II bingo gaming system known as the VPNAPS gaming system used by Desert Rose Bingo ( DRB ), a tribal gaming business located on the Indian lands of the Iipay Nation of Santa Ysabel ( Iipay ) (Iipay together with certain related entities and individuals are referred to collectively 1 Desert Rose Bingo v.1.5 rev 6171, which allows DRB to offer Class II electronic-linked bingo gaming conducted on Indian lands using a proxy system accessed by patrons using a browser-enabled Internet link. 2

14 Case: , 05/17/2017, ID: , DktEntry: 11, Page 14 of 55 herein as Appellants ). Both USA and California asserted claims based upon the UIGEA and California also claimed an alleged breach of its Class III gaming compact with Iipay. Since the very beginning of this litigation, Appellants contended that the gaming offered by DRB is legal Class II bingo conducted under IGRA, 25 U.S.C et seq., P.L , 102 Stat. 2467, and therefore is not subject to any UIGEA enforcement action or a Class III compact-based claim. The District Court denied California s summary judgment motion and dismissed its Class III compact-based claim, concluding that the current version of the VPNAPS gaming system used by DRB constitutes a technologic aid to bingo and DRB is therefore Class II gaming activity as a matter of law. (ER Vol. I/4 at 10-16). California has not appealed the District Court s decision to dismiss its Class III compact-based claim. (ER Vol. I/1). The District Court granted Appellees motion for summary judgment and request for permanent injunction on the UIGEA claim, finding that the statutory phrase conducted on Indian lands unambiguously requires patrons to be physically present within Indian country at the time they engage in gaming activity for IGRA to apply. (ER Vol. I/4 at 12-33). Appellants timely appealed this decision. (ER Vol. II/59). 3

15 Case: , 05/17/2017, ID: , DktEntry: 11, Page 15 of 55 IV. SUMMARY OF ARGUMENT IGRA regulates gaming conducted on Indian lands. 2 IGRA does not expressly and unambiguously require a DRB patron to be physically present on Indian lands to access bingo games played at tribal gaming operations, particularly games to be played by proxy located on-site at the tribal gaming facility. IGRA s text, structure and legislative history, as well as the Indian law canons of construction, applicable tribal law and other relevant legal authorities, support the legal conclusion that proxy play server-based bingo gaming accessed by patrons via a browser-based Internet link is conducted on Indian lands and therefore consistent with and permitted by IGRA. Accordingly, DRB s Class II bingo gaming is legally conducted under IGRA and is not subject to any UIGEA enforcement action, particularly in light of 31 U.S.C. 5361(b), which states that no provision of UIGEA shall be construed as altering [or] limiting any federal law permitting, or regulating gambling within the United States. IGRA is such a federal law permitting and regulating gaming. The District Court concluded that the key statutory phrase at issue here, conducted on Indian lands, 3 is unambiguous. In doing so, the District Court erred 2 Class II gaming, such as the bingo at issue here, is subject to tribal regulatory jurisdiction, and monitoring oversight by the National Indian Gaming Commission ( NIGC ). See 25 U.S.C See, e.g., 25 U.S.C. 2701(3) ( the conduct of gaming on Indian lands ); 2706(b)(1) ( class II gaming conducted on Indian lands ); 2706(b)(4) ( class II 4

16 Case: , 05/17/2017, ID: , DktEntry: 11, Page 16 of 55 by reading together IGRA and UIGEA to construe the meaning of conducted on Indian lands for purposes of IGRA. In reading these statutes together, the District Court erroneously found that the phrase was not ambiguous, thereby limiting IGRA gaming by creating a requirement that patrons must be physically located on Indian lands at the time IGRA bingo gaming is conducted. (ER Vol. I/4 at 2, 27, 29). The District Court erroneously ignored the clear directive of 31 U.S.C. 5361(b) and as a result, impermissibly narrowed the scope of legal gaming permitted by IGRA. Additionally, the District Court further erred by not applying Iipay tribal law or the Indian law canons of construction for statutory interpretation in addressing whether proxy play server-based bingo gaming accessed by patrons via a browser-based Internet link offered by DRB is legally conducted under IGRA. And in refusing to acknowledge the proxy play element of DRB s serverbased bingo gaming system, the District Court erred in not granting deference to federal and Iipay gaming regulators who permit proxy play with Class II bingo games and by giving short shrift to the maximum flexibility technology policy for Class II bingo gaming that Congress enshrined in IGRA. gaming conducted on Indian lands ); 2710(b)(4)(A) ( class II gaming activity conducted on Indian lands ). 5

