Florida Lawmakers Given Misleading FAQs On Sports Betting Compact And Allowability Of Mobile Wagering
By Daniel Wallach
May 18, 2021
Florida lawmakers will be tasked with a very important decision this week. They are re-convening in Tallahassee for a one-week special session that will address the future of gambling in Florida. Of the 15 gaming bills that are under consideration this week, the most important by far is whether to ratify a new 30-year gambling compact with the Seminole Tribe of Florida. The proposed tribal compact is sweeping in its scope, as it grants the Seminole Tribe exclusive control over all legal sports betting conducted statewide, including over mobile devices (regardless of the bettor’s physical location) and at licensed racetracks and jai-alai facilities located well beyond tribal borders.
The structure of the compact—with so much of the gambling activity originating from outside of tribal lands—has sparked concerns in some corners (particularly this one) that such an off-reservation arrangement violates the Indian Gaming Regulatory Act (“IGRA”), a 1988 federal law that governs the conduct of gaming on Indian lands.
In an attempt to educate lawmakers on the fundamentals and nuances of IGRA, Senate leadership recently disseminated a document entitled “Frequently Asked Questions” regarding SB 2A, the as-yet-voted-upon Senate bill that would ratify and implement the new compact. Unfortunately, in an effort to place their thumb on the proverbial scale and ensure passage of a controversial measure that will likely soon be the subject of litigation in both federal court and state court, the unnamed authors of this document presented a shockingly one-sided view of the federal law regarding whether IGRA permits Internet-based wagering. Here are two of the most glaring examples:
Federal law does not “allow” the “deemed accepted” server approach
The Senate FAQs present IGRA in a legally inaccurate way. According to the Senate-prepared document, IGRA “allows” a tribal compact to specify that a mobile sports wager shall be “deemed” to “exclusively occur” where the wagers are received by a server or other equipment housed on tribal lands, regardless of the location of the bettor. As represented by Senate leadership, “[t]his is not a new concept in terms of mobile sports wagering, and IGRA allows such jurisdictional arrangements.” Not only is that flat-out incorrect, but it is misleading. There is not a single instance on record of the U.S. Department of Interior ever approving a tribal-state gaming compact that included mobile sports betting. I’ve looked at hundreds of these compacts online, including every compact approved by the Department of the Interior since PASPA was overturned on May 14, 2018, and could not find so much as one compact which included mobile sports betting that was approved by the Department of the Interior.
To the contrary, as I reported last week for Forbes, every federal court and federal agency which have analyzed this issue have concluded—without exception—that gambling over the Internet and from locations external to tribal land flunk IGRA’s clear requirement that the “gaming activity” occur only “on Indian land.” As these authorities make crystal clear, the location of the gambler (rather than the server or other processing software) is the appropriate measure for determining the situs of “gaming activity” for purposes of IGRA.
The Bay Mills and Iipay Nation decisions, in particular, reject any notion that the location of the server or other processing equipment supplants the location of the gambler in determining where “gaming activity” takes place for purposes of IGRA. Remember, under IGRA, all of the “gaming activity” (and not just a portion of it) must take place solely “on Indian lands,” and “nowhere else” (to quote Justice Kagan in Bay Mills). In making this assessment, the federal cases interpreting IGRA instruct that the focus is on the gambler’s actions (i.e., the roll of the dice and spin of the wheel), and not the not the off-site administrative equipment. These cases uniformly recognize that the act of “initiating” a wager from outside of tribal lands constitutes “gaming activity,” and, as such, cannot be incorporated within a compact—which can only address activities taking place solely on Indian lands.
Further, the federal courts have rejected the use of state-law contract principles—such as offer and acceptance—to “deem” a mobile sports wager as being exclusively made at the server location on Indian lands where the bet is received. As one federal court explained, “[c]anons of statutory construction direct a court to resort to common law principles only when the term being construed itself is defined through common law concepts. . . . As the Webster’s definition demonstrates, ‘activity’ is not a conduit for the incorporation into IGRA of common law contract principles. Although Congress certainly could have limited the ‘on Indian lands’ requirement by reference to common law contract principles, it chose instead to require that all gaming ‘activities’ occur on Indian lands. For this reason, the Tribe’s discussion of offer, acceptance and consideration is simply not relevant.”
While this “deeming” approach may work under state law, especially since it involves the application of state-law contract principles (and state lawmakers are afforded significant discretion under state law to interpret undefined and ambiguous constitutional provisions, with New York’s recently-enacted mobile sports betting law the most notable example of that contract-based server theory in application), it’s an entirely different story under federal law, where the courts have consistently rejected attempts to import state-law contract principles to sidestep IGRA’s clearly-defined jurisdictional mandate that all of the gaming activities occur solely on Indian land.
