On Friday, we were given a bit of a peek under the hood at the potential setup for Florida sports betting.
We saw just how the state of Florida and the Seminole Tribe believe their newly signed compact that would govern FL sports betting could operate.
The Florida Legislature posted a question-and-answer document regarding the compact to its website.
The document, which addresses a number of basic questions, such as what is the Indian Gaming Regulatory Act (IGRA), also goes into more detail about the mobile FL sports betting aspects of the proposed agreement.
Does Amendment 3 impact mobile wagering?
This is the question asked at the top of page seven of the 14-page document.
Amendment 3 was a ballot measure passed in 2018 that sought to curtail gaming expansion in the state.
The answer to the question begins by noting the compact and its implementing legislation specify that a bet occurs where a server is located and that all servers would be located on tribal land.
Support for this argument
To support this argument, the document references two precedents.
One is New Jersey. The document states that New Jersey law deems a wager to take place where a server is located, which is at authorized casinos and racetracks. The document correctly points out this is the case elsewhere as well.
New Jersey, of course, offers commercial sports betting so the question of where a bet is placed is largely perceived to be a matter of state law.
The other example comes from Oklahoma. The document cites an arbitration case between the state of Oklahoma and the Iowa Tribe of Oklahoma, which this document states allowed the Iowa Tribe to offer games covered under their compact over the internet without offending IGRA.
Despite the title of the subheading, the answer does not really address Amendment 3 directly but instead focuses on what is likely the bigger issue: whether IGRA allows mobile wagering.
The document references a 2016 arbitration that was certified by a federal court. This arbitration did take place and was subsequently litigated in 2016.
What was the case about?
The case arose between the Iowa Tribe and Oklahoma after the tribe sent the state a letter indicating its intent to pursue internet gaming as a covered game under the state’s model compacts.
The state responded by saying they would like to seek arbitration on the issue.
The question that the arbitrator was asked to resolve was:
Whether the use of the internet (worldwide web) to conduct a covered game (for free and real money play), when the players are located outside the boundaries of the State of Oklahoma/United States and its territories during the entirety of the gaming transaction, is authorized under the Compact.
Roughly a month after the arbitration, the arbitrator, a lawyer from a respected Oklahoma City law firm, rendered his award in favor of the tribe. This was affirmed by the Federal Court in the Western District of Oklahoma, who ordered the arbitration be certified.
The tribe planned to launch an online poker site, PokerTribe.com, and secured a license from the Isle of Man gaming commission, though it is not clear if the site was ever launched.
What did the court case not address?
While it might appear that there is a helpful arbitration decision for the State of Florida and Seminole Tribe, the court case itself did not address whether online wagering is permissible under IGRA.
The court case only addressed effectively whether the state of Oklahoma had to accept the arbitrator’s award, which they did. The scope of IGRA was not within the District Court’s scope of review.
Any implication that the federal court approved or disapproved of the arbitrator’s decision is not contained in the court opinion. Instead, the opinion explicitly addresses the validity of the arbitration provision within the compact, which the court upheld.
The United States would like a word
As has been widely documented, the leading case on the issue appears to be from the Ninth Circuit Court of Appeals in the case of California v. Iipay Nation of Santa Ysabel.
The Iowa Tribe matter predates the decision, and it appears the Iipay Nation of Santa Ysabel tried to use the arbitration award for support in making their arguments against California and their co-plaintiff, the federal goverment, which the United States promptly attacked in their reply brief at the district court level.
The Tribal Defendants’ arguments regarding “off reservation means of access” begins with numerous references to the proceedings in an Oklahoma district court case captioned Iowa Tribe of Oklahoma v. State of Oklahoma. Notably, the Tribal Defendants do not rely on any court decision issued in Iowa Tribe, because the district court in Iowa Tribe merely confirmed an arbitration award without any substantive comment or analysis.
Instead, the Tribal Defendants cite to the underlying arbitration award itself as support for the proposition that “the use of the Internet to connect remote game players to the game servers located on . . . Indian lands [is] not contrary to IGRA nor prohibited by UIGEA.” Their reliance on the arbitration award, however, is misplaced for several reasons (internal citations omitted).
The problem with arbitration
Arbitration has a lot of advantages over litigation, but it also can have some of these advantages can become a stark disadvantage as well, depending on which side of an issue you are on.
One of those disadvantages is that it is not precedential. That means it is not binding on any court, or even any other arbitration panel. It is also often private, meaning the record of the arbitration can sometimes only be available to the parties (though that is not the case here.)
While the citizens of Florida are obviously hoping that the gaming compact will give them mobile sports betting, the arbitration decision cited in the document addressed the location of patrons outside of the United States according to the federal government’s reply brief:
… the Iowa Tribe proposed to use the Internet to conduct gaming using servers on its lands that could only be accessed by international patrons located outside of the United States where gambling is lawful.
The United States’ brief in Iipay Nation refers to the arbitrator’s analysis as “cursory at best.” The brief concluded its critique by stating:
“there is simply no analytical value in the arbitrator’s conclusions regarding IGRA and UIGEA.”
Another way for Florida sports betting?
The question of whether Florida sports betting fans will have mobile betting as a result of the pending compact remains unclear.
However, on closer inspection, the arbitration case the Legislature references for support appears less on point than is likely desirable for the parties involved.
In addition to the challenges of relying on an arbitration decision comes the fact that there is a Court of Appeals decision addressing similar issues that reaches a distinctly different conclusion, which came more recently than the arbitration award.
That, coupled with various pieces of federal guidance on the issue, raises substantial concerns about the mobile component of this deal surviving without it setting off signals at the federal level.