Florida operators launch lawsuit against new gaming compact

Two Florida operators have filed a lawsuit for the repeal of the state’s new gaming compact with the Seminole Tribe on the grounds it breaches the Indian Gaming Regulatory Act (IGRA). The lawsuit, filed with the US District Court for the Northern District of Florida by Miami’s Magic City Casino and the Bonita Springs Poker Room, alleges that the sports betting component of the compact violates federal law. Under the state compact, anyone in Florida over the age 21 can start placing and collecting online wagers on sporting events from anywhere in Florida beginning on October 15. In May, Florida senators approved a new 30-year tribal gaming compact with the Seminole Tribe, granting the tribe significant control over Florida’s gambling market while allowing sports betting for the first time. Competing operators can enter the state’s sports betting market but must operate as skins under technology provided by Seminole gaming partner Hard Rock Digital. As part of this arrangement, any operator using the Seminole platform is required to pay 40% of its revenue to the tribe – a potential deterrent for prospective operators. Any transactions would go through servers located on tribal land in a so-called “hub and spoke” model. This is aimed at bypassing both federal and state law, which both deem sports betting in Florida illegal. However, the two operators have alleged that this model contravenes IGRA and UIGEA. Under IGRA, while a state may enter a compact with any tribe to operate gambling, it must occur on Indian land, defined as “all lands within the limits of any Indian reservation” or lands held in trust by the US for the benefit of said tribe. “Deeming the bet to have been placed on Indian lands because the servers are located there contradicts decades of well-established precedent interpreting applicable federal law,” the lawsuit states. “Contrary to the legal fiction created by the 2021 Compact and Implementing Law, a bet is placed both where the bettor and the casino are each located,” it adds. The lawsuit also suggests the compact violates UIGEA in allowing bets to be placed outside of tribal lands and the prior 1961 Wire Act, which prohibits the use of interstate commerce for illegal transactions. The operators argue that they will lose revenue due to the competitive advantage given to the Seminole Tribe under the compact, which they state will impair their ability to compete. If successful, the lawsuit could see sports betting removed from the state’s gaming compact, which is still awaiting approval from the US Department of Interior before it can be ratified. The Seminole Tribe is also facing potential competition from a new constitutional initiative spearheaded by Florida-based not-for-profit political action committee (PAC) Florida Education Champions (FEC). The PAC, which is backed by DraftKings and FanDuel, would see the authorization of online sports betting at all Florida pari-mutuels, professional sports stadiums, and anywhere else in the state using a mobile sports betting platform. The ballot initiative, which would be voted on in November 2022, would require a 60% vote to pass.