17 Case: , 05/17/2017, ID: , DktEntry: 11, Page 17 of 55 V. STANDARD OF REVIEW The District Court s statutory interpretation of IGRA, and its determination concerning the meaning of the statutory phrase conducted on Indian lands for purposes of IGRA, is subject to de novo review. Schleining v. Thomas, 642 F.3d 1242, 1246 (9th Cir. 2011) (explaining that questions of statutory construction are reviewed de novo). No deference is to be accorded to the District Court s legal conclusions that lead to its grant of summary judgment in favor of Appellees on their UIGEA claim. Rabkin v. Or. Health Scis. Univ., 350 F.3d 967, 970 (9th Cir. 2003) (quoting Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991) ( When de novo review is compelled, no form of appellate deference is acceptable. ). The appellate court must consider the matter anew, as if no decision previously had been rendered. See Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006). Mixed questions of law and fact are also generally reviewed de novo. See Mathews v. Chevron Corp., 362 F.3d 1172, 1180 (9th Cir. 2004). In interpreting IGRA, the statute is to be construed liberally in favor of tribal interests and to Iipay s benefit. See County of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251, 269 (1992) (quoting Montana v. Blackfeet Tribe, 471 U.S. 759, (1985)) ( When we are faced with these two possible constructions [of a statute], our choice between them must be dictated by a principle deeply rooted in this Court s Indian jurisprudence: 6

18 Case: , 05/17/2017, ID: , DktEntry: 11, Page 18 of 55 Statutes are to be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit. ); see also Williams v. Babbitt, 115 F.3d 657, 660 (9th Cir. 1997); Cohen s Handbook of Federal Indian Law, 2.02[1], at 113 (2012 ed. Lexis Nexis) ( The Supreme Court has stated: the standard principles of statutory interpretation do not have their usual force in cases involving Indian law. The basic Indian law canons of construction require that... statutes... be liberally construed in favor of the Indians ). VI. ARGUMENT Appellants central argument in this case is straightforward: (i) UIGEA does not trump IGRA, or modify or restrict IGRA in any way; (ii) the IGRA statutory text conducted on Indian lands is ambiguous; and (iii) tribally-regulated proxy play server-based bingo gaming accessed by patrons via a browser-based Internet link is conducted on Indian lands consistent with IGRA and applicable tribal law. Accordingly, such gaming cannot be subject to an UIGEA enforcement action. The District Court reached the wrong result because it did not start its legal analysis with the right questions: (1) does UIGEA alter or limit IGRA in any way; and (2) does IGRA, by its terms and its terms only, prohibit tribally-regulated server-based bingo gaming conducted via proxy play which is remotely accessed 7

19 Case: , 05/17/2017, ID: , DktEntry: 11, Page 19 of 55 by patrons using a browser-based Internet link? 4 Assessing whether the DRB bingo gaming is conducted on Indian lands requires an analysis under IGRA and applicable tribal law that must be made only through a for purposes of IGRA focused lens, i.e., considering only those legal precedents and principles applicable to IGRA, and without regard to any statutory language related to UIGEA or any other federal or state law. The reason for this is simple: as a matter of federal law IGRA, and only IGRA, sets the limits of the bingo gaming to be offered by the DRB tribal gaming operation. See California v. Cabazon Band of Mission Indians, 480 U.S. 202 (1987); Kathryn R.L. Rand & Steven Andrew Light, Indian Gaming Law and Policy, Carolina Academic Press (2006) at 12 (explaining that in response to Cabazon, Congress enacted IGRA, using its plenary power over Indian affairs to create a set of limited restrictions on tribes sovereign rights over their tribal gaming activities). Applying the correct legal analysis leads to only one conclusion: the bingo gaming offered by DRB is legally conducted on Indian lands under IGRA and applicable tribal law. 4 Instead, the District Court started its legal analysis on faulty footing, stating [a]t the crosshairs of this inquiry is the construction that must be given to the phrase on Indian lands as used in IGRA in light of Congress s later enactment of [UIGEA].' (ER Vol. I/4 at 2) (both emphasis added). See also ER Vol. I/4 at 10 n. 9 ( the on Indian lands issue turns on the proper construction of IGRA and UIGEA ) (emphasis added). 8

