Miami Beach mayor to feds: Reject corrupted gambling compact

As Florida’s historic sports gambling deal with the Seminole Tribe is being reviewed for approval by the federal government, Miami Beach Mayor Dan Gelber on Thursday sent a letter to the U.S. Department of the Interior urging it to reject what he calls a “tortured artifice,” negotiated with the corrupt intent to expand gambling in Florida — in violation of both state and federal law.

“I support the goals of the Indian Gaming Regulatory Act (’IGRA’), namely, to provide Native American tribes with a pathway to greater independence and economic vitality. But the Florida Compact you are considering was not crafted in pursuit of those goals,” Gelber wrote in a nine-page letter to Deb Haaland, secretary of the U.S. Department of the Interior.

“It was simply a vehicle hijacked by non-tribal casino interests who fully corrupted the legislative and executive process in order to obtain advantages outside of tribal land and in direct contravention to the interests of Floridians.”

The Department of the Interior has 45 days after May 25, the date the bill to ratify the compact was signed by Gov. Ron DeSantis, to approve or reject the agreement with Florida. If DOI takes no action within that time, the compact is considered to be approved.

The 74-page compact, negotiated between DeSantis and the tribe’s chairman, Marcellus W. Osceola Jr., and a stable of lawyers, provides the tribe with exclusive rights to full casino games in Florida and 40 percent of profits off all sports bets in the state. In exchange, the tribe would guarantee the state $500 million a year in revenue-sharing payments for 30 years. The measure passed the Legislature overwhelmingly.

Gelber, whose city has consistently opposed casino gambling within its geographic boundaries, also alleges that the compact” was negotiated with an improper purpose because it “also requires the Seminole Tribe of Florida to agree not to object to gambling operations that are farther than fifteen (15) miles from its Hollywood casinos.”

“Our Governor was not seeking to advance the goals of IGRA, rather he was most interested in advancing the interests of non-tribal political donors and his most important political patron,’' Gelber said, referring to former President Donald Trump, who is rumored to be considering attempting to transfer a casino license to his Trump Doral resort and potentially sell the resort, which is struggling financially, to a casino corporation.

Gelber also referred to the efforts by Jeffrey Soffer, owner of the Fontainebleau Miami Beach, to bring a casino license to his resort.

Gelber argues the 15-mile language gives the Fontainebleau Miami Beach and Trump Doral “a necessary prerequisite to creating casinos in the cities of Doral or Miami Beach or other locations within Miami-Dade County” and noted that because Florida voters banned the expansion of gambling without a statewide referendum, the compact was “the only route arguably available to expand gambling to non-Indian interests.”

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“These same interests, according to news accounts, provided gifts in the form of plane trips, parties on yachts and other non-monetary contributions to state officials including Governor DeSantis,’' he wrote. “Indeed, their efforts paid off, as Governor DeSantis included provisions in the Florida Compact that set the groundwork for casino expansion for a prime campaign donor at the Fontainebleau Miami Beach and for his major political patron at the Trump Doral.”

Both DeSantis and the Seminole Tribe dismissed Gelber’s criticism and said they were confident the compact will be approved.

“It’s ridiculous,’' DeSantis said Thursday at a bill-signing event for a new Biscayne Bay commission at Bill Baggs State Park on Key Biscayne. “I think it’s just an example of some of these partisan politicians always trying to elevate themselves with any type of cheap headline they can get, trying to inject Trump into this.’'

DeSantis described the compact as a good deal for Florida with bipartisan support that prevents the Tribe from having leverage if the Legislature passes legislation allowing more casinos.

“There’s not going to be any type of transfer within Miami-Dade County. The Legislature flatly rejected that,” he said. If there was any attempt at transferring a license, the Legislature would have to approve it, he said.

“I don’t know what would happen...That’s up to the Legislature. But if there was something, why would I want to agree to a compact that’s going to trigger a violation?”

Seminole Tribe spokesperson Gary Bitner said that “while the Seminole Tribe of Florida always is respectful of the opinions of others, the gaming compact was overwhelmingly approved by the Florida House and Senate with broad bipartisan support. It fully complies with the law and is good for the people of Florida.”

Department of Interior’s role

In many ways, the agreement is unprecedented and requires the agency to contradict existing legal precedent to approve it, but both the governor, and Jim Allen, the CEO for the Seminole Gaming and Hard Rock International, have said they are confident the agreement will be approved.

Haaland, the first Native American cabinet secretary in U.S. history, will make the decision because DOI has jurisdiction over Indian gaming through the Indian Gaming Regulatory Act. The federal government’s role is not to settle legal disputes but instead to preserve the economic independence and sovereignty of the tribe. The agency has rejected compacts before, and it could do it again.

