This article was originally published in the Dailly Business Review. To read article please see here: https://www.law.com/dailybusinessreview/2021/11/24/federal-judge-bids-adieu-to-the-seminole-compact-and-sports-betting-is-illegal-in-fla/
A late-night order granting summary judgments puts a hold on the Seminole’s monopoly to conduct sports betting in Florida concluding that the 2021 Compact violates the Indian Gaming Regulatory Act (“IGRA”). The Federal Judge vacated the 2021 Compact and reinstated the 2010 Compact.
Background
In 2018, the Florida constitution was amended to limit and to control the expansion of “casino gambling” in Florida. See Art. X, § 30, Fla. Const. Article 30 provides that the State can only authorize an expansion through a citizen’s initiative but allows the State to negotiate a gaming compact with Native American tribes. See id. (Casino gambling is defined as “any of the types of games typically found in casinos and that are within the definition of Class III [of IGRA].” (Emphasis added)).
IGRA creates a framework for regulating gaming activity on Indian lands and divides gaming into three classes: Class I, II, and III. This case involved Class III gaming, which includes casino games and sports betting. In order to offer Class III gaming, the IGRA requires the Tribe to enter into a compact with the state where its lands are located and requires the Secretary of Interior to review and approve the Compact.
Earlier this year, the State of Florida and the Seminole Tribe entered into a new Compact to replace the 2010 Compact which had been the subject of many challenges (the Seminoles had stopped paying the State under the 2010 Compact alleging, among other things, the State violated its terms by allowing the state-regulated casinos to conduct designated-player games). Based on the new Compact, the Tribe was supposed to, among other things, pay about $2.5 billion in the first 5 years in return for the exclusive rights to operate online sports betting on Tribal land and throughout the State of Florida.
As required by the IGRA, the Compact was submitted to the U.S. Secretary of Interior for approval on June 21, 2021. The Secretary of Interior took no action, and the Compact was approved by default.
Lawsuit
West Flagler Associates and Bonita-Fort Myers Corporation, two Florida casinos, filed suit on August 16, 2021, challenging the Secretary’s approval of the Compact. Both casinos filed a motion for summary judgment and established standing by claiming online betting will divert business from their facilities. On the merits, they argued that the 2021 Compact violated the IGRA, the Unlawful Internet Gambling Enforcement Act, the Wire Act, and the Equal Protection Clause. Of main importance was their argument that the Compact violated the IGRA because it authorized
Class III gambling outside of Tribal lands. The 2021 Compact allowed the Tribe to conduct sports betting throughout the state, as long as the servers receiving the bets were located on Tribal land. The Court rejected this argument holding that the State and the Tribe cannot “deem” the bets to have been placed on Tribal land when they were indeed placed elsewhere in Florida. Accordingly, the Court vacated the 2021 Compact and reinstated the 2010 Compact.
What’s Could be Next?
Assuming this order does not get reversed, the State and the Tribe could negotiate a new compact which only authorizes the Tribe to conduct sports betting on Tribal land. Alternatively, Floridians could be asked to authorize such betting across the state through a citizen’s initiative or, in order to possibly bypass the need for a citizen’s initiative, an argument could be made that online sports betting is not “of the type of games typically found in casinos” because it is relatively new.
Many questions have yet to be answered and stakeholders will have to wait to see whether the state is going to appeal or not. For now, online sports betting is once again illegal in Florida.