Florida, Seminole Tribe Get Federal Approval for Sports Betting

Florida, Seminole Tribe Get Federal Approval for Sports Betting
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Florida sports betting is on track to begin Oct, 15 after the Department of Interior chose to take no action on the 30-year gaming compact between the State of Florida and the Seminole Tribe. A 45-day window to approve or reject the compact ended without a decision, thus clearing the way for its approval.

Unless a federal court intervenes, Florida will become the largest state in the U.S. with legal sports wagering when the compact takes effect. The compact has been portrayed as a major political victory for Florida Gov. Ron DeSantis, a potential GOP presidential candidate in 2024. He engineered the deal with the Tribe, which guarantees the state $2.5 billion in revenue over the next five years, and pushed for its passage in the state legislature via special session in May.

In a 12-page letter published Friday, the Interior Department said, “the Compact is considered to have been approved by the operation of law to the extent that it complies with IGRA and existing Federal Law. The Compact will become effect up publication of notice in the Federal Register.”

The letter states that:

“The Compact authorizes the Tribe to continue to conduct class III gaming on its lands and expands the allowable scope of gaming to include mobile sports betting, amongst other games. The Tribe may conduct and operate sportsbooks to offer sports betting on professional and collegiate sports events through mobile or electronic devices by patrons physically located within the State."

It also appears that sports betting is exclusive to the Tribe and doesn’t permit third-party partnerships, seemingly locking out other sportsbook operators:

"The State legislature authorized mobile sports betting exclusively for the Tribe through legislation enacted at the same time it ratified the Compact."

Opponents of the compact have already filed a federal lawsuit and more are expected on the federal and state level. Florida law does not allow an expansion of gambling without approval by voters. However, Indian gaming is exempt.

The compact also allows for the addition of craps and roulette at tribal casinos in Florida. The state will receive at least $500 million in revenue payments for the next five years under the deal. That money is guaranteed even if/though any portion of the compact — such as the off-site and online sport betting provision — is struck down by the courts or in the federal approval process. Tribe would have the exclusive right to offer in-person sports betting at its casinos even if the online component is eliminated.

Sports betting in Florida will be limited to those 21 and over. It would include wagering on college and pro sports, national and international events and motor racing. Prop bets on college games would be prohibited.

First Lawsuit Filed In Federal Court

The first lawsuit attacking the Florida betting compact was filed by the owners of Miami’s Magic City Casino and the Bonita Springs Poker Room in the Northern District of Florida on July 2. The federal suit claims that any deal allowing sports betting outside of 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.

“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 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 owners of Magic City Casino said in a statement.

The pari-mutuel license holders maintain they will lose millions of dollars because gamblers would opt to wager off-site using apps run by the Tribe. They also believe the penalty provisions in the compact incentivize the Tribe not to work with them in good faith.

“Pari-mutuels that are unable to or choose not to enter into a marketing agreement with the Tribe are completely shut out of any opportunity to offer sports betting,” the lawsuit alleges.

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, with the Tribe getting 40% of the net. Under the compact, sports betting operators such as DraftKings Sportsbook, FanDuel Sportsbook and BetMGM are prohibited from owning sites and can only manage the sites owned by others.

Even sponsors of legalized gambling in Tallahassee, including DeSantis, House Speaker Chris Sprowls and State Rep. Randy Fine, a former casino manager who shepherded the compact through the House, have all conceded the issue of online sports betting in Florida using servers on Indian lands would be decided by the courts.

The Seminole Tribe opposes the lawsuit, citing the revenue it guarantees the state and a poll that claims the compact is supported by three of four Floridians.

Sportsbooks Back Constitutional Amendment

A state amendment passed in 2018 mandates that any expansion of gambling in Florida outside Indian lands must be approved by 60% of the voters via referendum. That amendment was passed with strong financial backing and support from the Seminole Tribe, in addition to representatives of the state’s tourism industry.

A proposed constitutional amendment for Florida’s 2022 ballot would allow online sports betting without having to receive the Tribe’s approval.

If passed with 60% of the vote, the amendment backed by DraftKings and FanDuel would allow “sports and event betting under Florida law at professional sports venues and pari-mutuel facilities and statewide via online sports betting platforms.” Any organization — in addition to the Tribe — could take legal sports bets in Florida as long as it has been licensed to operate in at least 10 other states for least one year.

The effort is being directed by a political action committee called “Florida Education Champions.” The amendment would direct all the revenue raised by sports betting in the state to Florida’s Educational Enhancement Trust Fund. The PAC has launched a website and social channels, using images of children to promote the amendment, even though betting would be limited to those over 21.

Florida Has Long History With Legalized Gambling

Florida has a long and lucrative history with legalized gambling.

In 1828, a $1,000 lottery was approved to fund the Union Academy in Jacksonville 17 years before Florida became a state. Derby Lane Greyhound Track in St. Petersburg opened in 1925 and ran live dog racing for 95 years. Florida legalized parimutuel betting in 1931 to raise revenue and increase tourism during the onset of the Great Depression. It even briefly approved slot machines in the 1930s. Jai-alai betting was legalized in 1935. The Florida Lottery was born in 1986.

Dog racing was outlawed by Florida voters via referendum in 2018. Florida had 11 tracks at the time. Florida's final legal greyhound race went off on Dec. 31, 2020, at Palm Beach Kennel Club. Both Palm Beach and Derby Lane remain open for poker and simulcast wagering.

The simulcast racing allows those facilities, and several others in Florida, to remain open under their parimutuel licenses even though they no longer offer wagering on live events on-site. There are three live-action jai-alai frontons currently operating in the state. Live thoroughbred racing continues at Gulfstream Park in Miami and Tampa Bay Downs. Live harness racing takes place in season from November until May at Isle Casino Pompano Park, a Caesars property.