Florida voters just made it harder to change its laws regarding gaming. What does that mean for the future of sports betting in the state?
Florida and Amendment 3
On election night, as most of the country was watching to see if there was going to be an ideological shift in Congress, many in the gaming industry were watching a different race in Florida.
This race did not involve the election of an individual; the race was for Florida Amendment 3, a ballot measure that would shift the power from legislators to voters to authorize new casino gambling in the state.
The language of the measure was as follows:
“This amendment ensures that Florida voters shall have the exclusive right to decide whether to authorize casino gambling by requiring that in order for casino gambling to be authorized under Florida law, it must be approved by Florida voters pursuant to Article XI, Section 3 of the Florida Constitution. Affects articles X and XI. Defines casino gambling and clarifies that this amendment does not conflict with federal law regarding state/tribal compacts.”
Where did the gambling amendment come from?
Only two counties in Florida allow for “card games, casino games, and slot machines” at non-tribal owned facilities.
In 2004, before the current tribal compacts, under the watch of then-Gov. Jeb Bush, Florida voters in Miami-Dade and Broward Counties passed a ballot initiative that allowed for slot machines at racing and jai-alai facilities, which had operated in the two years prior.
The amendment effectively means that in order for the state to expand casino gambling beyond the tribal casinos and existing racing and pari-mutuel facilities, voters in Florida would need to initiate the process by collecting enough signatures to get the petition added to a ballot.
“In Florida, the number of signatures required for an initiative is equal to 8 percent of the votes cast in the preceding presidential election. Florida also has a signature distribution requirement, which requires that signatures equal to 8 percent of the district-wide vote in at least half (14) of the state’s 27 congressional districts must be collected.”
For reference, the 2016 Presidential election had 9,419,886 votes cast. Eight percent of this vote total is 753,591 signatures required in order to get a casino expansion measure on a future ballot. This is a daunting task, without considering the need for geographic distribution, which is required.
There are, however, a few Florida-based groups that might be able to back a campaign of sufficient size to gather these votes at a time in the future. Two which come to mind are Disney and the Seminole Tribe. Indeed, both Disney and the Seminoles were major backers for passing Amendment 3, allegedly putting in tens of millions of dollars to support the measure’s passage.
The opposition saw support from smaller gaming providers including West Flagler Associates and Hialeah Park, as well as the Miami Dolphins, who (in)famously tweeted out an image that implied that the passage of Amendment 3 “would effectively block any chance for legal sports betting in Florida.”
If the language of Amendment 3 seems complicated, that is because it is. The language used in the Amendment scored a grade-level rank of 24 (the equivalent of having 24 years of formal education or enough time to earn a Ph.D.) according to Ballotpedia, which ranks the readability of ballot measures. Amendment 3 was worded more complexly than others, with the average ballot scoring between 19-20.
It does not take a Ph.D. to see that the Amendment does not mention sports. So, does that mean that Florida can launch sports betting soon?
What is ‘casino gambling’?
According to Ballotpedia, Amendment 3 defines casino gambling as card games, casino games and slot machines. There is no mention of sports betting. So, while it may appear that Amendment 3 leaves open the question of whether Florida can offer sports betting, it neglects the much bigger issue, the fact that the State of Florida has a Class III gaming compact with the Seminole Tribe.
Sports betting is Class III gaming according to the Federal Register:
Class III gaming means all forms of gaming that are not class I gaming or class II gaming, including but not limited to:
(a) Any house banking game, including but not limited to –
(1) Card games such as baccarat, chemin de fer, blackjack (21), and pai gow (if played as house banking games);
(2) Casino games such as roulette, craps, and keno;
(b) Any slot machines as defined in 15 U.S.C. 1171(a)(1) and electronic or electromechanical facsimiles of any game of chance;
(c) Any sports betting and parimutuel wagering including but not limited to wagering on horse racing, dog racing or jai alai; or
While Amendment 3 does not restrict sports betting, the existing compact between the Seminole Tribe and the State of Florida may impose some restrictions.
