Florida-Seminole compact decision to have huge impact on online sports betting
Credit to Author: Doug Greenberg| Date: Wed, 26 Jun 2024 06:48:32 EST
On June 17, the Supreme Court of the United States declined to hear the case of West Flagler Associates v. Haaland. It was a simple decision and one that was several years in the making, but it could prove to have profound impacts on the American sports betting industry and the way it interacts with Native American gaming entities.
In October 1988, then-President Ronald Reagan signed the Indian Gaming Regulatory Act (IGRA) into law, creating a regulatory framework for Native American tribes to offer gambling on their reservations, including Class III games — a wide categorization that encompasses “games of chance” such as table games, slot machines and sports betting.
IGRA also dictates that the type of game offered must be legally allowed within the state in which the tribe is located, and the two sides must establish a tribal-state compact approved by the state’s Secretary of the Interior. The fall of PASPA in 2018 opened the door for legal online sports betting on a state-by-state basis.
There are only two federally recognized tribes in the state of Florida: the Miccosukee and the Seminole. Of those two, only the latter is authorized to offer Class III gaming in the state, as it is the only one with a compact. Further, the Seminole Tribe has an exclusivity provision built into its compact preventing any other entities from providing sports betting in the state.
“That’s somewhat not out of place. A lot of tribes have negotiated exclusivity agreements so they can limit the competition from outside folks. So that’s not really the big issue here,” Mike Andrews, who runs the Native American policy group at McGuireWoods Consulting, told ESPN. “The bigger issue is allowing bets to be placed outside of what is referred to as Indian land, the reservation.”
Following disputes over the Seminole Tribe’s compact with Florida from 2010, Gov. Ron DeSantis renegotiated a new compact with the tribe in 2021. The new document crucially delineated that any sports bet made on the internet from anywhere in the state would be considered valid, so long as that wager comes to rest on a reservation server.
West Flagler Associates, which owns casinos and racetracks in Florida, brought suit in Washington, D.C. — the correct jurisdiction because that is where the Bureau of Indian Affairs is located. West Flagler alleged that using server location as the location for a wager was a violation of IGRA — which says wagers must be made on tribal land — and gave the Seminole Tribe too much of an advantage in the state. The D.C. Circuit Court agreed, ruling in West Flagler’s favor.
However, the Seminole Tribe appealed and had the decision reversed. That led West Flagler to go to the U.S. Supreme Court, which declined to hear the case and reaffirmed the Seminole Tribe’s de facto monopoly on sports betting in the state until July 2051, when the current compact expires.
“The Seminole Tribe of Florida applauds today’s decision by the U.S. Supreme Court to decline consideration of the case involving the Tribe’s Gaming Compact with the State of Florida,” Gary Bitner, spokesperson for the tribe, said in a statement following the decision. “It means members of the Seminole Tribe and all Floridians can count on a bright future made possible by the Compact.”
The implications of this case not only affect Florida, but states across the nation with strong tribal presences who are considering entering the sports betting industry and even some that already have it.
Firstly, the Sunshine State may end up having only one sportsbook option — Hard Rock Bet, owned by the Seminole Tribe — for the foreseeable future.
However, as outlined in the compact and authorized by IGRA, the exclusivity provision in the tribal-state compact does not prevent the tribe from making deals with commercial entities such as DraftKings or FanDuel. The compact does say that the tribe must take at least 60% of revenue as part of any agreement to break the exclusivity, making the economics vastly unappealing to any non-tribal entities.
It’s a win-win for both the state and tribe, and it could also be argued as being a win for the public, even if they don’t get more choice in sportsbooks.
“The State of Florida cut a great deal with the Seminole Nation,” Andrews said. “The percent of recouping of profits that the state’s going to get out of this is going to be tremendous. They estimate in Florida it’s going to be a $3 [billion] or $4 billion industry, and the state is going to rep north of 50% of that.”
Andrews also notes that several states that already legalized sports betting with non-tribal partners could go back and revise their laws with the help of secretarial procedures, which means that tribes can negotiate with the state’s Secretary of the Interior on a Class III compact instead of going through a larger legislative process. He believes that Connecticut and New York are “ripe” for it.
But the larger impact of this legal decision is how it could affect states with strong tribal presences that do not already have sports betting.
Alabama, which has just one federally recognized tribe, the Poarch Band of Creek Indians, could easily follow Florida’s lead given the similarities in singular tribal power. But the state everyone will be keeping an eye on, due to its size and complicated tribal politics, is California.
“This is obviously an important decision for tribes throughout the country, not just California. This affirms the sovereign and legal rights of tribes with regard to the future sports wagering market,” Pechanga tribal chairman Mark Macarro said in a statement to ESPN. “Tribal leaders have been clear — it is for tribes, and not others, to decide what the future will look like, and this decision confirms that view.”
California sports betting legalization made headlines for all the wrong reasons in 2022, when two ballot initiatives, Propositions 26 and 27, both fell embarrassingly short of legalizing sports betting via a citizen vote, garnering just 33.02% and 17.72% of the vote, respectively.
There were issues with both propositions. While Prop 27 would have legalized online and mobile sports betting, it was backed by the national sportsbooks and was heavily opposed by the state’s native tribes. Californians struck it down hard. The tribes’ initiative, Prop 26, had more public support, but its problem was that it would have only authorized sports betting on tribal lands. The Florida-Seminole Tribe decision, therefore, creates the opportunity for tribal online sports betting via the server location precedent.
“[The California tribes] have a clear road map now of how to actually get online sports gambling under their control, and that is using the Florida model, having a governor who is willing to participate, and having the governor implement a new law,” Samir Patel, an attorney at Miami law firm Holland & Knight, which represents betting entities in the state, told ESPN. “It would be copying and pasting what Florida did, in that, creating the law on the books that deems bets made off tribal land coming to rest on a server on tribal land will be deemed a bet made on tribal land.”
California still cannot get legal online sports betting without a vote from the people, but that certainly becomes more appealing with a tribal-backed initiative that can promise online wagering. That said, California composing the right compact and organizing a new proposition would be much more complicated than it was in Florida.
“There’s still a lot of hurdles,” Patel said. “There are 110 tribes within California. The negotiations of revenue sharing amongst 110 tribes will certainly be a heavy lift.” Andrews calls Florida a “one-off because it’s a huge state, but there’s essentially one tribe.”
It all puts the commercial gaming entities in a tough position with the Golden State. Between the failed 2022 propositions and the recent Florida-Seminole Tribe decision, the national sportsbooks are waking up to the fact that they won’t be able to be in California unless they can work with the tribes.
“At the end of the day, if wagering is going to be done legally in California, it’s going to be done with and through the 100-plus tribes there. For a quarter of a century, the tribes have done a phenomenal job of stewarding the Class III gaming licenses,” FanDuel CEO Amy Howe said at Anaheim’s Indian Gaming Tradeshow & Convention in April. “It’s critical for us to do this together and not against one another.”
Of course, that type of cooperation, political maneuvering and legislation will take time. Andrews believes that any movement to legalize online sports betting in California will not come to fruition for at least “the next five to seven years.”
But, if and when the nation’s most-populated state finally figures out how to legalize the practice, it will likely be with an assist from the critical Florida-Seminole Tribe decision and could serve to benefit all with a stake in the industry.
“There’s enough, I would say, of a market share that if you play smart and you work well together, there’s no reason why everybody can’t enjoy the [benefits] of gaming,” Andrews said. “Everybody wins.”