Justia Gaming Law Opinion Summaries

Articles Posted in California Courts of Appeal
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Sutter’s Place, Inc., which operates Bay 101 Casino, challenged the City of San Jose's annual cardroom regulation fee, arguing it was an unconstitutional tax imposed without voter approval and violated due process. The fee was equally divided between Bay 101 and Casino M8trix, the only two cardrooms in the city. The plaintiff contended that the fee included costs outside the constitutional exception for regulatory charges and that the equal allocation was unfair.The Santa Clara County Superior Court held a bench trial and found the fee valid, covering reasonable regulatory costs and fairly allocated between the cardrooms. The court determined the fee was for regulatory functions, the amount was necessary to cover costs, and the equal allocation was reasonable given the equal number of tables and benefits to both cardrooms. The court also excluded certain expert testimony from the plaintiff and denied a separate due process trial.The California Court of Appeal, Sixth Appellate District, reviewed the case. It upheld the trial court's finding that the equal allocation of the fee was reasonable but reversed the judgment on other grounds. The appellate court found the trial court erred by not specifically determining whether all costs included in the fee fell within the constitutional exception for regulatory charges. The case was remanded for the trial court to identify and exclude any non-permissible costs from the fee and to conduct further proceedings on the due process claim if necessary. The appellate court also reversed the award of costs to the city and directed the trial court to reassess costs after applying the correct legal standards. View "Sutter's Place, Inc. v. City of San Jose" on Justia Law

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The case involves Sutter’s Place, Inc., a cardroom operator in San Jose, California, and the California Gambling Control Commission. Sutter’s Place sought to increase the number of gambling tables in its cardroom from 49 to 64. The request was based on a local ballot measure, Measure H, which was approved by San Jose voters. However, the Commission denied the application, arguing that Measure H did not comply with the requirements of the Gambling Control Act (GCA), specifically a provision governing the text of local ballot measures authorizing expansions of gambling. The Commission's decision was upheld by the San Francisco County Superior Court.Previously, the Commission had denied Sutter’s application for more tables, concluding that the San Jose ballot measure authorizing the increase did not comply with the GCA. The superior court denied writ relief, and Sutter appealed. The appellate court affirmed the lower court's decision, rejecting Sutter's arguments that recent state legislation validated San Jose’s ordinance and abrogated the Commission’s decision denying permission to expand.In the Court of Appeal of the State of California, Sutter argued that the Commission lacked authority to deny a gambling expansion application on the ground that a local authorizing measure fails to comply with state law. However, the court rejected each argument and concluded that the trial court did not err in denying Sutter’s writ petition. The court held that the Commission had the authority to refuse an application that conflicted with state law. The court also found that Measure H did not substantially comply with the GCA's requirements for ballot language. Therefore, the court affirmed the trial court's decision. View "Sutter's Place, Inc. v. California Gambling Control Commission" on Justia Law

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The lawsuit giving rise to this appeal was brought by Plaintiff-appellant Manuel Corrales, on behalf of himself, against the California Gambling Control Commission (the Commission) and the two competing factions of the California Valley Miwok Tribe (the Tribe), including his former client, the "Burley faction." In the Court of Appeals' preceding opinion, CVMT 2020, the Court affirmed, on res judicata grounds, the dismissal of a lawsuit filed by attorney Corrales against the Commission on behalf of the Burley faction. Through this lawsuit, Corrales sought to ensure that he received payment from the Tribe for the attorney fees that he claims he was due under a fee agreement he entered into with the Burley faction in 2007. Specifically, even though the Tribe’s leadership dispute was still not resolved, Corrales sought either (1) an order requiring the Commission to make immediate payment to him from the Tribe’s RSTF money, or (2) an order that when the Commission eventually decides to release the Indian Gaming Revenue Sharing Trust Fund (RSTF) money to the Tribe, his attorney fees had to be paid directly to him by the Commission before the remainder of the funds were released to the Tribe. The trial court dismissed Corrales’s lawsuit because the question of whether Burley represented the Tribe in 2007 for the purpose of entering into a binding fee agreement with Corrales on behalf of the Tribe required the resolution of an internal tribal leadership and membership dispute, over which the courts lacked subject matter jurisdiction. After judgment was entered, Corrales brought a motion for a new trial and a motion for relief from default. Among other things, Corrales argued that the trial court should have stayed his lawsuit rather than dismissing it. Finding no reversible error in the trial court's dismissal, the Court of Appeal affirmed. View "Corrales v. Cal. Gambling Control Com." on Justia Law

