US Department of Interior’s Decision on Florida Sports Betting Compact Likely to Inspire Future Gaming Expansion If It Survives Pending Legal Challenge

As we reported previously, the U.S. Department of the Interior (Department) issued a letter on August 6, indicating it had declined to take action regarding Florida’s state-tribal gaming compact (the Compact) within the 45-day window prescribed under the Indian Gaming Regulatory Act (IGRA). As a result, the Compact is “considered to have been approved” by operation of law. On August 16, two Florida-based gaming operators filed a lawsuit seeking to vacate the Department’s decision. If the Department can overcome this legal challenge, its August 6 decision will likely inspire tribal-state gaming expansion in other states.

THE DEPARTMENT’S DECISION

In the August 6 letter, the Department asserts that the Seminole Tribe’s (Tribe) “hub and spoke” sports betting model (whereby servers located on tribal land act as the “hub” for bets placed throughout the state) does not violate the provision in the IGRA that limits gaming to tribal lands because it is explicitly authorized under both the Compact and state law. In reaching this conclusion, the Department points out that the IGRA expressly provides that a tribe and state government shall negotiate the parameters for tribal gaming. The Department notes further that “[w]hen developing IGRA’s framework for tribal-state compacts, Congress stressed the importance of tribes and states engaging in dialogue over how best to achieve tribal gaming’s ‘mutual benefits.” The Department also stresses that the IGRA “should not be an impediment to tribes that seek to modernize their gaming offerings” and asserts the Compact’s mobile betting terms align with the policy goals of IGRA to “promote tribal economic development while ensuring regulatory control of Indian gaming.”

The Department’s decision sends a clear message to states interested in taking a similar route to legalizing online betting: as long as the proposed framework has been explicitly authorized under both a tribal-state compact and state law, the Department is unlikely to interfere. The Department’s refusal to “read restrictions into the IGRA that do not exist” signals an intent to take a more “hands-off” approach to tribal gaming expansion moving forward, giving state governments and federally-recognized tribes the space to decide how modern tribal gaming operations in their state should look.

PENDING LEGAL CHALLENGE

On August 16, two Florida-based gaming operators initiated a lawsuit seeking to vacate the Department’s decision. In the complaint, the operators allege three grounds for vacatur. They argue first that by approving the Compact’s “hub and spoke” betting model, the Department exceeded their authority under the IGRA, which only allows the Department to approve state-tribal gaming compacts “to the extent they concern ‘gaming on tribal lands.’” They assert that because the Compact “authorizes Internet gambling throughout the state of Florida,” it does not merely concern “gaming on tribal land.”

Next, the operators argue the Compact violates the Federal Wire Act and the Unlawful Internet Gambling Enforcement Act because it permits internet and bank wire transmissions relating to sports betting between the Tribe’s reservations and the rest of Florida, where sports betting is otherwise illegal.

Finally, the operators argue the Compact violates the Fifth Amendment’s guarantee of equal protection because it grants the Tribe a statewide monopoly over internet sports gambling throughout Florida “even as it remains a serious criminal offense for anyone else” to conduct sports betting operations.

We will monitor the progress of the pending lawsuit against the Department and provide further analysis of any significant developments.

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