Opinion: Did Feds Pass The Buck On Florida Sports Betting Compact?

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Florida sports betting

Friday’s decision by the federal Department of the Interior to neither approve nor disapprove the Florida sports betting deal reached earlier this year allows the tribal compact to become law.

It might, however, have simply kicked the can down the road.

The Seminole Tribe of Florida and Governor Ron DeSantis entered into a compact that would bring expanded payments to the state in exchange, in part, for substantial exclusivity over FL sports betting. The agreement was followed up by a special legislative session which saw the compact overwhelmingly supported by the legislature.

On Friday, the feds announced they would neither approve nor disapprove the compact. That means the agreement comes into force to the extent “that it complies with IGRA and existing Federal law.”

Passing the buck on Florida sports betting?

The question of whether the Department of the Interior is merely passing the buck instead of making a decision on several aspects of the compact is one for which we might not ever have a clear answer. However, the agency made a similar decision last year when several Oklahoma tribes entered into compacts with the Governor Kevin Stitt over objections of the legislature.

The choice to avoid what might be seen as dipping into highly controversial political issues that will inevitably be resolved by a court might provide the agency some cover from criticism. In the Oklahoma matter, the State’s Supreme Court eventually rejected the agreements as not complying with the process for compacting laid out in state statutes.

Why the controversy?

The new Seminole compact is likely the most contentious compact agreement in recent memory. The agreement, despite bridging a long-term split between the governor’s office and the Tribe, gained the approval of much of the legislature. Yet many others feel as though they have been cut out.

DraftKings and FanDuel last month teamed up to launch the so-called Florida Education Champions initiative to get mobile Florida sports betting on the 2022 ballot and give voters the ability to open up the market.

Similarly, West Flagler Associates, owners of the Magic City Casino, already filed suit challenging the compact in Federal Court. A response from the governor’s office is due in early September.

Despite the opposition from potential competitors, the Seminole Tribe has guaranteed the state an amount of money that those competitors are unlikely to be able to match, even in a New York sports betting style of arrangement.

Overview of the letter

The Department of the Interior letter begins by providing a summary of the key provisions of the compact including highlighting that the tribe’s sports betting revenue share to the state will be reduced to zero in the event of a successful citizen’s initiative that disrupts the tribe’s exclusivity.

The letter then details the 11 exceptions to the tribe’s exclusivity including the existing non-tribal facilities, the Florida Lottery, and the operation of daily fantasy sports games.

The letter also details a provision of the compact that has not received significant attention but provides that upon written notice of a tort claim, the patron and the tribe will have one year to resolve the dispute, after which time a patron can file the suit in court.

The analysis

The letter proceeds from a background and summary to an analysis section. The federal agency notes that the “hub and spoke” model is something that they have not encountered, and obviously something that Congress did not contemplate in the pre-Internet gaming era of 1988.

But the letter notes that the Indian Gaming Regulatory Act (IGRA) was designed as a flexible statute for promoting economic development and tribal-state relationships.

The sports betting question for Florida

In analyzing whether mobile sports betting is allowed, the letter states:

In examining the permissibility of mobile sports betting under IGRA as a novel matter, the Department seeks to uphold the intent of IGRA and notes that:

1) evolving technology should not be an impediment to tribes participating in the gaming industry

2) 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; and

3) the purposes of IGRA would be served through the improvement of tribal-state cooperation in the regulation of mobile wagering.

Why this is not like Desert Rose

The Department of the Interior distinguishes the current compact from cases that found against tribes operating Internet-based gambling, stating:

those cases presented scenarios where tribal internet wagering was not done with the consent of a State pursuant to a tribal-state compact; and, in some instance, where state law prohibited the contemplated form of online gaming.

Not without concerns

While the letter expressed support for the mobile wagering aspects of the compact, the agency expressed concerns over the compact’s requirement that the Seminole Tribe contract with pari-mutuel operators.

As IGRA requires “that a tribe have the sole proprietary interest in, and responsibility for, the tribal gaming operation to ensure that it receives the primary benefit of its gaming revenue,” the Department expressed concerns about the mandatory agreements.

What to make of this for sports betting in Florida?

The lawsuits are inevitably coming. West Flagler Associates were the first to challenge the compacts in federal court. The decision to allow the 45-day window to close without approving or denying the compact means the compact will become law when it appears in the Federal Register.

While the Department of the Interior’s letter provides support for the argument that tribes are able to offer mobile Florida sports betting, the letter does not bind a court to the same opinion.