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- By Rob Capriccioso
- Gaming
The Seminole Tribe of Florida and its lucrative Hard Rock Hotel & Casino chain has long captured the fancy of tribal gaming operators.
With 12 casinos — six of which are in Florida — and hotels and restaurants in 70 countries, the Seminole Tribe’s fortunes have impressed and sometimes even caused jealousy. Many tribes have wished they could imitate a fraction of the Seminole’s success if only they had more resources, less competition, more political clout and maybe even a bit more luck.
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A unique gaming compact and companion legislation that the tribe has negotiated with the state, which allow the Seminole Tribe to exclusively conduct online sports betting in Florida, are a new source of attention, both good and bad.
The agreement says in part that the tribe can operate sports betting from its own servers, while offering that form of gaming to Floridians not located on tribal lands. The tribe is also granted exclusive rights to offer roulette and craps, as well as to build three new casinos at its main resort.
In total, it’s a 30-year exclusivity deal, a type unheard of in the industry to date for a single tribe. (A runner-up duo: Connecticut’s governor and legislature in May granted exclusivity to the Connecticut Lottery Corporation and the state's Mashantucket Pequot Tribal Nation and Mohegan Indian Tribe to do online and retail sports betting, as well as online casino gaming and online daily fantasy sports.)
“This new compact comes in the wake of a long history of complex relationships between the Seminole Tribe of Florida, the state of Florida and industry competitors,” said Jessica Cattalino, author of the 2008 book, “High Stakes: Florida Seminole Gaming and Sovereignty.”
“Gaming has never been easy for the Seminole Tribe,” Cattalino, a professor of anthropology at the University of California at Los Angeles, told Tribal Business News. “They have been challenged at every step, and for decades they built their gaming empire on Class II gaming because the state of Florida refused to negotiate a compact with them.
“Yet, Seminole gaming has persisted and expanded over the past 40-plus years. What remains a through-line in that history is the Seminole Tribe of Florida’s unrelenting commitment to sovereignty. Too often, that principle and practice gets lost in the coverage of legal battles, business deals and political rhetoric.”
Indeed, politics and legal scuffles aplenty surround the tribe’s businesses at present. They’re not entirely negativities, but experiences that hold potential lessons about tribal sovereignty for other tribes as well.
Some tribes and their cautiously optimistic lawyers and consultants believe the compact creates a positive precedent that could allow them to similarly serve up sports-betting games from tribal servers on Indian lands via the internet to customers not located on tribal lands. To date, that’s been considered a no-no under the National Indian Gaming Commission’s reading of the Indian Gaming Regulatory Act during the early part of the Obama administration, as well as according to at least one district court ruling. Bipartisan legislation is pending in Congress that could partially resolve the issue, according to legal experts.
[RELATED: Bill aims to make online gambling a safer bet for tribes]
Gaming experts say if the practice is found legal in this instance, it would still be a tough hurdle for many tribes to maneuver, since the prospect would be predicated on the political will of states beyond Florida to negotiate similar compacts. Florida is unique in that it has one major gaming tribe and little inter-tribal competition, so the politics of such a decision remain largely between the state and the tribe. And, on this compact, they wholeheartedly agree.
Others worry that a negative legal precedent for tribes beyond the Seminole could have resounding implications if the internet sports-betting component of the deal were struck down in court. That’s what happened in 2018 to the California-based Iipay Nation of Santa Ysabel in the U.S. Court of Appeals for the Ninth Circuit after the tribe expanded its Desert Rose online bingo and poker gaming activities beyond its landbase in 2013.
Florida, led by Republican Gov. Ron DeSantis, a possible presidential contender in 2024, inked the deal with the Seminole Tribe this spring, and it was quickly approved by the state’s legislature in May. The governor had plenty of incentive to do so after the tribe in 2019 stopped paying the state $350 million annually because of disagreements involving the tribe’s exclusivity rights to operate banked card games, like blackjack, in the Sunshine State.
