The “hub and spoke” sports betting model proposed in the 30-year Florida-Seminole gaming compact is based on a “legal fiction” that could cost pari-mutuel operators “millions in revenue,” the owners of Miami’s Magic City Casino argue.
In a 67-page lawsuit filed Friday in U.S. Northern District Court of Florida, West Flagler Associates and Bonita-Fort Myers Corp. allege the sports-betting component of the compact violates federal law and seeks an injunction to prevent sports gaming from being legal on Oct. 15.
West Flagler Associates and Bonita-Fort Myers Corp., one of the oldest of Florida’s 27 pari-mutuels, own Southwest Parimutuels, which operates Miami’s Magic City Casino and Bonita Springs Poker Room.
After two years of negotiations, the 75-page gambling compact with the Seminole Tribe of Florida was approved by lawmakers after a three-day special session on May 19 and signed by Gov. Ron DeSantis May 25.
The compact makes Florida the 22nd state to legalize sports betting under revised state gaming regulations since the Supreme Court struck down a 1992 federal law banning commercial sports betting in 2018’s Murphy v. National Collegiate Athletic Association.
However, under the pact, in addition to exclusive control of blackjack, craps, online fantasy gaming in Florida, the Seminoles will also control sports betting at its seven casinos and on non-tribal pari-mutuels via its Hard Rock Digital platform using a “hub and spoke” model.
In exchange, the Seminoles will pay Florida at least $500 million annually for the pact’s first five years.
The deal must be endorsed by the Department of Interior’s Bureau of Indian Affairs (BIA) within 45 days of filling – mid-August – to ensure it complies with the Indian Gaming Regulatory Act (IGRA).
It is uncertain if the BIA will approve the “hub and spoke” model. When the pact was discussed during the May 17-19 special session, House Select Committee on Gaming chair Rep. Randy Fine, R-Palm Bay, a former casino executive, said the deal is on shaky ground.
“Me personally, I don’t think it’s going to survive,” he said, but noting even if the sports betting provision is removed, “the compact still goes forward,” although the $500 million in annual Seminole payments would likely be at least $100 million less.
No Casinos, a powerful anti-gaming coalition that has stymied non-tribal gambling expansion in Florida for a half-century, is also lobbying the agency to reject the deal and has vowed to challenge it in court if the BIA allows it to be implemented.
West Flagler Associates and Bonita-Fort Myers Corp., however, struck first, arguing that authorizing sports betting outside of tribal lands violates the IGRA and the Unlawful Internet Gaming Enforcement Act (UIGEA).
“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 suit states.
A provision allows the Tribe to build three 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 pari-mutuels to manage the three new casinos, including, conceivably, international casino corporations that have enviously eyed access to Florida for decades.
West Flagler Associates and Bonita-Fort Myers Corp. will “lose millions in revenue” because of the advantage this gives the Tribe, the suit contents.
“Individuals in Florida can now gamble from the comfort of their homes, which will significantly, if not completely, impair Southwest Parimutuels’ ability to compete with the Tribe,” it claims.
In addition to the suit, the pact also faces a challenge from FanDuel and DraftKings, the two largest online sportsbooks, who are sponsoring a prospective 2022 ballot measure to legalize sports gaming statewide beyond tribal land.
This article was originally posted on Pari-mutuel’s suit challenges ‘fiction’ of Florida-Seminole sports gaming model