Feds clear way for Florida gambling deal

Delivering a major victory to Gov. Ron DeSantis and the Seminole Tribe, President Joe Biden’s administration has allowed to go into effect a 30-year gambling deal that gives the tribe control of sports betting in Florida, setting the stage for litigation over the agreement that could reshape the state’s gambling footprint.

The federal Bureau of Indian Affairs allowed a 45-day review period to elapse Thursday without taking any action on the agreement, known as a compact. Under federal law, that means the agreement is "considered to have been approved" but only "to the extent that the compact is consistent with the provisions" of federal law regulating tribal gaming.

Under the compact, the Seminoles will serve as the state’s hub for sports betting, with pari-mutuel operators contracting with the tribe. The deal requires the Seminoles to contract with at least three pari-mutuels within three months after sports betting goes live and does not allow the tribe to launch sports betting until Oct. 15.

DeSantis and Seminole Tribe of Florida Chairman Marcellus Osceola Jr. signed the agreement in April, and the Legislature approved the compact in a special session in May. The "hub-and-spoke" sports-betting plan would allow Floridians and visitors anywhere in the state to place sports bets using apps on cell phones, and the Seminoles would host the sports-betting activities through computer servers on tribal lands.

The provision --- the first of its type in the nation --- was viewed by gambling experts as a major test of the federal Indian Gaming Regulatory Act, or IGRA, which was enacted before online gambling began. It forced federal regulators to decide whether sports bets made on mobile phones or other devices off of tribal lands comply with the 1988 law.

While the federal law did not contemplate such activities as sports betting or fantasy sports, "evolving technology should not be an impediment to tribes participating in the gaming industry," Bryan Newland, a deputy assistant secretary for Indian affairs at the federal department, wrote Friday in 12-page letters to DeSantis and Osceola.

The "pursuit of mobile gaming is in line with the public policy considerations of IGRA to promote tribal economic development, self-sufficiency, and strong tribal governments," Newland added.

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"The Department will not read restrictions into IGRA that do not exist. Accordingly, provided that a player is not physically located on another tribe’s Indian lands, a tribe should have the opportunity to engage in this type of gaming pursuant to a tribal-state gaming compact," he also wrote.

DeSantis hailed the decision to allow the compact to go into effect.

"The final approval of this historic gaming compact is a big deal for the state of Florida," DeSantis said in a prepared statement. "This mutually beneficial agreement will grow our economy, expand tourism and recreation and provide billions in new revenue to benefit Floridians."

Under the 30-year deal, the Seminoles agreed to pay Florida about $20 billion, including $2.5 billion over the first five years. The amount would dip by $50 million a year if the sports-betting provision doesn’t go into effect, essentially guaranteeing the state an annual minimum payment of $450 million.

The deal also gives the Seminoles such perks as offering roulette and craps at tribal casinos.

"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," Osceola said Friday..

The compact is already the subject of a federal lawsuit filed by two pari-mutuel facilities, and the Biden administration’s tacit approval of the agreement is expected to face additional legal hurdles.

Perhaps more difficult legal issues could center on a 2018 Florida constitutional amendment, known as Amendment 3, which required voter approval of gambling expansions in the state. The constitutional amendment’s backers maintain that sports betting that takes place off tribal lands requires voter authorization.

John Sowinski, president of the group No Casinos, said in a prepared statement that the compact "violates multiple federal laws as well as the Florida Constitution."

"Only Florida voters, not politicians in Tallahassee or Washington, have the power to expand gambling in Florida. This issue will have its day in both state and federal courts, where we are confident that this compact will be overturned. We are committed to ensuring that the people of Florida will always have the final say on gambling as required by Florida’s Amendment 3," Sowinski, whose group was behind the amendment, said Friday.

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The compact’s supporters, however, contend that sports betting would not require a referendum because bets would be run through computer servers on tribal property.

While the Biden administration allowed the sports betting provision to move forward, Newland flagged other parts of the deal, including the tribe’s revenue-sharing agreement with the state.

"The department is concerned with revenue sharing provisions in this compact and these provisions should not be considered a model for other states to generally impose on tribes," Newland wrote. "However, we are confident that the state’s concessions confer a substantial economic benefit on the tribe that justifies the proposed revenue sharing in this instance, and that these terms are the outcome of good-faith bilateral negotiations."

The provision requiring the tribe to contract with at least three pari-mutuel operators to market the Seminoles’ sports-betting endeavor is also problematic, according to Newland.

The federal law requires tribes to have "the sole proprietary interest in, and responsibility for, the tribal gaming operation to ensure that it receives the primary benefit of its gaming revenue," he wrote.

The Seminoles must pay 60 percent of the difference between the net win that any contracted pari-mutuel generates and the tribe’s expenses. But Newland wrote that the arrangement raises questions about the proprietary nature of the tribe’s sports-betting operations.

"Accordingly, the department does not endorse the marketing agreement arrangement provided in the compact," Newland wrote.

The federal agency also expressed "significant concerns" about provisions giving jurisdiction to the state over patron disputes and legal claims.

The legal claim jurisdiction "may violate the limited reach of civil jurisdiction" under federal law, Newland wrote.

"Compacts are not the appropriate vehicle to shift patron dispute and tort claim jurisdiction to the state," he said. "Accordingly, we believe that this provision is an impermissible compact provision under IGRA and is likely unenforceable."

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