On November 22, U.S. District Court Judge Dabney L. Friedrich ruled that the 30-year gaming compact between the state of Florida and the Seminole Tribe violates the Indian Gaming Regulatory Act (IGRA). With Friedrich’s decision, the entire compact, which promised billions in new revenues for the tribe and state, was invalidated.
The tribe didn’t miss a step. The next day, it continued to collect online wagers through its sports betting app and also filed a notice to appeal Friedrich’s ruling. In a court filing, Tribal Chairman Marcellus W. Osceola stated, “The tribe’s online sports betting authorized by the compact is now in operation, and is generating millions in revenue per week. The tribe is using these funds to pay back the development costs for its online sportsbook, make revenue-sharing payments to the state and fund important tribal programs.”
In his statement, Osceola noted the tribe has already made two $37.5 million revenue-sharing payments to the state under the compact and spent more than $25 million to develop the online sportsbook and hired more than 237 additional employees and vendors. He argued that the tribe “would be irreparably injured if it is required to cease online sports betting pending the outcome of an appeal,” by losing millions in revenue and jobs.
Under the compact signed by Governor Ron DeSantis and approved by the Florida legislature and Secretary of the Department of the Interior Deb Haaland, the Seminoles agreed to pay the state at least $2.5 billion over the first five years. In return, the tribe would have exclusive control over sports betting in the state and would be allowed to offer roulette and craps at its casinos, which is no longer the case.
Friedrich said the compact violates an IGRA provision that any state-sanctioned gambling must literally occur on tribal land. The state contends that, since wagers are processed through a server based on tribal property, then sports betting is in fact taking place on Indian land and is not an expansion of gambling.
Friedrich said that claim is a “fiction.” She said the so-called hub-and-spoke model for sports betting was an attempt to get around the limitations of the Florida constitution; voters approved a constitutional amendment in 2018 giving them exclusive rights to approve expanded gambling outside of a tribal compact.
She concluded that the Florida constitution “provides that the state may expand sports betting only through a citizen’s initiative or an IGRA gaming compact. And because no citizens’ initiative has approved online sports betting, such betting can be lawful in Florida only if it is authorized by a gaming compact.’’
In conclusion, she wrote, “The appropriate remedy is to vacate the compact.”
John Sowinski, executive director of No Casinos, a group that backed the constitutional amendment, said, “This ruling says what should’ve been obvious to everyone from the beginning, that Florida’s constitution gives only Florida voters, not politicians in Tallahassee and Washington, the power to expand gambling in our state.’’
Friedrich ordered the state “to reinstate the tribe’s prior gaming compact, which took effect in 2010.” She suggested DeSantis and the tribe “may agree to a new compact, with the secretary’s approval, that allows online gaming solely on Indian lands. Alternatively, Florida citizens may authorize such betting across their state through a citizens’ initiative.”
Three such initiatives, including a petition drive financed by FanDuel and DraftKings, currently are underway and attempting to collect the nearly 900,000 petition signatures needed to appear on the 2022 ballot.
The lawsuit, which named Haaland but not DeSantis or the state of Florida, was filed by West Flagler Associates, the Bonita-Fort Myers Corporation and the Havenick family that own Magic City Casino and Bonita Springs Poker Room parimutuels. Another lawsuit was filed by a group of plaintiffs including No Casinos supporters and Miami businessmen Armando Codina and Norman Braman, who helped finance the 2018 constitutional amendment giving voters exclusive rights to approve any gambling expansion om the state. Codina, a real estate developer, said, “I think this is a big victory. I couldn’t ask for more.’’
For the parimutuels, the judge’s decision to invalidate the entire compact also cancelled a provision allowing them to partner with the Seminole Tribe to operate online sports betting. In October, the tribe announced it had reached agreements with the several parimutuels to place sports-betting kiosks in their facilities and receive up to 40 percent of the revenue generated from them. But West Flagler argued despite the revenue-sharing option, any such agreement would require substantial upfront investments and significantly impact their existing gambling operation.
Hamish Hume, counsel for the Havenick family properties, said the compact “sought to give the Seminoles a monopoly on offering online sports gaming anywhere in the state, while making the same conduct a felony when conducted by anyone else. That violated federal law in numerous ways and we are very pleased with the Court’s thorough and well-reasoned decision.”
The Justice Department, which represented Interior in the case before Friedrich, argued Florida had come up with a “permissible hybrid approach” that was not explicitly prohibited. DOJ is expected to appeal Friedrich’s ruling and request that online gambling continue through the final outcome of the case.
DeSantis acknowledged that the hub-and-spoke model was “an unsettled legal issue. We anticipated that this could happen.”
His Press Secretary Christina Pushaw said, “We are reviewing the court’s perplexing ruling, which certainly contains appealable issues. Because neither the Seminole Tribe nor the state of Florida are parties to the case, it is unclear what if any immediate impact the ruling has in Florida. We look forward to working with the tribe to ensure the future success of the compact.”