Finally, ask yourself this question: if, as claimed, IGRA already permits tribes and states to specify that a mobile sports bet may be “deemed” at all times to exclusively occur at the location of the server on tribal lands (even when the patron is initiating the bet from an external location), then why is Congress trying to amend IGRA by broadening the concept of “Indian lands” to include wagers made over the Internet? H.B. 5502—introduced in 2019 and co-sponsored by four members of Congress and backed by several tribes—would “deem” such wagers to be made at “the physical location of the server or other computer equipment used to accept the sports wager,” regardless of where the bettor is located when he or she initiates the wager. This is a clear acknowledgement by federal lawmakers that IGRA does not allow for mobile sports wagering from patrons who are not physically present on Indian lands. After all, if online sports betting was already permitted under IGRA regardless of a patron’s physical location, then there would be no need whatsoever for this bill.
Misplaced reliance on an Oklahoma arbitration proceeding
The most stunning and bizarre aspect of the Senate FAQ Sheet is its reliance on a 2016 Oklahoma arbitration ruling—entered in Iowa Tribe of Oklahoma v. State of Oklahoma—to support the premise that Internet gambling is specifically allowed under IGRA. I’ve taken a closer look at the arbitration decision and its subsequent history in federal court (which confirmed the arbitration award) and it is obvious that the federal judge did not even analyze the question of Internet gambling under IGRA. The arbitration ruling was presented to the federal court on a “consent” motion—meaning that both parties (the Tribe and the State) agreed that the federal judge should confirm the arbitration award. There was no advocacy in the federal court proceeding over whether IGRA permitted Indian tribes to operate an Internet gambling website, and the federal judge did not analyze that issue in his order confirming the award, which was presented to the court as an agreed-upon motion.
Further, the circumstances surrounding the underlying arbitration ruling seem highly unorthodox. Most notably, it was not decided by a judge with any federal court judicial experience, but, rather, by a retired state criminal appeals judge whose law firm currently represents tribal gaming clients. In other words, this was not a situation even remotely akin to having an independent Article III federal judge—with a lifetime appointment and no ties to any law firm—deciding the case. And, unlike many court proceedings resulting in a final judgment on the merits, there was no oral argument or live witness testimony in this arbitration proceeding. It was just decided on the basis of the papers submitted.
For such a supposedly pathbreaking ruling—the first and only decision (to this day) interpreting IGRA as allowing mobile wagering initiated from locations outside of tribal lands—you would expect more of an evidentiary record. And you would certainly have expected the U.S. Department of the Interior or some other federal government agency to have been a party to the arbitration proceeding. Not only was that not the case, but the Oklahoma tribe never even formally sought to amend its gaming compact to include Internet gaming. Instead, it asked a local arbitrator to determine that its existing compact—which made no explicit reference to Internet gaming—granted the tribe the right to engage in that activity without any further federal agency approval.
Moreover, if you closely scrutinize the facts of this case, what the arbitrator approved here was a structure that runs afoul of two federal different laws—IGRA and the Unlawful Internet Gambling Enforcement Act. The specific Internet gambling at issue in the Iowa Tribe of Oklahoma arbitration was the operation of a tribal website—called Pokertribe.com—that would accept bets from persons located all over the world, not just from the State of Oklahoma, without regard to whether the betting at issue was legal in the transmitting jurisdiction. This was a very similar fact-pattern to the later-issued Ninth Circuit opinion in California v. Iipay Nation, which rejected the same legal construct—i.e., internet-based wagers originating from persons located outside the state—and determined that “gaming activity” for IGRA purposes must be viewed from the gambler’s perspective, not from the vantagepoint of where the server is located. This begs the question—why is Senate leadership relying on an arbitration ruling bereft of any federal court analysis that was implicitly—if not expressly overruled—by a later decided U.S. Court of Appeals decision on the same issue?
Finally, did anyone in Senate leadership even bother to attempt to learn more about the Oklahoma tribe’s plans for an “international real-money poker site”? Well, don’t worry, I did. The website never launched following allegations that the tribe’s commercial website partner scammed two other Oklahoma Indian tribes out of $9.5 million for promising—and failing a deliver—a similar iPoker website. That same developer was also under federal investigation by the National Indian Gaming Commission. It gets even better. The daughter of the then-Governor of Oklahoma, Mary Fallin, worked as a spokesperson for the tribe’s commercial website developer, which might (or might not explain) explain the surprising lack of pushback from the State on this issue. Is this really the case that our state’s political leaders want to hang their hats on in support of their legally-specious IGRA argument? I would not want to be the lawyer presenting that case as my principal legal authority to a federal court.
This article was originally published in Forbes.com on May 18, 2021.