Florida Legislature Begins Amended Compact, Sports Betting Approval (May 17)

Florida Legislature Begins Amended Compact, Sports Betting Approval (May 17) article feature image

Photo by: Joe Sohm/Visions of America/Universal Images Group via Getty Images. Pictured: Florida Capitol Building

Florida’s sweeping gaming compact will not permit online gaming and will prohibit legal sports betting until at least Oct. 15, lawmakers announced Monday.

Addressing the full House Monday, Speaker Chris Sprowls said policymakers and the Seminole Tribe of Florida had amended the agreement to alleviate lawmakers’ concerns about statewide mobile casino gaming authorization within the sweeping compact. Sprowls, followed by Senate President Wilton Simpson, announced the amendments shortly after gaveling in a special session intended to ratify the compact and address the state’s other gaming matters.

A Senate Appropriations Committee advanced amended the compact implementation legislation Monday and a House subcommittee was set to do so later Monday afternoon. More votes remain, but lawmakers intend to ratify the deal by Wednesday.

Last month Gov. Ron DeSantis and Seminole Chairman Marcellus Osceola Jr. announced an agreement that would permit expanded gaming options at the tribe’s casinos and a guaranteed $2.5 billion for the state in new gaming revenues over the next five years. As part of the overall 30-year deal, the state would grant the tribes exclusive rights to certain games in exchange for a portion of revenues, which officials project would average at least $500 million annually throughout the deal’s duration.

With Monday’s amendment, it appears online casino gaming, which is far more financially lucrative than online sports betting, would not only be excluded from the deal, but without future negotiations may not come to the state until at least the 2050’s.

The deal also allows the Seminoles to offer retail sportsbooks at their seven Florida gaming properties as well as permit statewide online wagering. The tribe can also partner with state horse tracks for additional sportsbooks.

Championed by Republicans DeSantis and Simpson, it appears lawmakers in the GOP-controlled legislature will sign off on the deal, which is only up for a yes-no vote and can’t be further amended by lawmakers. There are a host of other gaming bills under consideration in the session, but the compact – far and away and the most consequential focus of the special session – is seemingly on its way toward passage.

Legislative approval is just one step in what could be a lengthy and litigious implementation process. Florida anti-gambling groups are already threatening legal action, and some legal analysts further believe the deal violates federal statutes.

That hasn’t appeared to discourage lawmakers that applauded the amended deal Monday and seem excited to approve the long-sought-after agreement that will bring billions into state coffers.

Key Details

The deal allows online and retail sports betting under the Seminole’s purview. Along with tribal retail sportsbooks, at Seminole facilities, the tribe could allow statewide mobile wagering, presumably under its Hard Rock brand

The compact also requires the tribe to contract with “any willing, qualified pari-mutuel permitholder” for sports betting access, though finding partners may be difficult. The tribes would receive 40 percent of the sports betting profits in what is already a low-margin offering.

Additionally, though the pari-mutuel operators could partner with a different sportsbook, such as DraftKings, FanDuel or BetMGM, it would be simply a customer-facing marketing option still under the Seminole’s control. For example, a bettor might be wagering with “DraftKings” but he or she would in reality be using a DraftKings-branded app or site still using the Seminole’s proprietary operations.

The Seminoles would pay back 13.75 percent of sports betting profits under the compact. If the tribe doesn’t reach deals with at least three separate pari-mutuel operators in the first three months after the deal is ratified, that rate jumps to 15.75 percent.

Speaking at a Senate committee hearing Monday, Sen. Travis Hutson said he expects little trouble finding three willing partners. He said the reduced tax rate is an incentive to expand sports betting options beyond just the Seminole-owned betting option.

However, even if the pari-mutuel facility owners and tribe are on board, it remains to be seen if a top sportsbook operator would make such a deal, the first such arrangement of the more than two-dozen states with legal wagering. Seminole officials Monday said they wanted to work with major sportsbook operators under this regulatory framework, but Politico reports DraftKings is trying to kill the compact.

Additionally, the deal allows expanded gaming options such as craps and roulette at the Seminole Hard Rock Hotel & Casino in Tampa and Hollywood as well as the five other tribe-owned casinos. Dozens of smaller cardrooms, which have been locked in legal battles with the Seminoles over the rights to certain card games, would be allowed to continue offering these games as part of the agreement.

Next Steps

If approved by lawmakers as expected Wednesday, the compact still faces significant challenges, industry analysts say.

Anti-gambling groups led by No Casinos have argued the compact’s provisions violate Florida Amendment 3, which says all casino gaming legislation must be approved by voters. Compact proponents argue tribal agreements are not subject to Amendment 3’s restrictions. Additionally, sports betting itself is not subject to voter approval because it was not a common casino gaming option when approved in November 2018, sports betting legal analysts such as Daniel Wallach argue.

Notably, the Seminole Tribe contributed more than $22 million to the “yes” campaign, one of the amendment’s biggest financial supporters.

All state gaming compacts are also subject to federal approval by the Department of the Interior. The 1988 Indian Gaming Regulatory Act, the overarching federal statute that regulates tribal gaming compacts, limits gambling to tribal grounds. Ensuing court decisions have upheld a strict interpretation that online wagers are not permitted under compacts, as they are not physically placed on tribal lands.

The compact’s supporters have argued an arbitration agreement in Oklahoma actually opens the door legally for online wagering through the tribe as long as its servers are on Seminole lands. Proponents also cite similar provisions in New Jersey law, but these servers are in commercial casinos, not tribal gaming facilities, which are not subject to the same federal regulations.

The Interior Department could strike down certain provisions, such as the online sports betting language while allowing the compact to continue. In that scenario, retail sportsbooks could still open as of Oct. 15.

These matters could very well be headed to court. In the meantime, the legislative hurdle appears to be nothing more than a speed bump before what increasingly seems like lawmakers' inevitable signoff Wednesday.

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