On November 23, 2021, the US District Court for the District of Columbia invalidated a 2021 gaming compact between the Seminole Tribe of Florida and the State of Florida, which permitted mobile sports wagering throughout the state (the Compact). The court found that the Compact violated the federal Indian Gaming Regulatory Act (IGRA) and thus the Department of the Interior violated federal law by allowing the Compact to take effect. As states across the country consider proposals to launch online sports betting, including through partnerships with tribes, they will need to grapple with the complex question of how IGRA, a pre-internet gaming statute, governs agreements with sovereign tribes in their state.
In August of this year, the Seminole Tribe and the State of Florida entered into a compact, pursuant to IGRA, that permitted the Tribe to offer sports betting to any player located within the State of Florida, including to those placing bets off reservation. Florida's constitution prohibits sports betting and requires a “citizens' initiative” to change state gaming laws.1 In view of this statutory prohibition, the Compact classified all in-state wagers on sports events to “be deemed . . . to be exclusively conducted by the Tribe at its Facilities where the sports book(s) . . . are located,” even those that are made “using an electronic device” “by a Patron physically located in the State but not on Indian lands.” See Compact at II(CC)(2). The Seminole Tribe and Florida submitted the Compact to the Secretary of the Interior as required by IGRA. Simultaneously, the Florida legislature passed a law implementing the terms of the Compact.
In August 2021, the Secretary of the Interior issued a no-action decision, thereby approving the Compact by default. In the no-action letter, the Secretary took the position that the Compact's language “deeming” where bets occur fell within the authority of states and tribes to negotiate under IGRA the allocation of criminal and civil jurisdiction related to gaming, 25 U.S.C. 2710(d)(3)(c)(i)-(ii). The Secretary also opined that Congress “crafted IGRA as a flexible statute that acknowledged tribal sovereignty, was enacted for the benefit of tribal economic development, and for promoting tribal-state cooperation.” The Secretary concluded that “IGRA should not be an impediment to tribes that seek to modernize their gaming offerings, and this [Compact] aligns with the policy goals of IGRA to promote tribal economic development while ensuring regulatory control of Indian gaming.” The Seminole Tribe subsequently launched sports betting on November 1.
Following issuance of the Secretary's no-action letter, two brick-and-mortar commercial casinos in Florida challenged the Secretary's decision, asserting that the Compact violated IGRA, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), the Wire Act and the Equal Protection Clause of the US Constitution.
In a consequential decision, DC District Court Judge Dabney L. Friedrich held that the Compact's authorization of gaming outside Indian lands violated IGRA. The court relied heavily on the reasoning and language of the Supreme Court's 2014 decision in Michigan v. Bay Mills Indian Community: “everything—literally everything—in IGRA affords tools . . . to regulate gaming on Indian lands, and nowhere else.” 527 U.S. 782, 795. The court further reasoned that “because IGRA authorizes gaming only on Indian lands, it follows that the Secretary [of the Interior] must reject any gaming compact that authorizes gaming at any other location.”
The court rejected as a “fiction” the Compact's provision that “deem[s]” all sports betting to occur at the location of the Tribe's “sports book(s).” The court noted that “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.” The court also rejected the argument that the Compact should be read in conjunction with the Florida law implementing the terms of the Compact and authorizing sports bets placed in Florida to be received on Tribal lands. The court reasoned that reading the Compact and the Florida law together would be “inconsistent with the Florida Constitution['s]” approved method of expanding sports betting (i.e., through voter initiative or an IGRA gaming compact).2
Because it concluded that the Compact violated IGRA, the court held that the Secretary's default approval of the Compact was invalid. The court specifically stated that “[b]ecause the more recent Compact is no longer in effect, continuing to offer online sports betting would violate federal law.” The court declined to examine whether the Compact violated UIGEA, the Wire Act and the Equal Protection Clause. As a result, certain key issues concerning online sports gaming remain unresolved, such as whether bets transmitted from a state to tribal lands within that state violate the Wire Act's prohibitions on “interstate commerce” involving sports bets.
The Seminole Tribe has already filed a notice of appeal, although the court did deny the Tribe's motion to intervene in the case on the ground that the Tribe was not “indispensable” because the United States could adequately represent its interests. The Tribe also filed a motion to stay the district court's opinion, pending the appeal—which the district court denied on November 25.
The consequences of the court's ruling are significant. Since the US Supreme Court's 2018 decision in Murphy v. NCAA, 138 S. Ct. 1461 (2018), which opened the doors to state regulation of sports betting, states with IGRA-gaming tribes have grappled with devising a sports-betting model that protects gaming tribes' long-standing interest in the gaming space. Florida pursued a purely IGRA-governed “hub and spoke model,” where bets are received on tribal land (the hub), with the mobile devices and in-state brick-and-mortar locations where bets are placed acting as the spokes. Other states, like Michigan, Connecticut, Arizona and New York, have pursued a hybrid approach, permitting gaming tribes to conduct sports wagering on tribal land pursuant to an IGRA-governed compact but requiring tribes to obtain licensure by the state for statewide (off-reservation) sports betting. Those hybrid models may still pose Wire Act issues to the extent that bets are transmitted from a state to Indian land. Nevertheless, states with a strong tribal-gaming presence that are still considering a path to legal sports wagering will need to closely consider the district court's decision and any additional developments in the case as it moves through the appeals process.
1 Florida's Constitution has a caveat to the "citizens' initiative" requirement that permits the State and Native American tribes in Florida "to negotiate gaming compacts" under IGRA "for the conduct of casino gambling on tribal lands." See Fl. Const. art. X, 30(c). "Casino gambling" under the Florida Constitution includes sports betting. See id. at 30(b).
2 The court did note that it was not deciding whether Florida's Constitution permitted the Florida legislature to legalize placing sports wagers in Florida. Instead, the court noted that "to the degree that the Secretary invokes Florida law to explain the Compact's terms, her argument misses the mark."
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