It turns out the Florida legislature could effect change on the gaming compact with the Seminole Tribe after all.
Pressure from the House led to the Seminoles and Gov. Ron DeSantis agreeing to remove language on future online casino discussions before the legislature took up the compact in a special session on gaming Monday.
The tribe also agreed to delay the launch of sports betting until Oct. 15 to assure the installation of appropriate safeguards.
A Senate committee and House subcommittee advanced bills to ratify the amended compact on the first day of the special session. However, committee discussions revealed that concerns remain over the legality of sports betting provisions of the compact and the tribe’s motivation to include others in Florida sports betting.
Online casino language could have doomed compact
Internet gaming had been part of previous compact negotiations between the Seminole and the state. Language in the compact merely allowed them to continue those conversations into the future:
The State and the Tribe agree to engage in good faith negotiations within thirty-six (36) months after the Effective Date of this Compact to consider an amendment to authorize the Tribe to offer all types of Covered Games online or via mobile devices to players physically located in the state (…)
Members of the State House took issue with the compact ever being amended to include Florida online casinos. The opposition went right up to the top too. House Speaker Chris Sprowles announced the removal with this statement:
“In my discussions with our members, I realized many shared the same concern as I — that some language in the compact could be construed to lead to the backdoor expansion of online gaming. Even the mere possibility of this was unacceptable.”
Before the House Select Subcommittee on the Seminole Gaming Compact advanced the ratification bill, Chair Nick DiCeglie added that he had been “extremely concerned about the online gaming” and was “very pleased” with its removal.
Tribe gives assurances on intentions of inclusion
With the amount of money gambling and sports betting generates, passing a compact isn’t easy in a state like Florida. Opponents remain.
According to Politico, DraftKings has lobbyists working to kill the compact. But that’s obviously not a move the sports betting operator would make if it has access to the market.
Jim Allen, CEO of Seminole Gaming, assured lawmakers the tribe plans for major sports betting operators to take part:
“I want to make sure that there isn’t a perception that companies like FanDuel and DraftKings and Barstool, and obviously the parimutuels themselves, will not have an opportunity. As a matter of fact, for the record, we actually have proposals from some of those companies, specifically DraftKings and FanDuel. I’ve met personally with Barstool and many of the other companies.”
He later expressed frustration that such companies being opposed to the compact were “muddying the waters a little bit.”
Seminoles will be fair to parimutuels
Some lawmakers questioned how much parimutuels would really make from sports betting compared to the tribe.
The compact stipulates that parimutuels partner with the tribe to offer sports betting, with parimutuels getting 60% of the profits. Allen added that nothing restricts the tribe from negotiating a number greater than 60% with some parimutuels. And it intends to do so.
But if the tribe doesn’t set up these partnerships, it just pays an additional 2% of profits to the state.
Allen asserted that the tribe intends to partner for two reasons:
- Partnering with parimutuels, sports teams and other companies will help grow the Florida sports betting market much more quickly.
- The tribe knows it’s important to live up to this commitment for the sake of its relationship with the state.
He added the tribe might want to work with the state to amend the compact in the next five-to-10 years. That sounds like the possibility of a future online casino amendment helping ensure the tribe is cooperate on sports betting.
“If we alienate them in this process, our integrity will be questioned and our intentions moving forward would be diminished,” Allen said.
Seminole Gaming CEO expects court battle
The other major concern brought up by lawmakers was if the sports betting expansion and model could be thrown out in court or invalidated by the US Department of Interior. Allen didn’t deny the possibilities.
“Yes, it is possible that this will not be deemed approved by the Secretary of Interior’s office,” Allen admitted. “Yes, it is possible that a court will determine that the tribe is wrong in its interpretation of Amendment 3 or federal law associated with IGRA.”
But he contended that these possibilities shouldn’t worry legislators, as the state of Florida will still get paid.
“Even if we are wrong, we are resuming our revenue share on the land-based casinos that this year alone would be in excess of $400 million that the state is not receiving today,” Allen said. “So if the concern is sports betting and we’re wrong, the state is still at least $4 billion ahead of the game between now and 2030.”
Allen scoffed at suggestions that the tribe would be fine with the court throwing out the online aspect of sports betting, as it would give the tribe a state monopoly on brick-and-mortar sports wagering.
