Sports

Seminole Tribe Ignores Federal Ruling Halting Sports Wagering in Florida

During the most recent episode of US Bets' weekly Gamble On podcast, co-host Eric Raskin attempted to unspool the tangled web that is legal sports wagering in the Sunshine State, which carries on despite a federal judge's ruling last week that its mode of implementation was unlawful and should cease immediately.

After classifying Florida as "a state known for its ridiculousness in all aspects of life," Raskin pointed out that some two dozen American jurisdictions had managed to create a framework for legal sports betting without doing so in a manner that was destined to get tied up in the courts, which is where things stand in Florida after Gov. Ron DeSantis and the Seminole Tribe entered into a compact that sidestepped a 2018 state law requiring any expansion of gambling to be put to a vote of the people. They accomplished this by declaring that all mobile sports wagers in the state be routed through computer servers located on tribal land — meaning that gambling in Florida would technically undergo no physical expansion. Under this server-centered scheme, the Seminoles and, in turn, the state, would take a fat cut of the action.

"I just find the whole situation so unnecessarily messy," said Raskin. "If the state government of Florida wanted to give its citizens legal access to sports betting and wanted to generate tax revenue for the state, there were any number of models out there for how to do it successfully and in a way that actually serves the public. And they ignored those and made their own little backroom deal with the Seminoles and came up with this monopolistic mess that's now being held up in the courts."

Before we delve into the ridiculousness and messiness, let's rewind to 2018. In that year, thanks in large part to then-New Jersey governor Chris Christie, the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA), which previously restricted non-parimutuel sports betting to the state of Nevada. (Sports involving parimutuel betting include horse racing, jai-alai, and dog racing.) The high court's ruling cleared the way for each and every state to write and adopt its own set of rules surrounding sports wagering. Some have mandated that such wagers be made in person, while others have created space for mobile betting as well. Some require mobile sportsbooks to have a brick-and-mortar partner, while a few allow mobile wagering without any kind of retail counterpart. And a handful of states have opted to restrict such wagers — be they in person or of the geofenced, "onsite mobile" variety — to tribal properties.

Florida being Florida, it adopted what amounted to the most confusing hodgepodge of all of the above. And now, predictably, the fate of Florida sports betting rests with the courts — unless a well-funded initiative finds its way onto the ballot and scatters the Seminoles' stack of chips.

When Florida's state legislature approved the gaming compact the Seminoles negotiated with DeSantis, which effectively gave the tribe a sports-betting monopoly in the state, public officials and legal eagles alike immediately predicted that it would be challenged in court.

"It doesn't take a master's degree to know that there will be litigation," said Rep. Sam Garrison, while Speaker of the House Chris Sprowls added, "I don't think there's any chance of doing a gaming deal to the size and scope that was negotiated by Gov. DeSantis without a legal challenge. You are navigating the icebergs of legal hurdles as you do this."

But others felt that any legal challenges were likely to fail. On that score, Bob Jarvis, a professor specializing in gaming law at Nova Southeastern University, called one brought by a pair of parimutuel operators — Miami's Magic City Casino and the Bonita Springs Poker Room — "dead on arrival."

The big winners in this deal, which eventually won passive federal approval from the Department of the Interior, were, unsurprisingly, the state and the Seminoles. The compact called for the Seminoles to pay a total of $2.5 billion to the state over the first five years of the compact. And if the tribe wanted to partner with select parimutuel parlors to offer sports wagering — which it ultimately decided to do — it would collect a steep surcharge of 40 percent of gross gaming revenue per wager.

The tribe's parimutuel partners can team up with established national sportsbooks like DraftKings and FanDuel, but their third-tier cut of the action makes no sense from a business standpoint, given that they're afforded big-dog status in virtually every other state where sports betting is legal. This dynamic has led DraftKings and FanDuel to instead invest tens of millions of dollars in a public awareness and signature-gathering effort aimed at getting a measure on the ballot that would give voters the opportunity to open up sports betting to all qualified operators (including the Seminoles).

For as well-funded as this initiative is, its presence on the ballot is far from a foregone conclusion. For one, the sportsbook alliance's political action committee, Florida Education Champions, has been accused of airing distasteful ads featuring children, and its paid signature-gatherers have allegedly harassed college students on campus for their John and Jane Hancocks. And the PAC, which is highlighting education as the primary beneficiary of gambling expansion, has until Feb. 2, 2022, to collect 891,589 valid signatures. Only 123,323 had been verified as of this past weekend, although the PAC told the website Sports Handle that it had collected more than 500,000 and was confident it would hit the required threshold on time.

Speaking of last Monday, that's when a U.S. District Court judge in Washington, D.C., threw everything into disarray. Going against a previous ruling in the U.S. District Court for the Northern District of Florida, Judge Dabney L. Friedrich ruled in favor of the parimutuel plaintiffs, citing a 2014 U.S. Supreme Court opinion in which Justice Elena Kegan emphasized that "everything — literally everything — in the Indian Gaming Regulation Act affords tools...to regulate gaming on Indian lands, and nowhere else."

And to Friedrich, "nowhere else" includes cyberspace, where mobile wagers are placed.

"Although the Compact 'deem[s]' all sports betting to occur at the location of the Tribe's 'sports book[s]' and supporting servers, this Court cannot accept that fiction," she wrote. "When a federal statute authorizes 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."

So is that the end of sports betting in Florida, which only went live on November 1?

No. But maybe.

For one, in her ruling, Friedrich specified that sports betting could be legalized afresh through a revised compact or "citizens' initiative," such as the one DraftKings and FanDuel are backing. And, more crucially, the Seminoles ignored last Monday's decision and kept right on accepting mobile bets through its Hard Rock app, as the tribe appealed the ruling in the belief that it would be stayed pending further litigation.

They were wrong about a stay: A week ago, Friedrich denied their appeal. They immediately shifted their strategy to the U.S. Circuit Court of Appeals and, again, elected to keep their betting app chugging in defiance of the unsuccessful effort.

"There always was the chance that a judge would...conclude that only sports bets placed on Indian land are permissible under [the] IGRA," said Jarvis, who thinks the case could go to the U.S. Supreme Court.

The law professor went on to say that he disagreed with Friedrich's ruling, calling it "a crabbed interpretation of [the] IGRA," which was passed by Congress in the pre-internet era of 1988.

Jarvis believes the ruling "does not take into account what Congress would have done had it foreseen the rise of the internet at the time that it wrote [the] IGRA, and does not comply with the purpose and spirit of IGRA, which was to lift tribes out of poverty by allowing them to use gambling as an economic lever."