Feds, Seminoles Advance ‘Fiction’ That Compact Never ‘Authorized’ Online Sports Betting in Florida
By Daniel Wallach
September 28, 2022
What is it with sports betting lawsuits and the word ‘authorize’?
Nearly 8 years ago, the State of New Jersey – in a last-ditch attempt to legalize sports betting after an earlier legislative effort was struck down by a federal court – crafted the novel legal argument that a new state statute partially repealing state-law prohibitions against sports betting was not a forbidden “authorization” of sports betting for purposes of federal law. (The then-existing federal law known as the Professional and Amateur Sports Protection Act – or “PASPA” for short – prohibited states from “authorizing” sports betting within their borders).
While that argument failed to sway a New Jersey federal district court judge and a federal appeals court, it did get the attention of the U.S. Supreme Court, which granted certiorari on that discrete issue and soon thereafter invalidated PASPA on broader constitutional grounds.
That groundbreaking decision opened the door to state-authorized sports betting, and today more than 35 states (plus the District of Columbia) have taken advantage of that opportunity.
Now fast forward to the present day, and a similar argument is being made by proponents of legal sports betting in Florida.
The Seminole Tribe of Florida and the United States Department of the Interior are appealing a federal court decision from late last year which invalidated the Tribe’s new Class III gaming compact with the State of Florida. That compact – which became effective in August 2021 – granted the Tribe the exclusive right to operate online sports betting throughout Florida and decreed that all online wagers would be “deemed” to occur “exclusively” on tribal lands where the computer server processing the bet is located, regardless of the bettor’s physical location.
In a November 2021 ruling that this author had correctly predicted months earlier, U.S. District Judge Dabney Friedrich held that the compact’s online sports betting element violated the Indian Gaming Regulatory Act (“IGRA”) because it “authorized” betting by patrons who are “physically located in the State [of Florida], but not on [the Tribe’s] Indian lands” in derogation of IGRA’s requirement that all gaming activities take place “on Indian lands, and nowhere else.”
Although the compact “deemed” that all sports wagers – including those initiated over the internet – would occur “exclusively” on tribal lands where the server processing the bet is located, Judge Friedrich characterized that construct as a “fiction” designed to “evade” IGRA’s requirement that all gaming activity “authorized” by a compact take place “on Indian lands.”
As Judge Friedrich explained in her November 22nd decision, “[w]hen a federal statute authorizes an activity only at specific locations, parties may not evade that limitation by ‘deeming’ their activity to occur where it, as a factual matter, does not.” Since the compact allows patrons to wager throughout Florida – “including at locations that are not Indian lands” – Judge Friedrich concluded that the compact “authorizes gaming off Indian lands” in violation of IGRA, meaning that the Secretary of the Interior had an affirmative duty to reject the compact.
The ‘hybrid’ authorization theory is contradicted by the record
Now, nearly one year later, the Seminole Tribe and the Department of the Interior are taking a page right out of the New Jersey playbook. In appellate briefs recently filed with the U.S. Court of Appeals for the D.C. Circuit, both entities now claim that the compact did not “authorize” online sports betting at all. Rather, they insist that the compact authorized only in-person betting on tribal lands and that the online sports betting component was authorized solely by Florida law. As described by the federal government – and backed by the Seminole Tribe – the sports betting provisions of the compact “reflect a permissible hybrid approach, wherein gaming activity that occurs off of the Tribe’s Indian lands is authorized under state law, and gaming activity that occurs on Indian lands is authorized by IGRA pursuant to the Compact.”
The motivation behind this argument is obvious. If the compact – a creature of federal law – did not “authorize” online sports betting, then there would presumably be no IGRA violation and therefore no basis for striking the compact. (After all, Judge Friedrich’s invalidation of the compact was based on her determination that the online sports betting provisions exceeded the permissible jurisdictional boundaries of IGRA because it authorized gaming activities off of Indian lands). And if state law alone authorized online sports betting, then any challenge to its legality would have to be decided by a Florida state court judge rather than the Department of the Interior or a federal court, which review the compact for compliance with federal law.
