House panel approves compact, contemplates viability of the agreement

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Other states that have wagered on a contested provision in the compact could offer clues.

As the House considers a 30-year agreement governing gaming in the state, an important question has arisen: Does a provision in the agreement merely modernize gaming or illegally expand it?

The agreement, also called a compact, is a result of negotiations between Gov. Ron DeSantis and the Seminole Tribe of Florida.

The House Select Committee on Gaming passed the bill (HB 1A) in a 26-4 vote Tuesday. The whole House will vote on the ratification of the Compact and the underlying gaming bills Wednesday.

The Senate passed the bill and ratified the Compact Tuesday.

Online betting on casino games is not allowed under the Compact, but there are still some ways in which technology loosens the reins on betting locations, which is likely to face challenges.

The “hub and spoke model” laid out in the Compact creates a scenario where the Tribe is the hub and pari-mutuels are the spokes. Servers sitting on the Tribe’s reservation would process sports bets placed at pari-mutuel facilities not located on tribal land or mobile phones.

Jim Allen, the Seminole Tribe of Florida CEO of Seminole Gaming and Chairman of Hard Rock International, said the partnership helps pari-mutuel permit holders, some of which are struggling.

Pari-mutuel permit holders traditionally have offered live racing events for spectators to bet on at their facilities in addition to certain types of card gaming. But live racing has been in decline in recent years, due, in part, to Floridians voting to outlaw greyhound racing in 2018.

“We believe this is a way where the tribe and the pari-mutuels can work together to create a new business model that helps radically substitute some of the challenges that are happening in the industry,” Allen said.

But it’s unclear how the “radical substitution” will hold up to the various tests the Compact is likely to face including approval from the U.S. Department of the Interior, which must sign off on the agreement under the federal Indian Gaming Regulatory Act (IGRA) that does not specifically contemplate remote servers.

Bill co-sponsor Rep. Sam Garrison said lawyers disagree about how the hub and spoke model will be received by courts and other stakeholders.

“This is, in fact, an open legal question, and, quite frankly, it’s an open novel legal question that can only be resolved by a court of competent jurisdiction,” Garrison said.

An expert in tribal gaming law hired by the House, George Skibine, discussed cases with similarities in New Jersey and California.

New Jersey has been successful in pursuing online sports betting with servers located at the state’s licensed casinos in Atlantic City, under the idea that the gambling doesn’t take place until the wager is accepted, which takes place at the server.

But California was not granted that same allowance.

In California, the Santa Ysabel Tribe offered online gambling with servers sitting on tribal land. The state of California, joined by the federal government, sought and was granted an order to stop the gaming.

A ruling from the 9th Circuit said the bet or wager must be legal where it is both received and initiated under the federal Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). California law specifically states it is illegal to participate in online betting. The 9th Circuit also rejected Santa Ysabel Tribe’s argument that having the servers located on tribal land means the gaming should be governed under the IRGA.

Skibine said the underlying state laws in California are different from those in Florida and New Jersey, so he doesn’t expect the same thing that happened in California to happen in Florida. Additionally, the type of gaming ruled on in California was Class II gaming. In this compact, Florida is considering sports betting using the remote servers, which is Class III gaming.

But Florida isn’t certain to be like smooth-sailing New Jersey either, a state that has had servers in one location and bettors in another since 2013, because New Jersey is not subject to the IRGA, like Florida is, because New Jersey’s casinos are not on tribal lands.

And, Florida’s own state constitution could lead to a challenge from a group called No Casinos. The group’s President, John Sowinski, said the addition of sports betting could be viewed as an “expansion” of gaming, which, under Amendment 3 of the Florida Constitution, must be approved by voters. No Casinos is already threatening to challenge the Compact in court even if the Compact does get ratified. No Casinos is the group that worked to get Amendment 3 passed in 2018.

Allen pointed out that the Tribe was a major contributor to the effort behind Amendment 3, spending $22 million to help ensure its passage.

“So from our standpoint, we certainly think we understood what the intentions were of Amendment 3, but, candidly, we could be wrong,” he said.

Despite all of the “open legal questions,” House members already started to contemplate how to spend the billions in revenue the state stands to receive from the Compact, which could be a sticking point between the two political parties.

“We, in my caucus, want some portion of that money to go to some worthwhile cause that benefits the hardworking families of the state of Florida,” Democratic Rep. Joe Geller said.

But Republican Rep. Ralph Massullo disagreed.

“I don’t think we should pin ourselves down for an extended period of having to decide where the money goes. How do we know where we’re going to need the money in 10 years, let alone 15 or 20 or as this Compact designates, 30,” Massullo said.

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The News Service of Florida contributed to this post. Republished with permission.

Haley Brown

Haley Brown covers state government for FloridaPolitics.com. Previously, Haley covered the West Virginia Legislature and anchored weekend newscasts for WVVA in Bluefield, W.Va. Haley is a Florida native and a graduate of the University of Florida. You can reach her at [email protected]



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