Sports Betting Comes Under Court Scrutiny

TALLAHASSEE (CBSMiami/NSF) -- A Washington, D.C.-based judge harshly chastised lawyers for the Biden administration Friday for failing to be prepared to answer questions about whether a deal that gives the Seminole Tribe of Florida control over sports betting in the state violates federal law.

U.S. District Judge Dabney Friedrich gave the U.S. Department of Justice until Tuesday to explain whether a sports-betting provision in the deal between the Seminoles and the state is in keeping with the Indian Gaming Regulatory Act, or IGRA, which lays out the framework for tribal gambling.

Friedrich spent the first 30 minutes of a two-hour hearing wrangling with Rebecca Ross, a lawyer with the Justice Department's Indian Resources Section, about the government's unwillingness to take a position on the issue at the crux of a lawsuit filed by two Florida pari-mutuel operators that oppose the deal.

"It's hard not to sit here and think that the government's whole litigation strategy here is to delay this court from ruling," Friedrich, who was appointed by former President Donald Trump, said near the end of the hearing.

The sports-betting provision was included in an agreement, known as a compact, signed by Gov. Ron DeSantis and tribal Chairman Marcellus Osceola, Jr. this spring and approved by the Legislature during a May special session.

Under the 30-year deal, the Seminoles agreed to pay the state at least $2.5 billion over the first five years in exchange for having control over sports betting throughout Florida and being allowed to add craps and roulette to the tribe's casino operations.

The "hub-and-spoke" sports-betting plan is designed to allow gamblers throughout the state to place bets online, with the bets run through computer servers on tribal property. The compact says bets made anywhere in Florida "using a mobile app or other electronic device, shall be deemed to be exclusively conducted by the tribe."

The federal Bureau of Indian Affairs, which U.S. Department of Interior Secretary Deb Haaland oversees, in August allowed a 45-day review period to elapse without taking action on the compact. That effectively allowed the compact to move forward.

But owners of Magic City Casino in Miami-Dade County and Bonita Springs Poker Room in Southwest Florida filed a lawsuit challenging the agency's tacit approval, arguing that the sports-betting plan is a "legal fiction" because federal law does not authorize bets that occur off tribal lands. The plaintiffs also allege the tribe's sports-betting arrangement will have a "significant and potentially devastating impact" on their businesses.

Lawyers for Haaland, who is represented by the Justice Department, argued that the case should be dismissed because the plaintiffs lack "standing" to challenge the secretary's actions.

Ross told Friedrich that "the court should not proceed to reach the merits of any claims" and that the government wasn't prepared to go beyond the issue of standing. That drew a rebuke from the judge.

"Ms. Ross, I'm confounded by the government's position," she said.

Friday's hearing --- which was scheduled to address a number of motions, including the government's motion to dismiss and the plaintiffs' motion for summary judgment --- came just four days after the Seminoles launched online sports betting statewide.

Friedrich repeatedly asked Ross whether the government believed that online betting taking place outside of tribal casinos was occurring on tribal lands.

"We don't have an answer to that question for you today," Ross said during one exchange.

In another exchange, Ross said that the "gaming that's contemplated is occurring entirely on Indian lands."

"Stop right there. Help me understand. I'm having a hard time following that position. All of the online gaming is happening on tribal lands? That's your position?" Friedrich interrupted.

"That's what the compact provides," Ross said, adding that the government needed more time to respond "if the court wants a clear answer as to that question you're posing."

The litigation has been ongoing since the department's August decision to allow the compact to go into effect, Friedrich pointed out.

"I find it extremely hard to believe that the government doesn't even know what its position is. … It seems like you should be able to answer a simple question," the judge said. "Does the federal government interpret online betting as occurring solely on Indian land? Just yes or no, you can't answer that?"

"No," Ross replied.

Attorney Hamish Hume, who represents the plaintiffs, argued that the federal law is "focused on gaming on Indian lands."

"IGRA cannot be used to try and create some sort of loophole" to offer games off tribal lands, Hume said.

"That is not the purpose of IGRA. And what has happened is that there is now millions of people all over the state of Florida right now who are not anywhere near Indian lands who are able to place bets through their sports app on their phone or on their laptop that would be illegal, and in fact not just illegal but now a felony, if conducted by my clients (the pari-mutuels) or anyone else," he added.

Hume also argued that the sports-betting provision in the compact runs afoul of a Florida constitutional amendment, approved in 2018, requiring statewide votes for future expansions of gambling.

Deeming bets to be placed on tribal land because the servers are located there "is an end run around the citizens' initiative requirement in the Florida Constitution," Hume said, adding "IGRA is being abused here to accomplish something that is unlawful in the Florida Constitution."

"Sorry to interrupt, but to resolve all this category of arguments, do I necessarily have to resolve a question of Florida constitutional law?" Friedrich asked.

"I do not believe you do," Hume said. "What they have done is presented a compact that purports to be governing gaming on Indian land but in fact allows gaming off the land through the internet and trying to fit that within IGRA through this legal fiction of deeming the placing of sports bets … exclusively on the land."

Friedrich asked Hume what she should do if she sides with the plaintiffs.

"Is the proper remedy just set aside the full compact or just certain provisions?" she asked.

Hume said Haaland's ability to approve a compact is limited to "the extent" of what is permitted under federal law. That would allow courts "flexibility to set aside the approval to the extent it approved online gaming," he said.

The judge appeared skeptical of the government's arguments that the plaintiffs lacked standing to challenge the compact.

"Haven't they at least plausibly alleged injury here?" the judge asked.

But Ross said the pari-mutuel operators couldn't show that their customers would spend money elsewhere once sports betting becomes available.

The injury "had to be concrete, it had to be particularized and it had to be either actual or imminent" to establish standing, Ross argued, again irritating the judge.

"How can you possibly take the position that not a single person would prefer to use the online gaming system than go to a casino?" Friedrich asked.

"That would be conjecture," Ross said.

Friday's hearing also included brief arguments in a second lawsuit filed by two prominent South Florida businessmen and the group No Casinos. They allege that the federal government's approval of the compact "adversely impacts plaintiffs' properties and neighborhoods by, among other things, increasing neighborhood traffic, increasing neighborhood congestion, increasing criminal activity, reducing open spaces and reducing their property values."

(©2021 CBS Local Media. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. The News Service of Florida's Dara Kam contributed to this report.)