Are Pay Per Head Bookie Businesses Now fully Legal With DC Circuit Decision?
To be clear, pay per head businesses are considered legal as they consider themselves software providers and operate in jurisdictions where gambling is legal. Likewise, Google welcomes paid ads from said companies. They do not permit gambling sites to advertise in jurisdictions where the activity is not regulated (i.e. Utah).
On June 30, 2023, the U.S. Court of Appeals for the District of Columbia Circuit reversed the district court’s ruling in West Flagler Associates, Ltd. v. Haaland. The result is that the Seminole tribe can now take bets from their casinos and - interestingly enough - remotely. The Circuit Court has essentially determined that the bets, when entered online or via one's mobile device, take place on the Seminoles server located on their reservation.
With USA vs. Jay Cohen, the defendant argued his conduct was protected by 1084(b) because all betting took place in Antigua, not where the individual bettor was physically located. We would note that Cohen's company, World Sports Exchange, accepted both phone wagers and bets online. The servers for the web bets were located in Antigua.
All that occurred during the communications between New York and Antigua, according to defendant, was the conveyance of information that assisted in the placement of a bet in Antigua.
The Second Circuit rejected this argument, and held that Section 1084(b) did not provide defendant with a safe harbor both because the information in question was transmitted to and from New York, where gambling was illegal at the time. New York has since legalized online sports betting. The Second Circuit also found that such information constituted the actual bet itself, and not just information that assisted in the placement of a bet.
The US Supreme Court has since overturned the Professional and Amateur Sports Protection Act of 1992 and over half the states now regulate the activity.
The U.S. Court of Appeals for the District of Columbia Circuit reversal opens the door for the Seminoles to take bets online from Florida residents and visitors providing those bets occur on the server based on Seminole land. Likewise, bets with a pay per head provider are placed on servers in jurisdictions where the activity is legal (i.e. Costa Rica, Antigua, Curacao).
Gaming attorney I. Nelson Rose admits that the Circuit Court got it wrong but "SCOTUS will not hear the case, for political reasons".
The federal District Court followed precedent ruling that the state and tribe could not enter into a compact allowing the Seminoles to take sports bets from anyone in Florida, simply by placing the servers on their reservations. Now they can apparently.
Rose also makes it clear that the Circuit Court finding won't open the doors for every tribe in America to now operate online sports books and take bets from gamblers not on Indian land.
"It won’t change a thing in California or most other states, except to add an extra element of confusion."
He adds: "In California and other states, the question remains political, not legal. Gavin Newsom is not about to sign compacts with the Golden State’s 108-plus tribes. And even if he does, the state’s racetracks and cardrooms, and their employee unions and powerful friends in the State Legislature, are not going to allow tribes to have a multi-billion-dollar monopoly."
- Aaron Goldstein, Gambling911.com
