: As listeners know, I am not a lawyer, which means that I can tell you all about the various Cal-She legal dramas, but the insights can only go so deep. Thankfully, we've got International Masters of Gaming Law president and Jones Walker partner Mark Dunbar on hand to give us a deep dive into what is at stake in the Cal-She case and where to keep your attention focused as the saga now expands to six different courts with a wide range of opinions. You're not going to want to miss today's episode of iGaming Daily. iGaming Daily is brought to you by OptiMove, the number one CRM marketing solution for the iGaming market. Mark, so happy to have you here. And we had kind of timed this based on the third circuit, but I don't think our timing could have been better given what is going on in Maryland now. Perfect timing. You don't know what curveball is coming next week, but it is perfect timing on this. So quick, just setting the stage on this. You know, for those, I think who've been living under a in a cave, under a cave. We're at four lawsuits and counting, all just generally challenging Cal-She's sports contracts in general. We got really quick answers out of Nevada and New Jersey. Why did Maryland take so much time? I think it's the crescendo, the volume. When it came time for the briefs and I, you know, federal judges or political animals, they know what's going on. They know what's going on in other circuits, particularly cases, a huge profile. And I think they started to look at this and said, hold on just a second. We need to take a little bit more time and realize what's going on in the marketplace. And I think that this is just a function of the noise level. has gotten very noisy. We've got now a California one that's kind of taking the tribal angle on this. For those. non-lawyers like us that kind of want to understand it, but maybe don't need to get super in the weeds. Is there just kind of one big legal argument that this all is going to hinge on, or is it going to be these teeny tiny or not teeny tiny, but just a multitude of things, the wire act and IGRA and whatever? All of the teeny tiny's will be in there, but at the end of the day, this is going to be a big macro issue decided on the equities. of the marketplace. That's ultimately what's going to happen. Typically, when you see cases like this, the judges will have to get on to the nuanced legal arguments, but they will will back up as I think Maryland has started to do and say, what is going on in the national marketplace? What are the things that we should be considering that are sort of outside the nuanced legal arguments and are affecting society as a whole? And I think that at the end of the day, this this case is going to go up probably all the way to the Supreme Court, and it is going to be based the outcome is going to be based a lot more on what are the equities, what are sort of the common sense things that should apply to this industry and less so nuanced little wrinkles of field preemption or express preemption or conflict with IGRA, things like that. think they're going to, I think they're going to try and deal with something in the macro, not unlike what they did when they rendered the Catasone case that led to the passage of IGRA. So in other words, they're seeing, OK, this is really not what this is. This should be. So how do we solve this problem versus, OK, well, the special rule is is an if if and not an if then or the grammar debates. It's going to be more just like this is sports betting. So what do do here? That's exactly right. And they will use the smaller arguments to be the the number of legs they need to put under the table. to support the overall argument that is this is sports betting, is nationwide sports betting. What should we do or what guidance should we give the policymakers to resolve the issue ultimately to make sure that there's a sound regulatory structure that is the backbone of a nationwide sports betting industry. So looking at the Maryland one, I did think it was interesting that he basically, Judge Abelson in saying The Maryland decision wasn't on the case for those listening, especially the Brits. None of these are decisions on the case. It is a decision purely on whether or not CalGy can basically just stay online while the case moves forward. But with those, you have to prove you stand a reasonable chance of winning the case. it, yeah, I guess that's a good question for you. With these injunction rulings, like how often do you win the injunction and then lose the case? Oh, it happens more than you realize, but it is a it is a good initial tip on what the judge's initial reaction is. And a lot of times these judges, they don't have a lot of time when they're presented with these preliminary injunctions to really take a macro look. And that's what I think that's what I was saying. I think the noise level led to a much bigger macro look in Maryland and then Nevada or New Jersey was presented. And, you know, most judges will say, look, We want to preserve the status quo for people in commerce to make sure that we do not adversely impact a business. so rendering temporary injunctions so that they can then take a deep breath and look to see what is really going on is not unusual. But what is also not unusual is the fact that those injunctions result in a legal loss as opposed to a legal victory. Because you think, oh, my gosh, they said that we're going to put an injunction in place because We feel there's a substantial likelihood of success on the merits, which is an important legal standard you have to get the injunction. So you think the judge has already tipped. Well, no, not necessarily. It's just a gut