Lawsuit Challenges Florida Online Sports Betting in Compact

Lawsuit Challenges Florida Online Sports Betting in Compact
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A federal lawsuit has been filed by owners of Miami’s Magic City Casino and the Bonita Springs Poker Room against the state of Florida challenging the legality of the online sports betting allowed in its gaming compact with the Seminole Tribe.

The fate of the Florida gaming compact approved by the state legislature in May and signed by Gov. Ron DeSantis and the Tribe remains in the hands of the federal Department of the Interior. A 45-day timeframe to approve or reject the deal began on May 26. It would expire on Saturday.

The main thrust of the lawsuit — which was filed in the Northern District of Florida on Friday — claims that any deal allowing sports betting outside off tribal lands violates the Indian Gaming Regulatory Act. Sports betting off Indian land and away from their casinos is allowed under the compact by a “hub-and-spoke” approach. This means the servers that process actual wagers are be based on Indian land even though those betting would be located anywhere within the state.

That approach has drawn fierce criticism from opponents of the expansion of gambling in Florida. A state amendment passed in 2018 mandates that any expansion of gambling in the Sunshine State outside Indian lands must be approved by 60% of the voters via referendum.

“The question whether ‘deeming’ a bet to be placed on the Tribe’s reservations because of the location of the servers is legally allowed even though the persons placing the wager are doing so from elsewhere in the state must be settled through the judicial system, as this contradicts the Indian Gaming Regulatory Act (IGRA), the Wire Act and the Unlawful Internet Gambling Enforcement Act (UIGEA) as well as court decisions interpreting these laws," the owners of Magic City Casino said in a statement.

"The lawsuit filed will address these issues and we look forward to a swift legal process that focuses squarely on this topic within the Seminole Compact.”

The group refused to answer any further questions.

More Litigation Expected

It is expected that more litigation will be filed on the state level to prevent certain parts of the compact, including the sports betting provision off Indian land, from taking effect. A total of 19 current parimutuel license holders are allowed to accept wagering at their brick-and-mortar facilities and online under the compact, but they have to each reach agreements with the Tribe and share revenues.

Under the compact, sports betting operators such as DraftKings Sportspook, FanDuel Sportsbook and BetMGM are prohibited from owning sites and can only manage the sites owned by others.

A proposed Florida constitutional amendment for the 2022 ballot has been filed by a political action committee reportedly backed by DraftKings and FanDuel. If passed, the amendment would allow any entity to take sports bets in Florida, in addition to the Tribe, as long that operator has been licensed in at least 10 other states for at least a year.

Professor and attorney Bob Jarvis, who teaches a course in gambling law at Shepard Broad College of Law at Nova Southeastern University, said nothing is surprising in the suit filed by the Magic City group — known as Southwest Pari-mutuels — given that it centers on the argument that “IGRA only sanctions betting that takes place on Indian land.”

“Of course, the Tribe (and the State of Florida) believe they have gotten around this issue by having the compact deem off-Indian land bets to be on-Indian land bets because the server that takes the bet is on Indian land. That’s really the crux of the plaintiffs’ case, and that’s been the gamble all along for the Tribe and the State,” Jarvis said via email.

Under the compact, which also allows for the addition of roulette and blackjack at tribal casinos, the state is guaranteed at least $500 million in revenue payments each year through 2051. That money is guaranteed even if any portion of the compact — such as the off-site and FL online sport betting provision is struck down by the courts or in the federal approval process.

Sports betting would be allowed both on-site and online via servers based on Indian lands for those over 21. It would include betting on college and pro sports, national and international sporting events and motor racing. Prop bets on college games would be prohibited.

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