20 Case: , 05/17/2017, ID: , DktEntry: 11, Page 20 of 55 A. Overview of Technologic Nature of Current Version of VPNAPS Gaming System Used for DRB Gaming. The current version of the VPNAPS gaming system ( Desert Rose Bingo v.1.5 rev 6171 ) used by DRB was designed so that patrons not physically located on Iipay Indian lands could log onto a website, register, fund an account, engage a proxy located on Iipay Indian lands to purchase a bingo card and play bingo on their behalf, and observe bingo game play results. (ER Vol. II/204 at 8, 44). The designers of the VPNAPS gaming system started with the standard electronically linked server-based bingo gaming system operated in Indian country since the late-1990s 5 and enhanced it by adding a proxy play technology set to the gaming system. This technology set consists of (1) software and hardware components to assist a patron to engage their designated agent proxy (located on 5 The basic design features of the standard IGRA Class II gaming system are: client-server architecture with the game play servers located in a secure back room electronically linked to patron interface terminal boxes with entertaining video display screens which are located in the public space of the tribal gaming facility i.e., a wholly-electronic format. With each Class II gaming system in use today, all the game play video displays on the tangible components of the gaming system, including the electronic cards generated for the game, are merely a visual representation of the bingo mathematics and game management software programs electronically run on the backroom math and game management servers i.e., the bingo game play originates on the math and game management servers located in the secure back office area of the tribal casino, and the game results are then sent on a time delayed basis via a communication link to the patron s interface, where the game results are revealed by software components that translate the winning or losing associated with the patron s bingo card into an entertaining graphic display. (ER Vol IV/746 at 13-14, 43, 46, 48). 9

21 Case: , 05/17/2017, ID: , DktEntry: 11, Page 21 of 55 Iipay sovereign lands) via a modern communication link (i.e., Internet) and an electronic proxy engagement feature; (2) auto-daub (electronic bingo card minder) functionality via software and hardware components to assist the patron s designated agent proxy (located on Iipay sovereign lands) to play (on behalf of patron) a bingo game using a digital-format system with functionality like standard server-client architecture of electronic-linked bingo gaming systems; and (3) software and hardware components to assist the designated agent proxy to report via a modern communication link (i.e.. Internet) on a time-delayed basis to the patron the results of the bingo game played on the patron s behalf. (ER Vol. IV/746 at 15, 51). 6 The Class II bingo gaming conducted by DRB using the VPNAPS gaming system is licensed and regulated by the Santa Ysabel Gaming Commission ( SYGC ), Iipay s gaming regulatory agency. (ER Vol. II/171 at 5, 12). DRB s bingo gaming is subject to a multitude of Iipay laws and regulations, including, (i) the Iipay Gaming Ordinance approved by the NIGC pursuant to IGRA; (ii) the Iipay Tribal Business Transaction Code governing any consumer dealings between DRB and any DRB patrons; (iii) SYGC Regulation 14-I009, governing the procedures for approval of Class II bingo gaming systems and equipment; 6 See also ER Vol. IV/746 at describing the similar nature of the technology features relating to game system design between the VPNAPS gaming system and current Class II server-based electronic bingo gaming systems. (ER Vol. IV/746 at 65-76). 10

