A California tribe's invite-only casino opened on July 25 and shut down by August 1 after the Interior Department reversed federal gaming approval, leaving a $700 million resort project in limbo.
The Scotts Valley Band of Pomo Indians, a Lake County, based tribe, had spent years planning an ambitious 160-acre casino resort near Interstate 80 and Columbus Parkway in Vallejo, California. The development was supposed to include an eight-story casino, two dozen homes, and a 45-acre biological preserve. The federal government initially approved the Vallejo site for gaming at the beginning of 2025. By late July, the tribe was welcoming invited guests into modular buildings for a preview of what was to come.
Seven days later, it was over. Assistant Secretary for Indian Affairs William H. Kirkland III issued a written decision ruling the Vallejo property did not qualify under the "restored lands" exception of the Indian Gaming Regulatory Act, the federal law that governs where tribes can operate casinos. The tribe, Kirkland determined, had not demonstrated the required historical connection to the land.
The restored lands exception exists to let tribes conduct gaming on land that has been returned to them, but only if the tribe can show a meaningful historical tie to the property. The Interior Department concluded the Scotts Valley Band failed that test.
Kirkland wrote in the decision:
"Consequently, the Vallejo parcel does not qualify as restored lands within the meaning of applicable law, and the Band may not conduct gaming on the parcel pursuant to (the Indian Gaming Regulatory Act's) restored lands exception."
That language leaves little room for ambiguity. The federal government first approved the site, then reconsidered whether the property actually met the legal requirements, and decided it did not. The reversal came after the Yocha Dehe Wintun Nation, another California tribe, challenged the Scotts Valley Band's claim to the land. The Yocha Dehe argued the Vallejo site sits within the ancestral territory of the Patwin people, not the Pomo Indians.
So the federal government gave the green light, the tribe started building, opened the doors, and then Washington pulled the rug.
Scotts Valley Band Tribal Chairman Shawn Davis did not accept the decision quietly. He framed the reversal as unsupported by the record and signaled an immediate legal challenge.
Davis told Tribal Business News:
"The administrative record overwhelmingly supports the Tribe's gaming eligibility. We will move quickly to challenge the decision in federal court."
Whether that challenge has been formally filed remains unclear. Davis did not specify which federal court the tribe plans to use, and the specifics of the tribe's evidence for a historical connection to Vallejo have not been made public. What is clear is that a $700 million project, one that would have transformed a stretch of Vallejo near a major interstate, now sits frozen while lawyers prepare briefs.
The Scotts Valley Band's collapse is not happening in a vacuum. California's tribal gaming market generated a share of the $46.2 billion in tribal gaming gross revenue recorded nationwide last year, and the state's approach to tribal compacts has drawn criticism from within the gaming industry itself.
Governor Gavin Newsom recently signed a new 25-year gaming compact with the Fort Mojave Indian Tribe, allowing that tribe to operate up to two casinos with as many as 1,200 slot machines and other Las Vegas-style games on eligible trust land in San Bernardino County. But unlike previous deals, the Fort Mojave compact no longer requires revenue-sharing payments to the state. The tribe would primarily cover regulatory costs and contribute a small portion of gaming revenue toward local impact mitigation, but only if it operates more than 350 gaming devices.
Kyle Kirkland, president of the California Gaming Association and owner of Club One Casino in Fresno, argued the state is walking away from serious money. He said:
"[California] is actually giving up billions annually. In the short run, in any other state they would be giving up to 10% to 50% of slot revenue."
Other states negotiate revenue-sharing deals that return 10 to 50 percent of slot revenue to state coffers. California, under Newsom's compact with Fort Mojave, settled for far less. That is a choice, and taxpayers are the ones who absorb the difference.
Set the two developments side by side and the picture gets harder to defend. On one hand, the Interior Department reversed an approval it had already granted, shutting down a tribe's casino after it had physically opened. On the other, the governor signed a generous new compact with a different tribe that asks almost nothing in return for the state.
The Scotts Valley Band invested in a 160-acre site, erected modular buildings, and hosted guests, all on the strength of a federal approval that turned out to be temporary. The tribe now faces the prospect of a prolonged federal court battle to salvage a project worth $700 million. Meanwhile, the Fort Mojave compact sails forward with terms that critics say shortchange California's budget by billions.
None of this inspires confidence that the process is stable, predictable, or fair. A tribe that followed the federal approval process and began operations in good faith got reversed in a week. A separate compact that surrenders significant state revenue got the governor's signature without comparable scrutiny.
When the rules change after the doors open, and the deals that do go through leave taxpayers empty-handed, the system is not working for the people who are supposed to benefit from it.