Analyzing Washington Sports Betting Challenge By Maverick Gaming

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Washington sports betting

Were you wondering what happened to America’s sports betting hero, former Solicitor General Ted Olson? Well, he is back in the space in Washington sports betting, in something of a different role this time.

Olson and his colleagues at the law firm Gibson Dunn filed a complaint Tuesday in the U.S. District Court for the District of Columbia against about a dozen federal and Washington state officials.

Olson is representing Las Vegas-based Maverick Gaming, the owner-operators of 19 cardrooms in the state of Washington, as well as a variety of casinos in Colorado and Nevada. Maverick Gaming is pursuing a challenge to Washington state’s gaming compacts that granted more than a dozen of the state’s tribes exclusivity over WA sports betting.

Background of Washington sports betting lawsuit

Maverick Gaming claims that Washington’s grant of exclusivity over sports betting to 16 tribes via compact amendments discriminates against the Nevada-based gaming operator. Maverick argues that:

Washington’s tribal monopoly is inconsistent with IGRA and federal criminal statutes, which prohibit class III gaming activity by tribal casinos on Indian lands unless a State permits the same activity by non-tribal entities.

The company also argues that the tribal monopoly violates the Fifth Amendment’s Equal Protection component by “irrationally and impermissibly discriminating on the basis of race and ancestry.”

What does Maverick want?

Maverick is asking the D.C. District Court (the same court that struck down the compact between the State of Florida and the Seminole Tribe of Florida) to:

Theory of WA sportsbook case

The Plaintiffs argue that the Indian Gaming Regulatory Act (“IGRA”) allows tribes to conduct gaming “only if” three conditions are met:

The Complaint argues that failure to comply with any of the three provisions renders the gaming on tribal lands illegal under IGRA and a variety of other federal laws, including the Illegal Gambling Business Act.

A prohibition on monopolies?

In a theory that appears to be a threat to exclusivity agreements across the country, the Complaint argues that condition two “precludes tribal class III monopolies.”

The Plaintiffs argue that while IGRA prohibits tribal monopolies, the law also precludes the states from excluding tribes from engaging in forms of gaming that other operators in the state are permitted to engage in.

The Washington State landscape

The Complaint alleges that the State of Washington has authorized tribal gaming monopolies since the early 1990s (which makes sense given IGRA was passed in 1988.) Outside of tribal authorizations, the Plaintiffs allege that most other forms of class III gaming operation in the State are illegal.

As of September 19, 16 tribes in Washington amended their gaming compacts to allow for sports betting.

The Complaint argues that the Secretary of the Interior‘s approval of the compact amendments violates various federal laws. The basis for the allegation is that the Secretary has an obligation to disapprove compacts that are inconsistent with federal law, as Washington’s sports betting law does not allow “such gaming for any purpose by any person, organization, or entity.”

The Complaint makes similar allegations about Governor Jay Inslee‘s obligations not to enter into a compact that violates IGRA.

The Equal Protection claim

The Complaint claims that the Secretary of the Interior was obligated to disapprove the amendments because they violate the Constitution’s guarantee of Equal Protection. The Complaint states:

The Compact Amendments’ grant of sports-betting monopolies to Washington Indian tribes is a racial and ancestral classification, as membership in a Washington Indian tribe depends on lineal descent from historical tribal rolls and often also a minimum blood quantum.

The Plaintiffs allege that the “race-based preference” should be subject to strict scrutiny, placing an extremely high burden on the Government defendants to justify the law, perhaps fearing that a court might reject the calls for a strict scrutiny review. However, the plaintiffs argue that even under the much less burdensome rational basis review, the tribal monopolies cannot survive.

Tell me where you’ve heard this one …

Additionally, the complaint alleges that the process by which the Compact Amendments were executed violates the Tenth Amendment. The basis for this claim is the anti-commandeering clause; the Complaint cites the Murphy case, stating:

The legislative powers granted to Congress are sizable, but they are not unlimited. [C]onspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States (internal quotations and citations omitted).

The complaint argues that because IGRA mandates a state to negotiate a compact, it is a direct command from the federal government, violating the Tenth Amendment.

What to make of Washington sports betting lawsuit?

The allegations in this lawsuit would have massive fallout on tribal gaming across the country if the Plaintiffs were to prevail.

The challenge to IGRA’s ability to grant monopolies would threaten to undo dozens if not hundreds of compacts.

However, the Plaintiffs’ argument that IGRA’s state-negotiation mandate violates the anti-commandeering clause of the Tenth Amendment could take down tribal gaming as we know it. If for no other reason than IGRA will turn 35 years old next and has yet to be taken down, it would seem as though this suit might face long odds.