Wisconsin v. Nation

• Decision Date: 29 April 2015
• Docket Number: No. 14–2529.,14–2529.
• Citation: 784 F.3d 1076
• Parties: State of WISCONSIN, Plaintiff–Appellee, v. HO–CHUNK NATION, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

784 F.3d 1076

State of WISCONSIN, Plaintiff–Appellee

v.HO–CHUNK NATION, Defendant–Appellant.

No. 14–2529.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 2, 2014.

Decided April 29, 2015.

Christopher J. Blythe, Attorney, Clayton P. Kawski, Attorney, Office of the Attorney General Wisconsin Department of Justice, Madison, WI, for Plaintiff–Appellee.

Thomas M. Pyper, Attorney, Whyte, Hirschboeck & Dudek S.C., Madison, WI, Michael P. Murphy, Attorney, Ho–Chunk Nation, Department of Justice, Black River Falls, WI, for Defendant–Appellant.

Elizabeth L. Homer, Attorney, Homer Law Chartered, Washington, DC, for amicus curiae National Indian Gaming Association.

Before WOOD, Chief Judge, and WILLIAMS and TINDER, Circuit Judges.

Opinion

WOOD, Chief Judge.

The State of Wisconsin sued the Ho–Chunk Nation of Wisconsin to stop the tribe from offering electronic poker at its Madison gaming facility. The state maintained that the tribe was violating its agreement with the state to refrain from conducting Class III gaming at that location. The tribe responded that its poker is a Class II game that is permitted by law. The state prevailed in the district court, and the Ho–Chunk Nation now appeals. We reverse.

I

The Ho–Chunk Nation (the Nation) is a federally recognized Indian tribe with land located in fourteen counties in Wisconsin. That land is held in trust for the tribe by the United States. Like a number of tribes, the Nation has pursued gaming as a catalyst for economic development. The Nation established its first bingo hall in 1983 following a judicial ruling that a 1973 amendment to the state constitution legalizing bingo games had the effect of ending the state's authority to restrict and regulate bingo on tribal reservations. By 1992, pursuant to Wis. Stat. § 14.035, the Governor of Wisconsin had entered into gaming compacts with all of the state's tribes, including the Nation. The Nation adopted a gaming ordinance, which it later amended four times, authorizing the tribe to “conduct all forms of Class I and Class II gaming on the Nation's lands.”

The gaming classes to which these compacts and ordinances refer are defined in the Indian Gaming Regulatory Act (IGRA), at 25 U.S.C. § 2703(6), (7), and (8). Class I gaming includes social games and traditional Indian gaming; it is regulated exclusively by Indian tribes. 25 U.S.C. §§ 2703(6), 2710(a)(1). Class II gaming includes bingo and certain nonbanked card games that are “explicitly authorized by the laws of the State, or ... are not explicitly prohibited by the laws of the State and are played at any location in the State.” 25 U.S.C. §§ 2703(7)(A)(ii), 2710(b)(1). (Wisconsin's Legislative Reference Bureau defines nonbanked games as those “in which players compete against one another as opposed to playing against the house.” See Wis. Legislative Reference Bureau, The Evolution of Legalized Gambling in Wisconsin, Informational Bull. 12–2 at 24 (Nov. 2012) http://legis. wisconsin.gov/lrb/pubs/ib/12ib2.pdf. ) Class III gaming is a residual category that covers “all forms of gaming that are not class I gaming or class II gaming.” 25 U.S.C. § 2703(8). This case hinges on the fact that Class II gaming is enforced exclusively by the tribes and the National Indian Gaming Commission (Gaming Commission), 25 U.S.C. § 2710(b), whereas Class III gaming is regulated pursuant to tribal-state compacts, 25 U.S.C. § 2710(d).

The Nation operates several gaming facilities, including one in Madison, now called Ho–Chunk Gaming Madison. On April 25, 2003, the Nation and Wisconsin executed a document referred to as the Second Amendment to the Compact, which authorized the Nation to conduct Class III gaming at the Madison facility, provided Dane County authorized it to do so. But Dane County withheld its authorization after the voters rejected by a margin of nearly two to one a referendum to that effect held on February 17, 2004.

The current Compact, as amended on September 16, 2008, does not restrict the ability of the Nation to offer Class II gaming on its tribal lands, including the Madison facility (nor could it as a matter of federal law). Since November 2010, the Nation has offered nonbanked poker at Ho–Chunk Gaming Madison. (The parties' Joint Statement of Stipulated Facts explicitly recognizes that the type of poker offered at the Madison facility is nonbanked.¹ ) Wisconsin considers this nonbanked poker to be a Class III game. It accordingly sought an injunction in federal court to stop the poker, which if properly classified as Class III would violate the Nation's compact with the state. Both the state and the tribe filed motions for summary judgment based on the stipulated facts. The district court ruled that the electronic poker was, as the state had contended, a Class III game, and so it granted the state's motion for summary judgment and denied the tribe's motion. The court enjoined the Nation from offering poker at the Madison facility, but stayed the injunction pending the Nation's appeal to this Court.

