Bingo: Casino’s Federal License is a Shield Against Public Nuisance Claim

February 26, 2013Articles
The State of Alabama filed suit on February 19, 2012, attempting to shut down four casinos it contends are illegal. Three Indian gambling centers and VictoryLand – one of the state’s largest racetracks and casinos which has been a target numerous times over the past few years – are at the center of the State’s current lawsuit.

Setting aside the unique issues of sovereignty and jurisdiction associated with a licensed facility on Indian lands, the lawsuit said the tribe cannot operate slot machines or lotteries that are illegal throughout Alabama. Alabama’s Attorney General Luther Strange stated, “We argue that the … gambling activities are a ‘public nuisance’ that harms the surrounding community, the state, and Alabama's citizens. Just as an Indian tribe cannot build a factory that illegally pollutes the air of its neighbors, a tribe should not be able to operate unlawful games at a casino that affects the community around it.”

The Indian Gaming Regulation Act (“IGRA”), the federal framework for Indian gambling, states that tribes can only engage in types of gambling that are legal under state law. In 2011, without success, Strange argued to the National Indian Gaming Commission (“NIGC”) that they should declare electronic bingo machines off limits pointing out that since they are illegal under Alabama law, they should be illegal on Indian lands as well.

The Commission said that bingo games are legal in Alabama, so they are legal on Indian lands in whatever form they take. “So long as a state permits the game of bingo, regardless of the state’s definition of the game, an Indian tribe within that state may also play bingo as defined in IGRA,” NIGC Chairwoman Tracie L. Stevens wrote in the letter. The NIGC continued, “Accordingly, tribes are not bound to state definitions of the game of bingo. If a state permits paper bingo only, as Mr. Strange represents Alabama does, a tribe within that state may play electronic bingo so long as it otherwise meets IGRA’s Class II gaming definition.”

In its latest attempt to shut down the casinos, the State relies on Alabama’s “public nuisance” law. The complaint states, “The continued operation of slot machines and unlawful gambling devices by Defendants works hurt, inconvenience, or damage to the public interest. The public policy of Alabama is emphatically against lotteries or any scheme in the nature of a lottery.”

However, just calling it illegal gambling and a public nuisance doesn’t make it so. The real issue here is the fact that Indian casinos are permitted and licensed to operate under the IGRA and the rulings established by the NIGC. Over the past three years, some groups and individuals have taken aggressive efforts to not just regulate, but to prevent, close, eliminate or at least limit or down-size, permitted business activities by characterizing those activities as statutory public nuisances.

Permits and licenses are intended to encourage the business activity that the governmental authority licenses. See City of Cleveland v. Ameriquest Mortgage Securities, Inc., 621 F. Supp. 2d 513, 526 (N.D. Ohio 2009) (recognizing there is a “difference between conduct that is merely ‘lawful,’ as in ‘not legally prohibited,’ and conduct that is subject to regulation and, within the framework of a regulatory scheme, encouraged.”), aff’d, 615 F.3d 496 (6th Cir. 2010).

A permit encourages business activity by shielding the activity from legal attack as a public nuisance. Id. at 528 (“Under a long line of decisions, a showing that the challenged conduct is subject to regulation and was performed in conformance therewith insulates such conduct from suit as a public nuisance.”). See, e.g., du Pont de Nemours & Co. v. Train, 430 U.S. 112, 138 n. 28 (1977) (holding the purpose of the statutory permit shield in section 1342(k) of the federal Clean Water Act is to “insulate permit holders from changes in various regulations during the period of a permit and to relieve them of having to litigate in an enforcement action the question of whether their permits are sufficiently strict”). See also Sierra Club v. ICG Hazard, LLC, 2012 U.S. Dist. LEXIS 146140 (September 28, 2012) (“Permits place limits on the pollutants that may be discharged, but permits also protect dischargers.”).

Here, the Alabama Attorney General is resorting to this last-ditch theory after losing time and time again: declaring a permitted activity a public nuisance. By respecting the permitted activity, the Attorney General should recognize that the casinos at issue are operating well within the authorization and guidelines of the IGRA and the NIGC and are entitled to protection.