22 Case: , 05/17/2017, ID: , DktEntry: 11, Page 22 of 55 (iv) SYGC Regulation 14-I010, governing the situs of DRB s bingo gaming using the VPNAPS gaming system; and (v) SYGC Regulation 14-I011, establishing extensive regulatory requirements for DRB s bingo gaming using the VPNAPS gaming system. 7 (ER Vol. II/171 at 4-6, 7-8, 10, 15-16, 18) (ER Vol. II/204 at 56-83) (ER Vol. II/287). Additionally, all DRB bingo gaming using the VPNAPS gaming system is subject to written House Rules for bingo game play, (ER Vol. III/511 at 75-81), adopted by DRB as required by SYGC Regulation 14-I011, Section 11. (ER Vol. II/287 at 34-35). B. Legal IGRA Bingo Gaming Cannot be Subject to an Enforcement Action Under UIGEA. As a matter of federal law, and as Appellees conceded in the District Court below, UIEGA cannot and does not prohibit legal 8 IGRA Class II gaming using modern technologic aids. See 31 U.S.C. 5361(b). UIGEA, in fact, does not regulate gambling, but only prohibits certain financial transactions related to unlawful gambling. Simply put, UIGEA did not change the status quo: Indian 7 These regulatory requirements include, among others, those concerning (1) licensing of the gaming system vendor, (2) gaming system internal control features, (3) physical security of the gaming system, (4) system architecture, (5) cyber-attack protection features, (6) data security, (7) bingo rules, (8) patron registration site display information, (9) registration process for patrons, (10) patron account restrictions, (11) patron access restrictions, (12) account funds security, (13) record keeping, (14) advertising and promotions, (15) patron disputes resolution, (16) testing lab qualifications, and (17) problem gambling policies. (ER Vol. IV/746 at 8-9, 28) (ER Vol. II/287 at 17-49). 8 Section VI(D) infra, further addresses why the gaming at issue here is legal under IGRA. 11

23 Case: , 05/17/2017, ID: , DktEntry: 11, Page 23 of 55 gaming that is legal under IGRA remains legal, even after enactment of UIGEA. Whatever can be said about the reach of UIGEA, its plain terms spell out that none of its provisions are meant to alter [or] limit IGRA in any way, a federal law... regulating gambling within the Unites States. 31 U.S.C. 5361(b). Congress was quite emphatic on this point, expressly stating that no provision of UIGEA shall be construed to modify any existing federal law like IGRA. See id. Congress placed a clear ban on using anything in UIGEA to limit rights permitted by other statutes, such as IGRA. In violation of this statutory text, the District Court used UIGEA to aid in the statutory interpretation of IGRA s provisions. The result was to limit gaming that IGRA permits. It is this express rule of construction provision in UIGEA that must be the guidepost for this Court s analysis in this case, and one that the District Court simply ignored in erroneously finding that the DRB bingo gaming had to comply with both IGRA and UIGEA. (ER Vol. I/4 at 2). C. The District Court Erred by Reading Together and Using Provisions of UIGEA to Construe the Meaning of Conducted on Indian lands for Purposes of IGRA to Find That the Phrase was Not Ambiguous. To reach its result, the District Court had to find that the key IGRA phrase at issue here conducted on Indian lands was not ambiguous. 9 (ER Vol. I/4 at 21, 9 A statute is ambiguous if it is susceptible to more than one reasonable interpretation. Arizona v. Tohono O'odham Nation, 818 F.3d 549, 556 (9th Cir. 2016) (quoting Alaska Wilderness League v. United States EPA, 727 F.3d 934, 12

24 Case: , 05/17/2017, ID: , DktEntry: 11, Page 24 of 55 29). It did so in the most curious of ways by using UIGEA to inform its construction of IGRA in direct contravention of the 5361(b) rule of construction, stating that pertinent UIGEA provisions are highly relevant to whether on Indian lands is ambiguous and thus may properly be considered. (ER Vol. I/4 at 22). The District Court could not find that the conducted on Indian lands phrase was unambiguous based upon the express text of IGRA because this statutory phrase is not specifically defined in IGRA. 10 And neither could the District Court cite to any caselaw that directly addresses the interpretation of the conducted on Indian lands statutory phrase in the context of assessing the effect on Class II bingo gaming of the maximum flexibility technology policy enshrined in IGRA. The general question whether tribally-regulated server-based bingo gaming with patron access facilitated by a browser-based Internet communication link is conducted on Indian lands for purposes of IGRA has never been finally resolved by any court let alone the precise question here: Is tribally-regulated server-based bingo gaming conducted via proxy play which is 938 (9th Cir. 2013)). 10 Neither are the generic terms gaming activity or gaming activities expressly defined in IGRA. However, Class II gaming, the kind that DRB offers patrons, is expressly defined by IGRA and by tribal regulations. See 25 U.S.C. 2703(7)(A) and Iipay Gaming Ordinance, Section IIA. (ER Vol. II/204 at 59). And while neither has any mention of any requirement about the physical locale of the patron at the time the bingo game is played at the Indian gaming facility, Section 5.0(d) of SYGC 14-I009 expressly allows bingo game patrons to be in different patron locations and to use proxy play. (ER Vol. II/287 at 8-11). 13