What is in the Florida gaming compact?
The Compact, which was signed in 2010 between the Seminole Tribe and the state (it was amended in 2015 to add authorization for additional games), stated:
“It is in the best interests of the Seminole Tribe of Florida and the State of Florida for the State to enter into a compact with the Tribe that recognizes the Tribe’s right to offer certain Class III gaming and provides substantial exclusivity of such activities in conjunction with a reasonable revenue sharing arrangement between the Tribe and the State that will entitle the State to significant revenue participation.”
In the “Covered Games” section of the compact, there is no mention of sports betting, but there is a statement that would seem to cover sports betting as within the covered games section:
“Any new game authorized by Florida law for any person for any purpose, except for banked card games authorized for any other federally recognized tribe pursuant to [the] Indian Gaming Regulatory Act, provided that the tribe has land in federal trust in the State as of February 1, 2010.”
The tribe and the state agreed that the “Tribe is authorized to operate Covered Games on Indian Lands….” While Part IV of the compact excludes a number of games including roulette and craps (which were subsequently allowed) there is no mention of sports betting, as explicitly excluded.
The compact identifies seven Seminole-owned casinos which can be expanded or replaced but does not authorize new construction beyond the existing lands. In addition to abiding by state-sanctioned gaming rules, the tribe, in exchange for “partial but substantial exclusivity,” agreed to pay:
- $12.5 million per month during the first 24 months of the agreement;
- After that, 12 percent of net wins on all amounts up to $2 billion;
- 15 percent on net wins between $2 and $3 billion;
- 17.5 percent on net wins between $3 billion and $3.5 billion;
- Up to 25 percent on all amounts greater than $4.5 billion per revenue sharing cycle.
These payments are due on the 15th of every month for twenty years from the initiation of the compact.
What about online gambling?
For those hoping for online gambling, there is a clause in the compact that states: if the state law is changed to offer online gambling and tribal gaming revenue drops more than five percent from the previous twelve months, the tribe gets to substantially reduce their payments to the state below the guaranteed minimums. But, this will not apply if the tribe offers online gambling, subject to state authorization.
In the event that the Seminole Tribe loses exclusivity, the state of Florida will be in search of a new source of revenue. Part XII Section A. of the Compact states:
“If, after February 1, 2010, Florida law is amended by action of the Florida Legislature or an amendment to the Florida Constitution to allow (1) the operation of Class III gaming or other casino-style gaming at any location under the jurisdiction of the State that was not in operation as of February 1, 2010, or (2) new forms of Class III gaming or other casino-style gaming that were not in operation as of February 1, 2010.”
Should this happen, the tribe is entitled to cease some of their payments until such gaming is no longer operated. Similarly, if existing non-tribal facilities in Broward and Miami-Dade counties expand their Class III offerings, the Seminole Tribe can reduce some of their payments to the state as well.
So, about sports betting …
It is unlikely that Florida will see sports betting being offered by any entity other than the Seminole Tribe.
The gaming compact negotiated between the state of Florida and the Seminole Tribe of Florida is lucrative for the state and extremely beneficial for the tribe. For an overview of how lucrative this compact is for the State of Florida in 2016, the Seminole Tribe paid more than $300 million to the state. The likelihood that Florida would endanger even a portion of those payments to authorize something that would generate as little additional state revenue as sports betting is incredibly unlikely.
While Florida sports betting fans shouldn’t hold their breath for widespread legal sports betting, the Seminole Tribe could, under the compact, receive the ability to offer it at their seven casinos. While the Seminole Tribe has previously expressed an interest in being able to offer sports betting at its Florida Hard Rock properties, they have recently been quiet on the issue within the state of Florida.
Amendment 3 did not foreclose on any hope of sports betting in Florida. However, under the existing gaming compact terms, it would appear to be a costly endeavor for state lawmakers to allow someone other than the Seminole Tribe to offer it exclusively, a decision that would surely leave facilities in Miami-Dade and Broward counties unhappy.
Photo by the World Poker Tour used under license (CC BY-ND 2.0)