reaction to what would happen if I don't put this in. Will this company go out of business? And that, think, is what you saw in the early cases. Gotcha. I mean, It was interesting reading the Maryland one. commented to a friend, I was like, I love that Cal she describes the idea of geo location. Like it's asking them to build a time machine or something just absolutely insane. was just like, I don't, it doesn't seem that hard, you know, keeping in mind, you know, this is an incredibly sophisticated. tech platform back by tech bros from Silicon Valley that looked at it and said, Hey, this, this is worth throwing money at an interesting tech solution. And all of a sudden they feel like geo geolocation is something that Silicon Valley can't seem to figure out. Yeah. It is interesting. So with the Maryland one, we know that the lottery has kind of said, listen, we'll give until the next court date, which I believe is like the 13th before we really take any action on this. But. Part of this argument is that, is there merit too that you would be violating some of what you agreed to with the CFTC if you geolocate a state out of what you offer? Yeah, that's a good question. And it's a question that frankly, I don't think that there is precedent for. I you got to go back in time. And this is important, I think, for the listeners to realize that the CFTC and the concept of swaps and derivative trading actually has its roots in early gambling law. And so if you go back to the turn of the 20th century, when futures trading started on commodities, whether it was cotton or wheat, there actually was an entire body of litigation and law that basically said, we will recognize that Chicago can trade commodities, but we're not going to let it happen in Louisiana because Louisiana views that as gambling. And so you had a lot of very interesting cases that were going on all the way up until the 30s when federal government started to step in and create this amorphic, I don't say amorphic, but started to take what was an amorphic industry and put some structure around it. And then that led all the way up to the early 1970s when the CFTC and its precursor were sort of put in place. And the argument was that now, okay, you have full preemption of commodities trading to the federal government so that the futures trading on commodities could thrives in the United States. Now, why is all of that relevant? Well, all that's relevant is because we're coming full circle back around to essentially what this legal underpinning was when futures trading began to begin with, which was people recognized that it was gambling and states said it is gambling in our jurisdiction and therefore we are going to reserved the ability to prohibit it. these are bucket shop laws, the ones you're talking about from, okay. I know this because in the oral arguments on the election betting case, it did seem like the panel of judges in the Third Circuit asked a lot of questions around this. So as we get into these, you we've got two oral arguments coming up now. Do you think that given it's the same circuit, these kinds of questions are going to come up again? do. I think we're going to hear a lot of legal history around bucket shops. I think that that's going to matter a lot. And I know that I call this sort of the legal relief act for the members of the International Masters of Gaming Law. I have more colleagues involved in this and more clients involved in this. It's crazy watching. But I think that there is going to be a lot of that in the chatter that I'm hearing at conferences and the chatter I'm hearing outside of legal hearings and stuff is we are going to be bringing that up. And there's also another interesting twist on this. I was part of the legal group that sort of created the advanced deposit wagering industry in the United States. And one of the aspects of that had to look at some of these early bucket shop litigation that happened in the early 1900s. And during that, we were essentially forming an entire legal industry on where the wager was accepted and was the wager accepted in a state where they expressly determined that it was legal. And did the Interstate Horse Racing Act essentially preempt the field? And so those two things married up to create the nationwide ADW market so that you have legal horse racing, interstate horse racing going on across the United States. And that is a stark contrast to what Cal-She is arguing here. There is no interstate swaps of law. And that has an express field preemption, in my opinion, like you have with the Interstate Worst Racing Act. And you also don't have state laws that have stepped forward and said we are firmly going to legalize this activity in our jurisdiction so that you could argue that, well, it's accepted in Oregon, it's legal in Oregon, therefore it's OK in Oregon. Yeah, you mentioned this doesn't get as much play. think this was our first conversation when we first met that Churchill Downs challenging. Michigan's kind of ADW set up in need for licenses. Similar, it's they are saying, you know, the IHA preempts what you're doing. so far that has been very cut and dry. Every judge to date, including the appeals court this week on the injunction, are like, yeah, this pretty obviously preempts this. it doesn't seem like there's nearly the nuance and debate that we're seeing elsewhere. And oddly, I can see the ruling in that case being inserted into the discussion again, as this moves up to the federal circuits of appeal and ultimately the Supreme Court, I can see the legal rationale that might come out of Michigan could have some bearing on ultimately how federal circuits view the Cauchy case, because