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Lawmakers Jettison Controversial Online Gaming Provision From Seminole Compact

FILE - In this July 2, 2020 file photo, a woman plays a slot machine at the Golden Nugget casino in Atlantic City N.J.   The Florida Legislature will meet in a special session that would overhaul Florida’s gambling industry, including joining other states in allowing sports betting.
Wayne Parry/AP
FILE - In this July 2, 2020 file photo, a woman plays a slot machine at the Golden Nugget casino in Atlantic City N.J. The Florida Legislature will meet in a special session that would overhaul Florida’s gambling industry, including joining other states in allowing sports betting.

Lawmakers drew closer Monday to approving a proposed 30-year gambling deal with the Seminole Tribe of Florida after leaders agreed to strip a controversial provision that could have opened the state to online gaming under the control of the tribe.

The online gambling provision was included in an agreement, known as a “compact,” reached by Gov. Ron DeSantis and Seminole Tribe of Florida Chairman Marcellus Osceola Jr. late last month. Under the proposed compact, the Seminoles would pay the state at least $2.5 billion over five years in exchange for being able to operate sports betting in the state, along with getting perks such as offering roulette and craps at tribal casinos.

The deal also would have required the state to “engage in good faith negotiations” within three years “to consider an amendment to authorize the tribe to offer all types of covered games online or via mobile devices to players physically located in the state.”

But Republican House leaders balked at the online betting provision, potentially jeopardizing DeSantis’ chance at nailing down approval of the deal with the Seminoles. Similar efforts to reach gambling agreements have proven to be elusive, after a federal judge sided with the tribe and wiped out a 2010 compact amid a dispute about card games offered at pari-mutuel facilities.

To ensure swift passage of the new compact, House Speaker Chris Sprowls and Senate President Wilton Simpson on Monday announced that DeSantis and the tribe had agreed to remove the provision requiring the state to negotiate with the tribe about online gambling.

“In my discussions with our members, I realized many shared the same concern as I --- that some language in the compact could be construed to lead to the backdoor expansion of online gaming,” Sprowls, R-Palm Harbor, wrote Monday in a memo to the House, adding that “even the mere possibility of this was unacceptable.”

Amid scrutiny from gambling opponents and conservative lawmakers, the tribe last week sent a letter to DeSantis and the Republican legislative leaders, emphasizing that the provision would not necessarily lead to online gaming operated by the Seminoles. Online wagering already takes place but has not been legalized or taxed by the state.

“The question that has been asked is whether the tribe would have a remedy if the state failed to negotiate such an amendment or to negotiate in good faith. The simple answer is that the tribe would not have a remedy,” Osceola wrote Wednesday to DeSantis, Sprowls and Simpson in a letter obtained by The News Service of Florida.

The provision in the compact “is simply an agreement to continue discussions about online gaming, but there is no enforcement mechanism if the state fails to engage in such discussions,” Osceola wrote. The Seminoles would not be able to seek enforcement of the provision from the U.S. Department of the Interior, which oversees tribal compacts, Osceola said.

Florida lawmakers began meeting Monday afternoon for a special session focused on ratifying the tribal compact and several other pieces of gambling legislation, such as a measure that would create a statewide gaming commission appointed by the governor.

A Senate committee approved the removal of the online wagering provision from the compact on Monday.

Jim Allen, CEO of Seminole Gaming and chairman of Hard Rock International, pitched House and Senate panels Monday about the benefits of the proposed compact.

The tribe in 2019 halted annual payments of about $350 million to the state, following a legal dispute over controversial “designated player” games offered at many pari-mutuel card rooms throughout Florida.

Under the deal struck by DeSantis and Osceola, the tribe would pay at least $2.5 billion in the first five years of a 30-year agreement, which could net the state “in excess of $20 billion” over the next three decades, Allen told lawmakers Monday.

The compact, which requires legislative approval, would enable the Seminoles to serve as a hub for online sports betting, with pari-mutuel operators contracting with the tribe. Pari-mutuels would get to keep 60 percent of sports-betting revenue, with 40 percent going to the Seminoles. The tribe would pay the state up to 14 percent on the net winnings. Online sports betting is not affected by removing the provision that could have led to legalizing other online wagering.

But opponents of the proposed compact maintain that the sports betting authorization violates a 2018 constitutional amendment, known as Amendment 3, which required statewide voter approval of future expansions of gambling.

Rep. Sam Garrison, a Fleming Island Republican who is co-sponsoring legislation to ratify the compact, told a House panel Monday that the sports betting provision could be problematic.

"There’s a legitimate question and legal question as to whether or not the sports gaming, with the hub-and-spoke model as contemplated in the compact, triggers Amendment 3,” Garrison, a lawyer, said. "It’s an open legal question. Period."

Addressing lawmakers Monday, Allen acknowledged that the sports betting provision in the compact is likely to face legal challenges.

“Very candidly, it does not matter,” Allen said, “because the state of Florida is not taking a risk.”

Allen argued that the tribe and its lawyers believe the sports betting provision will stand up in court.

“We understand that even if we are wrong, we are resuming our revenue share on the land-based casinos, that this year alone would be in excess of $400 million that the state is not receiving today,” he said. “So if the concern is sports betting and we’re wrong, the state is still at least $4 billion ahead of the game between now and 2030. And that’s our point in a nutshell. We’re taking that risk.”

But John Sowkinski, president of the group No Casinos and chair of the political committee that backed the constitutional amendment, urged lawmakers to reject the proposal.

Amendment 3 allows the state and tribes to negotiate compacts “for the conduct of casino gambling on tribal lands,” but Sowinski maintained that the language only applies to games taking place on tribal property, not on cell phones throughout Florida.

“Those words matter. They matter not just to folks in Washington D.C. in the Department of Interior who are going to be reading them, but they also matter to the voters of Florida. That has a meaning in Florida law, above and beyond its meaning in federal law,” Sowinski said.

Sowinski rejected the notion that the constitutional amendment would allow people to place sports wagers on cell phones anywhere in the state, as long as the servers are located on tribal lands.

“That dog don’t hunt,” he said.

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Dara Kam is the Senior Reporter of The News Service Of Florida.