“There certainly could be a scenario depending on how a court would rule where we may be allowed to offer sports betting only on-premise,” Allen said. “But certainly the assumption is that mobile sports betting … is going to exceed 70% of the activity. So that’s obviously the area the tribe is banking on for the additional profit to offset its new revenue share of a minimum of $500 million a year to the state.”
Further explanation of legal concerns
Legal concerns over the compact’s sports betting proposal center around Amendment 3 and the Indian Gaming Regulatory Act (IGRA). Both were addressed on the first day of the special session.
Compact’s legality under Amendment 3
John Sowinski, president of No Casinos, asserted to lawmakers that the compact would face a legal challenge under Amendment 3.
He chaired the political action committee backing the measure in 2018. Amendment 3 requires any casino gambling expansion in Florida to go through the voters. That is, unless the expansion is through a compact for gaming “on tribal lands.”
Sowinski made his case to lawmakers that the compact violates Amendment 3. He said it wasn’t the intent of the amendment that the tribe and state could expand gambling through a compact.
“I assure you, those conversations were had with Mr. Sowinski before we ever wrote a check for $22 million,” Allen countered. “We may be naïve, but we’re not crazy.”
Sports betting model’s legality under IGRA
Whether a sports bet occurs at the location of the server on tribal land is central to the compact’s legality under both Amendment 3 and IGRA. Allen said the tribe followed precedent set in New Jersey and other states regarding the bet occurring at the server.
Sowinski tore down an Oklahoma court case Senate analysis used to make the argument that the use of the internet to play properly authorized covered games as agreed upon between the parties does not violate IGRA. He called it an arbitration agreement written by a criminal court judge.
“A Supreme Court decision and Ninth Circuit decision in California came after this that says online gambling offered with servers on tribal land is not permissible under IGRA,” Sowinski said.
Joe Webster, outside counsel for the Seminole, explained why the tribe doesn’t believe the Ninth Circuit California v. Iipay Nation of Santa Ysabel online bingo case applies here.
“Here, the tribe and the state are agreeing on a sovereign-to-sovereign basis to deem the transaction occurs where it’s received on the tribe’s sovereign lands,” Webster said. “That we believe is permitted by IGRA, which specifically allows a compact to have a provision for allocation of jurisdiction.”
Allen revealed that the tribe and state had numerous conferences with the Department of Interior in writing the compact. This makes it seem more likely to receive federal approval.
“I can assure you we took their guidance … and technical assistance as these documents were prepared,” Allen said.
Fantasy sports get no help in committee
As introduced, bills to regulate and tax the daily fantasy sports industry might kill the industry lawmakers are trying to legitimize.
Scott Ward, an attorney representing DraftKings and FanDuel, said those sites would have to stop offering fantasy contests in Florida if the bills pass.
“Unfortunately, right now, the way the bill is written, we don’t think we can operate,” Ward said.” “And those 3 million Floridians … would not be able to continue to operate with us if it’s passed in this form.”
Ward asked for four main changes:
- A grandfather clause allowing fantasy companies to continue operating in the state during the licensing and regulation process.
- Allow fantasy play on college sports.
- Don’t limit the number of entries in a contest. Floridians won’t be able to play in large contests with people from other states.
- Make the minimum age 18 rather than 21. Many 18-, 19-, and 20-year-old Floridians currently play on these sites.
The Senate Appropriations Committee advanced the fantasy regulatory bill and one that sets a $1 million license fee anyway.
Sen. Travis Hutson, who introduced all the Senate gaming bills, said he filed the fantasy bills because he wants fantasy sports to continue in the state. He was concerned the Florida Gaming Control Commission created in another bill could go after them as illegal gaming.
Hutson pledged to work with House counterparts to amend the fantasy bills on the floor.
Special session going forward
The Senate begins passing gaming bills Tuesday. The chamber meets from 11 a.m. to 6 p.m.
The House has more work to do in committee.
Removal of the online casino language was enough to get some key House leaders on board with the compact. That should be enough to ensure its passage. But some dissent remains in the House.
Even as chair of the House subcommittee that advanced the compact ratification bill, DiCeglie said he was concerned with what he heard Monday and might not support ratification on the floor.
“I was assuming that (people testifying) were going to say they would strongly disagree this was an expansion of gambling,” DiCeglie said. “And instead, we heard that we’ll have to leave this up to the courts. I’m up on this bill today in this committee, but I have some serious concerns about whether or not this is an expansion of gambling. … I wanted to be on the record saying that.”