The Shingle Springs Band of Miwok Indians owns and operates the Red Hawk Casino in Placerville, California. Photo: Red Hawk Casino

Shingle Springs Band prevails in long-running gaming contract dispute

A decade-old dispute between the Shingle Springs Band of Miwok Indians and a former gaming partner is finally over thanks to the nation's highest court.

Without comment, the U.S. Supreme Court on Monday rejected a petition in Sharp Image Gaming, Inc. v. Shingle Springs Band of Miwok Indians. The action, which came in an order list during an otherwise bad news day for Indian Country, means a state court ruling in favor of the tribe will stand.

The September 2017 decision from the California Court of Appeal for the Third District represented a big victory because it reversed a $30 million judgement against the tribe. The money was claimed by Sharp Image Gaming, which had helped open a casino on the reservation in the mid-1990s.

But since the agreements between the tribe and the firm were never approved by the National Indian Gaming Commission, a federal agency, they cannot be enforced, the court said in the ruling.

“I always believed the tribe was in the right,” then-chairman Nicholas Fonseca said at the time. Had the court not ruled in the tribe's favor, the judgement would have grown, with interest, to about $49 million.

According to Sharp Image Gaming's lawsuit, the firm loaned the tribe money and helped finance a casino that debuted in late 1996. The facility closed just eight days later amid disputes with local officials and with the NIGC, according to a subsequent decision from the federal agency.

Still, the relationship came back to haunt the tribe after it found a new partner and opened the Red Hawk Casino in December 2008. Sharp Image argued that it was owed millions of dollars as well as a share of the new facility's revenues.

The claims, however, ended up hurting Sharp Image because those kinds of arrangements are typically found only in management contracts with tribes. Under the terms of the Indian Gaming Regulatory Act, all management contracts must be submitted to the NIGC for review and approval, which never happened in this situation.

"We conclude that IGRA preempts state contract actions based on unapproved 'management contracts' and 'collateral agreements to management contracts' as such agreements are defined in the IGRA regulatory scheme," Judge William J. Murray, Jr. wrote in the 67-page decision.


The case had drawn the attention of the Department of Justice, which filed a brief in support of the federal pre-emption argument that was embraced by the court. The NIGC also issued a letter to the tribe in which the agency's chairman said the agreements with Sharp Image were unapproved management contracts.

As the case was making its way through the courts, Sharp Image lost its ability to engage in business in the state. A May 2016 decision from the California Gambling Control Commission found that the firm had provided "untrue, inconsistent and/or misleading information" about its dealings with the tribe, demonstration a "lack of good character, honesty, and integrity."

The Shingle Springs Band, meanwhile, has continued to make strides at Red Hawk, despite some rocky years following the national economic recession in 2008. The tribe ended up buying out its new partner, signing a new gaming compact with more favorable terms and refinancing its debt.

Turtle Talk has posted documents from the case, Sharp Image Gaming, Inc. v. Shingle Springs Band of Miwok Indians.

California Court of Appeal for the Third District Decision:
Sharp Image Gaming, Inc. v. Shingle Springs Band of Miwok Indians (September 15, 2017)

Related Stories:
Supreme Court delivers bad news to tribes as term draws to a close (June 25, 2018)
Shingle Springs Band wins reversal of $30 million judgment in gaming dispute (September 18, 2017)
Ex-manager for Shingle Springs Band's casino told to pay $2.4M (September 12, 2014)
Shingle Springs Band makes big strides in finances at casino (August 30, 2013)
Shingle Springs Band takes more control of finances at casino (August 13, 2013)
Judge rules against Shingle Springs Band in casino dispute (February 27, 2012)

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