Florida Sports Betting Opponents and Government Stakeholders Head to Oral Argument in Federal Appellate Court

By: Jacob Grubman

The long and winding road for Florida online sports betting ran through the nation’s capital again on Wednesday, as the parties contesting the legality of a 2021 tribal gaming compact engaged in oral argument before the U.S. Court of Appeals for the D.C. Circuit.

This week’s oral argument in West Flagler Associates, Ltd. v. Haaland is the latest step in the dispute over whether the State of Florida and the Seminole Tribe of Florida can offer online sports betting throughout the state and not just on tribal land. In November 2021, a federal judge in the District of Columbia answered that question in the negative, concluding that the new compact violated the Indian Gaming Regulatory Act (“IGRA”) by permitting betting outside of Indian territory.

On Wednesday, the federal government argued that IGRA did not require the Interior Department to block the gaming compact in these circumstances, while the parties challenging the compact reiterated their earlier arguments that the compact ran afoul of federal and state law. Simultaneously, the appellate panel grappled with the question of whether the Seminole Tribe was an “indispensable party” in the litigation below, an issue that could decide the case without consideration of the merits.

The New Florida Gaming Compact and Ensuing Litigation

In the spring of 2021, the State of Florida and the Seminole Tribe announced a compact under the Indian Gaming Regulatory Act (“IGRA”) purporting to authorize the Tribe to offer online sports betting through the state, including to bettors located outside of tribal land. Although IGRA governs “gaming on Indian lands,” the compact “deemed” all online betting throughout the state to occur in the location of the network servers on tribal land.

After receiving a copy of the compact, the U.S. Secretary of the Interior opted to take no action on it, a decision that amounted to an approval by default. In August and September 2021, multiple groups of plaintiffs—including brick-and-mortar casino owners, Florida residents living and work near existing casinos, and an anti-gaming non-profit organization—sued in federal court challenging the Secretary’s approval under a host of laws, including IGRA, the Unlawful Internet Gambling Enforcement Act (“UIGEA”), the Wire Act, and the Administrative Procedure Act (“APA”).

Following consolidation of the cases, Judge Dabney Friedrich of the U.S. District Court for the District of Columbia granted summary judgment in favor of the plaintiffs, ruling that IGRA does not authorize sports betting outside tribal territory. In reaching this decision, Judge Friedrich concluded that IGRA—and an earlier D.C. Circuit decision in Amador County v. Salazar—requires the U.S. Secretary of the Interior to affirmatively disapprove of compacts that are inconsistent with the statute, which she determined permits only “gaming on Indian lands.” Judge Friedrich further denied the Seminole Tribe’s request to intervene, determining that under Rule 19 of the Federal Rules of Civil Procedure, the case could proceed without the involvement of the Tribe, which is immune from suit.

Oral Argument: IGRA, the APA, and Indispensable Parties

On Wednesday, December 14, the parties engaged in more than 90 minutes of oral argument before D.C. Circuit Judges Karen L. Henderson, Robert L. Wilkins, and J. Michelle Childs.

Counsel for the federal government emphasized the primary argument appearing in its briefs—that the Secretary of the Interior acted within her authority when she took no action on the Florida compact. In the government’s view, the Florida constitution and state law—which bar sports betting—are not relevant to the Interior Secretary’s analysis under IGRA. Instead, the government cited 25 U.S.C. § 2710(d)(8)(B), which states that the Secretary “may disapprove a compact . . . only if such compact violates” IGRA itself, another provision of federal law, or the trust obligations of the United States to Indian tribes. In the government’s reading, only one of these grounds—violation of IGRA itself—now requires disapproval by the Secretary, following the D.C. Circuit’s holding in Amador County. Whether the compact complied with state law, then, is wholly irrelevant to the Secretary’s analysis and action under IGRA.

In limited discussion of the merits of the compact itself (as opposed to the Secretary’s treatment of it), the federal government, the Seminole Tribe, and the State of Florida argued that while IGRA does govern gaming on tribal lands, it also permits gaming compacts to address gaming in other areas. In brief remarks, counsel for the Seminole Tribe noted that IGRA was not intended to restrict Indian tribes from engaging in certain gaming activities but was instead meant to protect tribal gaming activities from state-government control.

In response, counsel for the plaintiff-appellees emphasized the view that IGRA simply does not permit statewide sports betting where it would contradict with state law. The plaintiffs view the efforts of the federal government, the State of Florida, and the Seminole Tribe as amounting to a transparent end-run around the state’s existing restrictions on sports betting. Notwithstanding the government’s argument that state law is irrelevant to the Interior Secretary’s analysis, neither the parties nor the appellate panel appear to question the conclusion that sports betting is not allowed under state law. Of course, the critical question for the Court is whether “deeming” gaming to occur on tribal land is a permissible measure under IGRA.

Importantly, the judges paid substantial attention to the threshold issue decided by Judge Friedrich last November—whether the Tribe was a necessary party to this case under Rule 19. In the Tribe’s view, the history of exclusion and disregard for tribal interests provides substantial, independent support for requiring the Tribe’s inclusion, and the federal government’s arguments do not adequately advance the important interests at issue for the Tribe. Meanwhile, neither the government nor the plaintiffs support the Tribe’s involvement in the matter: If the Court reverses on Rule 19 grounds, the plaintiffs’ case will likely be dismissed on sovereign immunity grounds, a ruling with potentially important implications for future APA cases.

Looking Ahead

The case now lies with the D.C. Circuit, which could rule on the matter anytime until the end of summer. Wednesday’s panel reserved the lion’s share of its questions for the government and the Seminole Tribe and paid particularly close attention to the aforementioned Rule 19 issue.

If the D.C. Circuit reverses the District Court’s ruling and concludes that the Tribe was an indispensable party to the litigation, the matter might resolve on non-merits grounds, as the Tribe can exercise sovereign immunity. That would be a triumph for the State and the Tribe, as the compact would go into effect and the Tribe would secure a win for tribal sovereignty. For the government, that route would be a mixed bag, as the Court would not upend the Secretary’s discretion under IGRA, but tribal sovereignty would present a greater hurdle to relief under the APA in future matters. Instead, the government hopes that the Court will reverse on the merits, which would also ultimately allow the compact to go into effect.

Alternatively, the Court could affirm, likely via a narrower reading of the types of compacts allowed under IGRA. Such an outcome would bring Florida gaming advocates back to the drawing board, with a focus on the state’s statutes and constitution.

Either way, the decision is likely to have a substantial impact on sports betting in Florida and elsewhere, as other industry players consider whether and how IGRA gaming compacts can pave the way for expanded sports betting.