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The Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation California (Chumash) appealed a judgment following the granting of a motion for summary judgment in favor of Lexington Insurance Company (Lexington) in Chumash’s lawsuit against Lexington for denial of insurance coverage.   The Second Appellate District affirmed. The court concluded that, among other things, Chumash did not present sufficient evidence to show that the COVID-19 virus caused physical property damage to its casino and resort so as to fall within the property damage coverage provisions of the Lexington insurance policy. The court explained that had the Chumash Casino and Resort sustained property damage, it was required to specify what property was damaged and to submit a claim for the dollar amount of that loss. The absence of such information supports Lexington’s decision to deny coverage. View "Santa Ynez Band of Chumash etc. v. Lexington Ins. Co." on Justia Law

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Skillz provides a mobile platform that hosts games in which players compete for cash prizes. To participate in paid-entry competitions, a user must save the player account; after entering a date of birth, the user must tap a box with the word “Next.” Below the “Next” box is the advisory statement: “By tapping ‘Next,’ I agree to the Terms of Service and the Privacy Policy.” A hyperlink, if tapped, takes the user to Skillz’s terms of service. Gostev saved a Skillz player account in 2019. The Terms of Service then had 15 pages.Gostev sued Skillz, alleging that its games constituted illegal gambling, predatory and unlawful practices, and violated the Unfair Competition Law and the Consumers Legal Remedies Act, Gostev alleged the arbitration agreement was unenforceable. Skillz argued that Gostev’s challenges to the enforceability of the arbitration provision had to be submitted to an arbitrator.The court of appeal affirmed a finding that the arbitration agreement was procedurally and substantively unconscionable. The court noted provisions that a plaintiff’s damages are limited, the arbitration must occur in San Francisco, a plaintiff only has one year to bring his claim, the parties must split the arbitration fees and costs, and the defendant can obtain equitable relief without posting a bond or security. Unconscionability ”permeates the agreement such that severance is unavailable,” View "Gostev v. Skillz Platform, Inc." on Justia Law

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After a hearing, the California Gambling Control Commission (Commission) revoked and refused to renew the gambling license of cross-appellant Eric Swallow. The Commission also imposed a monetary penalty and costs against Swallow. Swallow petitioned the trial court for a writ of mandate, challenging the revocation and nonrenewal of his gambling license, the amount of the monetary penalty, and the costs. The trial court granted Swallow’s petition in part and denied it in part, concluding the Commission did not violate Swallow’s due process rights when it revoked and refused to renew Swallow’s gambling license, except that the Commission may have relied on unproven misconduct. The trial court therefore remanded to the Commission “to ensure that Swallow is not disciplined based on misconduct that was not proven.” The trial court also concluded the amount of the monetary penalty imposed by the Commission was not supported by law, and the costs could only be assessed by the ALJ on remand. It therefore vacated the penalty and costs imposed and remanded for the Commission to redetermine the amount of the penalty and to refer the issue of costs to the ALJ. Both the Commission and Swallow appealed. The Court of Appeal concluded: (1) Business and Professions Code section 19930(c), when considered within the statutory and regulatory framework of the Gambling Control Act, did not authorize the monetary penalty; (2) the Commission had jurisdiction to revoke Swallow’s gambling license; (3) the Commission did not violate Swallow’s due process rights; (4) Swallow failed to present a proper argument challenging the sufficiency of the evidence; and (5) the trial court properly remanded the issue of costs for further proceedings. The Court modified the judgment granting the peremptory writ of mandate to order the Commission to reconsider the monetary penalty in a manner consistent with its opinion instead of the trial court’s order. View "Swallow v. Cal. Gambling Control Commission" on Justia Law