25 Case: , 05/17/2017, ID: , DktEntry: 11, Page 25 of 55 remotely accessed by patrons using a browser-based Internet link permitted under IGRA and applicable tribal law? 11 Rather than conduct a proper legal analysis of what IGRA permits, the District Court instead read together IGRA and UIGEA 12 to arrive at its faulty conclusion that the conducted on Indian lands phrase unambiguously means for purposes of IGRA that patrons [must] be physically present within Indian country at the time they access the DRB bingo games, saying this understanding of IGRA is supported by its consistency with UIGEA. (ER Vol. I/4 at 22, 24, 29). The District Court compounded its error in reaching its mistaken statutory interpretation of IGRA by also relying on a Department of Justice statement contained in the legislative history for a proposed congressional act (the Internet Gambling Prohibition Act of 2006). (ER Vol. I/4 at 27-28). Although this proposed legislation contained a specific provision requiring a patron of IGRA gaming to be physically located on Indian lands to be exempt from the act, 13 it was never 11 See, e.g., Putnam Family P ship v. City of Yucaipa, 673 F.3d 920, 928 (9th Cir. 2012) ( A statute is ambiguous if Congress has not directly spoken to the precise question at issue. (internal quotation marks omitted)). 12 The District Court justified this analysis by concluding it was proper to suss out IGRA s meaning by considering its relationship with other federal statutes, citing an Eight Circuit decision that read together IGRA and the Johnson Act. (ER Vol. I/4 at 22 n. 23). Noteworthy, however, is the fact that the Johnson Act does not contain any language resembling the specific Section 5361(b) ban on using anything in UIGEA when making a statutory interpretation of any provision in a law like IGRA. 13 See proposed revised 18 U.S.C. 1084(d)(1) in H.R. 4777, 109 th Cong., 2 nd Sess. 14

26 Case: , 05/17/2017, ID: , DktEntry: 11, Page 26 of 55 enacted by Congress, and did not deal at all with the question whether offreservation means of access to Class II bingo gaming was permitted under IGRA. Further, in reaching its erroneous conclusion that the conducted on Indian lands phrase is unambiguous, the District Court failed to give due consideration to Iipay tribal laws and gaming regulations directly applicable to IGRA gaming, and other relevant legal authorities, that demonstrate that, in the context of Class II bingo gaming, the phrase is indeed ambiguous and does not require the patron to be physically present at the DRB gaming facility at the time they access the DRB bingo games to be played by proxy, as described below. D. The Bingo Gaming Offered by DRB is Legally Conducted on Indian Lands in a Tribally-Regulated Gaming Facility for Purposes of IGRA. Nothing in IGRA requires Class II bingo game technology to be frozen in the analog 20 th Century world. To the contrary, in enacting IGRA Congress specifically intended for tribes to have maximum flexibility in using innovative technological advancements in offering Class II bingo gaming. Neither does IGRA expressly and unambiguously require a person to be physically present on Indian lands to access bingo games played at tribal gaming operations, particularly games to be played by their proxy located on-site at the tribal gaming facility. (2006) available at (last accessed on May 17, 2017). 15

27 Case: , 05/17/2017, ID: , DktEntry: 11, Page 27 of 55 (1) There is no general prohibition under IGRA preventing tribes from using modern technology communication links like the Internet to promote participation among bingo players as a means to increasing tribal revenues for tribal needs. There is a strong congressional policy enshrined in IGRA to allow tribes to take advantage of modern methods of conducting Class II games and the language regarding technology is designed to provide maximum flexibility. See S. Rep. No at 3079 (emphasis added); see also NIGC June 2013 One Touch Bingo Pronouncement, 78 Fed. Reg , (June 25, 2013) (acknowledging this policy and stating that the NIGC should give consideration to an interpretation of bingo that embraces rather than stifles technological advancements in gaming ). It is in this context that the Court must consider whether there is a general prohibition under IGRA preventing tribes from using modern technology communication links like the Internet to promote participation among bingo players as a means to increasing tribal revenues for tribal needs. IGRA s text and legislative history, as well as the Indian law canons of construction, applicable tribal laws and regulations, NIGC regulations, and relevant federal case law, demonstrate that modern communication technology links (like the Internet) serving as technologic aids to a tribe s Class II bingo gaming were fully comprehended by Congress when it enacted IGRA and are not prohibited under the statute. Any argument that a DRB patron must be physically 16

