Scotts Valley Band Sues Interior Over Vallejo Gaming Reversal

The Scotts Valley Band of Pomo Indians has asked a federal court to restore the gaming eligibility of its Vallejo property, filing suit against the U.S. Department of the Interior on August 7 in the U.S. District Court for the District of Columbia. The complaint challenges a July 30 departmental decision finding that the tribe's North Bay parcel does not qualify for gaming under the Indian Gaming Regulatory Act — a reversal that closed a modular preview casino roughly a week after it opened its doors.

The sequence was unusually compressed. The tribe began welcoming invited patrons to the temporary facility near Columbus Parkway on July 25. By the first days of August the building was dark, after Interior withdrew the eligibility determination that the department had issued in January 2025. The Scotts Valley Band lawsuit asks the court to vacate that reversal and, separately, seeks a preliminary injunction that would let the interim facility reopen while the merits are litigated.

At issue is the "restored lands" exception in Section 20 of IGRA, one of a narrow set of pathways that allow gaming on land acquired in trust after October 17, 1988. The department's decision concluded that the tribe had not demonstrated a sufficient modern and historical connection between the Vallejo site and the community's aboriginal territory. That is the same evidentiary standard that has become the principal chokepoint for off-reservation projects across the country, and it is explained in more depth in our overview of IGRA's Section 20 exceptions.

Why the Scotts Valley Band lawsuit matters beyond Vallejo

Reversals of prior federal gaming determinations were once rare enough to be treated as outliers. They are no longer. Interior has revisited several off-reservation eligibility findings over the past year, and each reconsideration has arrived after tribes and their capital partners committed real money to entitlement, design and site work. The Vallejo project has been described in public filings and press accounts as a development in the $700 million range once fully built out.

That is the part of the story lenders are watching. A determination letter from the Assistant Secretary for Indian Affairs has historically functioned as the milestone that unlocks construction financing: the moment when land-use risk is understood to be retired and the remaining questions are compact terms, construction cost and market performance. If those letters can be withdrawn years later — and after a facility has opened — the risk profile of a whole category of projects changes. We examined that repricing dynamic in our analysis of Interior's fee-to-trust reversals and off-reservation risk.

The practical question the court will confront is not only whether the department read the record correctly, but how much deference an agency receives when it reverses itself on a factual determination the applicant has already relied upon.

The tribe's request for preliminary relief adds a second dimension. Injunctions in this posture turn heavily on irreparable harm, and a shuttered facility with a hired workforce presents a more concrete injury than a paper dispute over a future opening date. Whether that is enough to overcome the government's interest in enforcing its own eligibility finding is a question the district court will address on its own timeline; nothing in the filing guarantees an early ruling.

California's crowded North Bay context

Vallejo sits at the edge of a Bay Area market that several tribes have identified as the last large underserved population center in California. Sonoma and Solano county projects have advanced on overlapping timelines, and intertribal opposition has been a persistent feature of the record — neighboring tribes with existing operations have consistently argued that new entrants dilute exclusivity value that their own compacts were built around.

That opposition is not incidental to the legal question. Section 20 determinations draw comment from surrounding tribes, local governments and state officials, and the administrative record assembled from those comments is precisely what a reviewing court will examine. The department's reconsideration cited the historical-connection element specifically, which is the element most sensitive to competing expert submissions about aboriginal territory and post-contact community history.

For readers tracking the earlier phases of this dispute, our coverage of the preview casino's opening sets out how the interim facility was structured and what the tribe expected the permanent resort to include.

What to watch next

Three procedural markers will define the next several months. The first is the government's response to the injunction motion, which will reveal how vigorously Interior intends to defend the substantive historical-connection analysis as opposed to arguing that the tribe's remedy lies in a renewed administrative submission. The second is whether the court consolidates the injunction question with the merits, a step that would compress the schedule but delay any interim reopening. The third is whether other tribes with pending or recently granted Section 20 determinations seek to participate as amici, which would signal that the industry views the case as precedent-setting rather than site-specific.

There is also a compact dimension that remains unresolved. Eligibility under Section 20 is only the first gate; Class III operation additionally requires a compact with the state or secretarial procedures. Tribes navigating both tracks simultaneously face the risk that progress on one is neutralized by a setback on the other. Our legal guide walks through how the two approvals interact and where each can stall.

For now, the Vallejo site is entitled but not operable, and the tribe's near-term revenue expectations have been removed from its planning horizon. The broader signal for Indian country is more sobering than any single balance sheet: the durability of a federal eligibility determination, long treated as settled once issued, is now itself a litigated question. How the District of Columbia court answers it will shape how developers, tribal finance officers and rating agencies price the next generation of off-reservation proposals — and whether the phased, open-early model that several tribes have adopted survives as a viable market-entry strategy.