Northern Arapaho v. State of Wyoming

F I L E D
United States Court of Appeals
Tenth Circuit

NOV 23 2004
PUBLISH
PATRICK FISHER
UNITED STATES COURT OF APPEALS Clerk
TENTH CIRCUIT

NORTHERN ARAPAHO TRIBE,

Plaintiff-Appellee/
Cross-Appellant,

v.
Nos. 02-8026
STATE OF WYOMING and 02-8031
GOVERNOR JIM GERINGER, his
agents, employees and successors, in
their official capacities,

Defendant-Appellants/
Cross-Appellees.

Appeal from the United States District Court
for the District of Wyoming
(D.C. No. 00-CV-221-J)

Craig E. Kirkwood, Senior Assistant Attorney General (Patrick J. Crank, Attorney
General, and John W. Renneisen, Deputy Attorney General, with him on the
briefs), Cheyenne, Wyoming, for Defendants-Appellants/Cross-Appellees.

Andrew W. Baldwin, Baldwin & Crocker, P.C., Lander, Wyoming, for Plaintiff-
Appellee/Cross-Appellant.

Before SEYMOUR, HENRY and LUCERO, Circuit Judges.

SEYMOUR, Circuit Judge.
 The Northern Arapaho Tribe brought an action seeking a declaration that

the state of Wyoming failed to negotiate in good faith with the Tribe in violation

of the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701 et seq. Partially

granting the Tribe’s motion for judgment on the pleadings, the district court held

that Wyoming failed to negotiate in good faith with regard to calcutta and

parimutuel wagering and ordered the parties to complete a compact within sixty

days. The court further held that casino-style gaming and slot machine wagering

were against Wyoming public policy and thus not subject to negotiation. Both

parties appeal. We affirm in part and reverse in part.

I

The Northern Arapaho Tribe is a federally recognized Indian tribe with a

reservation in the State of Wyoming. Under the IGRA, a tribe must negotiate

with the state and enter into a “tribal-state” compact in order to engage in gaming

on Indian lands. 25 U.S.C. § 2710(d)(1)(C). Seeking to engage in a casino-style

gaming operation on the Wind River Indian Reservation, the Tribe submitted a

written request to the state for tribal-state compact negotiations.

The Tribe submitted a proposal to the state under which it would be entitled

to operate gaming and gaming machines including poker, video poker, roulette,

dice games, sportsbook, parimutuel, wheel of fortune, keno, video keno,

raffle/lottery, multi-line slot, regular slot, blackjack, video blackjack, video pull-

-2-
tab, and video horse racing. In response, the state took the position that because

Wyoming has a broad criminal prohibition against gambling and exceptions to

that prohibition are narrowly drawn, the IGRA requires it to negotiate only

regarding the games that Wyoming law specifically permits for commercial

purposes. According to the state, the compact negotiations with the Tribe were

thus limited to raffles, bingo, pull tabs, calcuttas, and parimutuel wagering.

The Tribe disagreed, claiming that Wyoming was required to negotiate

regarding all games listed in the Tribe’s proposed compact because state law

permitted a nearly unlimited variety of gaming, including “any game, wager or

transaction,” albeit only for social or non-profit purposes. W YO . S TAT . §

6-7-101(a)(iii)(E). Over one hundred eighty days passed without a gaming

compact, prompting the Tribe to file suit seeking a declaration that Wyoming had

failed to negotiate in good faith in violation of the IGRA. See 25 U.S.C. §

2710(d)(7)(B)(i). In addition, the Tribe requested the court to order the state to

enter into a tribal-state compact within sixty days. Id. § 2710(d)(7)(B)(iii). In the

alternative, the Tribe sought an injunction to prevent the state from interfering

with the Tribe’s alleged right to conduct or regulate class III gaming on Indian

lands within Wyoming.

The district court partially granted a motion for judgment on the pleadings

in favor of the Tribe, holding that the state’s refusal to bargain on calcutta or

-3-
parimutuel wagering, other than in strict conformity with state law restrictions

that do not apply to tribes under the IGRA, constituted a failure to negotiate in

good faith. The court further held, however, that the state was not required to

negotiate regarding “casino-style” games or “gaming machines,” notwithstanding

Wyoming’s permissiveness in allowing casino-style gambling for social purposes.