28 Case: , 05/17/2017, ID: , DktEntry: 11, Page 28 of 55 present on Iipay s Indian lands for bingo game activity to be permitted under IGRA is meritless because all that IGRA actually requires is that the bingo game play offered by a tribe be conducted on Indian lands that is, bingo game play that originates on tribal lands. The question of whether under IGRA a DRB patron is required to be physically present on Iipay Indian lands in order to transmit to DRB their request to play the bingo games offered by DRB, whether by proxy or otherwise, has never been directly addressed by any court decision. Guidance on this issue, however, is found in this Court s decision in AT&T Corporation v. Coeur d Alene Tribe, 295 F.3d 899 (9th Cir. 2002). In that case, the Coeur d Alene Tribe requested that AT&T furnish toll-free services for the tribe s National Indian Lottery, which allowed persons located off-reservation (both in and outside the State of Idaho) to purchase tickets for the lottery through the use of telephone and other offreservation means of access. Id. at 908. AT&T objected to providing the services after state attorneys general warned AT&T that furnishing interstate toll-free service for the lottery would violate federal and state laws. In an almost identical conclusion to the District Court in this case, the district court in AT&T held that the lottery was operating outside IGRA, which would otherwise preempt state law because it determined that IGRA requires a participant in a lottery to be present on Indian lands when purchasing a ticket. Id. 17

29 Case: , 05/17/2017, ID: , DktEntry: 11, Page 29 of 55 at 903 (emphasis added). In vacating the district court s determination that the tribe s lottery was illegal under IGRA, the Ninth Circuit disagreed with the district court s conclusion that 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. Id. at 905. The court noted that the lottery was operated under a management contract with a third party that made clear the tribe s plans with respect to telephonic sales, and that the NIGC approved both the management agreement and the Lottery plan knowing that calls would be placed from other states. 14 Id. at 908. Therefore, the NIGC s actions approving both the management contract and the Tribe s resolution [authorizing the lottery] indicated that the Lottery is legal until and unless the NIGC s decision is overturned. Id. at Accordingly, this Court declared that IGRA governs the tribe s lottery unless and until the NIGC s decision that such gaming activity complies with IGRA is overturned. Id. at 909. The NIGC s decision regarding the legality of the Coeur d Alene Tribe s 14 The Ninth Circuit found that the NIGC had indeed considered the lottery s legality as IGRA requires, referencing a letter the NIGC Chairman sent in response to an inquiry about the lottery s legality, in which the NIGC Chairman specifically stated: In the opinion of the NIGC, the Tribe s lottery proposal, which involves customers purchasing lottery tickets with credit cards both in person and by telephone from locations both inside and outside the state of Idaho, is not prohibited by the IGRA. Id. at 902, (emphasis added). 18

30 Case: , 05/17/2017, ID: , DktEntry: 11, Page 30 of 55 lottery, which allows the purchase of tickets for the lottery through the use of telephone and other off-reservation means of access, has never been overturned. In fact, since the Ninth Circuit s decision, the NIGC has again approved the Coeur d Alene tribal gaming ordinance which continues to permit the use of such offreservation means of access to gaming activities conducted on its Indian lands. 15 And with good reason, because IGRA s text simply does not unambiguously require a lottery ticket purchaser (or Class II bingo game participant) to be physically present on the tribe s Indian lands when transmitting his offer to purchase lottery tickets (or bingo cards) in order for the gaming activity to be conducted on Indian lands and permitted under IGRA. In fact, the NIGC, the federal regulatory agency with oversight responsibilities for Indian gaming under IGRA, has never, by final agency action or other official pronouncement from the NIGC Chairman or Commission, formally made any conclusion that tribes making Internet gambling available to persons not located on Indian lands violates IGRA. 16 There are several reasons 15 See February 4, 2010 approval by NIGC Chairman of Coeur d Alene tribal gaming ordinance (Chapter permitting lottery) at NIGC website: OrdAppr.pdf (last accessed on May 17, 2017). 16 For example, in November 1997 the NIGC held a full-day public hearing on the effect of IGRA and NIGC regulations on Internet gambling conducted by Indian tribes, and, following this public hearing, the NIGC took no formal agency action declaring that the use of the Internet as a communication technologic aid to the play of Class II bingo was not permitted for purposes of IGRA (or, for that matter, 19

