DC Circuit Opinion Favorable to Seminole Tribe, Reinstating 2021 Compact

Published: June 30, 2023

Today, June 30, 2023, the U.S. Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”) released its opinion in West Flagler Associates, Ltd., et al v. Debra Haaland, et al, determining the current state of the most recent gaming compact between the Seminole Tribe of Florida (the “Tribe”) and the State of Florida. 

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The D.C. Circuit found in favor of Secretary Haaland, ruling that the Secretary did not violate the APA by choosing not to act and thereby allowing the 2021 Seminole Tribe Compact (“Compact”) to go into effect by operation of law.  Because the decision keeps the Compact in effect, the Tribe’s motion to intervene was denied.

Recognizing the evolving landscape of gaming in Florida and the resulting shortcomings of the gaming compact approved in 2010 and in place at the time, the Tribe and Governor DeSantis came to an agreement on the terms of a new compact in 2021 under the Indian Gaming Regulatory Act (“IGRA”).  Ratified by the Florida Legislature and codified as section 285.710(3)(b), Florida Statutes, the Compact was provided to the Department of the Interior (“Department”) for the required federal approval.  The Department took no action on the Compact for 45 days, allowing it to be deemed approved under the provisions of IGRA on August 11, 2021.

West Flagler Associates, Ltd. (“West Flagler”) is an entity that, at the time of the filing of this lawsuit, did business within Florida as Magic City Casino. During this litigation, the pari-mutuel licenses associated with Magic City Casino were purchased by PCI Gaming Authority.  PCI is operated by the Poarch Creek Band of Mission Indians (“Porch”), a tribe located in Alabama.  The Poarch have been expanding their gaming footprint over the past decade, currently operating gaming properties in Alabama, North Florida, Nevada, the Bahamas, and in Pennsylvania, where they recently completed a $1.3 billion purchase of the Sands Bethlehem, now known as Wind Creek Bethlehem.  The Magic City Casino purchase is rumored to be the largest single acquisition in Florida gaming history, with the industry estimating the all-cash deal to have a total purchase price of around $600 million.  Additionally, the deal allows PCI to operate at a location where slot machine gaming is permissible within Florida. The actual purchase price has not been disclosed.

Bonita-Fort Myers Corporation, a co-Plaintiff, does business within Florida as the Bonita Springs Poker Room (collectively, the “Operators”), and is currently operated by West Flagler.  Each facility is a licensed pari-mutuel operator within Florida.

Prevailing at the Federal District Court level in a lawsuit that named only Secretary Haaland[1] as a defendant, West Flagler argued that the Compact’s authorization of online sports betting violates IGRA because the Compact purportedly authorizes class III gaming outside of Indian lands, as well as the Unlawful Internet Gambling Enforcement Act (UIGEA), the Wire Act, and the Equal Protection Clause.

The District Court denied the Tribe’s attempt to intervene and determined that the Compact violated IGRA because by “authorizing gaming off Indian lands.”  Moreover, while West Flagler sought only to strike down the provisions of the Compact related to online sports betting, the District Court invalidated the Compact in its entirety. The current case is a consolidation of multiple appeals.

The Department, on behalf of Haaland, argued that while the Compact did validly address gaming taking place off Indian land, it did not authorize such gaming through the Compact or IGRA.  Furthermore, the Department noted that the District Court incorrectly interpreted Haaland’s responsibilities.  Primarily, the Department argued, Haaland lacked both a duty and the authority to disapprove a compact that authorizes gaming on Indian land simply because a compact also contemplates that a state will enact legislation permitting persons off Indian land to participate in the same gaming.  Similarly, the Department addressed West Flagler’s argument that Haaland has a duty to ensure that any compact before the Department complies with the entire universe of federal laws.  Instead, the Department stated that Haaland’s only duty is to ensure that the proposed compact complies with IGRA.  Even so, the Department took the position that the Compact was also compliant with other federal laws.

The Tribe addressed several perceived errors in its briefing.  First, by denying the Tribe intervention into the initial suit against Haaland, the Tribe argued that its interests would be substantially affected by the outcome of the matter and that without intervention those interest could not be adequately represented.  Next, the Tribe argued that the District Court’s order prevented the Tribe from exercising its sovereign immunity as a party to the Compact, as a result of the Operator’s decision to sue only an uninterested agency with no regulatory responsibility over the Compact.  Finally, the Tribe argued that the District Court prevented the Tribe from the opportunity to waive its sovereign immunity and participate in the case below.

The appellants’ arguments were bolstered by the State of Florida, which appeared as an amicus curiae supporting the federal government’s request for the reversal of the District Court’s Order. The State similarly argued that the District Court’s conclusion that a compact governing gaming on Indian land could not also address off-reservation gaming was incorrect, and added that the while Haaland’s only duty was to ensure the Compact complied with IGRA, it also was not in violation of either the Wire Act or the UIGEA.  The State also argued that failing to sever the sports betting provisions from the remainder of the Compact was an error.

The Operators again argued that the Compact’s authorization of online betting violates IGRA, the Unlawful Internet Gambling Enforcement Act (UIGEA), the Wire Act, and the Equal Protection Clause.  Additionally, they support the District Court’s denial of the Tribe’s request to intervene, framing the request as a way for the Tribe to block review of the Compact.

Gaming options within the lucrative Florida market have been a high-profile issue for several years.  

While the Compact granted the Seminole Tribe the exclusive right to operate and control sports betting, other industry players continue to make additional efforts to try to break into Florida. So far, those attempts have been expensive and unsuccessful.

The current owners of the Magic City Casino, the Poarch, contributed $2 million to an initiative predominately funded by the Las Vegas Sands Corporation to bring non-tribal Las Vegas style casinos to Florida, which ultimately failed.  Additionally, Southwest Florida Enterprises, Inc., an entity that is a partner in the West Flagler partnership and operated by many of the same individuals, contributed $4 million to Florida Education Champions, which attempted to bring a citizen’s initiative ballot measure before Florida voters in 2022.  The proposed amendment would have authorized betting at professional sports venues, pari-mutuel facilities, and online platforms throughout the state.  Despite receiving the aforementioned $4 million from the West Flagler affiliated entity, $22.7 million dollars from DraftKings, and nearly $14.5 million from FanDuel, the committee was unable to reach the requisite number of verified petition signatures before the statutory deadline.  As a result, the validity of the Compact’s sports betting provision determines not only whether the bets are legal, but also whether the Tribe expands its Florida market exclusivity over the popular wagers.

Ultimately, the D.C Circuit panel found in favor of Secretary. In doing so the Court reasoned that the government’s decision to take no action and have the Compact be deemed approved and go into effect was not a violation of the federal APA.  Therefore, the Compact now is in effect, although additional litigation could potentially impact its status.

As a result of this ruling, Florida can now receive the benefit of the $2.5 billion revenue share pledged to the State over the course of the first five years of the Compact term, as well as the additional revenue sharing provisions based on future gaming revenue. 

Furthermore, Tribe facilities are permitted to expand their gaming offerings by becoming the exclusive operators of craps and roulette games within Florida.  Additionally, sports betting will be available across the state, so long as the activities adhere to the terms of the Compact regarding how the betting is offered or marketed, and how revenue is shared.  Overall, the ruling is net positive for individuals who wish to legally wager on sports within Florida, and a boon to the Tribe as it further expands its offerings while maintaining exclusivity within the state.

Any additional appeals would have to be accepted and decided by the U.S. Supreme Court, which closes its current term today.

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1 In her official capacity as Secretary of the Interior.