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A U.S. District Court judge late Monday night invalidated the Seminole Tribe’s landmark new gaming compact with the state of Florida, bringing an abrupt end to the state’s mobile sports betting offering.
Judge Dabney Friedrich ruled that the entire gaming compact violates the Indian Gaming Regulatory Act of 1988 (IGRA) by authorizing gaming outside Indian lands.
As a result, the D.C. federal circuit court judge invalidated the entire compact signed earlier this year and that had been approved by the federal government, restoring the state’s previous compact with the tribe that does not include sports betting, craps or roulette.
Friedrich heard oral arguments November 5 in the lawsuit filed by West Flagler Associates, the owner of Magic City Casino in Florida, against the U.S. Department of the Interior for approving a compact that allegedly violated federal law.
Friedrich rejected the government’s argument that bets take place at the location of the server rather than the location of the player, enabling the tribe to accept mobile bets from players throughout the state.
“In its own words, the compact authorizes such betting by patrons who are 'physically located in the State [of Florida] but not on [the Tribe’s] Indian Lands (emphasis added),'" Friedrich wrote in her ruling. “That italicized phrase is no slip of the tongue, but instead describes the basic consequence of authorizing online betting throughout the State.”
“Although the compact 'deems' all sports betting to occur at the location of the tribe’s 'sports book(s)' and supporting servers … this court cannot accept that fiction,” Friedrich wrote.
“When a federal statute authorizes an activity only at specific locations, parties may not evade that limitation by 'deeming' their activity to occur where it, as a factual matter, does not.
“Accordingly, because the compact allows patrons to wager throughout Florida, including at locations that are not Indian lands, the compact violates IGRA’s 'Indian lands' requirement,” she added, referring to the federal statute authorizing only gaming activities that occur on tribal reservations.
The judge ruled that U.S. Secretary of the Interior Deb Haaland, who was the named defendant in the suit, had “an affirmative duty to reject” the compact as a result.
Friedrich said that the Department of the Interior’s August “deemed approved” letter lacks “a plausible defense of the compact’s scope,” while the federal government’s arguments in the litigation “fare no better,” after the government argued that state law permitted the off-reservation activity.
In terms of state law, Florida requires a voter referendum for any form of gambling expansion outside a compact.
Leading U.S. sports-betting operators FanDuel and DraftKings already begun pursuing a referendum initiative earlier this year to establish a ballot measure on competitive mobile sports betting for the November 2022 general election.
Friedrich said that her decision does not prevent the state from adjusting course and ultimately permitting sports betting by alternate means.
“The state and the tribe may agree to a new compact, with the secretary’s approval, that allows online gaming solely on Indian lands,” she said. “Alternatively, Florida citizens may authorize such betting across their State through a citizens’ initiative.
“What the secretary may not do, however, is approve future compacts that authorize conduct outside IGRA’s scope,” she added.
The compact included severability provisions that would have kept on-reservation sports betting, craps, roulette and other changes in the event that a court struck down solely mobile sports betting beyond tribal lands.
In fact, West Flagler suggested during oral arguments that the court could invalidate the portions that conflicted with IGRA while retaining the rest of the compact, but Friedrich ruled that the entire agreement was void, writing that the government “forfeited any request for severance by omitting it from its motions to dismiss, its corresponding replies, and its supplemental briefs.”
A separate lawsuit filed by No Casinos, a group opposed to gaming expansion in Florida, and several Florida businessmen was dismissed as moot after the judge’s ruling granted the relief that lawsuit sought, which was invalidating the entire compact.
Government and tribal officials were unavailable for comment Monday night, but an appeal is likely to come in some form.
The immediate effects on the tribe’s nascent sports-betting offerings were not immediately clear, although reports on social media suggested that bets and deposits were no longer being accepted by the Hard Rock online sportsbook that launched on November 1.
Although the biggest blow is dealt to Florida by denying the Seminole Tribe a state-wide mobile betting monopoly, the ruling carries ramifications throughout the U.S. as tribes pursue avenues to operate mobile betting.
Some states, including Michigan, Connecticut and Arizona, have worked around the IGRA concerns by granting tribes commercial licenses, but that move requires not only agreements between the respective state and the tribes, but typically requires tribes to pay taxes and waive sovereign immunity for the purpose of licensure, a concerning proposition for some tribes.
At least four tribes are pushing a ballot measure that would replicate the Seminole compact model for mobile sports betting in California.
Yet another question mark is how Monday’s ruling will play into the DraftKings-FanDuel ballot campaign in Florida.
The pair’s proposed initiative would allow the Seminole Tribe to join leading commercial operators in qualifying for a license for online sports betting in Florida, but the tribe has vehemently opposed the campaign so far.
DraftKings and FanDuel have so far collected around 223,000 valid voter signatures to qualify their ballot measure, but need to reach almost 892,000 before February 1 next year.
