Shedding Light On Compact Lawsuit: Does It Have A Leg To Stand On?

Written By John Holden on July 9, 2021

On July 2, 2021, the lawsuit filed by West Flagler Associates on behalf of their various gaming entities operating in South Florida raised some eyebrows.

First, the lawsuit seemed to dogpile on top of a growing number of voices questioning whether the Indian Gaming Regulatory Act (IGRA) allows for a state to authorize a tribe to conduct mobile wagering via a compact by determining the location of a wager as made at the location of the gambling operator’s servers.

Second, the lawsuit raises some constitutional questions about a non-party to the compact’s ability to challenge its validity in the federal court system.

A quick look at what lawsuit seeks

West Flagler Associates’ lawsuit against Gov. Ron DeSantis and Julie Imanuel Brown, Secretary of the Florida Department of Business and Professional Regulation, asks for Judge Allen Winsor of the federal Northern District of Florida court to declare that the newly signed compact with the Seminole Tribe is invalid by virtue of three federal laws.

The first count of the complaint asserts that “Congress designed the IGRA ‘to facilitate on-reservation gaming.’” By allowing the Seminole Tribe to offer wagering to patrons who may not be on tribal land, the compact and its enabling legislation exceed the scope of the governor’s authority. The mobile gaming provisions are therefore invalid as a matter of law.

The second count asserted in the complaint is that the proposed operation of mobile wagering would be a violation of the Wire Act. The argument made by the plaintiffs centers on the argument that simply because a server is in the same state as a bettor, sports betting off tribal land remains illegal in the state. Thus, any wagering occurring outside tribal land would be a violation.

The final count argues that the new compact would permit situations that violate the Unlawful Internet Gambling Enforcement Act (UIGEA). The plaintiffs argue:

The UIGEA makes illegal certain financial transactions associated with gaming on Indian lands facilitated by the Internet when the wager is being placed outside the reservation in a state whether the wager is otherwise illegal.

A quick primer on standing

The big question is whether the plaintiffs, in this case, can establish standing to move forward with this lawsuit. Article III standing is a constitutional doctrine that requires plaintiffs to show three things to maintain a lawsuit against a defendant.

The first is that the plaintiff has suffered an injury-in-fact. The plaintiff must have suffered some actual harm or faces an imminent threat of harm. Merely hypothetical harms do not satisfy the injury-in-fact requirements.

Secondly, the plaintiff must trace the injury to the defendant’s actions or show that causation of the injury stemmed from the defendant’s actions.

The third and final prong is that the injury must be something that the court’s decision can remedy. This factor is referred to as redressability. Essentially, the plaintiff must be asking a court for a remedy that they are capable of providing.

On the surface, these three elements seem easy to satisfy. But in reality, there are roughly 200 years of case law establishing a great deal of precedent to establish when a plaintiff has satisfied all three elements and can proceed with their lawsuit.

West Flagler Associates basis for standing

West Flagler Associates asserts:

As economic competitors of the Tribe, Southwest Pari-mutuels have standing to bring this claim because there is a controversy over whether or not the IGRA authorizes online Class III gaming, including sports betting, by persons who are not physically present on Indian lands.

Does IGRA allow non-parties to challenge compacts?

Several cases have addressed the ability of non-parties ability to challenge compacts under IGRA.

In a case from the Eastern District of California involving California card clubs, the card club owners challenged what they deemed a “monopoly” in the state granted by virtue of tribal compacts. Card clubs stood as potential competitors to the tribes in the eyes of the court. As a result, the court found those clubs had the necessary interest in the matter to be granted standing.

A necessary intervention

In a 2018 case, MGM sued to intervene in a case out of Connecticut involving tribal compacts arguing that it had standing under the “competitor standing doctrine” by virtue of amendments to a tribal agreement impacting competition to MGM’s property in Springfield, Massachusetts.

The District Court for the District of Columbia agreed, stating:

MGM would be sufficiently injured by the relief sought by Plaintiffs—the Secretary’s approval of Plaintiffs’ proposed amendments to the Pequot Procedures—to convey standing to intervene.

Not everyone gets to stand

While competitors have been found to have standing in some cases, taxpayer standing, a scarce means of establishing standing, has not been extended to those citizens who have sought to challenge tribal compacts by mere virtue of paying taxes in a state.

Counts two and count three

The two counts of the West Flagler Associates’ complaint against DeSantis that involve the Wire Act and UIGEA may have different challenges, as the plaintiffs will need to establish not only that they have standing but also that they satisfy other justiciability concerns as well.

Generally, courts cannot issue advisory opinions and must only decide cases that are “ripe,” meaning cases where an actual controversy has arisen.

Given the unique nature of the Florida compact and the uncertainty of the law surrounding certain aspects of the agreement, as well as the fact that the compact still awaits federal approval, a court may find not enough has happened yet to render a decision in particular on the last two counts, which implicates potential future activities.

What to keep an eye on now

When the defendants file their responses to the complaint, they will likely challenge the plaintiffs’ ability to bring these claims.

Case law, though limited, exists supporting challenges from economic competitors challenging various acts under IGRA. Plus, it seems possible to distinguish this case from those previously decided.

In the end, the plaintiffs only need to succeed on the first count to prevail. The first challenge, however, will be to establish that they have standing.

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John Holden

John Holden is an Ottawa native raised in Oakville. Holding a J.D. / Ph.D., Holden is an academic at heart. For PlayFL, Holden will focus mostly on the legal developments in the current battle over Florida sports betting.

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