Gelber, a lawyer and former candidate for Florida attorney general, offered DOI a legal framework on which to reach that conclusion.

First, he said what opponents have suggested since the deal was being drafted behind closed doors earlier this year: The plan to authorize gaming throughout the state violates IGRA it because it “improperly authorizes Class III gaming outside of tribal lands.”

Under the agreement, only a “hub and spoke” model would be allowed, and sports betting would be offered at horse tracks, card rooms and jai-alai frontons across the state, but every bet would go through the tribe’s internet server, which is the “hub.”

Under IGRA, gaming activities authorized in a tribal-state compact may occur “on Indian lands only,” and Florida’s compact defines electronic betting as occurring exclusively at the server location on Indian lands where bets are received, even though the person placing the bet could be anywhere in Florida.

Gelber argues the hub and spoke system is “inconsistent and fundamentally at odds with federal law.” He cites a federal court ruling in California v. Iipay Nation of Santa Ysabel, which found it “evident” that the phrase “on Indian lands” used in IGRA “was intended to limit gaming to those patrons who participate in the gaming activity while in Indian country,” and the act of placing a bet or wager while located outside tribal lands in California constitutes “gaming activity” that is “not protected by IGRA.”

Legislators foreshadowed legal concerns

This argument has even legislative supporters of the compact worried.

Rep. Sam Garrison, a Fleming Island Republican and a lawyer, told the House before it voted on the legislation on May 19: “As we’ve said from Day One, and as the parties have contemplated, it is an open question …There is no black and white answer whether the hub and spoke model is going to be permitted or not.’'

James Kilsby, vice president of VIXIO Gambling Compliance and a gambling analyst, said in an interview and podcast that legislatures in New Jersey and Michigan have authorized the hub and spoke model for their online sports betting but using the tribe as the hub is unprecedented. For DOI to consider it a form of tribal gaming, the Seminole Tribe has to be the sole proprietary interest over the sports betting operation, he said, and that includes controlling the platform, deciding what bets are accepted and setting the odds.

Next, Gelber suggests that because the tribe is a sovereign nation and not subject to state laws, except what it agrees to in the compact, the arrangement will “lead to ongoing and destructive conflicts” between the tribe and its gambling patrons and its parimutuel partners and disagreements over bets that are disputed.

“In order to advance this tortured artifice, the Florida Compact could not allow the wagering actually occurring off of tribal land to be regulated by non-tribal authorities” Gelber wrote. “Thus, not only is the Florida Compact actually promoting massive expansions of wagering off of tribal lands, but it also leaves any regulation or oversight for those wagering on non-Indian land to tribal oversight.”

Allen told legislators that disputes regarding gaming will be resolved by the Tribal Gaming Commission but, Gelber argued, if a parent “claims that minors gambled, or that there were deceptive practices that will only be resolved through the tribal legal process.”

“There is no basis to believe that the Seminole Tribe is prepared to provide anything close to the kind of oversight that would be necessary for the massive volume of bets from all over Florida,’' Gelber said. “And the dissatisfaction will only serve to worsen relations between the Seminole Tribe and Floridians.”

Allen testified to House committees that the tribe has an honorable record for regulating its gambling operations and suggested the state should trust it to continue to be a good steward.

Gelber notes the compact includes no requirement that the tribe protect the confidentiality of Floridians’ data that is captured through online mobile sports betting apps.

“What remedy will a parent in Miami have when she realizes her child ran up a gambling bill on her credit card after the child was targeted via data harvesting?’' he asked. “Either there will be no remedy or this will force the Tribal Commission to embrace a regulatory mission it is likely not prepared, nor should be asked, to accept.”

Allen was asked by Rep. Christine Hunchofsky, D-Parkland, during the legislative session what the tribe will do. He answered that the tribe currently protects data privacy but did not have an answer as to whether it will allow its customers to opt out of having their private information harvested for marketing purposes.

Finally, IGRA authorizes the secretary of the interior to reject a compact if it violates IGRA and if it violates federal law. He cites examples of federal laws that may be violated such as the unlawful Internet Gambling Enforcement Act, in which courts have said that even if a bet is accepted on tribal land, if payment is made over the internet, it is not legal if it is not initiated on tribal land.

“Floridians are watching as a tribal gambling compact is becoming a vehicle by which widespread casino gambling will be spread throughout our state,’' Gelber wrote. “...This agency should not join this misguided effort.”

Miami Herald staff writer Doug Hanks contributed to this report.