The US Supreme Court met on 13 June to decide whether to hear West Flagler Associates v. Haaland. The justices decided to pass, meaning a lower-court decision to allow the 2021 Florida-Seminole tribe compact will stand. That compact allows for what could be considered an expansion of the reach of the Indian Gaming Regulatory Act (IGRA).
It allows for bets to be considered placed where they are received. In simple terms, any bet placed in the state of Florida is considered to be a bet placed on tribal lands if the bet runs through a server on tribal lands.
IGRA changed life for many tribes
IGRA was passed in 1988 and, at its core, gave federally recognised tribes exclusivity to gaming. Practically, it raised many tribes out of poverty. But the internet as we know it now did not exist, so by extension the congress that passed IGRA did not contemplate digital gaming. But Bob Jarvis, a constitutional law professor at NOVA Southeastern, said that the 1988 congress would have agreed to allow tribes statewide digital gaming had it been on the table.
Jarvis said that in the legal world, the concept of “omitted case” applies here. In a situation where there is “no real answer” to a legal question, either because the question wasn’t considered or an answer couldn’t be found, “you have to go back in a time machine and ask those legislators what they would have done”.
In 1988, IGRA passed with broad bi-partisan support. While the reasons were different, Democrats and Republicans wanted tribes to stand on their own.
“If (congress) had known that everyone would have something called smartphones, where they could bet from their phones,” Jarvis said. “If in 1988, we had known about that, then that congress would have said, ‘Of course we support that idea’.
“It would have been a way for the tribes to make a lot more money. It boggles the mind to think that congress would have voted against that.”
Jarvis contends that even if the Supreme Court had taken the case and reversed the lower-court decision, the Seminoles would have had options.
“They would have gone to congress and said, ‘Please add this line that says we can have internet gaming,’” he said. “This congress would do that because it’s dysfunctional and can’t find its way out of a paper bag. But it knows money.”
Tribes still need a willing state partnership
The Seminoles have been offering digital sports betting throughout Florida since 7 November 2023. About five months prior, the US District Court for the Circuit of the District of Columbia ruled that US Department of the Interior Secretary Deb Haaland was within her rights to allow the 2021 compact to become deemed approved. The federal courts did not – and cannot – rule on the contents of the compact. But allowing the compact, in essence, means that the federal government gave its blessing to the Seminoles.
Taken on its own, the SCOTUS decision to allow the compact to stand is a win for the Seminoles. Paired with a recent update to the Bureau of Indian Affairs regulations, it also appears that tribes – particularly in those states where digital wagering and online gambling are not yet legal – may benefit. But the decision also left unanswered questions, and tribes across the US aren’t able or willing to run out and re-compact with states just yet.
“The Florida-Seminole compact provides a clear example of how a willing state and a willing tribe may structure a compact for statewide mobile gaming under IGRA,” tribal attorney Scott Crowell told iGB. “And it clearly strengthens the position of tribes confronted by many states that have approved expansion of mobile sports wagering for non-Indian entities. But the question of whether a tribe can compel a recalcitrant state to enter into a compact amendment for statewide mobile gaming remains unresolved.”
We need to stop this “rent-a-tribe” thing
In the current landscape, there are three major tribal gaming states that have not yet legalised digital wagering or casino. The three – California, Minnesota and Oklahoma – face wildly different scenarios.
There are two other key tribal gaming states – Arizona and Michigan – that do offer digital betting. Michigan also offers online casino. Tribes in both states agreed to be regulated by their respective state regulatory agencies. Those situations have come under fire, often from tribes in other states. And the situations may be difficult to change.
In Arizona and Michigan, tribes made deals with commercial operators. Companies like Bet365, DraftKings and SuperBook partnered with tribes and pay them a percentage of revenue. IGRA mandates that 60% of gross gaming revenue goes back to the tribe. While details of the commercial-tribal deals aren’t public, it is highly unlikely that Michigan’s Bay Mills Indian Community (DraftKings) or Arizona’s Ak-Chin Indian Community (Bet365) are getting a 60% cut of revenue.
“I don’t fault the tribes in Arizona and Michigan that went forward with the state-law model given the situation at the times,” Crowell said on Victor Rocha’s “The New Normal” podcast Wednesday (26 June). “I have a problem with the operators who are doing this rent-a-tribe thing. It’s low single-digits that a lot of these operators give to tribes and the rest goes to the vendor.”
Arizona, Michigan tribes may have left money on the table
Digital gaming was legalised in Michigan in 2019 and in Arizona in 2021.
“The approach of those large billion-dollar companies is that they want to leave crumbs,” California Nations Indian Gaming Association (CNIGA) chairman James Siva said on the webinar. “Tribes have always had to work within that 60%. Tribal chairmen have gone to jail for not doing that.”
Rocha said he fears the Arizona and Michigan tribes are going to be “trapped” in their current deals. And states that are taking in tens or hundreds of millions of dollars in annual tax revenue won’t be in a hurry to recompact.
But in states where wagering and online casino are not yet legal, there is a more clear way forward.
“Now we have a pathway where we can move forward and be great partners with the state,” Siva said. “The tribes in California have always said we need our needs and wants laid out for us. There is a little bit more clarity. But it’s still going to be difficult and expensive.”
How current situation could affect tribes in other states
How tribes can and will move forward will differ. Here’s a look:
California
California is considered the biggest tribal gaming state in the US. There are 100+ federally recognised tribes. Not all are gaming tribes. But there are nearly 70 brick-and-mortar casinos operating.