The court ordered the parties to enter into a compact within sixty days with regard

to calcutta and parimutuel betting.

II

We review the district court’s grant of a judgment on the pleadings de

novo, applying the same standard of review applicable to a Rule 12(b)(6) motion

and construing the pleadings and the reasonable inferences therefrom in the light

most favorable to the non-moving party. Aspenwood Investment Co. v. Martinez,

355 F.3d 1256, 1259 (10th Cir. 2004).

The IGRA was enacted in 1988 in order to “promot[e] tribal economic

development, self-sufficiency, and strong tribal governments.” 25 U.S.C. §

2702(1). The statute provides a comprehensive system to regulate gambling

activities on Indian lands. See id. §§ 2701-2721. The IGRA explicitly states that

“Indian tribes have the exclusive right to regulate gaming activity on Indian lands

if the gaming activity is not specifically prohibited by Federal law and is

-4-
conducted within a state which does not, as a matter of criminal law and public

policy, prohibit such gaming activity.” Id. § 2701(5). This declaration is

consistent with Supreme Court’s seminal pre-IGRA decision:

if the intent of a state law is generally to prohibit certain conduct, it falls
within [the state’s] criminal jurisdiction, but if the state law generally
permits the conduct at issue, subject to regulation, it must be classified as
civil/regulatory . . . . The shorthand test is whether the conduct at issue
violates the State’s public policy.

California v. Cabazon Band of Mission Indians, 480 U.S. 202, 209 (1987).

Accordingly, the primary issue in this case is whether “such gaming activity” in

which the Northern Arapaho Tribe wishes to engage is “prohibited” or merely

regulated by the state of Wyoming.

The IGRA divides Indian gaming into three classes: “Class I games” (social

games solely for prizes of minimal value or traditional forms of Indian gaming);

“Class II games” (bingo, including pull-tabs, lotto, punch boards, tip jars, instant

bingo, other games similar to bingo, and certain card games); and “Class III

games” (all other gaming including roulette, blackjack, and parimutuel wagering).

See 25 U.S.C. § 2703(6)-(8). Class I games are not subject to regulation under

the IGRA. Id. § 2710(a). Class II games are permitted on Indian lands under the

IGRA if the game is conducted within a state that permits Class II gaming “for

any purpose by any person, organization or entity.” Id. § 2710(b). Class III

gaming activities are “lawful on Indian lands only if such activities are . . . (A)

-5-
authorized [by an approved Tribal] ordinance or resolution . . . , (B) located in a

State that permits such gaming for any purpose by any person, organization, or

entity, and (C) conducted in conformance with a Tribal-State compact . . . .” Id. §

2710(d) (emphasis added). In order to engage in Class III gaming activities, the

Tribe must “request the State in which such lands are located to enter into

negotiations for the purpose of entering into a Tribal-State compact governing the

conduct of gaming activities.” Id. § 2710(d)(3)(a). The state must negotiate in

good faith with the tribe upon receipt of such a request. Id.

The controversy between the Tribe and the state of Wyoming centers on the

phrase “located in a State that permits such gaming for any purpose by any

person, organization, or entity.” Id. § 2710(d)(1)(B). As the district court

detailed in its opinion, this statutory language has spawned at least two different

approaches regarding the scope of negotiations required between tribes and states

under the IGRA.

The “Wisconsin” analysis or “categorical” approach requires courts to first

review the general scope of gaming permitted by the state. See, e.g., Lac du

Flambeau Band of Lake Superior Chippewa Indians v. Wisconsin, 770 F. Supp.

480 (W.D. Wis. 1991). If the state permits any form of Class III gaming, the tribe

must negotiate to offer all forms of Class III gaming because the state is merely

“regulating,” rather than “prohibiting,” this type of gambling. Id. at 484-88. This

-6-
categorical approach has been adopted by at least one circuit. See Mashantucket

Pequot Tribe v. Connecticut, 913 F.2d 1024, 1031-32 (2d Cir. 1990).

