How Different Outcomes For The Gaming Compact And Ballot Initiatives Could Affect Florida Sports Betting

Written By Steve Schult on June 30, 2022 - Last Updated on August 15, 2022
Outcomes for FL gaming compact and sports betting ballot initiatives

Last summer, it looked like sports betting was a near-lock to come to Florida.

The legislature and eventually the federal government approved a new gaming compact between the state and the Seminole Tribe.  The new 30-year agreement would bring both retail and online sports betting to the Sunshine State.

But the compact would basically give the tribe a monopoly on the new industry. In response, DraftKings and FanDuel funded a PAC that focused its efforts on a ballot initiative that would allow other operators to enter the market.

With the compact and the ballot initiative, there were multiple avenues for Florida sports betting to become a reality.

But how can these proposals co-exist? One gives exclusivity to the tribe, and the other will allow established operators into the market.

What a difference a year makes

Despite all of last year’s momentum, both proposals hit roadblocks around the new year. In response to a lawsuit from the ownership group of two Florida pari-mutuel facilities, a federal judge ruled last November that the agreement violated the Indian Gaming Regulatory Act. The ruling vacated the compact.

And Florida Education Champions, the PAC working on the sports betting ballot initiative, didn’t get enough signatures to be on the 2022 ballot.

Luckily for Florida bettors, neither is officially dead. Most airlines would refer to this as a brief delay.

The appeals process is already underway for the compact. A ruling is expected in early 2023. If the D.C. Court of Appeals overturns the previous ruling, the compact would be reinstated. On the other hand, the compact would be in big trouble if the appellate court upholds the District Court’s decision.

As for the initiative, Florida Education Champions will be working to get the initiative in front of voters in 2024. DraftKings CEO Jason Robins said earlier this year he was “optimistic” that voters will decide on it in two years.

Here’s a deeper look into the possible outcomes in the battle for Florida sports betting.

Outcome #1: The compact is reinstated, but the ballot initiative fails

If the Court of Appeals overturns the District Court, it’s likely the Seminoles immediately relaunch their Hard Rock Sportsbook. The tribe’s online sportsbook initially launched last November and shuttered after the ruling deemed the compact illegal.

But if the appellate court decides otherwise, then the compact immediately becomes law of the land in Florida again. Therefore, there would be nothing stopping the tribe from relaunching the operation and accepting wagers again.

In fact, one employee of the Seminole Tribe described the month with legal betting as “crazy.” The comment implied the tribe was taking a lot of bets on the online sportsbook. Therefore, they would be heavily incentivized to relaunch it as soon as possible.

On the other hand, if the ballot initiative fails, it’s pretty much lights out for a more open sports betting market. At least for a couple of years.

Obviously, Florida Education Champions could just start the process over again and shoot for a different result in 2026. But that will depend on how much money is left in the coffers and whether executives at FanDuel and DraftKings believe it’s possible to get enough public support for the measure.

The PAC is one of the most well-funded political groups in the state. Florida Education Champions received $41.3 million in contributions. Only Florida Voters in Charge, a PAC funded mostly by Las Vegas Sands Corp seeking to get casino expansion on the ballot, had more money.

Donation Breakdown for Florida Education Champions

  • DraftKings – $22.8 million
  • FanDuel – $14.5 million
  • Southwest Florida Enterprises – $4 million

The Havenick family owns Southwest Florida Enterprises. It’s the same family that owns West Flagler Associates, which is the corporate entity for Magic City Casino and Bonita Springs Poker Room.

West Flagler Associates is the group that filed the federal lawsuit that ended up overturning the gaming compact. Their main complaint was over the ‘hub-and-spoke’ model used in the sports betting market.

By donating to the PAC, the group leaves no doubt that they want a bigger piece of the Florida sports betting pie.

Outcome #2: The DC Court of Appeals keeps compact illegal, but the ballot initiative passes

This is a straightforward scenario. In this situation, there would simply be an open market when it comes to sports betting.

If the appellate court upholds the District Court’s ruling, the tribe, and the Department of the Interior, could technically continue to appeal the decision by bringing the case to a higher court.

But it would take a ton of time for that process to play out. Since we are clairvoyant for the moment, we can look into the future and know the initiative passes in November 2024. As a result, the compact would eventually be irrelevant with regard to sports betting because of Amendment 3.

