International edition
September 26, 2021

Claiming it violates federal law and means millions in revenue loss for Southwest Parimutuels

Florida's new sports betting compact sued by Magic City Casino owners

Florida's new sports betting compact sued by Magic City Casino owners
Southwest Parimutuels, comprised of Miami’s Magic City Casino and the Bonita Springs Poker Room, claims that the compact violates the federal Indian Regulatory Gaming Act (IRGA) and the Unlawful Internet Gaming Enforcement Act (UIGEA).
United States | 07/06/2021

In a lawsuit filed Friday, the company that also owns Bonita Springs Poker Room argues the compact with the Seminoles authorizes sports betting outside of tribal lands. This would allow Floridians to place sports bets from anywhere, in a competitive advantage for the tribe. The court could strike down just the provision about the model based on servers sitting on tribal lands.

T

he owners of Miami’s Magic City Casino and the Bonita Springs Poker Room have filed a federal lawsuit challenging the Florida gaming compact between the state and the Seminole Tribe of Florida, alleging that the sports betting component is based on “legal fiction” that violates federal law.

The lawsuit was filed Friday in U.S. District Court for the Northern District of Florida by the Havenick family’s West Flagler Associates and Bonita-Fort Myers Corporation.

Sports betting is set to become legal in Florida on October 15 under the new gaming compact. Southwest Parimutuels, comprised of Miami’s Magic City Casino and the Bonita Springs Poker Room, claims that the compact violates the federal Indian Regulatory Gaming Act (IRGA) and the Unlawful Internet Gaming Enforcement Act (UIGEA) because it authorizes sports betting outside of tribal lands. It also asks the court to enjoin implementation of sports betting.

“While we are fully supportive of Gov. DeSantis and his work to secure a new Seminole Compact, the lawsuit focuses on a very narrow aspect of the Compact — the legality of off reservation and online sports wagering,’’ Isadore Havenick, Vice President for Public Affairs for Southwest Parimutuels, told the Miami Herald.

During legislative sessions leading to the compact's approval, the “hub and spoke model” laid out in the agreement was referred to as “an open legal question” even by supporters of the compact. Under this model, online sports betting would be allowed off tribal grounds under the idea that the servers that are used to facilitate the bets sit on tribal lands. “Contrary to the legal fiction created by the 2021 Compact and Implementing Law, a bet is placed both where the bettor and the casino are each located,” the lawsuit states in part.

The compact allows sports bets at six of the tribe’s reservations but permits Florida’s existing racetracks and jai-alai frontons to develop their own mobile apps and to conduct off-reservation sports bets if they are chosen by the tribe as its partners, under an agreement that gives the parimutuels 60% of the proceeds and the tribe the remaining 40% of the proceeds. But the lawsuit argues that by granting Floridians the ability to place sports bets from anywhere, Southwest Parimutuels’ permanent facilities stand to “lose millions in revenue.”

The court could strike down just the provision in the compact about the hub and spoke model without invalidating the entire compact, according to reporting by the Miami Herald. “If a federal court were to determine that the off-reservation elements of the Compact violate IGRA’s ‘Indian lands’ requirement, then the severability provision would allow the Seminole Tribe to operate sportsbooks on Indian land, while the parimutuel operators lose their limited right to participate,’’ Daniel Wallach, a lawyer and gambling consultant who has studied Florida’s laws, said.

The compact is currently awaiting federal approval from the U.S. Department of the Interior. Under the IRGA, the federal government has 45 days – or until mid-August – to approve or deny the compact, and an eventual approval would be for the entire compact, since severing specific provisions is not allowed under the IRGA.

Jim Allen, the Seminole Tribe of Florida CEO of Seminole Gaming and Chairman of Hard Rock International, testified during committee hearings that he thinks the compact will receive federal approval. “The conferences that we had with Interior, we think there is a high probability they will approve this,” Allen said.

The compact, approved by the Legislature in May, guarantees at least $500 million in annual revenue to the state for the next 30 years. If the sports betting component is struck down the revenue sharing is expected to shrink by about $100 million, according to Allen.

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