The “Florida” analysis or “game-specific” approach requires courts to

review whether state law permits the specific game at issue. See, e.g., Coeur

d’Alene Tribe v. Idaho, 842 F. Supp. 1268, 1278 (D. Idaho 1994) (citing Seminole

Tribe of Florida v. Florida, 1993 WL 475999 (S.D. Fla. Sept. 22, 1993)). If the

state allows a particular game for any purpose, it must negotiate with the tribe

over that specific game. Id. at 1279-80. Similarly, if the state entirely prohibits a

particular game, the state is not required to negotiate with the Tribe as to that

game, even if the state permits other games in the same category. Id. Under this

approach, the state’s permissive treatment as to one type of Class III game does

not mean that the state must negotiate with tribes as to all Class III games. At

least two circuits follow the “game-specific” approach. See Rumsey Indian

Rancheria of Wintun Indians v. Wilson, 64 F.3d 1250, 1257-58 (9th Cir. 1994);

Cheyenne River Sioux Tribe v. South Dakota, 3 F.3d 273, 278-79 (8th Cir. 1993).

The district court specifically adopted the “Florida” or “game-specific”

approach. We need not decide whether to follow the Wisconsin or Florida

analysis regarding the scope of gaming under the IGRA because we conclude that

Wyoming must negotiate with the Tribe under either approach regarding the full

gamut of “any game, wager or transaction,” W YO . S TAT . § 6-7-101(a)(iii)(E).

-7-
 In order to determine the appropriate scope of negotiations between the

Tribe and the state under either analysis, it is critical to determine the scope of

gaming permitted by state law. Under Wyoming law, Class III calcutta wagering

is permitted on “amateur contests, cutter horse racing, dog sled racing,

professional rodeo events or professional golf tournament[s]” if “conducted by a

bona fide nationally chartered veterans’, religious, charitable, educational or

fraternal organization or non-profit local civic or service club . . . .” W YO . S TAT .

§ 6-7-101. For-profit parimutuel wagering is permitted on specified events so

long as the profits are limited to 25.90% of the total wagers per event. Id. §

11-25-102.

The district court held that because Wyoming law specifically authorizes

calcutta and parimutuel wagering, the state is required to negotiate with the Tribe

regarding the full gamut of those types of games. The fact that calcutta wagering,

under state law, may only be conducted by incorporated non-profit groups for

non-profit purposes is inapposite: the tribe is not limited to “just wagering subject

to the conditions of W YO . S TAT . § 6-7-101(a)(iii)(F) and 11-25-105.” Aplt. App.

at 139. In other words, the district court held that state law “person” or “purpose”

restrictions on calcutta or parimutuel wagering do not apply to tribes under the

IGRA.

The state argues that the district court erred in concluding the IGRA

-8-
requires the state to negotiate with the Tribe as to calcutta and parimutuel

wagering without regard to the limitations of Wyoming law. If the state’s

approach were correct, however, “[t]he compact process that Congress established

as the centerpiece of the IGRA’s regulation of Class III gaming would thus

become a dead letter; there would be nothing to negotiate, and no meaningful

compact would be possible.” Mashantucket Pequot Tribe, 913 F.2d at 1031.

Furthermore, “the legislative history [of the IGRA] reveals that Congress intended

to permit a particular gaming activity, even if conducted in a manner inconsistent

with state law, if the state law merely regulated, as opposed to completely barred,

that particular gaming activity.” United States v. Sisseton-Wahpeton Sioux Tribe,

897 F.2d 358, 365 (8th Cir. 1990) (emphasis added).

It is clear under Wyoming law that the state regulates, rather than prohibits,

calcutta and parimutuel wagering. Thus, the IGRA’s requirement that Class III

gaming be “located in a State that permits such gaming for any purpose by any

person, organization, or entity” is fulfilled. 25 U.S.C. § 2710(d)(1)(B). The state

is therefore clearly required to conduct negotiations with the Tribe concerning the

full gamut of calcutta and parimutuel wagering.

With regard to the broader issue of other casino-style Class III gambling,

the district court recognized that Wyoming allows such activities because it

permits “any game, wager or transaction” for social and non-profit purposes.

-9-
W YO . S TAT . § 6-7-101(a)(iii)(E). The court stated that “[u]nder a straightforward

Florida analysis, Wyoming would have to negotiate over casino-style gambling

with the Arapaho because it allows such gaming for any purpose; namely, a social

one.” Aplt. App. at 140. Nonetheless, the court held the state was not required to

negotiate regarding casino-style gambling. Forcing the state to do so simply

because Wyoming permits social gambling, the court concluded, would lead to an

“absurd result.” Id. at 140-42. We disagree.

