U.S. Congress Bill Would ‘Clarify’ Mobile Sports Betting Under IGRA

As Congressmen Lou Correa of California and John Katko of New York (l. to r.) presented a bill to “clarify” mobile sports betting under IGRA, a Florida parimutuel filed a federal lawsuit to stop remote betting by the Seminole Tribe on the same issue.

U.S. Congress Bill Would ‘Clarify’ Mobile Sports Betting Under IGRA

On July 1, U.S. Reps. Lou Correa of California and John Katko of New York introduced HR 4308, a bill they say would “clarify” the definition of online tribal gaming under the Indian Gaming and Regulatory Act (IGRA).

Concurrently, a Florida parimutuel filed suit in federal court claiming the Seminole Tribe’s gaming compact is “legal fiction” that violates federal law. The suit claims the provision would give the tribe a competitive advantage by allowing Floridians to wager remotely.

Many tribes have expressed concerns about online gaming and mobile sports betting vis a vis IGRA, which was written long before internet gaming. The Correa-Katko bill states that iGaming would be defined as “tribal” provided it is operated through servers located on Native American lands.

“I am introducing this bill to clarify the federal Indian Gaming Regulatory Act and make clear what the congressional drafters would have done in 1988 had the internet been around at time.” Correa said in the Congressional Record.

“As someone who has long lived in a state with more than 110 federally recognized tribal nations, I have seen firsthand how tribal-government gaming has benefitted the tribal nations, their citizens, the surrounding communities, and the state government,” Correa concluded by painting an apocalyptic scenario in which tribes not enabled to offer iGaming go the way of Blockbuster Video rather than being “able to thrive and move forward like Netflix in the age of the internet.”

Correa also said that HR 4308 would “eliminate frivolous litigation” and would not expand or authorize tribal iGaming where it does not now exist.

In addition, he noted, if tribal nations are barred from offering online gambling, they risk revenue streams that enhance education, health care and housing for their communities, and puts tribal gaming on the same level playing field as commercial gaming.

The bill might have anticipated legal challenges such as the lawsuit by Southwest Parimutuels, owners of Magic City casino in Miami and the Fort Myers-Bonita Springs Poker Room. The suit claims the sports betting provision of the Seminole Tribe of Florida’s gaming compact is “legal fiction” that violates federal law. Southwest also argued the provision would give the tribe a competitive advantage by allowing Floridians to wager remotely.

The Seminoles’ 30-year compact, signed by Governor Ron DeSantis and Tribal Chairman Marcellus Osceola Jr. during a special session in May, also allows the Seminoles to offer craps and roulette at their casinos. In exchange for exclusivity for sports betting, slots and other casino games, the Seminoles will guarantee a minimum of $500 million in annual revenue payments to the state. The compact now must be approved by the U.S. Department of the Interior, which has 45 days to approve or reject it, or take no action.

According to the compact, a bet is “deemed” to be made on tribal lands because the server would be located on Seminole land. In its lawsuit, Southwest said that contradicts the Indian Gaming Regulatory Act, Wire Act and Unlawful Internet Gambling Enforcement Act, as well as court decisions interpreting those laws. “’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. 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.”

Specifically, the lawsuit was filed in U.S. District Court for the Northern District of Florida by the Havenick family’s West Flagler Associates and Bonita-Fort Myers Corp.—aka Southwest Parimutuels. It asks the court to forbid implementation of sports betting and claims it will lose millions since allowing the Seminoles to operate sports betting will give them a competitive advantage.

The compact would allow the Seminoles to offer sports betting at six tribal-land locations. Racetracks and jai-alai frontons also could develop sports betting apps if they’re chosen as partners by the Seminoles. Those parimutuels then could take 60 percent of the proceeds from each bet; the tribe would receive the remaining 40 percent.

Wagerers, who must be at least age 21, could place online wagers on sporting events “via the internet or web application” from anywhere in Florida, starting October 15. All transactions would go through servers located on tribal land in a “hub and spoke” model designed to bypass state and federal law; both consider sports betting illegal in Florida.

Southwest Parimutuels Vice President for Public Affairs Isadore Havenick said, “While we are fully supportive of Governor DeSantis and his work to secure a new Seminole compact, the lawsuit focuses on a very narrow aspect of the compact: the legality of off-reservation and online sports wagering.’’

Seminole Gaming spokesman Gary Bitner responded, “The gaming compact fully complies with the law and is supported by Floridians 3-1. It guarantees $2.5 billion in revenue sharing in its first five years, the largest commitment by any gaming company in U.S. history.”

The compact also represents the largest expansion of gambling in Florida history. However, voters approved a constitutional amendment in 2018 giving them, not lawmakers, the right to approve any gambling expansion. Therefore, the lawsuit claims, the compact is “an effort to circumvent this clear prohibition in the state constitution” since “a person sitting on her poolside lounge chair or his couch at home placing a sports bet through the tribe is ‘deemed’ not to be placing a bet that is otherwise illegal in the state.” It continues, “This is nothing more than a legal fiction belied by the fact that sports betting is still taking place outside the tribe’s reservations in a state where sports betting remains illegal.”

The fate of the compact is uncertain. State Rep. Randy Fine said he doubted the sports betting component would survive, but stated the deal still would benefit the state because the tribe could offer the other provisions of the compact and pay the state accordingly−about $100 million less per year, according to Seminole Gaming Chief Executive Officer Jim Allen.

In an editorial, the Orlando Sentinel said Florida’s interpretation of IGRA is “bizarre.”

“If someone inside their Orlando home makes a bet on a football game, the state of Florida is saying that bet is really being made on a computer server in a faraway, air-conditioned office on Seminole Indian property somewhere,” the editorial stated. “If the state’s thinking on this issue was consistent, it would tax online sales not based on where the consumer is, but where the Amazon, Walmart or Etsy server is located.”