Florida Casinos; Challenges to Gambling Deal, New Gaming Agency

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Recent developments in Florida gambling news see the Biden Administration asking a Federal Judge to dismiss a challenge by state parimutuel operators to the 30-year gambling agreement between Governor Ron DeSantis and the Seminole Tribe of Florida. The agreement gives the tribe, which is best known for its Hard Rock Casino brand, control over sports betting in the state as the vertical skyrockets across the US gambling horizon.

In legislative news, the Department of Business and Professional Regulation has proposed a budget of about $25 million to get the nascent Florida Gaming Control Commission off the ground. The gaming regulator was created during a special session of the legislature earlier this year with the governor signing the law enforcement and investigative agency into law in May.

Feds ask Judge to Toss Challenge to 30-Year Gambling Compact

Update: 10-19-2021

A Federal Judge has dismissed a lawsuit by pari-mutuel operators in Florida that sought to overturn the state’s 30-year gambling compact with the Seminole Tribe.

The US Department of Interior, Bureau of Indian Affairs, oversees gambling compacts between sovereign tribes and state governments under the Indian Gambling Regulatory Act of 1988.

Lawyers for the agency have asked U.S. District Judge Dabney Friedrich to reject a request by longtime gambling facilities owners, the Havenick family, to issue an injunction against implementing a 30-year compact between the Tribe and the State. The compact sets the terms of the business relationship between the parties and was passed by the Florida Legislature and signed into law by the governor.

The family has been in the Florida gambling business for over fifty years. The Magic City Casino in Miami-Dade County as well as the Bonita Springs Poker Room in Southwest Florida have been family businesses for over five decades.

The plaintiffs want full control of race betting revenues rather than a percentage of handle on bets placed through their mobile apps. Race betting would be hosted and booked by the Seminoles.

Compact Became Valid After 45 Days with No Actions

After the compact came under the purview of the BIA, the US Department of Interior allowed a 45-day action window to lapse, which allowed the compact to become a federally approved agreement. After the 45th day, a compact goes into effect automatically and “shall be considered to have been approved by the secretary, but only to the extent the compact is consistent with the provisions” of the Indian Gaming Regulatory Act (IGRA).

The plaintiffs motion seems to rely on circular logic in its assertion that states: “In any event, if plaintiffs are correct that certain provisions of this compact are contrary to IGRA, then under their own theory, those provisions are not actually deemed approved. As a result, the secretary could not have made the allegedly unlawful approvals”.

The pari-mutuel operators contend that their profits will be “cannibalized”, a term often used by casinos operating in the same market that denotes one property taking business away from another – the term usually applies to properties under the same ownership but can also apply to competitors.

U.S. Department of the Interior Secretary Deb Haaland, defending the BIA approval stated that the pari-mutuel operators, “appear to assume … that if online sports betting becomes available, it will have an instantaneous and transformative impact on the Florida gaming market to their detriment”.

The motion went on to say that the information used to assume a loss in business was unreliable and didn’t support the assumption that the operators would lose business under the compact.

Plaintiffs Cite Equal Protection Clause

The operator’s injunction motion also makes a Constitutional claim under the Equal Protection Clause (Section 1, Fourteenth Amendment). Plaintiffs complain that sportsbetting provisions of the compact establish a “statewide, race-based monopoly.”

Bureau lawyers dismissed the complaint’s validity, stating, “…the Equal Protection Clause does not protect plaintiffs from increased market competition.”

Source: Biden wants judge to dismiss challenge to Florida’s gambling deal with Seminoles, The SunSentinal, October 15, 2021

$25 Million Budget to Establish New Florida Gambling Regulator

When the Florida Senate passed, and Gov. DeSantis signed the state’s Gambling Enforcement Act into law after a special session this year, there was only $2,100,000 appropriated for the new, as-yet-unrisen Florida Gaming Control Commission (FGCC) to find its land legs..

The Department of Business and Professional Regulation has proposed a starting budget of more than ten times that amount to get the Commission up and running as well as to fund other mandates of gaming enforcement.

These include: “Expanding the authority of the Office of Statewide Prosecution within the Department of Legal Affairs to investigate and prosecute certain crimes; creating the Florida Gaming Control Commission within the Office of the Attorney General; creating the Division of Gaming Enforcement within the commission; specifying that certain persons are ineligible for appointment to or employment with the commission; providing standards of conduct for commissioners and employees of the commission, etc.”

Julie Brown, the DBPR Secretary who answers to DeSantis, wants a legislative budget committee to appropriate about $14,000,000 from the Division of Pari-Mutuel Wagering and to find another $10,000,000 to help the Division of Gaming Enforcement gets its feet under it with the hiring of 15 new law enforcement officers, 15 outfitted law enforcement vehicles, working staff and other pieces of functional machinery the regulatory agency will need to operate effectively.

According to the text of the law, the Florida Gaming Control Commission will operate within the Attorney General’s office under the direction of cabinet level law enforcement administration two steps down from the Governor with the AG ultimately involved in gambling crimes enforcement.

The reporting structure is different than how things worked previously with the Division of Pari-Mutuel Wagering handling compliance working under the DBPR.

The funding will help the FGCC ramp up its staff from a mere 15 employees and managers hired under the initial appropriation to nearly 200 full time gaming officials and support staff.

The FGCC’s structure will include an executive director, five commissioners, and an office of the inspector general to keep things on the up and up and advise the commission on matters of compliance, liability, risk, and integrity among other things.

The new regulatory and law enforcement body won’t actually replace existing agencies.

According to Florida Politics, the Division of Gaming Enforcement will be staffed by 20, the Division of Administration will employ 29, and the Division of Pari-Mutuel Wagering will keep its staff of 109 employees on the payroll.

According to the source, the expenditures are minimal when compared to other states and the staffing level is about average.

The new Gambling Compact between Florida and the Seminole Tribe guarantees the state revenues of at least $2,500,000,000 over the next half a decade and $6,000,000,000 through the year 2030.

Source: Officials outline $25 million plan for new gaming regulation agency, Florida Politics, October 14, 2021

CS/SB 4-A: Gaming Enforcement, The Florida Senate, July 8, 2021

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