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For as much as Florida profits from gaming and gambling, it has struggled mightily with daily fantasy sports.
There’s no single reason for the lack of progress toward legalization. The landscape is complicated, with constitutional language and tribal compacts adding layers to the debate. Efforts to legalize DFS date back to 2015, and each attempt has stalled without much progress.
This year, lawmakers are taking another swing at legislation. The newest development came late on Friday, as an omnibus gaming bill in Senate was amended to include a new compact with the Seminole tribe.
The Senate version now includes the Seminole Compact, a renewed gambling deal btw the state & the tribe. The House bill had it; the original Senate bill did not. #FlaPol
— Jim Rosica (@JimRosicaFL) February 9, 2018
DFS is already a cog in a much larger negoitation in Florida. How did we get here, and where are we going?
The Sunshine State is a gambling state. It has been running greyhound races, which are basically a purpose-built betting product, since the 1930s. Florida has poker rooms, jai alai betting, bingo, bowling tournaments and a handful of casinos run by the Seminole Tribe. So far, though, DFS has been a non-starter.
Part of the issue stems from debate over semantics. Lawmakers and tribal leaders have been unable to come to an agreement about whether or not DFS should be classified as gambling under state law.
Florida statues contain a long list of definitions and prohibitions surrounding gambling. Here are a few relevant things that are considered illegal, unless an exemption was made in a subsequent law:
There’s also an unfavorable attorney general opinion to consider.
Way back in 1991, AG Robert Butterworth provided his opinion on paid-entry fantasy sports. Butterworth opined that fantasy contests fall under the definition of gambling, and they should therefore be prohibited under 849.08. His stance was not binding, and it was made before the existence of DFS as we know it today. Still, it’s the most recent AG opinion on the matter, as AGs since have not touched the subject publicly.
There are, of course, a lot of exceptions to those laws which have been spelled out in subsequent amendments. The state has its own lottery, for example. The Seminole Tribe was also granted a broad exemption to anti-gambling laws, and that agreement presents the largest hurdle for DFS going forward.
Tribal compacts give the Seminoles exclusive rights to offer various forms of gaming in Florida, such as table games. In return, the tribe pays hundreds of millions of dollars to the state via revenue-sharing agreements.
The compact with the Seminole Tribe includes language which allows those payments to be reduced or ceased if the state authorizes other forms of gambling, including online gaming. Here’s what the state can not allow:
Internet/online gaming (or any functionally equivalent remote gaming system that permits a person to game from home or any other location that is remote from a casino or other commercial gaming facility)
The question before the legislature is whether or not legalizing fantasy sports would infringe upon those terms. Does the compact’s definition of online gaming cover DFS?
According to the tribe, it absolutely does.
Last December, tribal counsel warned lawmakers that their efforts to legalize DFS would indeed violate the existing compact. A court may eventually have to make that determination if the standoff comes to a head.
For the state, jeopardizing that relationship in exchange for modest DFS revenue would be a poor tradeoff. The two parties don’t have the best relationship to begin with, including a history of taking each other to court. And the potential revenue from DFS is just a fraction of that for other, more popular forms of gaming.
State economists have reclassified revenue-sharing payments from the Seminole Tribe as “nonrecurring” after this year, despite the fact that they are on the books until 2030.
There are three active DFS bills in the Florida legislature.
H 223 is the House bill filed by Rep. Jason Brodeur. The bill simply defines DFS and moves to exempt it from the relevant gambling statutes.
The Tourism and Gaming Control Subcommittee recently advanced Brodeur’s bill by a 13-0 vote. Ways & Means and the Commerce Committee are its next two stops. That bill mirrors an effort in the Senate, too.
S 374 was introduced by Sen. Dana Young on behalf of the Committee on Regulated Industries. It contains most of the same language as the House bill, but it’s undergone one revision once since introduction. The amended language prohibits contests based on collegiate and amateur matches. Young’s bill has cleared Regulated Industries and the Rules Committee.
There’s another gaming bill on file in the Senate, as well. S 840 was introduced by Sen. Travis Hutson, and it’s an omnibus attempt to overhaul aspects of the pari-mutuel wagering industry. It also includes provisions for legalizing daily fantasy sports.
Hutson’s bill cleared Regulated Industries, which Hutson chairs. On Friday, the Appropriations Subcommittee on Finance and Tax reviewed the bill. As Florida Politics‘ Jim Rosica reported, the bill was amended. (Read Rosica’s timeline for some instant analysis.)
The strike-all amendment moves to install a new tribal compact which would supersede the existing one. As Hutson notes, his bill used to be far different from a House version, which has Seminole compact language already.
It’s important to note that we took a step closer to some house positions. Compact, dormant permits, pre reveal machines.
— Travis Hutson (@TravisJHutson) February 9, 2018
If that committee advances the bill, it will move on to Appropriations itself.
Does every gaming issue have to be taken care of in one fell swoop in Florida if any are to be dealt with? It certainly looks that way.
In an interview with Florida Politics, tribes reaffirmed the stance that an expansion of slot machines, table games, or daily fantasy sports would be an absolute deal breaker.
Galvano made a similar effort last year before withdrawing his bill.
But for DFS, it remains in the mix.
The legal definition of DFS is still very much in question in Florida, although a lot of sites serve the state. Is it gaming, gambling, or something else entirely? If fantasy contests are classified as gambling, then authorizing them would certainly be in violation of the compact.
The committees submit lengthy reports on the bills they consider, both before and after. Their analyses provide a lot of insights into the general sentiment among lawmakers.
Regulated Industries seems to agree that the tribes have a sound argument if DFS was classified as a Class III game alongside blackjack and roulette.
If fantasy contests permitted under the bill constitute gaming, are considered Class III gaming under federal law, and constitute, under the 2010 Gaming Compact, new Class III gaming in Florida, the payments due to the State under the 2010 Gaming Compact could end when fantasy contests begin to be offered for public or private use.
Although outdated, the AG opinion directly lumps fantasy sports in with gambling. It hasn’t been legally classified as such, but if it were, it likely wouldn’t fall into Class I (social games) or Class II (bingo/lottery games). So, the first step for lawmakers is to get around that obstacle. To that end, the current bills explicitly move to exclude DFS from the umbrella of gambling laws.
Until there is more clarity in the eyes of lawmakers, though, the state will struggle to move forward in the short term.
In the meantime, the aforementioned lawmakers are taking matters into their own hands. And it appears the fate of DFS legality in the state will continue to depend on much bigger issues related to gaming in Florida.