31 Case: , 05/17/2017, ID: , DktEntry: 11, Page 31 of 55 explaining why. First, the NIGC continues to respect and adhere to its Coeur d Alene Lottery original decision finding that using off-reservation means of access (whether by telephone, Internet or otherwise) to tribal gaming operations is authorized under IGRA. Second, the changes made in 2002 by the NIGC to the Part 502 regulations concerning technologic aids supports the use of modern technology communication links like the Internet to promote participation among Class II bingo patrons accessing tribal gaming operations from remote locations. 17 See 25 CFR 502.7(b), which declares that technologic aids built into a gaming system used to play the game of bingo include aids that assist with any of the following three elements: (1) broaden the participation levels in a common game; (2) facilitate communication between and among gaming sites; or (3) allow a player to play a game with or against other players rather than with or against a machine (emphasis added). Third, in 2008 and 2012, the NIGC adopted, by final agency action, Part 543 and 547 regulations relating to technologic aids used in the play of bingo games (i.e., Class II gaming systems that are electronic linked bingo has taken to date any formal agency action expressly prohibiting the use of the Internet in conducting IGRA gaming). See NIGC s Public Hearing Notice, 62 Fed. Reg (Oct. 15, 1997). 17 In this respect, IGRA is game specific, and bingo play under IGRA, as Class II gaming, may be permitted to use technology assistants incorporated into a bingo gaming system design which may not be allowed for other games like craps, roulette, blackjack, keno, slots, etc.; and such aids may include modern communication technologies like the Internet. 20

32 Case: , 05/17/2017, ID: , DktEntry: 11, Page 32 of 55 systems using client/server architecture). These regulations are consistent with tribes use of modern technology communication links like the Internet to promote participation among bingo players. Even the Department of the Interior ( DOI ) has taken final agency action dating back to 2002 repeatedly indicating that the use of modern technology communication links like the Internet by tribal gaming operations is permitted for purposes of IGRA. 18 Finally, Congress is well aware of the NIGC agency action regarding the Coeur d Alene Lottery declaring that the use of the Internet and other off-reservation means of access to gaming activities conducted on its Indian lands is authorized under IGRA, and the DOJ s and states objections to this agency action, and Congress has declined to take any steps to change the current state of the law. 19 In fact, in the only instance since 2002 where it did take action to 18 The DOI has by final agency action affirmatively approved several Tribal-State Compacts permitting Internet gaming by tribes under certain conditions. For example, see the Tribal-State compact between California and Iipay (ER Vol. IV/606 at 52), the compact between the Commonwealth of Massachusetts and the Mashpee Wampanoag Tribe, and the State of Arizona s compacts with various tribes, available at IA/OIG/Compacts/index.htm (last accessed on May 17, 2017). The logical and legal inference from these DOI compact approval actions is that such Internet gaming must be considered conducted on Indian lands for purposes of IGRA; otherwise such gaming would not be permitted under IGRA and could not be included in any Class III gaming compact approved pursuant to IGRA. 19 See Lac Vieux Desert Band of Lake Superior v. Ashcroft, 360 F. Supp. 64, 66 (D.D.C. 2004) (noting that the DOJ letter describing the DOJ s position on the tribe s proposal to offer proxy play bingo to patrons using an Internet communication link was issued after a House Sub-Committee hearing held on 21

