The Seminole Tribe’s landmark new 30-year gambling compact with the state of Florida has passed federal scrutiny.
It did so by avoiding federal judgment. The Department of the Interior informed the Tribe and State of Florida on Friday that it would take no action in ascertaining its legality, letting the deal bringing legal sports betting to Florida pass into law without a verdict as the 45-day consideration period ended.
That doesn’t mean this is over and that sports betting in Florida will launch on Oct. 15, as the Seminoles and Gov. Ron DeSantis hope.
The wrinkle in this compact remains the fact it would grant the tribe the right to offer mobile sports betting beyond its six casino properties and tribal lands. This prospect has been heavily hypothesized by industry observers as contrary to the word and precedent of the Indian Gaming Regulatory Act.
But by not ruling either way, the DOI and Bureau of Indian Affairs have effectively allowed the federal courts to decide if this game-changing deal is legal. And there will be plenty of challenges and challengers in what figures to be a lengthy process.
Here’s the letter from the feds to the Seminole Tribe.
While most analysts agree retail sportsbooks at tribal casinos will pass muster, online sports betting is much more speculative.
“The final approval of this historic gaming compact is a big deal for the State of Florida,” said DeSantis. “This mutually-beneficial agreement will grow our economy, expand tourism and recreation and provide billions in new revenue to benefit Floridians. I again want to thank Seminole Tribe of Florida Chairman Marcellus Osceola Jr., Senate President Wilton Simpson and House Speaker Chris Sprowls for their part in getting this done for our great state.”
How Department of Interior justified non-decision
DOI justified not striking the controversial mobile sports betting provision by describing IGRA as a document meant to flex with modern technology and provide native tribes with opportunity to exploit them. But mainly, it contended, that Florida legalized sports betting in conjunction with the compact and bargained to allow the Seminoles to offer it, the letter said, the matter was beyond federal purview.
Opponents will certainly dispute this vigorously.
The Department of the Interior explanation:
“In examining the permissibility of mobile sports betting under IGRA as a novel matter, the Department seeks to uphold the intent of IGRA and notes that:
1) evolving technology should not be an impediment to tribes participating in the gaming industry;
2) the pursuit of mobile gaming is in-line with the public policy considerations of IGRA to promote tribal economic development, self-sufficiency, and strong tribal governments; and
3) the purposes of IGRA would be served through the improvement of tribal-state cooperation in the regulation of mobile wagering.
Until recently, compact review under IGRA was limited to “brick and mortar” gaming facilities located on Indian lands, with both the player and the bet taking place in one physical location. By virtue of internet gaming, however, the player can be in one physical location and the server – which facilitates the wager – can be in a separate location, creating ambiguity as to the physical location where the wager occurs.
“Until recently, compact review under IGRA was limited to “brick and mortar” gaming facilities located on Indian lands, with both the player and the bet taking place in one physical location. By virtue of internet gaming, however, the player can be in one physical location and the server-which facilitates the wager-can be in a separate location, creating ambiguity as to the physical location where the wager occurs.
“Courts and agencies have previously examined tribal use of the internet for gaming, finding that such an offering was impermissible under IGRA. However, those cases presented scenarios where tribal internet wagering was not done with the consent of a State pursuant to a tribal-state compact; and, in some instance, where state law prohibited the contemplated form of online gaming.
“Here, both the Compact and the State law authorize the Tribe to engage in mobile sports betting and provide that the gaming takes place on Indian lands where: (1) the Tribe owns and operates the gaming, (2) the server is located on Indian lands; and (3) the player is located within the geographic bounds of the State.”
Earlier, the letter described the Seminoles as holding an “exceptional bargaining position” in Florida and noted their “incredible success story” made possible “through a mix of business savvy and shrewdness.”
“Today is a great day for the people of Florida, who will benefit not only from a $2.5 billion revenue sharing guarantee over five years, but also from statewide sports betting and new casino games that will roll out this fall and mean more jobs for Floridians and more money invested in this state,” said Marcellus Osceola Jr., Chairman of the Seminole Tribe of Florida. “We thank Governor DeSantis, President Simpson, Speaker Sprowls and the Florida Legislature for their leadership and hard work.”
Background on the Seminole Tribe’s Florida deal
In April, the Florida Legislature approved a compact with the Seminole Tribe that hardened its virtual monopoly on gambling in the state even further with the addition of sports betting. In exchange for $500 million revenue share payments, the tribe was to be granted the right to offer craps and roulette in its casinos, retail sports betting at tribal casinos and statewide via mobile and online.
The Seminoles have the option to exclusively offer mobile betting through its Hard Rock Digital platform and also subcontract to pari-mutuel entities in the state through marketing agreements. The DOI expressed concerns with this aspect, writing “IGRA requires that a tribe have the sole proprietary interest in, and responsibility for, the tribal gaming operation to ensure that it receives the primary benefit of its gaming revenue, consistent with IGRA’s statutory goals. … the Department does not endorse the marketing agreement arrangement provided in the Compact.” By not ruling against the compact, the Seminoles still have the right to make these deals or keep the whole market for themselves.
Legal observers immediately noted that the provision allowing a tribe to offer state-wide sports betting through the auspices of a compact was fraught with legal tangles, unprecedented under the Indian Gaming Regulatory Act and therefore likely not to pass muster of the Department of the Interior’s Bureau of Indian Affairs. In Arizona and Michigan, native tribes had gained similar state-wide access by agreeing to deals outside of their compacts.
Even if the DOI struck down the mobile aspect of the compact, the Seminole Tribe, through its Hard Rock brand would still have the right for the next 30 years to offer sports betting in its casinos.
“At this point, all focus for the Seminoles is to get sports betting up and going in roughly the next 70 days,” Brendan Bussmann, Director of Government Affairs for Global Market Advisors told PlayUSA. “Time will tell on whether the courts intervene before the start occurs in mid-October but once the genie’s out of the bottle, it is hard to put him back in.”
National powers arm the rivals in Florida sports betting fight
Outside forces began wrangling for bargaining positions and a spot in line to file lawsuits in the weeks after the state of Florida submitted the compact to DOI in late June. Magic City Casino and Bonita Springs Poker Room in South Florida filed a federal lawsuit in July claiming the basis for the compact was “legal fiction.”
Miami Beach Mayor Dan Gelber has petitioned the DOI to deny the compact’s legality.
The so-called Florida Education Champions PAC also sprung up in Florida with the stated purpose of legalizing sports betting off tribal lands with funds directed toward the seemingly noble purpose of funding education. The effort has been bank-rolled predominantly by DraftKings and FanDuel, two of the largest sportsbook operators nationally who like their competitors would like an entry point into a state of nearly 22 million residents. F
Florida Education Champions seeks a ballot initiative to revisit sports betting statewide.
The Florida-based No Casinos organization has also been an ardent foe of the compact. Group president John Sowinski testified before legislators during compact deliberations that the right to build new casinos included in the package is contrary to a successful 2018 referendum that requires all expansion of gambling in Florida to be approved by voters. Sowinski said after the compact was signed that his group was “interviewing lawyers,” but No Casinos hadn’t filed suit yet on Friday.