II

We review a district court's grant of summary judgment de novo. Prestwick Capital Mgmt. v. Peregrine Fin. Grp., 727 F.3d 646, 655 (7th Cir.2013). We also review de novo any legal questions, including those involving statutory interpretation. Tradesman Int'l, Inc. v. Black, 724 F.3d 1004, 1009 (7th Cir.2013). If the version of poker the Nation offers at its Madison facility is a Class II game under the statute, the Nation has the authority to offer the game without securing Wisconsin's permission. If it is a Class III game, the Nation may not offer it at the Madison facility under the current compact with Wisconsin.

To decide which is the proper classification, we begin with IGRA, 25 U.S.C. §§ 2701 –2721. The Act's “stated goals were to create a comprehensive regulatory framework ‘for the operation of gaming by Indian tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments,’ to ‘shield [tribes] from organized crime and other corrupting influences, to ensure that the Indian tribe is the primary beneficiary of the gaming operation, and to assure that gaming is conducted fairly and honestly by both the operator and players.’ ” Wells Fargo Bank v. Lake of the Torches Econ. Dev. Corp., 658 F.3d 684, 687 (7th Cir.2011) (quoting 25 U.S.C. § 2702(1) -(2) ).

As we noted earlier, IGRA divides all Indian gaming (that is, gambling run by federally recognized tribes) into three classes, each subject to different levels of tribal, federal, and state regulation. As we have noted, we are concerned with Classes II and III. Class II gaming includes bingo, bingo-like games (such as pull tabs), and nonbanked card games allowed under state law. In a nonbanked game, players bet against one another, and the house has no monetary stake in the bets. In a banked game, such as blackjack, players bet against the house. Among Class II games, IGRA includes

card games that—

(I) are explicitly authorized by the laws of the State, or

(II) are not explicitly prohibited by the laws of the State and are played at any location in the State,

but only if such card games are played in conformity with those laws and regulations (if any) of the State regarding hours or periods of operation of such card games or limitations on wagers or pot sizes in such card games.

25 U.S.C. § 2703(7)(A)(ii).

Class II gaming is within the control of the tribes, but it is also subject to regulation by the Gaming Commission, which has the power to bring enforcement actions against tribes. The Commission must oversee a tribe's Class II gaming unless it has granted the tribe a certificate of self-regulation.

Class III gaming (the residual category) includes the types of games that most would associate with casinos: slot machines, craps, roulette, and banked card games like blackjack. It is permitted if three conditions are met: 1) the tribe has eligible trust lands in the state, 2) the state permits the gaming for any purpose, and 3) the gaming is governed by a state-tribe compact. Notably, the first two are identical to the requirements for Class II gaming. To meet the third requirement, a tribe must enter a compact with the state, and the compact must take effect before the casino opens. Id. § 2710(d)(1). These compacts sometimes involve extensive negotiation and litigation. See, e.g., In Re Gaming Related Cases, 331 F.3d 1094 (9th Cir.2003). A state must “negotiate in good faith” with a tribe when it requests a compact, but a state cannot be forced through litigation to negotiate. Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). If the parties succeed in concluding a compact and the Secretary of the Interior approves it, she must publish notice of the approval in the Federal Register. 25 U.S.C. § 2710(d)(8)(D). The Secretary may disapprove a compact, if it violates IGRA, any other federal law, or the trust obligations of the United States to Indians. Id. § 2710(d)(8)(B). If the Secretary takes no action within 45 days of the date when the compact is submitted for approval, the compact is considered approved. Id. § 2710(d)(8)(C).

Wisconsin law does not explicitly authorize the Nation to offer nonbanked poker, and so the Nation cannot rely on section 2703(7)(A)(ii)(I). It can prevail, if at all, only under section 2703(7)(A)(ii)(II) —that is, if the games are not explicitly prohibited by the laws of the state and are played at any location in the state. One other provision of IGRA is relevant: section 2710(b)(1), which says that a tribe may engage in Class II gaming if the state “permits such gaming for any purpose by any person, organization or entity.” Id. In other words, Class II gaming “is permitted only on tribal lands in states that do not entirely prohibit such gaming and only where the tribal resolution authorizing the operation is approved by the Chairman of the Commission.” Wells Fargo Bank, 658 F.3d at 687 (citing 25 U.S.C. § 2710(b)(1)(A)-(B) ).

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