Sports betting plan hit with legal challenge

By Jim Saunders
News Service of Florida

Pointing to a “legal fiction,” two pari-mutuel facilities have filed a federal lawsuit challenging a newly approved plan for the Seminole Tribe to operate sports betting in Florida.

Owners of Magic City Casino in Miami-Dade County and Bonita Springs Poker Room in Southwest Florida filed the lawsuit last Friday contending that a sports-betting plan that lawmakers passed in May violates federal laws. Lawmakers backed the plan as part of a gambling “compact” negotiated this spring by Gov. Ron DeSantis and tribal leaders.

Under the deal, the Seminoles would serve as the hub for sports betting, which in the past has been illegal in Florida. Gamblers throughout the state could place bets online, with the bets run through computer servers on tribal property.

But the 67-page lawsuit contends, in part, that a law known as the federal Indian Gaming Regulatory Act does not authorize bets to be placed from off tribal lands. Also, the lawsuit argues that the structure of the plan is an attempt to get around a 2018 state constitutional amendment that requires voter approval of gambling expansions.

“In an effort to circumvent this clear prohibition in the state Constitution, the 2021 compact and implementing law provide that a person sitting on her poolside lounge chair or his couch at home placing a sports bet through the tribe is ‘deemed’ not to be placing a bet that is otherwise illegal in the state,” the lawsuit said. “The 2021 compact unlawfully deems the bet to be placed on the tribe’s reservation, where the servers will be located. However, this is nothing more than a legal fiction belied by the fact that sports betting is still taking place outside the tribe’s reservations in a state where sports betting remains illegal.”

Sports betting was the highest-profile part of the compact that DeSantis and tribal leaders announced in April. The compact, which lawmakers overwhelmingly approved during a special legislative session, includes the tribe paying $2.5 billion to the state over the first five years in exchange for having control over online sports betting. The tribe also will get other benefits, such as being able to offer craps and roulette at its casinos.

The sports-betting part of the deal still requires approval from the U.S. Department of the Interior, which oversees tribal gaming. Lawmakers acknowledged in May that they expected legal challenges.

“Obviously, having this kind of agreement, you’re navigating kind of the icebergs of legal hurdles,” House Speaker Chris Sprowls, R-Palm Harbor, told reporters in May.

Sprowls, an attorney, said it was an “open question” whether a legal challenge would be successful.

“You know, reasonable people disagree. Some people have looked at it and said, ‘Hey, I don’t think it’s gonna make it.’ I’ve looked at it. I think it will. The reality is that’s going to be resolved by a court,” he added.

Jim Allen, CEO of Seminole Gaming, also acknowledged in an interview last month with The News Service of Florida that he expected legal challenges. But he pointed to benefits of the plan for the state.

“Our problem is that if you look at the illegal sports betting in online gaming sites, there is billions of dollars that’s occurring on an annual basis already from the citizens of the state of Florida,” Allen said in the interview. “So part of our message to the leadership of the state was it’s happening anyway. It’s not regulated. Many, many times these sites are just a magnet for offshore activity that may or may not include money laundering and many other illegal activities. So why not offer the product, because clearly the citizens have told us they want it.”

Under the plan, the tribe would contract with pari-mutuel facilities to help market sports betting. The lawsuit said that would include offering kiosks to place bets at pari-mutuel facilities.

But the lawsuit, filed by attorneys from the Buchanan Ingersoll & Rooney firm, argues that pari-mutuels would be put at a disadvantage if the plan goes forward. It said “pari-mutuels that are unable to, or choose not to, enter into a marketing agreement with the tribe are completely shut out of any opportunity to offer sports betting.”

“Accordingly, the pari-mutuels will not only lose the walk-in traffic on which their business models are based, which will ultimately affect their revenue from slot machines, card rooms, and pari-mutuel wagering, as well as the ancillary entertainment and dining options offered to patrons of their facilities — but they are also being denied the opportunity to compete on a level playing field with the tribe,” said the lawsuit, first reported last Monday by the Miami Herald.

The Magic City and Bonita Springs facilities are headed by the Havenick family, longtime players in the state’s pari-mutuel industry. The lawsuit, which seeks an injunction, also contends the sports-betting plan violates federal laws known as the Wire Act of 1961 and the Unlawful Internet Gaming Enforcement Act.