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After the Seminole Tribe of Florida’s legal victory to keep state-wide mobile betting intact, a prominent tribal gaming attorney believes that precedent now allows tribes to amend their gaming compacts to offer mobile wagering instead of states granting licenses for betting.
The U.S. Supreme Court on June 17 declined to hear an appeal by West Flagler Associates and Bonita-Fort Myers Corp. to a federal court’s decision that allowed the Seminole Tribe under a compact to take sports bets through a so-called “hub and spoke” model in which all wagers are accepted via servers on tribal land.
West Flagler and Bonita-Fort Myers argued that processing bets placed outside of tribal lands, even though servers are on a reservation, violated the Indian Gaming Regulatory Act, or IGRA, of 1988.
The Seminole model is entirely different from regulatory regimes in other states, such as Arizona, Michigan and Connecticut, that have allowed tribes to participate in state-wide sports betting and internet gaming only if they obtain a state license and agree to be regulated via a state gaming commission.
“I don’t fault the tribes in Arizona and Michigan that went forward with the state law model given the uncertainty at the time,” Scott Crowell, founder of Crowell Law Office Tribal Advocacy Group in Arizona, said Wednesday (June 26) during a webinar hosted by the Indian Gaming Association.
“The problem that I have is with the major operators, where they have basically used these state-run models to create a rent-a-tribe scheme,” Crowell said.
There are specific provisions within IGRA that protect tribes from being forced to give up a majority of their tribal gaming revenue to any commercial entity that may help to support their operation, Crowell said.
Nothing prevents a tribe from making deals with commercial operators such as BetMGM or DraftKings. However, under IGRA, the tribe must receive at least 60 percent.
“Under that model, it ensures the tribes are going to receive the bulk of the revenue,” Crowell added.
Signed into law by President Ronald Reagan in October 1988, IGRA created a regulatory framework for tribes to offer gaming on their reservations.
IGRA also demands that the state and tribe negotiate a gaming compact that is approved by the U.S. Secretary of the Interior to participate in Class III gaming, which includes slot machines, table games and sports betting.
In line with federal regulations, tribes can only offer mobile betting on a state-wide basis if they are expressly authorized to do so under a compact.
Crowell accused West Flagler and Bonita-Fort Meyers of trying to use IGRA to prevent tribes from competing in the emerging markets of the gaming industry.
“A lot of dust was still kicked up in the way this thing was going to play out. Had it gone the other way, it would have been devastating for tribes,” Crowell said.
Among the key questions being asked in the wake of the Supreme Court’s decision is whether it could speed up California’s efforts to legalize sports betting, which will require a voter referendum regardless of whether sports betting is pursued under an IGRA model or any other regime.
James Siva, chairman of California Nations Indian Gaming Association (CNIGA), admitted there was a lot of excitement over the Seminole Tribe’s sports-betting decision, but there was never going to be an immediate push for a new initiative in California.
“We are going to continue on the same path that we are doing the last few years,” Siva said. “This opens up some new paths for us to utilize and look at as potential opportunities, but our timeline remains the same even with this decision.”
Siva declined to put a date on when tribes are likely to push for another ballot initiative but it is not going to be this year. An effort to legalize sports betting in 2022 fell short as voters overwhelmingly defeated two initiatives.
Proposition 27, which was backed by operators like FanDuel and DraftKings and opposed by tribes, failed dramatically garnering just 17.7 percent of the vote, while a tribal effort to legalize retail wagering at casinos and racetracks, Proposition 26, earned just 33.02 percent of the vote.
“The models they have used in the past are not going to work in California,” said Siva of the DraftKings and FanDuel measure, which would have obliged tribes and their partners to obtain a state license. “Our protection of this industry that we have built up from nothing over the last three decades means more to us than just adding another percentage to the bottom line.”
The hour-long discussion with Siva and Crowell was moderated by Victor Rocha, IGA’s conference chairman, and Jason Giles, executive director of the IGA.
Beyond California, Giles asked Crowell what the decision means for Minnesota, a state that has struggled to legalize sports betting.
“I believe in those states like Minnesota or California where there is either actual exclusivity by the tribes or substantial exclusivity like in New Mexico and Oregon … they should take a serious look at this model,” Crowell said.
“The legislation that almost passed in Minnesota [earlier this year] was more akin to Michigan, a state-law model,” said Crowell.
“I think they should take a very hard look at an IGRA model before expanding sports betting in Minnesota.”
