Florida‘s gaming compact with the Seminole Tribe gained federal approval by default.
In not acting on the compact by Thursday’s deadline, the Bureau of Indian Affairs (BIA) gave its tacit approval without taking an official position on controversial elements related to Florida online sports betting.
However, the BIA did comment on the compact’s hub-and-spoke model for mobile sports betting in letters to Gov. Ron DeSantis and Seminole Chairman Marcellus Osceola Jr.
In letters sent to the principals in the compact, BIA Deputy Assistant Secretary Bryan Newland explained why the Bureau didn’t take action on the compact:
“The Department has concerns regarding the inclusion of provisions relating to jurisdiction over tort claims and mandatory vendor contracts. We also believe it is important that the Department address the provisions relating to internet gaming activities and revenue sharing.”
Housed within the US Department of Interior, the BIA had 45 days to review the compact. By letting the review period elapse, the Bureau allowed the compact to go through.
The 30-year compact creates a statewide online sports betting model through servers located on tribal lands. It also gives tribal casinos craps and roulette, and allows the Seminoles to build three more casinos.
Bureau comments on mobile sports betting model
The Indian Gaming Regulatory Act only permits compacts between a state and tribe for gaming “on tribal lands.”
The Seminole and the state claim that sports wagers originating from anywhere in the state are taken on tribal lands if that’s where the servers are located.
In its letters, the BIA acknowledged ambiguity as to the location a bet occurs. It cited state laws, such as in New Jersey, that place it at the server.
“Multiple states have enacted laws that deem a bet to have occurred at the location of the servers, regardless of where the player is physically located in the state. The Compact reflects
this modern understanding of how to regulate online gaming.”
By not disapproving the compact, the BIA determined that it complied with IGRA and existing federal law.
“IGRA should not be an impediment to tribes that seek to modernize their gaming offerings, and this jurisdictional agreement aligns with the policy goals of IGRA to promote tribal economic development while ensuring regulatory control of Indian gaming. The Department will not read restrictions into IGRA that do not exist.”
Other concerns with compact
Additional concerns laid out in Newland’s letter include:
- Allocation of jurisdiction to the state over patron disputes and tort claims. Newland said the BIA believed this provision to be an impermissible compact provision under IGRA.
- Requiring the tribe to contract with pari-mutuels to provide marketing services for the tribe’s sportsbook. Newland indicated that the Department doesn’t endorse the marketing arrangement provided in the compact.
- Revenue sharing provisions, which he says should not be considered a model for other states.
The Bureau seemed to give a lot of leeway to the Seminole Tribe based on its tremendous success in gambling operations.
Why would Bureau take no position on compact?
The BIA was tasked with reviewing the compact under the IGRA.
By letting the clock expire, the BIA allowed the compact to proceed by operation of law without validating its contents. But in not disapproving the compact, the BIA determined it complied with the provisions of IGRA.
George Skibine, a DC-based attorney who used to work for the BIA, told the Florida Phoenix he expected this result. That by not expressing an opinion on the compact’s controversial components, it makes legal challenges more difficult than if the BIA articulated its reasons for approving the compact.
It’s not a surprise that the compact cleared the federal hurdle. Seminole Gaming CEO Jim Allen told lawmakers during a special session to ratify the compact that the tribe had conferenced with the BIA while developing the language.
State and tribe reactions to federal approval
The governor issued a press release celebrating approval of the gaming compact.
“The final approval of this historic gaming compact is a big deal for the State of Florida,” DeSantis said. “This mutually-beneficial agreement will grow our economy, expand tourism and recreation and provide billions in new revenue to benefit Floridians.”
DeSantis announced the compact in April. It includes a guaranteed minimum of $2.5 billion to the state over the first five years and projections of $6 billion by 2030. The tribe wasn’t paying anything to the state in recent years due to violations of the previous compact.
The state legislature ratified the compact in a special session in May. Leaders of each legislative chamber also lauded the approval.
The press release also includes a quote from Osceola:
“Today is a great day for the people of Florida, who will benefit not only from a $2.5 billion revenue sharing guarantee over five years, but also from statewide sports betting and new casino games that will roll out this fall and mean more jobs for Floridians and more money invested in this state.”
Federal approval sets stage for lawsuits
Pari-mutuels in Southwest Florida already filed a federal lawsuit alleging that the compact exceeds the scope of the governor’s authority because IGRA was meant to facilitate on-reservation gaming.
Under the compact, pari-mutuels can participate in sports betting. But they must use the tribal servers and give about 40% of their revenue to the tribe.
Now that the compact received federal approval, more lawsuits are likely to follow.
John Sowinski told the Florida Phoenix that No Casinos would fight the compact in federal and state courts.
If a court doesn’t intervene, the Seminole could launch sports betting Oct. 15 per the compact.
Approval creates precedent for other states
The BIA implicitly determined that taking statewide mobile bets from servers located on tribal land can happen under IGRA.
For the first time, the US Department of Interior allowed for IGRA to apply to Class III gaming by persons not physically present on tribal lands.
In states such as Michigan, Connecticut and Arizona, tribes entered commercial agreements with the state to offer statewide mobile sports betting.
Knowing they can get approval for mobile sports betting under IGRA is a game-changer for tribes in many states.
But they’ll probably want to wait and see if the compact survives court challenges before exploring the opportunity.