you do have this novel argument of an interstate wagering platform and whether or not a state can stomp on it or not. OK, so I get told by people on the the event contracts, I do like these don't really interplay all that much, even though you're seeing a lot of the same terms in terms of preemption. But I mean, you wouldn't think like an abortion pill case necessarily works that way either, that it does seem like one that at least people would be keeping their eye on. Yeah, I think a lot of people are reading the the the calcium fundraising memos, you know, the the the as they raise more money to scale their platform. There's a there's a lot of that in there. But I will tell you, I mean, look, they have a case of first impression. I mean, it is that there are some good arguments there. There is some grounds for their pathway, particularly if you look at the history of litigation that led to the Indian Gaming Regulatory Act. But you have an overwhelming body of of of law that started. I believe with the Interstate Horse Racing Act and with the Indian Gaming Regulatory Act, and even in a weird way with the Unlawful Internet Gaming Enforcement Act and the WIRE Act out there, there's so many hoops that, and I think the Maryland judge realized that, that there are a number of nuanced issues out there that stand for this basic proposition. Interstate gambling is something that we are not going to go lightly into. And we have a federalist system of government and a state's determination of what is and what is not gambling has been the way it always has been. And I just don't see a body of judges stomping on that federalist framework, particularly when you get to the US Supreme Court. You have what I would say is a 7-2 overwhelming majority in favor of a states' rights system right now. Because one of the liberal judges has weighed in on in support of states in some of these issues. I think that she will probably not take the cal she argument in my opinion, because it would essentially create a deregulated federal gambling market, which I don't think anybody's going to subscribe to. I was looking through the response or the amicus briefs in the Third Circuit supporting Kalashii. And there is one from 10 members of Congress that were around for the passage of the Dodd-Frank Act. And I know we've seen that excerpt with Senator Feinstein and Senator Lincoln where it's, you know, no, the intent is not gambling. know, Senator Lincoln is one of these people and they've said, you know, the intent of Congress, you can only read so much into the lawmakers themselves. How impactful is it that these 10 people kind of got together and put together a brief to say, no, no, we meant for this to happen? Well, it's led by somebody that had to disclose that they have a financial interest in the outcome. you begin with that. And I will say that having been in constitutional litigation and statutory interpretation litigation where people have tried to submit testimony of lawmakers, the vast, vast majority of courts just throw that out. They really don't care about it after the fact opinion. They will look at the internal discussions if they truly believe that there is some confusion. But you got to remember the federal courts now for the most part are dominated at least on the right, you know, with the right judges, with people that subscribe to the Scalia view of statutory interpretation. And it is, I don't care what they said during the debate. What do the words mean that they wrote? And so I don't think again, I'm projecting ahead to the Supreme Court. that you do not have a majority of judges that are going to say, oh, well, Senator Feinstein during a committee meeting said such and such. And all of a sudden that's going to be overwhelmingly persuasive on, let's go ahead with a deregulated national sports betting marketplace. just don't think that's. And the other part about it is this concept of self-regulation. you look at where the federal government and state governments agree to industries moving forward with self-regulation, doesn't involve the sin industries. I mean, they don't let that happen for tobacco or they don't let it happen for alcohol. mean, like RV manufacturing is a good example of something that is a self-certified industry. This is a little different than a fifth wheel that's rolling down the highway. You look at granted polymarket, not CFTC, but you look at some of the contracts there and the WNBA events of this week and you kind of were just like, oh yeah, that is not gonna end. That is not what the intent of this is. This was about ensuring that if there was a drought, my corn was still worth something, not this. Yeah, I don't think Senator Feinstein's comments were intended to address the polymarkets on the WNBA. Yeah. You mentioned the Supreme Court is where this goes for all of us that are trying to kind of follow everything. What's the pathway to get there? Is it going to be the injunction appeal in the third circuit? I don't think so. you look at what happened with the PASP litigation, the Supreme Court does not like to take cases that aren't fully developed and have a good record. I could see it going up and being review denied. I could see it going up and even having some guidance given on the injunction law if they feel like it was inappropriately applied. I look at the past litigation as really a guide to how this is going to work because the Supreme Court is going to be, oh my gosh, there's gambling going on. That's not going to make them accelerate this. I mean, we have a lot bigger issues like how are the congressional districts going to look? And they deferred that a year. I mean, I think that the