There’s just one problem with that argument. The so-called “hybrid approach” that the Tribe and the Department of the Interior are now championing – i.e., that the compact only authorized in-person betting on tribal lands while state law authorized all online wagers placed by persons outside of tribal lands – is contradicted by the plain language of the compact, the Florida statute ratifying the compact, and the prior statements of the compacting parties.
Online sports betting was ‘authorized’ by the federally approved compact
A review of the pertinent compact provisions makes clear that online sports betting is expressly “authorized” by the compact. Section III.F of the Compact lists “Sports Betting” as a “Covered Game” and subsequently defines it in Section III.CC it to include “any such wagering undertaken by a Patron physically located in the State but not on Indian Lands using an electronic device connected via the internet, web application or otherwise . . . .” (Compact, at pp. 4 & 15). Part IV of the Compact, revealingly titled “Authorization and Location of Covered Games,” in turn declares that “the Tribe is authorized to operate Covered Games on its Indian lands,” (id. at p. 20), and in the very first clause, provides that sports wagers “made by players physically located within the State . . . shall be deemed to take place . . . on Indian Lands” at the “location of the servers or other devices used to conduct such wagering activity.” (Id. at p. 20).
As explained by Judge Friedrich, the inclusion of the “deemed” language in the “Authorization” section of the compact “make[s] clear” that sports wagering by patrons physically located outside of Indian lands is “authorized” by the compact. “By simultaneously authorizing sports betting on Indian lands and deeming gaming across Florida to occur on those same lands, Section IV(A) purports to authorize sports betting throughout the State,” Judge Freidrich concluded. Even “[t]he title of [Part] IV, ‘Authorization and Location of Covered Games,’” Judge Friedrich added, “suggests that the location of gaming is relevant to its authorization.”
Once upon a time — before there was ever any hint of litigation — the compacting parties also interpreted the compact as having “authorized” online sports betting. When the new compact was signed in April 2021, the Seminole Tribe issued a press release proclaiming that the compact “authorizes the Tribe to accept sports wagers in person and from patrons physically located in the State via mobile devices.” On that same day, Florida Governor Ron DeSantis issued his own press release declaring that “[m]ost notably, the compact modernizes the gaming industry through the authorization of sports betting in Florida through the Tribe.” The State of Florida – one of the two signatories to the compact – also expressly acknowledged the compact’s authorization of online sports betting in its amicus curiae brief filed with the district court in October 2021 – at a point in time before the Department of the Interior and the Seminole Tribe had cooked up their new “hybrid approach/jurisdiction-shifting” argument. In revealingly plain language, the State declared that “[t]he Compact authorizes the Tribe to conduct intrastate online gambling within Florida,” adding that “[t]he Compact expands and modernizes casino gaming in Florida, including by authorizing – as have many other states – intrastate internet sports betting.”
Even the federal government – through the Department of the Interior – took a decidedly different view of the compact before there was ever any litigation. In his August 6, 2021 letter announcing the approval of the compact, the DOI’s Assistant Secretary for Indian Affairs, Bryan Newland, stated that the compact “authorizes the Tribe to conduct Class III gaming on its lands and expands the allowable scope of gaming to include mobile sports betting, amongst other games.” (Letter, at p. 2). He acknowledged that “both the Compact and the State law authorize the Tribe to engage in mobile sports betting and provide that the gaming takes place on Indian lands where: (1) the Tribe owns and operates the gaming; (2) the server is located on Indian lands; and (3) the player is located within the geographic bounds of the State.” (Id., at p. 7).
The Department of the Interior’s prior view of the compact deviated so wildly from its current litigation posture that the agency’s litigation counsel – who was admonished by Judge Friedrich for her inexplicable refusal to address the merits of the compact during the November 2021 oral argument – took the highly unusual step of requesting that the Court not even consider Mr. Newland’s letter in making her ruling.
