Court denies Seminole Tribe’s request for stay in Florida sports betting case

An appellate panel ruled Friday that the tribe has not shown that it will be irreparably harmed if it is forced to halt its sportsbook operation while it appeals.
The Seminole Tribe of Florida, which owns the Guitar Hotel near Hollywood, was dealt another blow Friday in its efforts to control online sports betting in Florida.
The Seminole Tribe of Florida, which owns the Guitar Hotel near Hollywood, was dealt another blow Friday in its efforts to control online sports betting in Florida.
Published Dec. 4, 2021|Updated Dec. 4, 2021

TALLAHASSEE — A District of Columbia appellate court late Friday dealt another blow to the Seminole Tribe of Florida’s efforts to control online sports betting in Florida and ruled that the tribe has not shown that it will be irreparably harmed if it is forced to halt its sports book operation while it appeals a lower court ruling.

The decision leaves in place the Nov. 22 ruling by Judge Dabney L. Friedrich of the U.S. District Court in the District of Columbia that invalidated the 30-year, multi-billion-dollar gambling agreement with the state, known as a compact. The judge ruled that the tribe’s sports betting and casino expansion deal violated federal Indian gaming law and that U.S. Department of the Interior Secretary Deb Haaland, whose agency oversees tribal gambling, erred in allowing the deal to go forward.

The tribe is appealing the ruling and asked the appellate court to stay, or temporarily halt, the effect of the ruling pending the appeal. But in the brief ruling issued late Friday by a three-judge panel of the U.S. Court of Appeals for the District of Columbia ruled in a 2-1 per curiam order that the tribe’s emergency motion for a stay be denied because it “has not satisfied the stringent requirements for a stay pending appeal.”

The ruling now raises the stakes on the online sportsbook operation the Seminole Tribe launched on Nov. 1. Friedrich ruled that the operation is unlawful, but her ruling is not self-executing. If the tribe decides not to halt its sportsbook, it will be up to either the U.S. Department of Justice, the National Indian Gaming Commission or Friedrich to take action to force it to stop.

In a statement on Friday, the tribe did not indicate whether or not it will discontinue the games as it pursues appeal.

“The Seminole Tribe is aware of today’s appeals court decision and is carefully considering the steps it will take as a result,’’ said Gary Bitner, spokesman for the tribe. “Despite the decision, the Seminole Tribe looks forward to a hearing from the appeals court based on the appeal previously filed by the tribe and an expected appeal by the U.S. Department of Justice.”

Dustin Thomas, chief of staff for the National Indian Gaming Commission, which oversees tribal activities, told the Miami Herald on Friday that “the National Indian Gaming Commission does not comment on potential investigations or ongoing litigation but is aware of the judge’s decision in the West Flagler case and is monitoring the situation closely.”

Tribe’s argument for stay failed

The tribe had argued that failure to put the ruling on hold will cause “irreparable harm” to the Seminole Tribe’s sovereignty and economic interests. If it is forced to stop its sports betting app, it said that would jeopardize hundreds of jobs for employees and vendors already hired to work on the gaming operations.

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The tribe told the court it has made two $37.5 million revenue-sharing payments to the state under the compact, signed by Gov. Ron DeSantis and approved by the Florida Legislature in May. It has also hired hundreds of employees, and spent over $25 million to develop the online sportsbook.

But West Flagler Associates, the owners of Magic City Casino and the Bonita Springs Poker Room which brought the lawsuit challenging the legality of the compact, accused the tribe of being “disingenuous with the court over its alleged irreparable harm.”

“While telling the court that, absent an emergency stay, it ‘stands to lose’ tens of millions in revenue, it is telling its customers (over a week after the district court’s ruling) that its unlawful online sports gaming ‘remains fully open to all players’ and ‘there is no need to worry,’” lawyers for the plaintiffs wrote in their 29-page response.

Under the compact, the tribe agreed to pay the state at least $2.5 billion over the first five years in exchange for having control over sports betting in the state and being allowed to add roulette and craps to its casino operations.

To get around a state law that prohibits any expansion of gambling without voter approval unless it is authorized as tribal gaming, the governor and tribe agreed to give the tribe a monopoly on online sports betting in Florida by having all wagers go through the tribe’s computer servers. But the court said that provision violated federal Indian gaming law.

Second rejection of request for a stay

This is the second time a court has rejected the Seminole Tribe’s attempt to put a stay on Friedrich’s ruling. Two days after her initial ruling, the tribe asked Friedrich to stay her own decision as it pursued an appeal. She rejected it, issuing a four-point rebuttal that the tribe had no guarantee of success on the merits of the case and could not show that it was irreparably injured without a stay.

Friedrich’s order, however, is not self-executing.

In a message to the plaintiffs’ lawyers on Monday before the plaintiffs filed their response to the motion for a stay, tribal attorney Joe Webster said that “the tribal council will evaluate the tribe’s options after reviewing the decision by the D.C. circuit.”

Now, that the appellate court rejected the stay, the stakes are higher, as “every bet could face the risk of operating in defiance of a federal court ruling,’’ said Daniel Wallach, a Hallandale Beach gaming law expert.

Wallach said that Friedrich was clear in her ruling, saying that the continued operation of sports betting would violate federal law. If the tribe continues its sportsbook and evades the ruling, there are two potential options for the plaintiffs, he said.

He said West Flagler Associates could ask Friedrich to ask the court to direct the U.S. Department of the Interior to force the Seminole Tribe to discontinue its online sports betting operations until a court orders otherwise or it could file a new lawsuit against the tribe and all of its commercial vendors for “aiding and abetting an illegal sportsbook operation.”

“If you enjoin any of the vendors, then the sportsbook can’t operate,’’ he said.

Wallach said the court’s options include imposing sanctions, monetary penalties, garnishing bank accounts and imposing limits on vendors.

“I suspect they are going to discontinue their sportsbook,’’ he said. “I wouldn’t bet on it, but thumbing their nose at a district court ruling is not a sensible or smart way of approaching a federal court. It would be in their best interests to cease operations now.”

He said that with a second rejection of their request for a stay, “they had one more bite at the apple, and now it will be months before any potential appellate ruling could alter the status quo. Time is up.”