As the district court acknowledged with respect to calcutta and parimutuel

wagering, if gaming is permitted by a state “for any purpose by any person,” such

gaming is lawful on Indian land without the restrictions otherwise imposed on

off-reservation gaming as a matter of state law. 25 U.S.C. § 2710(d)(1). The

Tribe contends that because the state broadly permits any casino-style gaming for

social and non-profit purposes, it is required to negotiate with the Tribe

concerning the full gamut of “any game, wager or transaction.” W YO . S TAT . § 6-

7-101(a)(iii)(E).

The state argues that its limited authorization of casino-style gambling for

social purposes does not amount to a general allowance of “such gaming” within

the contemplation of the IGRA. 25 U.S.C. § 2710(d)(1)(B) (Class III gambling is

lawful if “located in a State that permits such gaming for any purpose by any

person, organization, or entity”). The state apparently claims that the appropriate

-10-
baseline category to which the term “such gaming” refers is neither all Class III

gambling games nor all casino-style gambling games, but rather the subset of

specific Class III games at issue—in this instance, casino-style gambling games

for non-commercial purposes. The state’s argument fails under either the

Wisconsin or Florida analysis.

Under the Wisconsin or “categorical” approach, the state must negotiate

concerning all forms of Class III gaming because Wyoming permits and regulates

“such gaming,” albeit only for social and non-profit purposes. Under the Florida

or “game-specific” approach, the state must negotiate regarding the broad

category of “any game, wager or transaction” because the state specifically

permits and regulates all types of “such gaming” for certain purposes by certain

people and organizations. We are aware of no court that has approved a state law

restriction against gaming “for-profit,” “professionally,” or anything similar when

the state permits the same type of gaming for social and non-profit purposes.

Instead, courts have rejected states’ attempts to limit negotiations with Tribes due

to state law restrictions against commercial gaming. See, e.g., Mashantucket

Pequot Tribe, 913 F.2d at 1032 (holding that limited permission by state for

occasional, charitable gaming does not preclude commercial gambling by Tribe

under the IGRA); Ysleta Del Sur Pueblo v. Texas, 852 F. Supp. 587, 595-96

(W.D. Tex. 1993) (holding that limited permission for only social gaming under

-11-
state law does not preclude commercial gambling the Tribe seeks under the

IGRA), rev’d on other grounds, 36 F.3d 1325 (5th Cir. 1994). In sum, if a state

permits Class III gaming under the “Wisconsin” approach, or if a state permits

any specific games (here, all games) in any fashion under the “Florida” approach,

that state must negotiate a compact for those games even if state law restricts the

sponsors or purposes of such gaming. The district court erred in concluding to

the contrary.

Finally, the state contends the Tribe produced no evidence that the state

failed to respond in good faith to the request of the Tribe to negotiate a compact.

The district court held that because (1) Wyoming had a duty to negotiate for terms

beyond those Wyoming law expressly permits and (2) the state conceded that it

only negotiated to the extent that Wyoming law permitted parimutuel and calcutta

gaming, the state had not negotiated in good faith. We agree.

The IGRA provides that:

upon the introduction of evidence by an Indian tribe that . . . (I) a Tribal-
State compact has not been entered into . . . and (II) the State did not
respond to the request of the Indian tribe to negotiate such a compact or did
not respond to such request in good faith, the burden of proof shall be upon
the State to prove that the State has negotiated with the Indian tribe in good
faith to conclude a Tribal-State compact governing the conduct of gaming
activities.

25 U.S.C. § 2710(d)(7)(B)(ii). The Tribe alleged and the state conceded that

Wyoming only negotiated regarding “raffles, bingo, pull tabs, calcuttas, and

-12-
parimutuel wagering” and only to the extent state law permits such activities.

When a state refuses to negotiate beyond state law limitations concerning a game

that it permits, the state cannot be said to have negotiated in good faith under the

IGRA given the plain language of the statute. Moreover, “when a state wholly

fails to negotiate,” as Wyoming did here concerning casino-style gambling, “it

obviously cannot meet its burden of proof to show that it negotiated in good

faith.” Mashantucket Pequot Tribe, 913 F.3d at 1032.

The judgment of the district court is AFFIRMED in part, REVERSED in

part, and REMANDED for further proceedings in accordance with this opinion.

Appellee’s motion to file a supplemental appendix is granted.

-13-