A blow for online gambling and gaming in Florida
A Federal Judge ruled late on Monday November 22 that Florida's gaming compact with the Seminole Tribe should not allow for online sports betting in the state. The tribe had launched an online app for sports betting earlier in November, having reached a 30-year agreement with Governor DeSantis. It was thought to be worth $2.5 Billion in revenue from the tribe to be paid to the state over the next 5 years.
Judge Dabney L. Friedrich ruled that the compact violates federal gaming law as it applies to the Seminole Tribe. This has put an indefinite halt to all future online sports betting expansion in the state and resulted in the Hard Rock Sportsbook app having to be shut down.
The Seminole Tribe had launched the App across Florida, and as its computer servers were located in tribal land, they believed that the compact covered online sports betting. Judge Friedrich's ruling takes a different view:
“Although the Compact ‘deem[s]’ all sports betting to occur at the location of the Tribe’s ‘sports book[s]‘ and supporting servers ... this Court cannot accept that fiction. When a federal statute authorizes an activity only at specific locations, parties may not evade that limitation by ‘deeming’ their activity to occur where it, as a factual matter, does not.”
The rise of sports betting and gambling
A report published in January 2021 estimated that US sports betting could reach revenues of $3 billion this year. Sports betting has been becoming more prevalent in recent years, and in particular following the COVID-19 pandemic, when the confined atmospheres within casinos meant that gaming corporations had to find new ways of allowing gambling.
In July 2021, the state of Wisconsin signed a similar compact with the Oneida nation which would also allow sports betting in the state.
A wasted financial opportunity for Florida
From a purely financial perspective, the evidence for allowing sports betting seems compelling:
- Sports betting has mass-market appeal. A study from the American Gaming Association in February 2021 projected that 23.2 million Americans were projected to bet up to $4.3 Billion on the Superbowl.
- Industry research projects an enormous potential market for sports betting. Firm Gambling Compliance suggests that sports betting could account for in excess of $8.1 Billion by 2024.
- Underground and illegal sports betting could become legitimized. The American Gaming Association estimates that illegal sports betting could account for as much as $150 billion which would significantly inflate the market (and revenue)
- State Tax revenue from sports betting would be welcome. The Pew Trust found that annual tax revenues received a staggering hit due to the loss of commerce to COVID-19, reporting that total State Tax Revenue was down by $46.4 Billion to June 30 2020.
The loss of potential revenue for the state must come as a blow - as does the overruling of Governor DeSantis' agreement with the Seminole tribe. It will be interesting to see if there is further legal challenge of the ruling.
What do you think about the federal courts overruling Governor DeSantis' agreement? Is this federal overreach or a legitimate case of the courts calling-out an illegitimate and illegal agreement? Let me know in the comments section below.
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