Federal Judge Strikes Down Florida Legislature's Seminole Gaming Compact

A federal judge has undone a signature achievement of Gov. Ron DeSantis’ time in office by invalidating the Seminole Gaming Compact, a deal between the state and the tribe that purported to OK statewide sports betting and bring billions of dollars to state coffers.

U.S. District Judge Dabney Friedrich in Washington, D.C., ruled that Interior Secretary Deb Haaland, in allowing the gambling deal to take effect in August, violated the federal Indian Gaming Regulatory Act (IGRA), by allowing sports betting to take place throughout the state as long as the bets were processed by computer servers on tribal lands.

The state referred to that arrangement, with remote bets feeding into central servers, as “hub and spoke.”

But Friedrich ruled that the federal law defines ‘Indian lands’ literally.

“[A]lthough the compact deems all sports betting to occur at the location of the tribe’s sports book and supporting servers … this court cannot accept that fiction. When 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,” Friedrich wrote in an opinion released Monday evening.

“Accordingly, because the compact allows patrons to wager throughout Florida, including at locations that are not Indian lands, the compact violates IGRA’s ‘Indian lands’ requirement.”

The Seminole Tribe of Florida filed a notice of appeal on Tuesday with the U.S. Court of Appeals for the District of Columbia Circuit.

Friedrich did not address a severability cause contained within the compact, which on its face would have allowed the main part of the deal — allowing the tribe to offer formerly illegal games such as craps and roulette at its casinos and hold exclusive control over future sports betting — to take effect even if the sports betting language were struck down.

Instead, she wrote that the proper remedy is to invalidate the entire deal, although the state and the tribe are free to revert to a compact they struck in 2010. The tribe had stopped remitting $350 millon per year under that deal to the state because the state had allowed pari-mutuel sites to offer card games the tribe argued were within their exclusive rights.

“This decision does not foreclose other avenues for authorizing online sports betting in Florida. The state and the tribe may agree to a new compact, with the secretary’s approval, that allows online gaming solely on Indian lands,” Friedrich wrote.

The judge took note of language in the Florida Constitution requiring a citizens’ initiative to expand gambling options.

“Alternatively, Florida citizens may authorize such betting across their state through a citizens’ initiative. What the secretary may not do, however, is approve future compacts that authorize conduct outside IGRA’s scope. And IGRA, as the Supreme Court explained [in an earlier case], authorizes gaming ‘on Indian lands, and nowhere else.’”

No Casinos, one of the parties that sued to vacate the gambling compact, contended it violates state and federal laws, including the 2018 voter-approved constitutional amendment it championed that bans expanded gambling except as approved by statewide referendum.

‘Historic compact’

The new compact was negotiated in April between DeSantis and the tribe and ratified in May by the Florida Legislature. It guaranteed $2.5 billion in gambling revenues to the state during the first five years, with more to come over the course of the 30-year deal.

“This historic compact expands economic opportunity, tourism, and recreation, and bolsters the fiscal success of our state in one fell swoop for the benefit of all Floridians and Seminoles alike,” DeSantis said in announcing he had negotiated the deal with Tribal Chairman Marcellus Osceola.

Gov. Ron DeSantis

Asked about the situation on Tuesday, DeSantis said he wasn’t up to date about the ruling and spoke as if the severability clause was in effect.

“Now we also knew that when you do ‘hub and spoke,’ it was an unsettled legal issue. We structured the compact so that the compact is preserved, for the casinos and the other stuff, so we’re going to still be getting revenue. Obviously, we’ll get less revenue from sports betting if we’re not able to do hub and spoke, but I imagine that’s going to be appealed,” he said during a news conference.

“So we’ll support whatever we can to validate the compact. I think that it is, I think the ‘hub and spoke’ is fine, but we anticipated that this could happen.”

He noted that the state wasn’t a party to the lawsuit and that the Interior Department “did a poor job in the argument.” The Seminoles attempted to intervene in the case but Friedrich ruled it lacked standing.

“The Seminole Tribe is reviewing the judge’s opinion and carefully considering its next steps,” spokesman Gary Bitner said in an email.

A spokeswoman for House Speaker Chris Sprowls didn’t respond to requests for comment. Senate President Wilton Simpson released the following written statement:

“The ruling from the D.C. District Court on the compact between the state or Florida and the Seminole Tribe of Florida addresses novel and complex legal issues. We believe the case will be appealed to the D.C. Circuit, and perhaps ultimately, the Supreme Court of the United States. In the meantime we will be watching.”

‘Shocking and infuriating’

House Republican Randy Fine of Brevard County, a consultant to the gambling industry, had noted during debate on the compact that the sports betting language might fail in court but believed the severability clause would preserve most of the deal.

He blamed the Biden Interior Department for not pointing out the provision to the court.

“What is shocking and infuriating is the Biden administration’s refusal to let the judge know that they could strike down the sports betting yet keep the compact in place. It’s inconceivable to me. I just don’t know — was it incompetence or an intentional effort to hurt the state of Florida,” Fine said in a telephone interview.

“Joe Biden owes the state of Florida $500 million a year,” he added, referring to the five-year, $2.5 billion payout had the underlying compact survived.

Fine noted that the ruling likely will be appealed, and that the appellate court might stay its effects and let the gambling continue pending a ruling. The matter likely ultimately will land before the U.S. Supreme Court, he said.

John Sowinski, president of No Casinos, welcomed the ruling. His group participated in the case before Friedrich.

“All that has to happen is for the state of Florida to come into compliance with the provisions of the 2020 compact and the tribe will have to resume paying the state $350 million a year — which is about 80 percent of what they were looking for moneywise, and there’ll be zero expansion of gambling in the state,” Sowinski told the Phoenix.

That would mean taking those card games away from those pari-mutuels, he said.

West Flagler Associates and Bonita-Fort Myers Corp., which operate two south Florida pari-mutuel facilities — Magic City Casino and Bonita Springs Poker Room — had filed suit against Haaland, arguing the compact would put them at a competitive disadvantage to the tribe’s casinos, which gained exclusive authority over sports-betting operations through the deal.

The tribe announced earlier this month it had chosen to partner with five pari-mutuel facilities, not including the two that sued for broader access to sports betting.

“We are very pleased with the court’s thorough and well-reasoned decision,” Hamish Hume, a Washington attorney representing Magic City and Bonita Springs, said via email.

Magic City released its own statement:

“Last night’s ruling was 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. We would like to thank our legal team at Boies Schiller for their outstanding efforts. 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.”

A citizens’ vote could be in the works: DraftKings and FanDuel, major players in sports betting, contributed $20 million to Florida Education Champions, which is circulating a petition to place statewide sports betting on the 2022 ballot.

Spokeswoman Christina Johnson issued a written statement on the campaign’s behalf.

“Our effort was always mutually exclusive from the compact. Florida Education Champions’ focus remains in securing the nearly 900,000 valid petitions to make the November 2022 ballot,” Johnson said.

“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.”

Phoenix Reporter Laura Cassels contributed to this report.

Note: This story has been updated with additional details from the ruling and comments.