But it’s too late to put the genie back in the bottle. The compact’s text – as acknowledged by the pre-suit statements of the Tribe, the State, and the DOI – makes plain that the compact “authorizes” sports betting “both on and off Indian lands.” Any argument to the contrary would be, as Judge Friedrich pointedly observed, “incompatible with the Compact’s text.”
State law did not independently authorize online sports betting
Likewise, the appellants’ newly-minted assertion that state law – rather than the compact – “authorized” online sports betting is contradicted by the plain language of the Florida statute ratifying the compact. That statute – Section 285.710, Florida Statutes [entitled “Compact authorization”] – clearly and unambiguously states that online sports betting is “authorized” to be conducted by the Tribe “pursuant to the compact.” (See Ch. 2021-268, § 2 [adding Section 285.710(13)(b)(7) to specify that “. . . the following class III games are hereby authorized to be conducted by the Tribe pursuant to the compact . . . Sports betting, . . . including wagers made by players physically located within the state using a mobile or other electronic device . . . .”]).
Section 285.710 is the only Florida Statute that purports to authorize online sports betting. It makes crystal clear that the state law authorization is completely tethered to the compact. Contrary to the assertion made by the Seminole Tribe and the Department of the Interior, there is simply no independent state law authorization of online sports betting. As Section 285.710(13)(b) makes abundantly clear, the State’s authorization of online sports betting is strictly and solely “pursuant to the compact.”
By the State’s own admission, the tethering of online sports betting to a federal tribal compact was designed to avoid a conflict with Florida Amendment 3, a voter-approved constitutional amendment which prohibits the authorization of casino gambling other than through a citizen-initiated ballot question. Crucially, Amendment 3 – which is codified in Article X, Section 30 of the Florida Constitution – exempts tribal compacts “pursuant to the Federal Indian Gaming Regulatory Act for the conduct of casino gambling on tribal lands.” This exemption was the impetus behind the State’s decision to authorize online sports betting “pursuant to” a compact governed by federal law since the State believed that any authorization of online sports betting other than pursuant to a compact governed by IGRA would have violated Amendment 3.
The State’s belief that it was traveling under federal law is confirmed by several state-authored documents, including a “Summary of the 2021 Compact” prepared by Governor DeSantis’ Office in advance of last year’s special legislative session. On page 3, under the heading “Key Points,” the Governor’s Office asserts that “[b]ecause of Amendment 3, commercial sports betting outside of a tribal compact is unconstitutional in Florida.” In addition, a fact sheet authored by Florida Senate leaders in May 2021 also addressed the state constitutional question and asserted that the online sports wagering component of the compact will be governed by federal law. (See Frequently Asked Questions, SB 2-A – Implementation of the 2021 Gaming Compact, at p. 7 [stating that with respect to online sports betting, “the parties have agreed that the entire gaming transaction will be governed by IGRA as taking place on Indian lands.”). This is an express acknowledgement by the State of Florida’s executive and legislative branches that online sports betting was authorized “pursuant to the compact,” and not solely under state law.
The assertion that state law alone authorized online sports betting is yet another fiction advanced by the Seminole Tribe and the Department of the Interior in a desperate attempt to save a federally flawed compact. It is a misdirection designed to recast West Flagler’s IGRA lawsuit as a state law challenge under Amendment 3 to prop up the argument that the proper forum for such a challenge is state court, not federal court. Indeed, the Department of the Interior’s Opening Brief posits that “this open question of state constitutional law cannot be definitively resolved by the federal courts.” But, contrary to that assertion, the federal courts do not need to resolve any questions of Florida constitutional law to find that the compact violates federal law through its authorization of off-reservation gaming in violation of IGRA’s “Indian lands” requirement.
While the avoidance of Amendment 3 may explain the State’s and Tribe’s motivation for using the federal compacting process as the vehicle for legalizing online sports betting in Florida, it does not transform that federal process into a uniquely state-law vehicle when the plain language of both the compact and the state statute ratifying the compact make crystal clear that online sports betting is authorized “pursuant to the compact,” and not solely under state law.
Look for West Flagler to hammer this point when it files its answer brief on October 6th.
This article was originally published in Forbes.com on September 28, 2022.