Scotts Valley Casino Plan in Vallejo rejected by U.S. Interior Dept.

Interior's ruling centers on the IGRA "restored lands" exception, a narrow legal pathway that allows certain tribes to conduct Class III gaming on newly acquired trust land if they can show a significant historical nexus to the area. In its decision, Interior stated the tribe "has not demonstrated a significant historical connection to the lands in Vallejo," a conclusion that blocks the tribe from negotiating a Class III gaming compact with the State of California.

Opposing Tribes Applaud the Decision

A coalition of tribes that have opposed the Vallejo project for years welcomed Interior's determination, saying it validates their longstanding position that Scotts Valley is historically tied to Lake County, not the Bay Area.

"This decision confirms what we have said from the beginning - Scotts Valley has no ancestral ties to Vallejo," an opposing tribal representative said. "The restored lands exception exists to protect legitimate tribal homelands, not to justify speculative casino projects."

Opposing tribes submitted extensive historical, anthropological, and genealogical evidence challenging Scotts Valley's claim to ancestral ties in Vallejo, prompting Interior's reconsideration and ultimate rejection.

Class II Casino Remains Legal

Despite the setback, the tribe's Class II gaming facility - a temporary modular "preview casino" recently opened on the 128-acre trust parcel - is not affected by Interior's decision. Under IGRA, Class II gaming (bingo-style electronic machines) is permitted on any land held in trust, without a federal gaming eligibility determination or a state compact.

The land remains in trust, and Interior did not issue any prohibition on Class II gaming. As a result, the preview casino may continue operating while the tribe evaluates its next steps.

A Scotts Valley spokesperson said the tribe is reviewing the decision and considering its options.

"We are disappointed in Interior's conclusion and are evaluating all legal avenues," the spokesperson said. "Our Class II facility remains open, and we will continue serving the community while we determine our next steps."

Long-Term Casino Plan Stalled

The tribe's long-term vision for a full-scale casino resort - including slot machines, table games, and a hotel - is now effectively blocked unless the decision is overturned in court.

The ruling follows years of litigation and administrative back-and-forth. A federal judge previously vacated Interior's 2025 rescission of an earlier approval, finding the agency had violated the tribe's due-process rights. That ruling forced Interior to revisit the matter, ultimately resulting in this week's final denial of Class III eligibility.

Local Agreements Remain in Place

The City of Vallejo's municipal services agreement with the tribe - covering public safety, administrative fees, and nonprofit contributions - remains active. The agreement includes:

• Approximately $402,000 per year for municipal services
• A $100,000 activation fee
• At least $100,000 annually for local nonprofit support

City officials have not yet commented on how Interior's decision may affect future development plans for the site.

"The municipal services agreement is tied to Class II operations, which are still allowed. We expect the tribe to continue meeting its obligations," a Vallejo city staff member said.

What Comes Next

Scotts Valley is expected to challenge the ruling, potentially setting up another round of federal litigation. Opposing tribes are likely to intervene to defend Interior's decision, continuing a dispute that has stretched more than a decade.

For now, the tribe's Class II preview casino remains open, while the path to a full Class III resort has been closed - at least temporarily - by the federal government's final determination.