Gaming Tribes In U.S. Face Legal Challenges, Commercial Encroachment

November 7, 2023
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U.S. Supreme Court Justice Brett Kavanaugh’s recent comments that the Seminole Tribe’s compact in Florida may have violated the equal protection clause in the 14th Amendment of the U.S. Constitution is a warning to tribes not to be complacent, a prominent tribal gaming attorney has said.
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U.S. Supreme Court Justice Brett Kavanaugh’s recent comments that the Seminole Tribe’s compact in Florida may have violated the equal protection clause in the 14th Amendment of the U.S. Constitution is a warning to tribes not to be complacent, a prominent tribal gaming attorney has said.

Scott Crowell, a tribal gaming attorney and owner of Crowell Law Office Tribal Advocacy Group in Sedona, Arizona, credited Kavanaugh with recognizing that the Seminole sports-betting case, as well as another unrelated case dealing with child welfare for Native Americans, were not the proper vehicles to consider whether federal laws on Indian affairs are discriminatory.

“Although he used [his comments in a recent order in the Seminole case] to say … 'please bring the issue to me in the right context',” Crowell said.

Crowell said that Maverick Gaming’s effort to invalidate tribal-state compacts in Washington state was another case where the opponents of a compact have sued even though the tribes, the state and the federal government all supported tribal exclusivity over retail and on-property mobile sports betting. 

The case is currently before the U.S. Court of Appeals for the Ninth District in San Francisco. Maverick, which operates cardrooms in Washington state, has sued challenging the exclusivity of tribes to offer sports betting.

U.S. District Court Judge David Estudillo dismissed the case in February, ruling that the Shoalwater Bay Indian Tribe was a required party to the lawsuit that could not be joined due to its sovereign immunity. Therefore, dismissal was required under Federal Rule Civil Procedure 19 and 12 (b) (7).

The Shoalwater Bay Tribe, which Crowell represents, had intervened in the case for the limited purpose of moving to dismiss Maverick’s claims on these grounds.

Maverick argued the compacts violate equal protection and are invalid because the company’s cardrooms are not permitted to offer the same forms of gaming as tribes.

Theodore Olson, a prominent American litigator who is a partner at Gibson Dunn and lead attorney for Maverick, claimed the federal judge went too far in allowing a tribe to seek dismissal of the case. In announcing the appeal in July, Olson said: “Federal law does not allow tribes to insulate these federal actions from judicial review.”

Crowell rejected Olson’s argument, saying the district court properly dismissed the case because Olson and Maverick chose to sue the United States and the state of Washington and not the tribe.

Crowell said he doubted that the case would be the one that the Supreme Court uses to tackle the issue of equal protection in Indian gaming, “although I’m sure that Ted Olson will make his best pitch that it should be.”

Among other major cases, Olson represented the state of New Jersey in its successful legal challenge to overturn the federal ban on expanded sports betting as decided by the Supreme Court in 2018.

Crowell said lawyers expect oral arguments in the Maverick case early in 2024, although a hearing has not been scheduled yet.

“We expect to prevail,” he added. “We expect Ted Olson and Maverick to ask the Supreme Court to review. But just like Kavanaugh recognized that the West Flagler litigation wasn’t properly framed to take up the equal protection issue, I doubt he would find a rule 19 context to be any more favorable.”

Crowell said tribes are very hopeful that the litigation from Washington state will see a “quick and certain death.”

“We should not get complacent because they haven’t taken it yet, but it is clear from Kavanaugh’s comments … that when the right vehicle comes along, he is going to find three other votes to get certiorari granted to hear it,” Crowell said last week during a webinar hosted by the Indian Gaming Association.

Since the Supreme Court struck down the Professional and Amateur Sports Protection Act of 1992 (PASPA) in May 2018, there has been a tidal wave of expansion of sports betting across the U.S. As of Monday (November 6), sports betting is live or regulated in 38 states.

Florida will become the 39th state when tribal casinos owned and operated by the Seminole Tribe launch retail sports betting on December 7. The tribe plans to roll out retail wagering over five days, but when mobile sports betting will resume in the state is unclear.

Unlike in Florida, Crowell said that even in states where there are positive tribal-state relationships, states were adopting laws allowing non-tribal entities to operate sports betting to the exclusion of tribes.

“And those few states — Connecticut, Michigan and Arizona — that choose to include tribes required them to offer the game under a non-Indian Gaming Regulatory Act (IGRA) model, outside of IGRA, outside of the parameters of IGRA subject to state licensing, state taxation.”

Crowell said the “real world effect” of those deals in Arizona is a situation where large sportsbook brands are contracting with local sports entities rather than Indian tribes, meaning the vast majority of the revenue is going to non-tribal entities.

In Michigan, even though the tribes still have the bulk of the sports wagering market, partnerships with commercial operators could not be executed under IGRA without violating the statute's requirement for tribes to remain the primary beneficiaries of gaming activities.

“So, back in 2021, I applauded the Seminoles and Florida for doing it under IGRA because I think that is essential to stopping that tidal wave of expanding sport wagering across the country and giving the tribes a bone of what should be primarily a tribal expansion of gaming.” 

Crowell believes there is still a role for DraftKings, FanDuel and other major players when it comes to tribal sports betting, but that is to provide the hardware and software and the technical support just like tribes do with IGT and Everi as it relates to slot machines.

The message sent with last year’s defeat on Proposition 27 in California and the recent Seminole victory in the federal court is that “we are going to do this the right way under IGRA where we have sole proprietary interest,” Crowell said.

“And where we are the primary beneficiaries and we will pay you for your operational expertise at fair rate but that’s a sea change from what you have been trying to accomplish, not just with Prop 27, but everywhere they go across the country.”

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