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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. 

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