Florida-Seminole pact hinges on federal approval of ‘new business model'

(The Center Square) – Gov. Ron DeSantis Tuesday signed into law bills that “de-couple” pari-mutuel operators from live-racing requirements and ratify a 30-year gaming compact with the Seminole Tribe of Florida.

Unlike his recent spate of campaign rally bill-signings broadcast live on conservative TV news networks, DeSantis endorsed the gaming legislation without ceremony or comment because, while the deal is done, the dice roll it hinges on has not played out.

Florida lawmakers ended a three-day special session on May 19 by ratifying the 75-page pact that grants the Seminoles exclusive control of blackjack, craps, online fantasy and sports betting at its seven casinos and on non-tribal pari-mutuels via its Hard Rock Digital platform.

In exchange, the Seminoles will pay Florida at least $500 million annually for the first five years of the pact, which must be endorsed by the U.S. Department of Interior within 45 days to ensure it complies with the federal Indian Gaming Regulatory Act (IGRA).

The compact faces two immediate challenges – a likely lawsuit claiming it violates 2018’s Amendment 3 and uncertainty in how federal regulators will view “a new business model” that forges a “hub-and-spoke” partnership between remote servers on tribal lands and pari-mutuel operators.

A provision allows the Tribe to build three more casinos on its Hollywood reservation in Broward County, which recently added a 36-story, guitar-shaped $1.5 billion tower to anchor the Hard Rock Casino.

Under the agreement, the Seminoles can contract with other operators to manage the three new casinos, including, conceivably, international casino corporations that have enviously eyed access to Florida for decades.

The pact also requires the Tribe to contract with at least three pari-mutuels within the first three months after sports betting goes live in October.

The agreement departs from long-standing Seminole resistance to competition and, instead, creates a partnership between the state’s 27 pari-mutuels and the Tribe.

Seminole Tribe of Florida Gaming CEO and Hard Rock International Chair Jim Allen told lawmakers during special session the partnership benefits all involved.

“We believe this is a way where the Tribe and the pari-mutuels can work together to create a new business model that helps radically substitute some of the challenges that are happening in the industry,” Allen said.

The proposal is to “radically substitute” place for process. In the context of the gaming compact, that means no matter where the person making a wager is, it’s not a transaction, nor therefore a bet, until it is processed by servers on tribal land.

“We believe the actual transaction of the bet occurs at our servers,” Allen said, noting in preliminary discussions with federal regulators, there is “a high probability they will approve this.”

How remote servers are addressed under the IGRA “is going to be an issue the (federal) department pays very close attention to,” George Skibine, a gaming law expert hired by the House, told lawmakers in special session hearings.

Skibine said the 9th U.S. Circuit Court recently rejected the Santa Ysabel Tribe’s argument that having servers located on tribal land means gaming should be governed under the IRGA, not California state law.

The court ruled a bet or wager must be legal where it is both received and initiated under the federal Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) and, therefore, because California law specifically states it is illegal to participate in online betting, the arrangement is illegal.

However, Skibine said, Florida law does not prohibit online betting and is comparable to New Jersey law, where online gaming through servers at state-licensed Atlantic City casinos has been legal under a 2013 law that states no gambling takes place until a wager is accepted, which takes place – literally – at the server.