Supreme Court will, if there are these extraordinary petitions to get in front of them, we're going to continue to slap them back and encourage the the federal trial courts to develop a good record for the appellate circuits to review. And then what I think is going to happen is I think the appellate circuits just from a timing standpoint are going to stage this to where they can look to see what their brethren rendered. And it's very, very possible that, let's say, Maryland sprints ahead of New Jersey. and gets into the fourth first and the fourth comes out and says, no, this is sports betting. This is not okay. That all of a sudden the ninth and the third say, we're going to adopt that opinion. And then, and then it goes up and it's cert denied by the Supreme court and the law of the land is what the fourth set. That's very possible, but you're two years away from that in my opinion. Wow. I think for those of us that are like, I don't know, I mean, you're going to have to wait until at least October, November. But even then, once you hear something from the third who's going to do oral arguments on September 8th, I believe it is, it's still going to be status quo for a while or? think it can be status quo for a while. I really do. I think that each one of the circuits is going to allow it to play out so they can develop a decent record. That's you know, and like I said, These judges and their clerks can accelerate things, you still, the docket volume is the docket volume for these judges and the ability to process this and then get it up in front of a circuit court of appeal. I mean, let's just say we get an opinion by January. To be able to brief that in the third and argue it, you're not going to get an opinion on a third until probably the following spring. And that's... You know, it's just a function of docket process. And if there are intervening appeals and procedural issues that delay the review for whatever reason, it just makes it that much longer. Remember how long it took for PASPA to get to the Supreme Court? Years and years. So I think that it's going to be choppy, I believe. And separate and apart from it, behind the scenes, you have the chairman whose nomination people are seem to be forgetting to put on Senate agendas. So it's also possible, even though even though the initial reaction to Trump administration was not to appeal, it is possible the CFTC could he could pull that appointment and the CFTC could all of sudden change their mind again, which impacts everything. And the amount of lobbying that's going on the Hill is considerable. to the listeners, I'll remind them of Black Friday. What was the difference between Black Friday and the fantasy sports with FanDuel and DraftKings? The investors and FanDuel and DraftKings had the cell phone numbers of the chief of staff of the White House, the attorney general of United States, and a whole bunch of US senators on the Senate Judiciary Committee. Poker stars and their brethren did not. Yeah, that was- this particular instance, You know, they're while the tech bros certainly have some of them, the A.J. and the the Indian Gaming Association, which is almost never unified. Right. You know, they they have considerable political clout and they are bringing it right now. So I could see a curve. The next curve while coming comes from the administration does not come from a court. Yeah. The appointment stuff. It's very funny to me that the gaming side is like this guy is just. He's kind of out there and it's going to be a free for all. And then the crypto side is like too conservative, not good enough, need more. It's funny that we have magically aligned on this where you've just fully come full circle. All right. We're running up short on time. So my last question for you is, so every case kind of just keeps moving forward, you think, or is there some consolidation like for Cal-She? What's the benefit of doing this? You know, being the plaintiff in three different places. I'm in market, you know, I mean, they're making money, right? So the longer you're in market, the better you are. always tell people that, you know, in this really is over and, you know, more brick and mortar. But if you can get a slot, if you can get a casino open and you can get that first coin drop, it's very unlikely that you're ever going to have government shut it down. And so Koushi's in the marketplace. And so the longer they're in the marketplace, you know, and the better they're able to just kind of continue to rock along and show that they're good, good, you know, responsible, operating sports betting company, you know, the longer the better for them, frankly. And to my brethren in the IMGL, you know, it's going to be a lot more legal work. could be good Christmas bonuses. I have great confidence. Yeah. I mean, I appreciate all of the insight. Extremely illuminating. bit disheartened to think about just how much more of this I'm going to be writing on the horizon for the next two years. Oh, For your law degree, Jess. I know I'm going to have to like sneak into more IMG sessions and get ready because I got asked on a panel, what did you wish you knew seven years ago that you know now? And I was like that I should have just gone to law school then. Basically, that's right. And some more stuff we'll be talking about in Lisbon, no doubt. Oh, yeah. IMGL co-located in Lisbon during our big event. So we will see you guys there. Mark, can't wait to see you in person. And I'm sure there will be some big decisions that are creeping us closer to some sort of progress in this case to go over when I do. So thanks so much for joining us and thank you guys for tuning into iGaming Daily.