On Wednesday, the U.S. Supreme Court denied a request to order to stay the implementation of a gaming compact (“Compact”) between the State of Florida and the Seminole Tribe of Florida (“Tribe”). As a result, the Tribe can continue to operate sports betting throughout the state while the Court decides whether or not to take up the question of whether the Compact violates the Indian Gaming Regulatory Act (“IGRA”) because it allows bettors located throughout Florida to place wagers using on-reservation Tribe servers. The ultimate outcome of this legal challenge may have significant impact on whether tribal compacts can extend beyond Indian lands, and by extension, how much competition may exist between tribal and non-tribal gaming operators.
The Compact
The IGRA created a joint gaming regulatory system between federal and state governments that attempts to balance tribes’ self-governance, states’ police powers, and the federal government’s interstate economic interests. Under the IGRA, federally recognized tribes may conduct Class II games like bingo and non-banked card games on tribal land without state approval. For Class III gaming, which includes casino-style gaming and sports wagering, tribes must negotiate a gaming compact with their home state that state lawmakers and the U.S. Department of Interior must approve.
In 2010, the Tribe and the State of Florida entered a tribal-state compact pursuant to the IGRA, which was subsequently approved by the Secretary of the Interior. In 2021, the Tribe re-negotiated the 2010 compact with the State of Florida. The re-negotiated Compact was approved by the governor and state legislature in April and May 2021, respectively, and then submitted for approval to the U.S. Department of the Interior. In August 2021, the Compact became effective when the Secretary of the Interior failed to either approve or disapprove it within 45 days of receipt.
The 30-year, multi-billion-dollar Compact establishes a “hub and spoke” mobile sports wagering plan that allows bettors throughout Florida to place sports wagers online, with the wagers running through servers located on the Tribe’s lands. Specifically, the Compact states that wagers using a mobile app or other electronic device are deemed to be exclusively conducted by the Tribe. Thus, the Compact would allow the Tribe the right to offer sports wagering throughout the state even though the State of Florida has not explicitly legalized or regulated sports wagering in the state.
Legal Challenges Ensue
Shortly after the Compact was approved, two casino operators filed a lawsuit in D.C. District Court styled West Flagler Associates, Ltd. v. Haaland. The suit alleges that the Compact violates the IGRA because it grants the Tribe gaming rights outside Indian lands and gives the Tribe a de facto statewide monopoly on sports wagering, which violates plaintiffs’ equal protection rights.
In November 2021, the district court vacated the Compact, finding that the agreement violated the IGRA by allowing the Tribe to offer sports wagering off Indian land. The trial court’s decision turned on the distinction between gaming activities occurring physically on the Tribe’s land and those activities operated by the Tribe but with players located outside reservation lands.
In August 2022, the Interior Department appealed, arguing that the trial court’s distinction between on- and off-reservation gaming activities is moot because the IGRA already endorses activities that occur off tribal land, such as horse racing, and that this protection should be extended to online sports wagering. On appeal, the casinos restated the arguments made before the trial court: the Compact impermissibly expands the interpretation of the IGRA in a way that permits gaming outside tribal lands, giving the Tribe an unfair monopoly over sports wagering in Florida, as sports wagering is otherwise illegal in the state. Additionally, the Tribe moved to intervene in the matter, arguing that the U.S. Department of the Interior does not adequately represent the Tribe’s interests.
In June 2023, the D.C. Circuit held that the IGRA allows for tribal gaming activity to occur off tribal lands because it provides for activity that is “directly related to gaming.” In its holding, the court highlighted the fact that the Compact authorizes only wagering that occurs on tribal lands because the wagers occur through servers on the Tribe’s land. The panel held that gaming on the Tribe’s servers is sufficient to constitute gaming on tribal land.
In September 2023, the D.C. Circuit rejected pleas from Florida casino operators for an en banc hearing and to stay the June decision. The casino operators in turn appealed to the U.S. Supreme Court, urging the court to review the recent ruling due to its implications on the IGRA and secondary effects relating to preference for tribes. The U.S. Supreme Court issued an order on October 12 to pause the implementation of the D.C. Circuit’s ruling.
Looking Ahead
Because the U.S. Supreme Court vacated its stay order, the Compact has been reinstated and the Tribe can once again offer sports betting in the state through its Hard Rock Sportsbook mobile app. The casino operators have committed to filing a formal petition with the U.S. Supreme Court by November 20.
All signs point to the Supreme Court granting certiorari. The Supreme Court’s internal guidelines state that it will grant certiorari if a lower court’s decision: (1) is in “conflict” with decisions from other federal appeals courts “on the same important matter”; (ii) is arguably in “conflict” with the Supreme Court’s own precedent; and (3) has decided “an important question of federal law that has not been, but should be, settled” by the Supreme Court. Here, the West Flaglercase satisfies all three criteria.
The D.C. Circuit’s holding in the West Flagler case conflicts with at least eight federal appeals court decisions from other circuits declaring that the IGRA has no application to off-reservation tribal gaming activities. The conflicting rulings are from the Ninth Circuit (five cases), Tenth Circuit (two cases), and First Circuit (one case). For example, in Artichoke Joe’s California Grand Casino v. Norton, the Ninth Circuit stated that the IGRA “pertains only to Indian lands . . . and regulates activities only on Indian lands.” Addressing the issue of off-reservation tribal gaming, the Ninth Circuit opined that “[u]nder IGRA . . ., individual Indians (or even Indian tribes) could not establish a class III gaming establishment on non-Indian lands.”
Further, the decision conflicts with the Supreme Court’s holding in Michigan v. Bay Mills Indian Community, which states that the placing of a wager by a tribal customer from outside of Indian lands is indisputably “gaming activity,” regardless of where the wager is ultimately received.
Finally, the West Flagler case raises an important question of law that the Supreme Court will need to resolve if there is to be any clarity regarding the IGRA’s intent and effect. This question affects relationships between tribal, state, and federal governments across the country, as well as competition between tribal and non-tribal gaming operators.