The deal, which replaces the tribe’s 2010 compact with the state, will allow Florida to bring in $6 billion through 2030, according to DeSantis, who called it a “historic compact” when he announced it. If sports betting were not part of the deal, the state would take in almost $1 billion less over that period, according to the tribe.
Gaming experts estimate the Seminoles are set to make much more. With approximately 4,300 members, the tribe is already estimated to be one of the top three gaming earners in the country, and the prospects here for increased sports-betting profits are enormous. (The tribe does not publicly disclose its earnings annually, and the National Indian Gaming Commission does not publicly release annual earnings by tribe.)
DeSantis and the tribe are far from the only ones who are excited by the prospects.
“Online gaming is the new frontier across the United States,” says Mark Levitan, an Indian gaming lawyer with Levitan Law of California who serves clients that he says may be interested in this area in the future. “These new possibilities that haven’t been there in the Indian gaming space are a breath of fresh air. Everyone is really looking forward.”
Compact in the crosshairs
While the prospects are certainly ripe, legal challenges are as well, with two lawsuits already in progress against the Seminole compact.
One was filed in July in the U.S. District Court for the Northern District of Florida against DeSantis and the state. The litigants are West Flagler Associates, which operates the Miami-based commercial Magic City Casino, and Bonita-Fort Myers Corp., which operates the commercial Bonita Springs Poker Room, an affiliate of Magic City.
The lawsuit alleges that the compact runs afoul of the Indian Regulatory Gaming Act and the Unlawful Internet Gaming Enforcement Act because it allows sports betting outside of tribal lands: “Contrary to the legal fiction created by the 2021 Compact and Implementing Law, a bet is placed both where the bettor and the casino are each located,” the plaintiff said in court filings.
The same litigants filed suit this month against Secretary of the Interior Deb Haaland and the Department of the Interior in the U.S. District Court for the District of Columbia. They argue that Haaland illegally approved the compact on Aug. 7 as a result of an explanation written by Bryan Newland, who was confirmed by the Senate to become Assistant Secretary – Indian Affairs on the same day. Again, the litigants allege that it is “fiction” that sports betting of the type Florida is allowing can take place on tribal lands.
Lawyer Dan Wallach, who established Wallach Legal LLC in 2019 as what he labels the first law firm in the U.S. “devoted exclusively to the burgeoning field of sports wagering and gaming law,” has repeatedly argued in multiple news outlets in Florida and on social media that he believes the compact is illegal. He has drawn attention to the commercial lawsuits, explaining various reasons for why he believes the compact violates IGRA, the Unlawful Internet Gambling Enforcement Act and the Wire Act.
An interesting side note: Via a recent Twitter post, Wallach took umbrage with DeSantis’ compact for all of the above legal reasons, while also expressing outrage at the governor’s office for making an admission in a FAQ sheet it provided to the state legislature that implied the Seminole Tribe is the only legal avenue for sports betting in the state, both online or in person. In the document, the governor’s office highlighted Amendment 3 of the Voter Approval of Casino Gambling Initiative of 2018, which says voters “through citizen-initiated ballot measures” have “the exclusive right to decide whether to authorize casino gambling in Florida.” Because the state’s voters never explicitly approved non-Indian sports betting in commercial casinos in Florida, Wallach appears concerned that the FAQ calls the practice into question.
Wallach described it as a “stunning and unnecessary admission” and has said it is an indication that the governor’s office is harming commercial gaming interests.
“Embedded in the document metadata is the name of the Governor’s General Counsel,” Wallach lamented, implying that the DeSantis administration has harmed commercial gaming with what he calls an “unforced error.”
When reached by email, Wallach said he was in Siberia, Russia for the next two months, and he could not respond to requests for comment by press time.
Because of the ongoing litigation, lawyers for the tribe and tribal leaders have been reluctant to provide in-depth comments, despite the fact that the tribe has not been sued in the two suits.
