Sports Betting Deal Faces Second Court Challenge

By Dara Kam, News Service of Florida

August 18, 2021

Gov. Ron DeSantis and Seminole Tribe of Florida Chairman Marcellus Osceola Jr. signed a gambling agreement in April.

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TALLAHASSEE --- Upping the ante in the courts, two pari-mutuel facilities have filed a second federal lawsuit challenging a 30-year gambling agreement reached by Gov. Ron DeSantis that gives the Seminole Tribe control over sports betting throughout Florida.

The latest legal challenge, filed Monday in Washington, D.C., came less than two weeks after the U.S. Department of the Interior signed off on a gambling “compact” negotiated by DeSantis and passed by the Florida Legislature in May.

Owners of Magic City Casino in Miami-Dade County and Bonita Springs Poker Room in Southwest Florida contend in the lawsuit that the sports-betting plan violates federal laws and will cause a “significant and potentially devastating” impact on their businesses.

The Havenick family, which has owned both facilities for more than five decades, last month filed a similar lawsuit in federal court in Tallahassee. The Florida complaint was amended Monday.

The compact, signed by DeSantis and Seminole Tribe of Florida Chairman Marcellus Osceola Jr., opens the door for the first time to sports betting in Florida. Under the agreement, the Seminoles will serve as the host for sports betting and contract with pari-mutuels that would get a cut of online bets placed using the pari-mutuels’ mobile apps.

The “hub-and-spoke” sports-betting plan would allow gamblers throughout the state to place bets online, with the bets run through computer servers on tribal property. The compact says bets made anywhere in Florida “using a mobile app or other electronic device, shall be deemed to be exclusively conducted by the tribe.”

But calling Florida’s sports-betting model a “legal fiction,” the pari-mutuels’ lawsuits maintain that federal law does not authorize bets that occur off tribal lands.

“Through this fiction, the compact and implementing law seek to expand sports betting outside of Indian lands to individuals located anywhere in Florida so long as they have a computer and internet connection --- subject only to the tribe’s monopoly,” lawyers for the pari-mutuels wrote in Monday’s 43-page lawsuit, which names as defendants Interior Secretary Deb Haaland and her agency.

This month, the federal Bureau of Indian Affairs, which Haaland oversees, allowed a 45-day review period to elapse without taking action on the agreement. Under a federal law known as the Indian Gaming Regulatory Act, that means the compact is “considered to have been approved” but only “to the extent that the compact is consistent with the provisions” of the law.

While the law did not contemplate such activities as sports betting or fantasy sports, “evolving technology should not be an impediment to tribes participating in the gaming industry,” Bryan Newland, a deputy assistant secretary for Indian affairs at the federal department, wrote on Aug. 6 in letters to DeSantis and Osceola.

The “pursuit of mobile gaming is in-line with the public policy considerations of IGRA to promote tribal economic development, self-sufficiency, and strong tribal governments,” Newland added.

But the lawsuit filed this week maintains that the federal agency lacked the authority to approve the Florida compact.

“Although Secretary Haaland could have approved a compact between Florida and the tribe to permit in-person or online sports betting by patrons physically on the tribe’s reservations, the plain language of IGRA prevents her from approving the compact here because it does not comply with IGRA’s ‘Indian lands’ requirement. The compact therefore both violates IGRA and falls outside the scope of compacts she is authorized to approve in the first instance,” the pari-mutuels’ lawyers wrote.

The lawsuit also argued that Florida’s sports-betting scenario will hurt pari-mutuel operators because gamblers won’t have to go to the facilities to place bets. The pari-mutuels’ business model is based on in-person visits, said the lawsuit, which notes that owners have spent more than $65 million in capital improvements on the two facilities.

“By enabling the tribe to offer sports betting via computer or phone from a person’s home or any other location in Florida, the tribe will have a significant competitive advantage and cost plaintiffs significant amounts of revenue. ‘Home casinos,’ as contemplated by the compact, will significantly diminish revenue” at the plaintiffs’ facilities, the lawsuit alleged.

The legal complaint also asserts that the compact puts pari-mutuels at a disadvantage because it allows the Seminoles to accept cash for sports bets placed at the tribe’s casinos, but pari-mutuels will not be permitted to accept cash wagers for sports betting, even if they accept cash for other forms of gambling.

“Pari-mutuel customers that prefer cash wagers for their gaming thus will have no incentive to use the pari-mutuel’s facilities, and those who prefer to do so via credit card will have no need to visit the facility to do so. … At the same time, the tribe will be able to offer both on-site cash sports betting and the ability to engage in sports betting online from anywhere in the state,” the lawsuit said.

Under the 30-year deal, the Seminoles agreed to pay Florida about $20 billion, including $2.5 billion over the first five years. The amount would dip by $50 million a year if the sports-betting provision doesn’t go into effect, essentially guaranteeing the state an annual minimum payment of $450 million.

The deal also gives the Seminoles such perks as offering roulette and craps at tribal casinos.

The compact also likely will face state court challenges centered on a 2018 Florida constitutional amendment, known as Amendment 3, which required voter approval of gambling expansions in the state. The constitutional amendment’s backers maintain that sports betting that takes place off tribal lands requires voter authorization.

John Sowinski, president of the group No Casinos, said in a prepared statement this month that the compact “violates multiple federal laws as well as the Florida Constitution.”

“Only Florida voters, not politicians in Tallahassee or Washington, have the power to expand gambling in Florida. This issue will have its day in both state and federal courts, where we are confident that this compact will be overturned. We are committed to ensuring that the people of Florida will always have the final say on gambling as required by Florida’s Amendment 3,” Sowinski, whose group was behind the amendment, said on Aug. 6.

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