33 Case: , 05/17/2017, ID: , DktEntry: 11, Page 33 of 55 address issues relating to the Internet and gaming, Congress went to great pains to exclude Indian gaming from that legislation. See 31 U.S.C. 5361(b). Moreover, IGRA and its legislative history contain numerous indications that Congress specifically contemplated that some actions relating to Indian gaming may occur off Indian lands. This is particularly true when analysis and interpretation of IGRA is conducted in accordance with the proper Indian law canons of statutory construction and the statute is construed liberally in favor of Indians. 20 For example, IGRA is silent on the meaning of the term gaming activities. 21 The statute never suggests, much less states, that the purchaser of bingo cards for participation in a tribe s Class II gaming must be physically present November 17, 2000 on the issue of Internet Proxy Bingo ). 20 In declining to apply the construed liberally in favor of Indians canon in determining the meaning of IGRA s undefined statutory phrase conducted on Indian lands, the District Court was misguided in relying on language in Cabazon Band of Mission Indians v. NIGC, 14 F.3d 633 (D.C. Cir. 1994) referencing the inapplicability of the canon when statutory language is clear. However, the IGRA language at issue in Cabazon did not involve the undefined phrase disputed here, and the NIGC s Part 502 amendments adopted in 2002 acknowledged that several key [IGRA] terms were not specifically defined, and thus subject to more than one interpretation. See 67 Fed. Reg (June 17, 2002). A statute is ambiguous if it is susceptible to more than one reasonable interpretation. See, e.g., Alaska Wilderness League, 727 F.3d at 938; Arizona v. Tohono O'odham Nation, 818 F.3d at In its capacity as the primary regulator of Class II bingo under IGRA, the Iipay tribal gaming commission determined the meaning of this phrase under IGRA, finding that bingo gaming activities consist of three essential elements for purposes of IGRA; all of which, like is the case with other Class II gaming systems operating in Indian country today, are conducted and originate on the math and game management servers of the VPNAPS gaming system. (ER Vol. IV/746 at (e-g)). 22

34 Case: , 05/17/2017, ID: , DktEntry: 11, Page 34 of 55 on the reservation. Neither bingo card purchasers nor their on-reservation accounts are mentioned in the statute. Nor does the statute contain anything resembling a requirement that every portion of gaming activity must take place on Indian lands. 22 Congress did not specifically address either in the terms conducted on Indian lands or gaming activities, or in IGRA as a whole whether the purchasers of bingo cards for participation in a tribe s Class II gaming activities are required to be physically present on Indian lands at the moment they transmit their offer to purchase bingo cards and authorize deductions from their onreservation accounts. Congress s unmistakable silence on this issue precludes the conclusion that IGRA unambiguously requires the purchasers to be physically present on Indian lands when transmitting their offer to purchase the bingo cards. See, e.g., Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, , (1984) (finding Clean Air Act ambiguous on meaning of term stationary source where Act was silent as to term s significance); 22 In this respect, it has never been true that tribal activities were subject to state regulation simply because one portion of the tribal activity occurred off Indian lands. See Cabazon Band of Mission Indians v. Wilson, 37 F.3d 430, 435 (9th Cir. 1994) (in connection with California efforts to tax revenues from on-reservation off-track betting, the Ninth Court rejected the argument that holding the race offreservation subjected the tribe to state taxation. ( It is not necessary... that the entire value of the on-reservation activity come from within the reservation s borders [so long as] the Bands have made a substantial investment in the gaming operations and are not merely serving as a conduit for the products of others. )). 23

35 Case: , 05/17/2017, ID: , DktEntry: 11, Page 35 of 55 Williams, 115 F.3d at 661 n. 4 (Alaska Reindeer Act is ambiguous where it was silent as to intent to give native Alaskans monopoly in reindeer business). In addition to IGRA s silence on the meaning of the terms conducted on Indian lands or gaming activities, the statute contains indications that Congress expressly contemplated that purchasers of bingo cards for participation in a tribe s Class II bingo gaming need not be present on the reservation. For instance, Congress exempted Indian gaming conducted pursuant to IGRA from the federal anti-lottery acts. 23 Exemption from these statutes permits tribes, at the very least, to conduct an interstate lottery by mail. Such exemption signals Congress acceptance of the possibility that some actions associated with Indian gaming might be conducted off Indian lands. See also S. Rep (1988), at 3082 ( It is the Committee s intent [that] no other Federal statute... preclude the use of otherwise legal devices used solely in aid of or in conjunction with bingo or lotto or other such gaming on or off Indian lands ) (emphasis added)). This part of IGRA s legislative history is incompatible with any conclusion that Congress unambiguously intended to require that a Class II bingo game patron be physically present on the tribe s Indian lands when offering to purchase bingo cards to be 23 See 25 U.S.C ( sections 1301, 1302, 1303 and 1304 of title 18, United States Code, shall not apply to any gaming conducted by an Indian tribe pursuant to this Act ). Section 1301 of the U.S Code prohibits interstate transportation of lottery tickets, and Section 1302 proscribes use of the mails to transmit lottery information or materials. 24