US Sports Betting Update – Federal Judge Blocks Florida’s Sports Betting Law

US Sports Betting Update – Federal Judge Blocks Florida’s Sports Betting Law

A federal judge has overturned Florida’s decision to award the Seminole Tribe the exclusive rights to run online sports betting in the state. US District Judge Dabney Friedrich ruled that the plan violated both the Florida state constitution and the federal Indian Gaming Regulation Act. It means the Seminole Tribe’s Hard Rock Sportsbook, which launched quietly on November 2, must stop accepting sports wagers from Floridians.

Sports fans in Florida therefore enjoyed just three weeks of legal sports betting before the compact was overturned. It followed an appeal from the owners of Magic City Casino in Miami-Dade County and Bonita Springs Poker Room in Southwest Florida. Those pari-mutuel operators argued that the sports betting deal, struck by Gov. Ron DeSantis and the Seminoles, represented a “legal fiction,” because federal law does not authorize betting that occurs off tribal lands.

They claimed that the state was trying to create a legal loophole by ensuring that the servers processing the online sports bets would be located on Seminole land. They said it would have a “significant and potentially devastating impact on their own gambling operations”. It was also a win for sportsbooks such as FanDuel and DraftKings, which had also argued that the decision to award the Seminole Tribe an exclusive on sports betting in the third most populous state in the country was in violation of state and federal law.

“This Court Cannot Accept That Fiction”

To seal the deal, the Seminole Tribe agreed to provide the Florida treasury with at least $2.5 billion in revenue over the next five years. DeSantis admitted that he knew it would be controversial. “We anticipated that this could happen,” he told reporters at a press conference this week. He called it “an unsettled legal issue”, referencing a “no casinos” amendment to the constitution, which requires any new casino gambling in Florida to be approved by voters, and the Indian Gaming Regulatory Act, which stipulates that all gambling must take place on tribal lands when authorized by state compacts.

“When we did the compact, I can only negotiate with the tribe,” DeSantis said. “I cannot do any gambling outside of that per the amendment that passed in 2018… They wanted to do the sports, and so we said fine, and the reason why I said that was because it would probably pass on a referendum anyway. And then if a company gets it, the tribe gets it anyway. So we felt that that made sense.”

The judge rejected the Compact. “Although the Compact “deem[s]” all sports betting to occur at the location of the Tribe’s ‘sports book(s)’ and supporting servers, see Compact § III(CC)(2), this court cannot accept that fiction,” said Judge Friedrich in her verdict. She added that “it is well-settled that IGRA authorizes sports betting only on Indian lands,” and that “it is equally clear that the Secretary must reject compacts that violate IGRA’s terms.”

Magic City Casino spokesman Christian Ulvert called the ruling “a victory for family-owned businesses like ours, who pay their fair share in taxes and believe the free market should guide the business operations of gaming venues”. He added: “The judge clearly understood the blatant

violation of IGRA as her ruling demonstrates. We look forward to working with the Governor, Legislature, and the citizens of Florida to pave a path forward that ensures a fair gaming marketplace exists in Florida.”

The Appeal Process

The Seminole Tribe mounted an immediate bid to stop the halt on its statewide online sports betting deal. The tribe’s lawyers argued that it would “lose substantial revenue” as a result of the decision. Judge Friedrich rejected that appeal. She said the tribe had not demonstrated that it would be irreparably harmed if a stay were not granted. The next step for the Seminoles is an emergency motion for stay pending appeal with the Circuit Court of Appeals to have sports wagering reinstated. If it fails, an appeal against Friedrich’s decision should be heard at some point in 2022.

“We are reviewing the court’s perplexing ruling, which certainly contains appealable issues," DeSantis press secretary Christina Pushaw said. “Because neither the Seminole Tribe nor the State of Florida are parties to the case, it is unclear what if any immediate impact the ruling has in Florida. We look forward to working with the Tribe to ensure the future success of the Compact.”

Right now, the tribe’s online Hard Rock Sportsbook is still operational in the Sunshine State, although it does not have the legal right to operate. Bob Jarvis, a Nova Southeastern University law professor, said: “This has always been the Seminoles’ M.O. They fight in court, but they continue to do business as usual.” Jarvis believes the deal will be upheld on appeal.

Florida-based industry expert Daniel Wallach, who has a law practice in Hallandale Beach, said the groups that opposed the Seminole Tribe’s deal could request an injunction from Judge Friedrich. “If I’m in the position of West Flagler or No Casinos, I ask judge Friedrich to enter a supplemental order imposing an injunction requiring the Seminole Tribe and all entities acting in concert with the tribe, to shut down online sports betting immediately.”

Alternative Options

Most states that have legalized online sports betting since the federal ban, PASPA, was overturned in 2018 did so via a voter ballot. There are three separate measures underway in Florida, all of which seek to gather the necessary 900,000 signatures to get sports betting on the ballot in the fall of 2022. One of them, which is funded by DraftKings and FanDuel, opposed the Seminole exclusive.

A portion of the revenue generated from online sports betting in Florida will go towards the state’s education department. DraftKings and FanDuel argued that a more competitive market would result in more revenue for education. “Now is the time for all entities to come together so we may provide a competitive legal sports betting market for Floridians, while generating the expected hundreds of millions of dollars in annual revenues for the Florida Educational Enhancement Trust Fund,” said Christina Johnson, spokeswoman for Florida Education Champions, the political committee behind the effort.

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