Could the DraftKings Sportsbook Be Coming to Florida? Don't Hold Your Breath

The D.C. Circuit ruled in favor of the Seminole Tribe completely reversing a District Court decision pertaining to the tribe's ability to operate sports betting from the Sunshine State.

The decision now makes it possible for the Seminoles to operate a sportsbook app barring any legal challenges.

So far, the group that forced the initial District Court decision in the first place, Magic City Casino, has yet to challenge the latest ruling.  It's entirely possible they were ill-prepared for the news during the 4th of July four-day holiday weekend.  We would also note that Magic City is now under new ownership since challenging the compact.  West Flagler Associates initiated the action but has since transferred ownership to the Alabama-based Poarch Band of Creek Indians, who themselves are not particularly close allies of the Seminoles. 

Jeff Ifrah, a prominent gaming attorney from the South Florida area, heralded the D.C. Circuit court decision as "a huge victory for Hard Rock and the first to favorably resolve a post-PASPA challenge under IGRA."

IGRA stands for The Indian Gaming Regulatory Act, 25 U.S.C. sections 2701 et seq., enacted in 1988, and provides a statutory basis for regulation of tribal games. This law allows traditional Indian gaming as well as bingo, pull tabs, lotto, punchboards, tip jars, and certain card games on tribal land.  And now sports betting will likely be thrown into the mix based on this ruling.  PASPA, which stands for The Professional and Amateur Sports Protection Act (PASPA), prohibited wagering on sports in most US states.  It was thrown out by the Supreme Court in 2018.

Hamish Hume, an attorney who represents the pari-mutuels, criticized the D.C. Circuit panel’s ruling and, thus, offered some glimpse into possible future actions forthcoming without getting into any specific detail as to strategy.

“The court correctly recognized that IGRA does not and cannot authorize gambling off of Indian lands, but then upheld a compact that purports on its face to do exactly that. We respectfully disagree with that decision, and are evaluating our possible next steps,” Hume said in an email.

Florida voters already sided against any form of gambling expansion.  There are few that would argue having the ability to place bets from one's own living room doesn't qualify as gambling expansion, it does.  Only the Seminoles see things otherwise, but they also pretty much hold all the cards. There are all types of complicated loopholes the tribe can employ to get around that constitutional amendment apparently.  We won't go into those here.

The Seminoles argue that mobile sports wagering is not taking place outside the reservation provided the server where the bet is placed is located on their land.  In 2000, USA vs. Jay Cohen found that online bets were indeed placed where the actual bet was made, not on the server located in Antigua.  As some industry analysts have rightfully pointed out, should this decision hold, the government would be opening up a Pandora’s Box.  We are no lawyers, but it would seem that anyone living in the US will be able to start their own online sportsbook, park it on a server in Antigua, and simply point to the D.C. Circuit ruling.  Antigua is a Caribbean island nation that has long regulated web gambling.  The well-known brand, Bovada, is licensed there and accepts bets from US residents in all but a few states.

A number of wise gamblers brought up the notion that the Seminoles would maintain a monopoly over mobile sports betting in Florida, thus eliminating any type of competition.  Ifrah insisted this would not be the case.  He corrected folks by reminding them that the Seminoles will be able to act as a master licensee to the likes of DraftKings and FanDuel.  This is something that few of us in the industry seemed to be aware of, we here at Gambling911.com included.  As much as we trust Ifrah's knowledge on the subject, we're still seeking out further confirmation.

But why would the Seminoles even want to go this route?

The Seminoles had a mobile site live pretty much the day after Governor Ron DeSantis announced a new compact with the Tribe courtesy of their Hard Rock brand.  Those able to access it claimed the site was actually pretty decent overall.  The District Court judge ruled against it and forced the app to be pulled.  The tribe also did everything in its power to keep DraftKings and FanDuel out of the market. In fact, their commercial campaign was more aggressive than former President Donald Trump's PAC's campaign against the state governor Ron DeSantis in his bid to become the GOP presidential nominee.

For those unfamiliar with the business landscape here in Florida, Disney is the largest employer.  Next to Disney, the Seminoles and Publix super market chain pretty much rule the roost.

One could certainly argue that Universal's theme park within the same proximity of Disney poses a threat to the latter company's dominance.  It does not.

The competition between Walt Disney World Resort and Universal Orlando Resort has always been a healthy one, writes Andrew Boardwine of Inside the Magic.  Both Orlando tourist destinations draw millions of visitors each year.  They offer somewhat different experiences.  Typically, us old folks would be drawn to the Universal theme park but probably want to visit Disney while in the area. In other words there are great synergies between the two.

There exists no such synergies between a DraftKings and the Hard Rock casino brand.  It's akin to Jeffrey Dahmer serving the African American community.  The former gets a free meal, the latter...well...you all know how that went.

Under any licensing arrangement, the Seminoles would receive a cut of the DraftKings business, probably a small percentage at best.  If the Hard Rock existed all its own, the Seminoles get everything. 

Think for a moment who benefits the most from the Seminoles willingness to hold licensing control over DraftKings in Florida.  Can you think of any reason why the Seminoles would benefit the most? 

We can't.  We tried, but we simply cannot.

DraftKings, on the other hand, gain access into the state, cannibalize most of the business the tribe wants all its own and might even end up harming the Hard Rock casino retail properties in the process.  Gamblers losing their parlay bets on the DraftKings site doesn't leave much left to go play at the Hard Rock. And we would be remiss in not mentioning DraftKings has garnered some bad press over the last year courtesy of a data breach as well as their policy of booting or strictly limiting winning customers.  The Hard Rock, on the other hand, rewards winning players with free rooms at their lavish Guitar Hotel.  There simply doesn't exist much in the way of any bad press when it comes to the Seminoles. 

DraftKings ability to cannibalize off of other iconic brands is already becoming evident with the newly launched collaboration between it and Churchill Downs.

DraftKings hopes to be live with their standalone app, DK Horse, in 21 states over the next year pending all necessary regulatory approvals. That's great for DraftKings.  They now operate a horse product.  But the Churchill Downs TwinSpires website has long dominated the horse betting market during one of the largest wagering events of the year, the Kentucky Derby, through its exclusive broadcast advertising arrangement.  It just seems as though they are ceding their dominant market share over to DraftKings. 

This is akin to a franchise model in some sense.  But you don't see Burger King offering its products and platform to McDonald's franchisees for a reason.  Hence the reason the Seminoles allowing DraftKings in Florida through a licensing agreement does not make a whole lot of sense.

Then again, there's a reason we locals refer to this state as Flori-DUH.  Anything is possible perhaps.   The Seminoles just seem way too smart.

- Jagajeet Chiba, Gambling911.com