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Blizzard Entertainment, Inc. (Blizzard) appealed an order denying its motion to compel arbitration. B.D., a minor, played Blizzard’s online videogame “Overwatch,” and used “real money” to make in-game purchases of “Loot Boxes” - items that offer “randomized chances . . . to obtain desirable or helpful ‘loot’ in the game.” B.D. and his father (together, Plaintiffs) sued Blizzard, alleging the sale of loot boxes with randomized values constituted unlawful gambling, and, thus, violated the California Unfair Competition Law (UCL). Plaintiffs sought only prospective injunctive relief, plus attorney fees and costs. Blizzard moved to compel arbitration based on the dispute resolution policy incorporated into various iterations of the online license agreement that Blizzard presented to users when they signed up for, downloaded, and used Blizzard’s service. The trial court denied the motion, finding a “reasonably prudent user would not have inquiry notice of the agreement” to arbitrate because “there was no conspicuous notice of an arbitration” provision in any of the license agreements. The Court of Appeal disagreed: the operative version of Blizzard’s license agreement was presented to users in an online pop-up window that contained the entire agreement within a scrollable text box. View "B.D. v. Blizzard Entertainment" on Justia Law

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Plaintiffs, two American Indian tribes, business entities affiliated with the tribes, and individual tribe members, sued a number of non-tribal cardrooms alleging they were offering banked card games on non-tribal land, in violation of the exclusive right of Indian tribes to offer such games. Based on those allegations, plaintiffs asserted claims for public nuisance, unfair competition, declaratory and injunctive relief, and tortious interference with a contractual relationship and prospective economic advantage. The defendants demurred and, after two rounds of amendments to the complaint, the trial court sustained the third and final demurrer without leave to amend and entered judgment of dismissal. The court ruled that, as governmental entities, the Indian tribes and their affiliated business entities were not “persons” with standing to sue under the unfair competition law (UCL), and were not “private person[s]” with standing under the public nuisance statutes. The court further ruled the business entities and the individual tribe members failed to plead sufficient injury to themselves to establish standing to sue under the UCL or the public nuisance statutes. Although plaintiffs broadly framed the issue on appeal as whether they, as American Indians, had standing to redress their grievances in California state courts, the Court of Appeal determined it was much narrower: whether the complaint in this case adequately plead the asserted claims and contained allegations sufficient to establish the threshold issue of whether any of the named plaintiffs had standing to bring those claims. The Court agreed with the trial court’s conclusion that the complaint did not do so and, therefore, affirmed judgment in favor of the defendants. View "Rincon Band of Luiseno Mission Indians etc. v. Flynt" on Justia Law

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Plaintiffs filed suit challenging the Governor's authority to concur in the decision of the United States Secretary of the Interior to take 305 acres of land in Madera County into trust for North Fork Rancheria of Mono Indians for the purpose of operating a casino. The trial court sustained demurrers by North Fork and the state defendants. In 2016, the Court of Appeal reversed the judgment of dismissal, concluding the Governor lacked the authority to concur in the Interior Secretary's determination to take the Madera site into trust. The California Supreme Court granted review and held this case pending its decision in United Auburn Indian Community of Auburn Rancheria v. Newsom (2020) 10 Cal.5th 538. The Supreme Court transferred this case back to this court after deciding that California law empowers the Governor to concur. The Supreme Court directed this court to vacate its decision and to reconsider the matter in light of United Auburn.The Court of Appeal concluded that the facts of this case are distinguishable from those in United Auburn because at the November 2014 general election California voters rejected the Legislature's ratification of the tribal-state compact for gaming at the Madera site. The court concluded that the people retained the power to annul a concurrence by the Governor and the voters exercised this retained power at the 2014 election by impliedly revoking the concurrence for the Madera site. Consequently, the concurrence is no longer valid, and the demurrer should have been overruled. Accordingly, the court reversed the judgment of dismissal and directed the trial court to vacate its order sustaining the demurrers and enter a new order overruling them. View "Stand Up for California! v. California" on Justia Law