Passed in 2018, Amendment 3 mandated that voters approve all future gambling expansion plans. Ironically, the Seminole Tribe backed the proposal. Ultimately, it could be the rule that costs them exclusivity in Florida’s sports betting market.

The gaming compact actually flies directly in the face of the approved proposal. This was one of the focal points of the Monterra AF, LLC lawsuit against the compact, but the DC Court of Appeals dismissed Monterra’s suit.

For Florida bettors, the worst part about this scenario is the timeline.

Regulators could cause delay

November 2024 would be when the voters choose to allow sports betting. But regulators still have a long to-do list to complete before launch.

Florida gaming regulators would need to put together the blueprint for the market. Following a passage at the polls, they would need to establish rules for the new market, decide how many licenses will be available, accept applications, distribute licenses and then set a tax rate for both online and retail betting.

That’s no small task. In some states, that is a multi-year process. Therefore, this route could push a sports betting launch all the way back to late-2026, if not even slightly longer.

Outcome #3: The DC Court of Appeals reinstates the compact, and the ballot initiative passes

This scenario is the best of both worlds for bettors. The overturning of the District Court decision would put Hard Rock Sportsbook back on the internet almost immediately. That’s a big plus for those who are itching to start betting again.

But any ballot initiative would essentially override the compact because of Amendment 3.

Eventually, Florida gamblers would have other options when other operators enter the market thanks to the ballot initiative. The non-Seminole entities would take at least a few years before launch.

There would be anywhere between 18-24 months between the court’s approval of the compact and the initiative passing at the ballot box. Afterward, the regulators would then start the same elongated process outlined above that includes establishing rules and setting a tax rate.

This scenario puts the compact in jeopardy

However, this scenario will bring the most headache to lawmakers.

At the beginning of May, the Seminole Tribe paused its revenue-sharing payments to the state. Instead, the tribe put the equivalent amount in an escrow account they control.

The tribe said that if the gaming compact is vacated, they aren’t mandated to make the payments outlined in the agreement. As a spokesperson for the Seminole Tribe Gary Bitner told PlayFL when the news broke:

“The Governor, the State of Florida and the Seminole Tribe continue to work together closely to defend the 2021 Gaming Compact in the litigation pending in the DC Circuit Court of Appeals, just as they did when it was challenged in the U.S. District Court in Tallahassee. Until the litigation is resolved, the Tribe is making revenue share payments based on the 2021 Gaming Compact into escrow.”

The compact essentially gives sports betting exclusivity to the tribe. If the passage of the ballot initiative changes that, the compact is essentially void. And the tribe would almost certainly start to withhold payments again.

The Seminoles could still operate their sportsbook, but the state would no longer be entitled to revenue-sharing payments. It would also force the state’s governor to negotiate a new gaming compact. Otherwise, the tribe would stop sending payments completely.

Outcome #4: The District Court’s ruling is upheld and the ballot initiative fails

I saved the easiest scenario for last. If the appellate court rules the compact is illegal and voters don’t pass a ballot initiative, then there is simply no legal sports betting without major changes.

The DOI and the tribe could continue the appeals process. Or the tribe could decide to ditch the legal battle and negotiate a completely new deal with the state that would receive significantly less pushback from other interested parties.

As far as the ballot initiative goes, the PAC could try again in 2026 or scrap the idea entirely. Again, this would be slightly dependent on how much money the PAC has left. Additionally, it would depend on how much money prospective operators would donate for a third try.

If the gaming compact completely stalls out, it’s possible more operators could jump onboard to push it over the edge. Last January, Barstool Sports founder Dave Portnoy took to social media in a last-ditch effort to get signatures.

If the right landscape appeared, Portnoy could help fund the effort to get his Barstool Sportsbook in Florida.

Photo by Shutterstock / dimid_86
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Written by
Steve Schult

As Managing Editor of PlayFL, Steve will stay on top of all things related to the Florida gaming industry. He is also a veteran of the gambling world. The native New Yorker started covering high-stakes tournaments in 2009 for some of poker's most prominent media outlets before adding the broader U.S. gaming market to his beat in 2018.

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