“The Seminole Tribe believes that its Compact fully complies with federal law and the Florida Constitution,” Joseph Webster, a lawyer for the tribe with Washington, D.C.-based Hobbs, Straus, Dean & Walker LLP, told Tribal Business News via email.
Atlantic City model?
As the two lawsuits move their way through the courts, with potentially more challenges on the way, Indian gaming experts not connected to the tribe have been speculating on the pros and cons of the legal reasoning against the compact.
Levitan believes that while New Jersey lacks tribes, the Garden State offers an important example that the Seminole Tribe has appeared to follow.
“The advantage that the tribes have now is that New Jersey followed the same model, having nothing to do with tribes, saying that because their servers are in Atlantic City, their gaming is located in Atlantic City as long as their patrons are in the state of New Jersey,” Levitan said. “The fact that a state did that suggests there’s no reason under IGRA why tribes and governors can’t agree to the same parameters in a compact.”
“If the governor has the appropriately delegated authority under state law to negotiate tribal-state gaming compacts, then the governor should be able to have that same level of authority to designate definitions and agreements with tribes that the New Jersey legislature had to make its decision about how to define gaming activity,” Levitan added.
Kathryn Rand, co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota, says that the difference between the Seminole compact and the Desert Rose Bingo case involving the Iipay Nation of Santa Ysabel from 2018 hinges on whether mobile wagering is legal in a given state.
“In the Desert Rose Bingo case, the Ninth Circuit held that the tribe’s online bingo operation violated the federal Unlawful Internet Gambling Enforcement Act, which prohibits financial transfers involved in illegal online gaming,” Rand said. “Because online gaming was illegal in California, the tribe’s online bingo operation was in violation of UIGEA.”
In Florida, however, the state has authorized mobile sports betting, Rand noted.
“That’s a big difference, but it may not completely resolve the possible legal issue, because Florida’s authorization is through the compact, rather than through state legislation,” Rand said.
“UIGEA defines unlawful internet gambling as when someone places or receives a bet using the internet where the bet ‘is unlawful under any applicable federal or state law in the state or tribal lands in which the bet or wager is initiated, received, or otherwise made.’
“One of the potential arguments is that the compact is an insufficient means, under state constitutional law, to legalize mobile wagering. The argument is that unless and until the state passes a law legalizing mobile wagering, it is ‘unlawful under … state law’ in Florida for purposes of the UIGEA.”
Rand said that she and her colleague Steve Light, fellow co-director of the Institute for the Study of Tribal Gaming Law and Policy, don’t have a prediction about how a court would rule on that issue, but they do believe that Florida is on “firmer ground” because the state legislature approved the compact.
“In other states, where legislative approval isn’t part of the state’s compacting process, the argument that the compact isn’t sufficient to change state law might have more weight,” Rand added.
Several gaming experts said that tribes in Colorado are closely watching the Seminole situation, as they don’t have a state license for their betting products, yet no one has sued them.
Interior’s ‘deemed approval’
Indian gaming aficionados observing the Seminole situation say that Assistant Secretary Newland’s Aug. 7 memo clearly distinguishes how the tribe’s situation differs from that of the Desert Rose Santa Ysabel situation. His memo, for one, makes clear that all three sovereigns — the tribe, the state and the federal government — are on the same page in this case, which was not the case at Desert Rose. The tribe in that case was largely going it alone.
That Newland and Haaland handled the decision by allowing 45 days to go by before the compact was automatically “deemed approved” leaves some wondering if that will be the way the Biden administration will deal with most future Indian compacts it examines. The other choices available to Interior in this and all other compact cases are to disapprove or to approve the compact before letting it automatically go into effect after 45 days.
Rand believes there was some strategic thinking involved. (Interior has not responded to requests for comment.)
“The Interior Department’s analysis is premised on ‘the exceptional bargaining position’ of the Seminole Tribe,” Rand noted. “One pragmatic use of the ‘deemed approved’ option is to allow a compact to take effect, even though it may have worrisome provisions from the department’s perspective. Here, the department is signaling that it is less concerned that the Seminoles are getting a bad deal from the state because the tribe has sufficient resources and bargaining power to protect its own interests.”
