Home Gambling Florida lawsuit challenges new Seminole gambling deal

Florida lawsuit challenges new Seminole gambling deal

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TALLAHASSEE – One of Florida’s oldest pari-mutuel companies, owner of Miami’s Magic City Casino and Bonita Springs poker room, has filed a federal lawsuit challenging Florida’s gambling contract between the state and the tribe Seminole of Florida, alleging that the sports betting component is based on a “legal fiction” that violates federal law.

The lawsuit, filed Friday in the United States District Court for the Northern District of Florida by West Flagler Associates and Bonita-Fort Myers Corp. from the Havenick family – also known as Southwest Parimutuels – argues that deal allowing sports betting outside Florida tribal lands violates India’s gambling regulation law and asks court to ban the implementation of sports betting.

Florida lawmakers ratified the pact signed by Governor Ron DeSantis and Seminole Tribe President Marcellus Osceola Jr. in a special three-day session in May, allowing Florida to join dozens of other states in offering sports betting and opening the door to the largest expansion in Florida gambling in a decade. In return, the tribe will guarantee at least $ 500 million in annual revenue to the state for the next 30 years.

Related: DeSantis signs gambling bills, reshaping Florida betting landscape

Under the agreement, anyone over the age of 21 in Florida can begin placing and collecting online bets on sporting events “via the Internet. [or] web application “from anywhere in Florida starting Oct. 15. All transactions would go through servers located on tribal lands in a” hub and spoke “model intended to circumvent both federal and US law. State, which deem sports betting illegal in Florida.

“While we fully support Governor DeSantis and his work to secure a new Seminole Compact, the lawsuit focuses on a very narrow aspect of the Compact – the legality of offline and online sports betting,” said Isadore Havenick, vice-president. president president of public affairs of Parimutuels du Sud-Ouest.

The company says it “will lose millions” in income “because individuals in Florida can now gamble from the comfort of their own homes, which will significantly, if not completely, affect Southwest Parimutuals’ ability to compete with the tribe.”

The contract allows sports betting on six of the tribe’s reservations, but allows existing jai alai racetracks and pediments in Florida to develop their own mobile apps and conduct off-reservation sports betting if chosen by the tribe as partners. Parimutuals would then be allowed to take 60 percent of the proceeds of each bet, with the tribe receiving the remaining 40 percent.

Question on “tribal land?” “

This is a provision of the agreement that says that a bet is “deemed” to be placed on tribal land due to the location of the server. The lawsuit argues that the arrangement contradicts India’s Gaming Regulation Act, Wire Act and Internet Gambling Enforcement Act, as well as court rulings interpreting those laws.

“To consider that the bet was placed on Indian land because the servers are located there contradicts decades of well-established precedents interpreting applicable federal law,” the 67-page complaint read. “Unlike the legal fiction created by the Covenant and the 2021 implementing law, a bet is placed where both the bettor and the casino are each.”

The hub and spoke model violates India’s gambling regulation law, the lawsuit argues, because even though the state can make a deal with a tribe to allow gambling, it has to happen “on Indian land.” The law describes this as meaning “all lands within the boundaries of any Indian reservation” or lands held in trust by the United States for the benefit of the Indian tribe.

Further, the lawsuit argues that the agreement violates the Federal Wire Act of 1961, which prohibits the use of interstate commerce for illegal transactions, and violates the Illegal Internet Gambling Law Enforcement Act. by allowing bets to be placed outside of tribal lands.

Gary Bitner, spokesperson for Seminole Gaming, defended the pact and cited polls conducted by the company.

“The Gaming Compact is fully compliant with the law and is supported by the Floridians 3-1,” he said. “It guarantees $ 2.5 billion in revenue sharing in its first five years, the biggest commitment of any game company in US history.”

The governor’s office did not respond to requests for comment.

Federal exam is pending

The deal is pending approval from the US Department of the Interior, which has 45 days after the pact was submitted to it to make a decision. A spokesperson for the governor said the pact was sent to the agency on June 3, but the lawsuit said it was formally presented to the DOI on June 21.

