April 30, 2015 – The U.S. Court of Appeals for the Seventh Circuit has ruled that Ho-Chunk Nation can offer electronic poker at its Madison gaming facility, reversing a prior decision that said electronic poker is illegal under Ho-Chunk’s agreement with the state.
U.S. District Court Judge Barbara Crabb of the Western District of Wisconsin had previously ruled that electronic poker is a Class III gaming activity, and the state prohibits Class III gaming under its gaming agreement with Ho-Chunk Nation.
However, the tribe appealed, arguing that electronic poker is a Class II gaming activity that is allowed. Recently, in State of Wisconsin v. Ho-Chunk Nation, No. 14-2529 (April 29, 2015), a three-judge panel for the Seventh Circuit Appeals Court reversed, siding with the tribe.
Under the federal Indian Gaming Regulatory Act (IGRA), Class II gaming includes bingo, pull-tabs, and certain “nonbanked” card games – where players compete against each other and not the “house” – that are explicitly authorized or not explicitly prohibited by state law. Class I games include traditional Indian gaming and social games.
Class III gaming activities, the most lucrative, are those games that are not classified as Class I or II and usually involving banked card games like Blackjack and other Vegas-style activities like slots, craps, and roulette, where the “house” has a stake in the game.
In 2003, the state reached an agreement with Ho-Chunk Nation to allow Class III gaming at its Madison casino if Dane County authorized it. But Dane County voters, through a referendum, rejected it and Dane County withheld authorization.
However, the current gaming compact between Wisconsin and Ho-Chunk Nation places no restrictions on Class II gaming that takes place on tribal lands. Ho-Chunk nation does not need Wisconsin’s permission to offer Class II gaming activities.
In 2010, Ho-Chunk began offering nonbanked, electronic poker, deeming it a Class II activity. Wisconsin filed for an injunction, viewing electronic poker as a Class III activity.
Unlike the district court, the three-judge panel for the Seventh Circuit Appeals Court ruled that nonbanked electronic poker is a Class II activity because, although Wisconsin does not explicitly authorize nonbanked electronic poker, state law does not explicitly prohibit that gaming activity. Therefore, Ho-Chunk did not need Wisconsin’s permission.
The court noted that although Wisconsin prohibited “poker” specifically through a constitutional amendment in 1993, the state has not specifically criminalized poker, which is required if the state wants authority to restrict poker on tribal lands.
The panel noted that electronic poker games at Ho-Chunk Casino would have been allowed if Dane County allowed it, despite the constitutional amendment, and a 1999 law decriminalized the possession video gambling machines, including video poker.
It also noted that the National Indian Gaming Commission, in a 2009 letter, deemed Ho-Chunk’s poker as Class II gaming because Wisconsin does not wholly prohibit poker.
“IGRA was designed to avoid precisely that kind of patchwork prohibition, in which the state banishes gaming in one county or situation and allows it in another,” wrote Judge Diane Wood. “Wisconsin cannot have it both ways.”
“A state must criminalize a gambling activity in order to prohibit the tribe from engaging in it,” Wood continued. “Wisconsin does not prohibit nonbanked poker; it decriminalized that type of gaming in 1999. IGRA thus does not permit it to interfere with Class II poker on tribal land.”
