Pro-gambling and anti-gambling forces take aim at FL compact with Seminole Tribe from different angles

By: - July 7, 2021 3:45 pm

Parx SportsBook, Bensalem, PA. Credit: CreativeCommons

Pro-gambling and anti-gambling forces appear to be united in fighting Florida’s new, high-dollar gambling compact between the State of Florida and the Seminole Tribe of Florida.

But for different reasons, of course.

Still under review by federal Indian gaming authorities, the compact ratified by the Florida Legislature in mid-May already has attracted a legal challenge from existing gambling facilities in Florida, an effort to amend the state Constitution in 2022 to allow unfettered sports betting, a local ban on new casinos in Doral, and official letters of opposition from No Casinos, local authorities, and the Florida League of Women Voters.

The newest development is a lawsuit filed in federal court against state officials last week by two south Florida pari-mutuel facilities, where gambling on card games and slot machines is permitted because they also host live betting events such as horse races and jai alai contests.

Pari-mutuel is a system of betting on races or contests in which all winners who choose competitors that finish first, second or third share the winnings. Some facilities that combine races and casinos are called racinos.

Sports betting line at the Westgate Las Vegas Resort & Casino in Las Vegas. Credit: Ethan Miller/Getty Images 2016

The lawsuit seeks to strike down provisions of the gambling compact that propose to give the Seminole Tribe exclusive control of online sports betting in Florida and to limit how pari-mutuel facilities may engage in it, should it become legal in Florida.

Online sports betting – wagering on live sporting events via mobile devices – is a multi-billion-dollar expansion of gambling that was given a greenlight by the U.S. Supreme Court in 1996 and is working its way into nearly every state in the nation.

The lawsuit filed by the pari-mutuels, and other critics of the compact, contend the agreement violates three federal laws that govern online sports betting and other gaming in all states that have gambling compacts, aka gaming compacts, with Native America tribes.

The three laws are the Indian Gaming Regulatory Act, or IGRA; the Unlawful Internet Gambling Enforcement Act, or UIGEA; and the Federal Wire Act.

In Florida, the Legislature authorized online sports betting in May and Gov. Ron DeSantis signed that legislation into law, effective Oct. 15.

However, the legislation can’t be instituted unless the federal government approves the compact between Florida and the Seminole Tribe.

If it clears all legal hurdles, online sports betting (wagering on live sports) could begin Oct. 15. Fantasy Sports betting (wagering on fantasy teams composed of athletes chosen by the bettor) would require implementing legislation, which is expected to be proposed in the 2022 Legislature.

Both sports betting and Fantasy Sports are conducted in Florida already but are not yet regulated. The markets are worth billions.

Indian Gaming Regulatory Act

IGRA, created by Congress in 1988, aims to promote the wellbeing of native American tribes by protecting their rights as sovereign nations to conduct revenue-generating gambling operations on tribal land and by requiring that states in which they operate provide adequate benefits to the tribe in exchange for the tribe paying the state a share of its gambling revenue.

Indian gaming experts say Florida is not comparable to any other state in its mix of state and federal regulations, which includes a 2018 amendment to the Florida Constitution banning expansion of gambling except by statewide voter referenda.

In the proposed gaming compact in Florida, the benefits offered to the tribe by the state in exchange for $2.5 billion in gambling revenue over the next five years are a monopoly over future online sports betting and the right to add more games in its casinos, such as craps and roulette, which cannot currently be played legally.

To facilitate online sports betting without violating Florida’s Constitutional Amendment 3 (banning expansion of gambling without voter approval), the compact proposes to “deem” that wagers placed on devices anywhere in Florida were made on tribal land by virtue of being processed through servers on tribal land.

The authors of this device call it a hub-and-spoke system, with the tribal servers being the hub and the spokes being mobile devices and pari-mutuel facilities where the wagers originate.

Monopoly on sports betting

The pari-mutuel facilities that could participate in this arrangement with the Seminole Tribe or be excluded from it would be determined by the tribe.

For Magic City Casino in Miami and Bonita Springs Poker Room in Lee County, the affiliated pari-mutuels which brought the lawsuit filed Friday, that’s a very expensive problem.

Jim Allen, CEO of Seminole Gaming and chairman of Hard Rock International, testifies to the Senate Appropriations Committee. Credit: The Florida Channel

They filed suit against DeSantis (who negotiated the contract) and against Julie Brown, new secretary of the Department of Business and Professional Regulation (which regulates pari-mutuels), after receiving a letter from Seminole Gaming and Hard Rock casinos executive Jim Allen inviting those two pari-mutuels to pursue a partnership to host sports betting in their facilities under the auspices of the tribal compact. Magic City and Bonita Springs balked at that notion.

Their lawsuit claims the compact gives the tribe unilateral power to decide whether they or other pari-mutuels can get into the potential sports betting market that is worth billions.

“[P]ari-mutuels that are unable to or choose not to enter into a marketing agreement with the Tribe are completely shut out of any opportunity to offer sports betting,” their lawsuit argues.

They want the court to find that the compact violates IGRA, which regulates gambling “on Indian lands” and not beyond, in order to void the monopoly granted to the Seminole Tribe. To “deem” that a bet is made where the server is located, regardless where the person placing the bet is physically located, is a “legal fiction” created by the compact, the filing says.

The pari-mutuels industry would prefer to engage in future sports betting without strings attached.

A campaign to amend the Constitution to legalize sports betting statewide would do exactly that, allowing commercial vendors to operate widely in Florida free of constraints related to the tribal compact.

That campaign, bankrolled by sports betting giants DraftKings and FanDuel, would ask voters in 2022 referenda to legalize sports betting statewide. It operates under the campaign title of Florida Education Champions.

Block sports betting

John Sowinski, president of No Casinos, also argues that the compact violates IGRA. In a letter to the Bureau of Indian Affairs, which is reviewing the compact, Sowinski describes the hub-and-spoke model as a “legal and practical illusion.”

Like Magic City Casino and Bonita Springs Poker Room, Sowinski contends that IGRA, the Unlawful Internet Gambling Enforcement Act, and the federal Wire Act outlaw internet betting and wagering off Indian lands. The latter two aim to restrict the transmission of wagers and money, rather than directly authorizing or prohibiting types of gambling.

No Casinos, which opposed the ratification of the tribal compact and the new legislation to implement it, is expected to mount a challenge to the compact by arguing in court that it violates Constitutional Amendment 3 by attempting to legalize sports betting without voter approval. No Casinos has announced it also opposes the new campaign to legalize sports betting by voter referenda in 2022.

The League of Women Voters of Florida also objects to the expansion of sports betting statewide via the tribal compact, saying it violates Amendment 3 if not approved in a referenda.

League President Cecile Scoon formally objected in a letter to the U.S. Department of Interior, which houses the Bureau of Indian Affairs, and asked authorities there to reject the compact.

The original version of this story incorrectly classified blackjack, which is already legal. The story has been corrected.

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Laura Cassels
Laura Cassels

Laura Cassels is a reporter, former statehouse bureau chief, and former city editor. She is a classical pianist, a Florida State University graduate and proud alum of the Florida Flambeau, an independent college newspaper.