The tribe is also threatened by a constitutional amendment for the 2022 poll proposed by two of the nation’s top sports betting platforms, FanDuel and DraftKings, which would allow online sports betting in all Florida parimutuals, professional sports stadiums and everywhere. elsewhere in the using a mobile sports betting platform.

Related: FanDuel and DraftKings Propose Florida Voting Initiative to Expand Sports Betting

During the pact debate in May, lawmakers anticipated the legal challenge based on the unprecedented nature of the hub and spoke model.

“As we said from day one, and as the parties have considered, this is an open question,” said Representative Sam Garrison, a Fleming Island Republican and lawyer during the debate at bedroom. “There is no black and white answer as to whether the hub and spoke model will be authorized or not. “

Rep. Randy Fine, a Palm Bay Republican and former gaming executive, told colleagues during the floor debate that he didn’t think the sports betting component would survive, but argued the deal was still good for the state because of a severance clause in the pact, whereby the tribe is allowed to pursue the other terms of the agreement and would pay the state a proportionate amount.

In addition to continuing to operate bank card games, including baccarat, chemin de fer, and blackjack at the Tribe’s seven casinos in Florida, the contract allows the Tribe’s Hard Rock Casinos in Broward Counties and Hillsborough to add roulette and craps, giving them full Vegas-style Las Casinos.

According to Seminole Gaming CEO Jim Allen, the court could sever the sports betting component of the gaming deal and the tribe would reduce the annual revenue share with the state by about $ 100 million.

Who is the “target audience? ”

But lawyers say the court could come up with another alternative: invalidate the hub and spoke model but allow the tribe to continue to operate sports books as a monopoly.

“If a federal court determined that the off-reserve elements of the pact violate the IGRA’s ‘Indian lands’ requirement, the severability provision would allow the Seminole tribe to operate sports books on Indian lands, while that parimutual operators would lose their limited rights. to participate, ” said Daniel Wallach, a gambling consultant who has studied Florida laws.

Wallach argued that the timing of the trial is important because the severance clause “is only triggered by a Federal Court decision and has no enforceability when it is the federal agency that disapproves of the pact ”.

“Therefore, the target audience for this ‘pre-approval’ trial may very well be US Home Secretary Deb Haaland to persuade her to reject the pact and thereby prevent the severance clause of the pact from. enter into force and create a -mortar monopoly on Indian lands, ” he said.

West Flagler Associates and its subsidiaries have been owned and operated by the Havenick family for over 65 years when family patriarch Isadore Hecht purchased Flagler Greyhound Park in the early 1950s. Magic City Casino claims to have 425 employees.

Wallach said that because the Havenicks are a tribal competitor, they have the right to challenge the pact. He predicts that they will prevail.

“This is an overwhelming case, as long as there was a plaintiff willing to ‘act’ to prosecute,” he said. “Today Magic City did its best. And I don’t think they’re going to be missing. They have a strong case.

The pact was negotiated with the tribe by the governor and, in addition to concerns about its legality, many Tory MPs who traditionally viewed sports betting as a risky expansion of gambling have refused their opposition.

Governor and Lt. Gov. Jeanette Núñez aggressively lobbied the measure, as the governor held a veto threat over hundreds of legislative projects in the $ 110 billion budget. The House approved the deal in a 97-17 vote, and the Senate approved it 38-1.

The lawsuit notes that when Congress enacted the Indian Gaming Regulation Act, it found that “Indian tribes have the exclusive right to regulate gambling activities on Indian lands if the gambling activity is not specifically prohibited by federal law and is conducted in a state which does not, for reasons of criminal law and public order, prohibit such gambling activities. “

The complaint says that because Florida law prohibits any expansion of gambling without the approval of statewide voters, the pact is “an effort to circumvent this clear ban in the state constitution.” by allowing “a person sitting in their lounge chair by the pool or on their sofa at home to place a sports bet via the tribe is” considered “not to place a bet which is otherwise illegal in the state. “

He continues: “It is nothing more than a legal fiction belied by the fact that sports betting still takes place outside of tribal reserves in a state where sports betting remains illegal.”