Florida’s gambling deal faces legal questions

After years of legal wrangling and failed attempts to seal a deal, Gov. Ron DeSantis and the Seminole Tribe of Florida have nailed down a gambling agreement to bring sports betting to the state and rake at least $2.5 billion into state coffers within five years.

But the complicated 30-year pact faces significant hurdles before Florida residents and visitors legally could whip out their phones and place bets on their favorite sports teams.

State lawmakers would have to sign off on the agreement, which is known as a “compact.” The U.S. Department of the Interior also has to authorize the deal. 

In addition, experts are divided about whether the Florida Constitution requires statewide voter approval to legalize sports betting. Other lawyers believe that the proposed compact with the Seminoles could run afoul of federal law.

“Florida is a legal landmine,” Hallandale Beach lawyer Daniel Wallach, who specializes in sports betting, said in an interview. 

Wallach warned that the compact could result in a legal quagmire because of the federal Indian Gaming Regulatory Act which governs what activities tribes can engage in.

Under the agreement inked April 23 by DeSantis and Seminole Tribe of Florida Chairman Marcellus Osceola Jr., the Seminoles would serve as a hub for online sports betting, with pari-mutuel operators contracting with the tribe. Pari-mutuels would get to keep 60% of sports-betting revenue, with 40% going to the Seminoles. The tribe would pay the state up to 14% on the net winnings.

But Wallach and others question whether federal law allows the state to enter into a compact that authorizes gambling off tribal lands, even if the technology handling wagering transactions is located on the Seminoles’ property.

Wallach pointed to the Indian Gaming Regulatory Act, which provides that tribes may conduct certain types of gambling activities “on tribal lands.” Courts have strictly interpreted the federal law to mean that the activities need to take place on tribal lands.

“There’s no ambiguity,” Wallach said. “It’s not the server. It’s not the administrative off-site. It’s the roll of the dice. It’s the actions of the gambler.” 

But Jim Allen, CEO of Seminole Gaming and chairman of Hard Rock International, said the tribe believes the sports betting arrangement laid out in the compact is on solid ground.

“It’s our feeling, and we certainly have talked to the Department of the Interior, as long as the servers are on sovereign land, we are within the boundaries of the law. I certainly recognize that there are many companies that are trying to derail this,” Allen told The News Service of Florida in a phone interview.

The federal agency has 45 days to authorize a tribal compact, once it has been ratified. If the Department of the Interior doesn’t act within that period of time, the compact automatically goes into effect. Florida’s compact wouldn’t be ratified until the Legislature signs off on the deal.

Under the agreement, sports betting would be “geo-fenced” within the state’s borders. The tribe would be required to contract with three pari-mutuel operators within three months of sports-betting operations going live or it would face financial penalties. 

The pari-mutuels wouldn’t be limited to offering sports wagering at their brick-and-mortar facilities but would be allowed to issue what are known as “skins,” or apps, to market sports betting operated on the Seminoles’ properties.

Allen noted that the tribe is “very aware of certain individuals or companies that would not like this particular contract approved, and we certainly respect that,” but he repeatedly said the wagering “transaction” would take place on tribal sovereign lands,

“Candidly, we would never enter into this agreement if we did not verify this with other legal representation, that the bet in the transaction happens at the server, and as long as that is on tribal sovereign lands, we think we are within the boundaries of the law,” he said. “I’ll reiterate we certainly respect there’s those who feel that’s not accurate, and we respect that but that’s our position. And obviously if someone challenges that legally, then we’ll have to go through the process.”

If courts found that the wagers could only take place on tribal lands, that could leave the Seminoles with exclusive rights to conduct sports betting in Florida, even if only at their casinos. The Interior Department or the courts could wipe out other aspects of the sports-betting arrangement laid out in the compact, Wallach said.

“This is as open and shut case as it gets in gaming law, and it’s confounding, absolutely confounding to me that the state agreed to a deal that runs a significantly high risk of being modified or being pared back significantly…and leaving in its place a tribal monopoly with nothing for the pari-mutuel facilities. That undermines what the state is intending to do here,” he said.

Lawmakers, who finished their regular legislative session Friday, are set to address the compact and associated gambling-related bills when they come back to the Capitol for a special session during the week of May 17.

House Speaker Chris Sprowls acknowledged that the deal is complex.

“One thing I’ve found in gaming … is that it’s all interconnected,” Sprowls told reporters. “It’s kind of a hodgepodge of laws. So we’re going to take our time.”

Sprowls called the compact “a big deal” for the state.

More than two-dozen other states have legalized sports betting since a 2018 U.S. Supreme Court decision in a New Jersey lawsuit cleared the decks for the popular activity.

Allen said the tribe does not believe state lawmakers have to take any action to legalize sports betting in Florida for the compact to be valid.

But whether the compact complies with federal law isn’t the only legal landmine. 

Floridians in 2018 approved a constitutional amendment, known as Amendment 3, requiring statewide voter authorization of expansions of gambling.

Some lawyers, including Wallach, argue that the amendment doesn’t require a statewide vote to legalize sports betting. 

But John Sowinski, chairman of the political campaign behind the constitutional amendment, disagreed. He said the compact for a number of reasons would violate Amendment 3 and an earlier state constitutional amendment that authorized slot machines in Broward and Miami-Dade counties, as well as federal law.

“So how many ways can something violate Florida’s Constitution or federal law before somebody just looks at it and says this is a bad idea?” he told the News Service.

Amendment 3 allows the state and tribes to negotiate compacts “for the conduct of casino gambling on tribal lands,” but Sowinski maintained that the language only applies to games taking place on tribal property, not on cell phones throughout Florida.

Allen had a different interpretation.

“There’s different points of view but our point of view is that Amendment 3 specifically excluded, I mean no one can dispute, that it excluded the state’s ability to do a deal with a sovereign nation, a federally recognized Indian tribe. The Seminoles certainly qualify in that category,” he said.

DeSantis, lawyer, isn’t worried about potential legal wrangling.

“If somebody wants to try to contest that, both the tribe and the state will be vigorously defending the agreement that we have made here today,” the governor said at a ceremonial signing of the compact.

Sprowls, a lawyer, said he doesn’t think Amendment 3 applies to the Seminoles.

“Obviously, I don’t believe that Amendment 3 doesn’t necessarily apply to the tribe. Now, there may be other collateral issues in there that need to be looked at, but as far as the actual tribe is concerned, as far as I understand, Amendment 3 doesn’t apply,” he said.

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Republished with permission from News Service Florida.