Florida sports betting goes up in smoke with Federal court ruling
Judge reveals “affirmative duty” to reject Seminole Tribe compact on grounds it violates Indian Gaming Regulatory Act
Florida’s sports betting ambitions have been dealt a hammer blow after a US Federal Judge threw out the Sunshine State’s compact with the Seminole Tribe on the grounds it violated the Indian Gaming Regulatory Act (IGRA).
Issuing a 25-page opinion on the compact, US District Judge Dabney Friedrich ordered the “vacation” of the highly controversial compact signed by the state and the tribe in August.
The opinion affirms claims made in a lawsuit by two of the state’s parimutuel operators; Magic City Casino and the Bonita Springs Poker Room, that the compact violates IGRA because it allows the Seminole tribe to take bets off of its existing tribal lands.
The parimutuel pair contend that in allowing sports betting to proceed under the compact, the state will cause them to incur financial losses, as well as violating the Unlawful Internet Gambling Enforcement Act (UIEGA) and the Wire Act.
In considering the lawsuit, Friedrich asserted there was a “substantial probability” that authorising online gambling would cause the parimutuels competitive injury under US law.
She also ruled that the Seminole Tribe could not intervene in the proceedings to preserve its sovereignty, as it was not an ’indispensable’ party in any legal argument.
“On the merits, it is well-settled that IGRA authorises sports betting only on Indian lands,” Friedrich wrote.
“This requirement stems from IGRA, which authorises the Secretary to approve compacts “governing gaming on Indian lands.
“Indeed, if there were any doubt on the issue, the Supreme Court has emphasised that ‘everything—literally everything—in IGRA affords tools . . . to regulate gaming on Indian lands, and nowhere else’.
“It is equally clear that the Secretary must reject compacts that violate IGRA’s terms.
“The D.C. Circuit addressed this very issue in Amador County v. Salazar, which held that IGRA imposes ‘an obligation on the Secretary to affirmatively disapprove any compact’ that is inconsistent with its terms,” Judge Friedrich added.
A central axiom of this is a so-called ‘hub and spoke’ model, which funnels sports betting transactions, is that any transactions would go through servers located on tribal land. Addressing this specifically, Friedrich took aim at the hub and spoke “fiction” of the compact.
“When a federal statute authorises an activity only at specific locations, parties may not evade that limitation by “deeming” their activity to occur where it, as a factual matter, does not,” she wrote.
“Accordingly, because the compact allows patrons to wager throughout Florida, including at locations that are not Indian lands, the compact violates IGRA’s “Indian lands” requirement,” Friedrich added.
Under IGRA, while a state may enter a compact with any tribe to operate gambling, it must occur on Indian land, defined as “all lands within the limits of any Indian reservation” or lands held in trust by the US for the benefit of said tribe.
“Deeming the bet to have been placed on Indian lands because the servers are located there contradicts decades of well-established precedent interpreting applicable federal law,” the parimutuels lawsuit stated.
“Contrary to the legal fiction created by the 2021 compact and Implementing Law, a bet is placed both where the bettor and the casino are each located,” it adds.
Based on the arguments made, Friedrich has ordered the August tribal compact be nullified and its prior 2010 compact be reinstated, an agreement which effectively renders any actions taken by the Seminole Tribe since its initial signing illegal.
Under the auspices of the August compact, the Seminole Tribe had launched online sports betting operations in Florida in partnership with five parimutuel operators.
Operators could enter the state’s sports betting market but were required to operate as skins under technology provided by the Seminole’s gaming partner Hard Rock Digital.
As part of this arrangement, any operator using the Seminole platform would have been required to pay 40% of its revenue to the tribe – a potential deterrent for prospective operators.
The status of these operations following Friedrich’s ruling remains unclear. Hard Rock Digital have not commented following the ruling.
However, the ruling comes as a welcome one to competing operators including DraftKings, FanDuel and BetMGM who had all previously launched political lobbying campaigns and legislatory initiatives aimed at widening sports betting beyond the scope of the existing tribal compact.
Las Vegas Sands (LVS) and the Poarch Band of Creek Indians, Alabama have also committed significant resources to aggressive lobbying campaigns against the Seminoles.