Rand said that Interior also appears to accept at face value that the state and tribe can determine where a bet occurs, noting the Florida compact provisions as well as similar laws or provisions in other states.
“The department’s analysis concludes that this arrangement is consistent with IGRA’s provisions and purposes,” she added. “Notably, though the department does not take up the thornier issue of the Wire Act — that is, even if the bet occurs where the server is, do the communications about the bet occur ‘interstate’ when they cross from Florida to tribal lands, so that remains unresolved.”
Russ Brien, an Indian gaming lawyer with Brien Law LLC in Kansas, told Tribal Business News that the “deemed approval” was not a surprise.
“Any time (Interior) has concerns that any compact provision violates IGRA, other applicable federal law, or the trust obligations of the United States, this approach avoids disapproval of the entire compact,” Brien said. “As a practical matter, the determination of which provisions actually violate IGRA or other applicable federal law will be left to the courts, as we see in the Seminole situation.”
Brien said that what interests him most in this situation is that Newland’s analysis raised questions over tort jurisdiction and mandatory contract provisions, but it found acceptable the internet and mobile sports wagering provisions and accompanying state legislation permitting wagers initiated outside of Indian lands.
In fact, the department’s analysis seemed to recognize that internet and mobile and sports gaming may be the strong future of Indian gaming.
Newland wrote in his analysis: “In examining the permissibility of mobile sports betting under IGRA as a novel matter, the department seeks to uphold the intent of IGRA and notes that: 1) evolving technology should not be an impediment to tribes participating in the gaming industry; 2) 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; and 3) the purposes of IGRA would be served through the improvement of tribal-state cooperation in the regulation of mobile wagering.”
Despite Newland’s seemingly proactive stance, Brien offers some caution.
“These mobile/internet wagering provisions, which raise significant questions under IGRA, the federal Wire Act and UIGEA, are the subject of two different pending lawsuits,” he said. “Assuming there are no changes to current federal statutes, the outcome of those suits will have an enormous impact on the future of mobile/internet wagering and the ability of tribal gaming enterprises to effectively compete in that space.”
In search of precedents
Like many in the Indian gaming field, Scott Riley, a board member with the Tribal Gaming Protection Network, has been closely following the Seminole compact because he believes it may set certain precedents for future Class III gaming compacts that the Department of the Interior will review in the coming months and years.
“The DOI has basically implied that only certain provisions of the Seminole compact that fall under IGRA will be enforced. Any other provisions not under the enforcement of IGRA, the DOI will not have any jurisdiction,” Riley told Tribal Business News.
“The model is simple in that it is intended to bypass both federal and state laws by allowing off-reservation sports betting using the tribe’s server.”
Riley does, however, note the uniqueness of the Seminole situation, since the tribe basically has a monopoly on Class III gaming in the state, with no tribal competition.
“I believe that this Class III gaming compact is unique and could only be accomplished by the Seminoles and Florida,” he said. “Trying to apply the same model compact to other tribes would not be a likely scenario.”
Still, Riley sees some pros coming out of this situation for other tribes, such as Interior taking steps to broaden the interpretation of gaming on Indian lands, including servers located on Indian lands and bets placed off reservation lands. He also is confident that Interior knows full well that evolving technology should not be an impediment for tribes engaging in gaming.
Riley also said that states beyond Florida may wish to negotiate on sports-betting compact issues with tribes, while still including commercial operations in the calculations, which has already happened in Arizona and Michigan.
“There are other concerns that tribes must look into before attempting to pursue sports betting added to their Class III gaming compact,” he said. “States will want revenue sharing, and this could be costly to the tribes if there is an exclusivity clause.”
“I believe it is in the tribes’ best interests to have interdependent relationships to draft a compact that would best benefit them in their state,” Riley added. “By negotiating in good faith with the tribes … it stresses the importance of government-to-government relationships.”