In 2022, the tribes were hoping voters would legalise in-person betting at casino sportsbooks and four horse racetracks. But commercial operators, including the two biggest by market share, DraftKings and FanDuel, had other ideas. Seven major operators banded together on a ballot initiative to legalise digital wagering. Only the biggest operators would have qualified under the initiative to enter the state. But the language in the proposal didn’t appeal to tribes, which felt that their exclusivity and sovereignty would be compromised.
California’s tribes spent a quarter of a billion dollars to defeat the initiative, killing their own in the process. Nearly two years removed from the vicious fight to protect their sovereignty, the Supreme Court’s choice represents another tool for California tribes. But it doesn’t make legal sports betting a sure thing. Or even a near-term thing. In fact, while many are hoping for a tribal-led initiative in 2026, Siva wouldn’t even commit to that.
“I know there is a lot of excitement over this decision, and I think people think this means we are going to have gaming quickly,” he said. “But our timeline remains the same. We’re still going to move methodically.”
In California, an expansion of gambling, even on tribal lands, must go to the voters. The 2026 election would be the soonest an initiative could be on the ballot. But before Indian Country proposes another ballot initiative, there must be consensus about what legal betting will look like.
Among the key issues is how betting platforms will be branded. Commercial operators want their names front and centre. But the tribes do, too.
“We will not be erased by a corporate brand,” Rocha said. “There’s always a chance that a company like DraftKings won’t get into the market, or at least won’t get its name in the market. It could be Morongo or Pechanga” as the front-facing brand.
Minnesota
Minnesota has 11 federally recognised tribes that comprise the Minnesota Indian Gaming Assocation (MIGA). That group just finished out an exhaustive legislation session in which digital betting was not legalised. The state is dealing with multiple players – horse tracks, charitable gaming and the tribes. Brokering a deal has proved elusive.
With 11 tribes, it may be easier to get consensus. Like in California, Minnesota tribes have a legal right to exclusivity, and the new BIA rules interpretation and SCOTUS choice could give the tribes more leverage. It seems like a very real possibility that a Seminole-style situation could work in Minnesota.
“This legalisation that almost passed in Minnesota would have been more akin to Michigan,” Crowell said. “I don’t represent any Minnesota tribes, but I think they should take a serious hard look at an IGRA model for sports betting.”
Minnesota’s house has been open to supporting tribal sovereignty; the issue over the last five years has been in the senate. The new landscape could force senators to stop pushing for horse tracks to be on equal footing with tribes. In the Florida-Seminole compact, there is an allowance for any pari-mutuel in the state to partner with the tribe. The pari-mutuel would have to pay the Seminoles 60% of gross gaming revenue, per IGRA. The cost is steep, but the option exists.
Minnesota tribes could offer a similar deal to local tracks.
Oklahoma
When Crowell referred to “recalcitrant states”, he likely had Oklahoma on his mind.
That state has 39 tribes that operate about 130 land-based casinos. But it does not have legal sports betting or online gambling. And it likely won’t until Governor Kevin Stitt is out of office. Stitt’s relationship with the tribes is, at best, fraught and, at worst, is fractured. Tribes there have previously said they will wait until Stitt term limits out to even try to legalise. Elected in 2019, Stitt is in his second term, which ends in January 2027.
Even in the latest landscape, Oklahoma tribes would still have to compact with the state for online gaming. So for now, it’s likely that the status quo will remain.
When the time does come to open the compacts with a more tribal-friendly governor, Oklahoma tribes will have much work to do. In California, every tribe has the right to negotiate a compact with the state. Oklahoma tribes must negotiate as a group. It is a one-size-fits-all approach that could give the tribes leverage, but also requires every tribe to agree to the same terms.
So what happens now?
What’s next is the question on the tip of everyone’s tongues. The answer is a little deflating: not much. The updated BIA rules and the decision by the US appeals court are complex and nuanced. Tribes in every state will want to study and test theories of how to best use IGRA before moving forward.
In addition, the SCOTUS decision to let the lower-court ruling stand ends WFA’s effort to change things at the federal level. But there is still the very real possibility that WFA will revisit litigation at the state level.
The pari-mutuel last autumn filed a case in Florida’s Supreme Court, but the court declined to hear it. WFA skipped the traditional process in Florida and went directly to the state supreme court. In denying the petition, however, Florida justices left open the door for WFA to file in Leon County court and work its way through the system. Should that happen, Florida’s supreme court could again consider whether or not to hear the case.
At the heart of WFA’s arguments is the idea that the state – meaning Governor Ron DeSantis and the legislature – and the tribe illegally compacted. Voters passed Amendment 3, which requires any expansion of gaming be decided at the polls, in 2018. WFA contends that the compact and the legislature’s approval of it violate state law.
“The decision of the Florida Supreme Court earlier this year denying (WFA’s) writ petition does not prevent the card rooms (pari-mutuels) from filing in Florida’s lower courts,” Crowell said. “That litigation does not threaten the national impact of (the) SCOTUS decision, however.
“Moreover, even if the card rooms would prevail in the state court action, any adverse judgement could be cured by a state-wide election on a compact that brings billions of dollars into Florida’s state treasury.”
Translation? The Seminoles may not be quite free of litigation just yet. But tribes across the US are free to use the latest interpretation of IGRA however they see fit.
Original article: https://igamingbusiness.com/sports-betting/online-sports-betting/1988-congress-have-approved-digital-betting-igra/
