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The U.S. Supreme Court's decision not to review the landmark compact between the Seminole Tribe and state of Florida reaffirms the new model for how tribes in various states might conduct state-wide mobile gaming under federal law, according to tribal gaming law experts.
“And it clearly strengthens the position of tribes confronted by many states that have approved expansion of mobile sports wagering for non-Indian entities,” Scott Crowell, founder of Crowell Law Office Tribal Advocacy Group in Arizona, told Vixio GamblingCompliance.
“But the question of whether a tribe can compel a recalcitrant state to enter into a compact amendment for state-wide mobile gaming remains unresolved,” Crowell said. “We will likely see that issue come to a head in the near future.”
On that issue, which could see states with established commercial markets for online sports betting become obliged to enable tribes to compete through amendments to their compacts, Crowell said he believes “the proper answer is yes.”
“If a state has authorized state-wide mobile sports wagering for any person, organization or entity to offer state-wide mobile sports betting or online casinos, then the state is obligated under the Indian Gaming Regulatory Act (IGRA) to negotiate a compact or compact amendment to offer the same game,” he said.
The Seminole Tribe relaunched its Hard Rock Bet mobile sportsbook in Florida late last year following a favorable Court of Appeals ruling on the compact, which grants the tribe exclusivity over online betting state-wide and determines that wagers legally take place via servers on tribal lands.
Crowell said the model is well-suited for other states where tribes have actual or substantial exclusivity over gaming, such as Wisconsin, New Mexico, Washington State and Minnesota.
Kathryn Rand, senior distinguished fellow of tribal gaming policy at the University of Nevada, Las Vegas’ International Center for Gaming Regulations, noted that numerous tribes and states have already negotiated new or amended compacts to allow retail sports betting in tribal casinos, without a state-wide mobile wagering component that is included in the Seminole compact.
“We'd expect that in at least some of those states, tribes may seek renegotiations for state-wide mobile wagering,” Rand told Vixio in an email.
California Dreaming
Perhaps the biggest question is whether the Seminole compact, following the end of federal legal challenges, now provides a blueprint for California tribes to legalize mobile sports wagering as a form of Indian gaming subject to IGRA.
One group of California tribes have previously proposed such a model for a state-wide referendum, before altering the measure due to an initial federal court defeat for the Seminole compact. That group then ultimately decided not to proceed with qualifying a modified initiative for the 2022 ballot, which already included two separate sports-betting initiatives.
The decision by the Supreme Court recognized “the notion that as long as the servers accepting the bets are on tribal facilities, online wagering falls within the compact,” Deutsche Bank analyst Carlo Santarelli wrote in a research note published Tuesday (June 18).
Santarelli told investors that for tribes in California, the Seminole model “essentially allows them to potentially amend their current compacts to permit sports betting and avoid a ballot initiative.”
“Much like Florida, however, should the tribes successfully amend the compact, the opportunity for the traditional online operators would remain cloudy,” Santarelli wrote.
Tribes in California spent millions of dollars in 2022 to defeat Proposition 27, an initiative financed and supported by FanDuel, DraftKings and other commercial operators to legalize online sports betting in California.
Proposition 26, financed and supported by tribes, would have allowed for retail sports betting at tribal casinos and racetracks in California. But that initiative was also overwhelmingly defeated by voters.
It is not the case that California tribes could now proceed with a compact amendment for sports wagering without a ballot measure, according to Crowell.
“An amendment to the [state] Constitution will be required for sports betting to occur in California, which will require a state-wide initiative or referendum,” he told Vixio.
“The overwhelming failure of the industry-backed Prop. 27 reveals the people of California do not have an immediate appetite for online sports betting. That being said, when California has the appetite to join the rest of the nation, sports betting will likely be driven by a California tribal initiative measure.”
The Seminole compact, Crowell said, “now provides a proven model for the California tribes to work with if [and] when the time is right.”
California tribes have supported launching a retail betting market first, followed by state-wide online sports betting, with servers located on tribal lands. Most tribes are still digesting the decision and plan to discuss its potential impact on plans to legalize sports betting in the state.
“One big issue in California will be whether tribes should have exclusive rights to operate state-wide mobile wagering, or whether the state will also legalize commercial state-wide mobile wagering,” Rand said.
Although some believe the tribes would simply partner with existing online sports-betting operators, such as DraftKings or FanDuel, Santarelli noted that they believe this view lacks an understanding of tribal politics.
“In our view, given the quantum of tribes in California far surpasses the number of online sportsbook providers, and given the importance of the balance of power amongst the tribes, we see this view as overly optimistic,” he wrote.
“Moreover, given the sensitivity around the control of gaming in the state, we believe it is naïve to expect the tribes to turn over any element of gaming to outside entities, without a significant and ongoing financial return.”
