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Two Florida pari-mutuels seek to block sports betting debut

The motion, filed by Magic City Casino and Bonita Springs Poker Room, asks a court to block the sports-betting portion of the state’s compact with the Seminole Tribe of Florida.
Gov. Ron DeSantis and Marcellus Osceola, Jr., chairman of the Seminole Tribe of Florida, pose for a photo at a signing ceremony on Friday, April 23, 2021.
Gov. Ron DeSantis and Marcellus Osceola, Jr., chairman of the Seminole Tribe of Florida, pose for a photo at a signing ceremony on Friday, April 23, 2021. [ GOV. RON DESANTIS | The Daytona Beach News-Journal ]
Published Sep. 22

TALLAHASSEE — Two Florida pari-mutuels filed a new motion in federal district court in Washington late Tuesday, asking a judge to block implementation of online sports betting under the Florida tribal gaming compact which is scheduled to begin later this year.

The motion, filed by Magic City Casino and Bonita Springs Poker Room against U.S. Secretary of Interior Deb Haaland, asks a court to enjoin the sports-betting portion of the state’s compact with the Seminole Tribe of Florida. The compact gives the tribe a monopoly over sports betting in the state by allowing wagers to go through an internet server on tribal land.

The plaintiffs allege that although the Department of Interior allowed the compact to take effect, the court should reverse that decision and block implementation until a legal sports-betting compact is established for Florida.

Under the deal signed by Gov. Ron DeSantis and approved by the Florida Legislature, anyone in Florida over age 21 can start placing and collecting online wagers on sporting events “via the internet [or] web application” from anywhere in Florida beginning on Oct. 15. All transactions would go through servers located on tribal land in a “hub and spoke” model intended to bypass both federal and state law, which both deem sports betting in Florida illegal unless authorized in state law.

Although the Florida statute sets an Oct. 15 start date for tribal sports betting, a footnote in the lawsuit states that “representatives of the Tribe have informed Plaintiffs that the Tribe will not implement online sports betting until November 15, 2021.”

Seminole Tribe spokesperson Gary Bitner said Wednesday “an exact launch date for mobile sports betting in Florida has not been announced.”

Argument centers on the issue of servers on tribal land

Ultimately, the federal District Court for the District of Columbia will have the final say.

The court has scheduled a Nov. 5 hearing date to hear oral arguments on the Magic City motion for summary judgment with the goal of blocking the launch of online sports betting in Florida.

Daniel Wallach, a lawyer and gambling consultant who has studied Florida’s laws, said that at the core of the lawsuit is the question that was argued in previous court filings and during the legislative process.

“That is whether internet-based wagering by persons located outside tribal land become magically transformed into gaming on Indian land simply because the server which processes the bets happens to be located on Indian land,’’ he said.

Magic City and Bonita Poker room allege that the 30-year agreement with the state illegally violates the federal Indian Gaming Regulatory Act which requires that any state-sanctioned gambling occur on tribal land.

“In numerous ways, IGRA makes abundantly clear that its provisions are limited to gaming conducted ‘on Indian lands,’ ‘’ the 45-page motion reads. “Indeed, IGRA refers to gaming on ‘Indian lands’ thirty-four times, and does not once discuss gaming that occurs outside of Indian lands.”

Magic City and Bonita Poker Rooms argue that “when a bet is placed by a gambler using the internet somewhere in Florida that is not on a reservation, that person is engaging in sports betting off the reservation. That is a fact, and no agreement between the Tribe and Florida can change that fact.”

Secondary argument on excluding other businesses

The parimutuels also allege that the Legislature not only gave the Tribe the sole right to conduct sports betting in Florida, it made it a felony for anyone else to operate sports betting.

“This is an unlawful abuse of IGRA that goes way beyond anything Congress ever intended,’’ the motion states. “It also violates the Constitution’s Equal Protection Clause by discriminating in favor of one specific tribe [a group defined by race, ethnicity, and/or national origin], who is given a monopoly to conduct a gambling business, while providing that if any person belonging to a different race, tribe, ethnicity, or national origin tries to engage in the same gambling business, then they are guilty of committing a felony.”

The compact allows sports bets at six of the tribe’s reservations but permits Florida’s existing racetracks and jai-alai frontons to develop their own mobile apps and to conduct off-reservation sports bets if they are chosen by the tribe as its partners. The parimutuels are allowed to take 60% of the proceeds from each bet with the tribe receiving the remaining 40%.

Magic City and Bonita Poker Rooms also argue that because of the tribe’s state-sanctioned monopoly, they “will be seriously handicapped by the inability to provide comparable services” and the online sports betting operation “will divert business” away from its gambling operations to the tribe’s.

“Plaintiffs also will lose new business and new customer bases, and will suffer a loss of goodwill developed over decades of development of their in-person gaming facilities,’’ they wrote.

This is the second lawsuit filed by West Flagler Associates and Bonita-Fort Myers Corporation, which is owned by the Havenick family, one of Florida’s oldest parimutuel companies. The first lawsuit filed in federal court in the Northern District of Florida, alleged that the sports betting component of the compact is based on “legal fiction” that violates federal law.

Department of Interior’s role is key

In letter to the state in August, the Department of Interior ruled that it will neither approve nor deny the compact and, “as a result, the Compact is considered to have been approved by operation of law to the extent that it complies with IGRA [Indian Gaming Regulatory Act] and existing Federal law.”

In his letter, Bryan Newland, principal deputy assistant secretary of Indian Affairs concluded that “evolving technology should not be an impediment to tribes participating in the gaming industry” and the goals of IGRA “would be served through the improvement of tribal-state cooperation in the regulation of mobile wagering.”

“Multiple states have enacted laws that deem a bet to have occurred at the location of the servers, regardless of where the player is physically located in the state.,’’ the letter said. “The Compact reflects this modem understanding of how to regulate online gaming.”

Wallach, the legal scholar, considers the 12-page letter from Newland avoiding approval but attempting to make the case for it was unusual.

“Secretary Newland apparently was trying to put his thumb on the scale, even though his agency made it determination not to weigh in and make a decision one way or the other,’’ he said. “His reasoning looks like it was written by lawyers for the Seminole Tribe and it won’t be given that much weight by a court — given the fact that the agency didn’t make a formal approval.”

The Department of Interior did not respond to requests for comment.