Southwest Parimutuels Files Lawsuit against FL Gaming Compact

Sports betting legalization in Florida is now facing legal hurdles after a pari-mutuel company filed a federal lawsuit to challenge the state compact with the Seminole Tribe.

Legal Fiction

Southwest Parimutuels, owner of Magic City Casino in Miami and the Bonita Springs Poker Room, filed a lawsuit in the US District Court for the Northern District of Florida last week, arguing the sports betting component in the compact is based on “legal fiction” and violates state and federal laws.

According to the two companies behind Southwest Parimutuels, West Flagler Associates and Bonita-Myers Corporation, the provisions in the compact which authorize sports betting outside of tribal land are in violation of the Indian Gaming Regulatory Act (IGRA), hence, they request the court to enjoin sports betting implementation.

“While we are fully supportive of Gov. DeSantis and his work to secure a new Seminole Compact, the lawsuit focuses on a very narrow aspect of the Compact — the legality of off reservation and online sports wagering.’’

Isadore Havenick, VP, Public Affairs, Southwest Parimutuels

The state compact, signed by Gov. DeSantis and the Seminole Tribe, approved by Florida legislators and pending final approval from the US Department of the Interior (DOI), will allow adult Florida residents to place wagers on sporting events via the internet from anywhere in the state, starting from October 15, 2021.

The compact utilizes a “hub and spoke” model in which gaming servers are located on tribal land to bypass both state and federal laws that prohibit sports betting, and Southwest Parimutuels argues that arrangement contradicts IGRA, the Wire Act, and the Unlawful Internet Gambling Enforcement Act (UIGEA), including court decisions interpreting those laws.

According to IGRA, gambling must occur “on Indian lands”, which means “all lands within the limits of any Indian reservation” or lands held in federal trust for the intended benefit of the tribe, a requirement clearly violated by the hub and spoke model.

Further, by allowing to place bets outside of tribal land, the compact is in violation of the UIGEA, while the means of placing wagers violate the Wire Act ban of using interstate commerce for illegal transactions.

Standing to Challenge the Compact

Due to this contradiction, Florida residents can place wagers from the comfort of their homes, giving the Seminole Tribe a huge competitive advantage over Southwest Parimutuels, which will result in millions of lost revenue for the operator, while it can join the online betting party only as a partner of the tribe in exchange of 40% of the proceeds.

The compact awaiting approval from DOI is also facing resistance from a Florida nonprofit, which strongly opposes gambling expansion in the state without the consent of voters.

In addition, a constitutional amendment proposed by sports betting big boys FanDuel and DraftKings for the 2022 ballot, seeking online sports betting authorization for all Florida pari-mutuels, professional sports stadiums, as well as via mobile sports betting platform, may also spoil the Seminole party.