By Jeff Ifrah, of Ifrah Law
The Court of Appeals for the D.C. Circuit issued a decision in late June in West Flagler Associates, Ltd. v. Haaland, that will have meaningful implications for the future of online sports betting in Florida along with the interpretation of the Indian Gaming Regulatory Act (“IGRA”).
By way of background, in the spring of 2021, the State of Florida and the Seminole Tribe announced a compact under 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. The Tribe appealed the denial of its motion to intervene, and the Secretary appealed the grand of summary judgment for Plaintiffs.
On June 30, 2023, the Court of Appeals issued its decision, granting judgment in favor of the Secretary. In sum, the Court rejected the District Court’s interpretation of the Compact, concluding that the lower court had “erred by reading into the Compact a legal effect it does not (and cannot) have, namely, independently authorizing betting patrons located outside of the Tribe’s lands.” Although the Compact discussed activities taking place outside of tribal lands, it did not approve and/or authorize such activity. The mere discussion of such activities did not constitute legal approval or violate the terms of IGRA.
In reaching its conclusion, the Court boiled down IGRA’s complex regulatory scheme to two main principles. First, IGRA abrogated tribal sovereign immunity for certain gaming activity on Indian lands by regulating gaming activity on Indian lands – but nowhere else. Put simply, IGRA generally does not restrict or regulate tribal, or any other activity, outside of Indian lands. Second, under IGRA’s provisions, a Class III gaming compact to authorize gaming on Indian lands may include discussion of a “litany of other topics,” including “any other subjects that are directly related to the operating of gaming activities.” In other words, IGRA does not prohibit a gaming compact from discussing activities that may or may not take place outside of Indian lands. Mere discussion of such topics, the Court reasoned, did not amount to approval of those activities.
Relying on this framework, the Court reasoned that the Compact at issue did not independently authorize betting by patrons located outside of the Tribe’s lands. The Court highlighted the Compact’s language, which discussed “wagers on sports betting ‘made by players physically located within the State using a mobile or other electronic device,’ which are ‘deemed to take place exclusively where received.’” This language, the Court emphasized, does not say that such wagers are authorized by Compact or any other legal authority. Rather, “it simply indicates that the parties have agreed that they both consider such activity . . . to occur on tribal lands.” Simply put, the Compact authorized only the Tribe’s activity on its own land and its language had no effect on the lawfulness of any other related activity (such as the placing of wagers from outside Indian lands) under state law or tribal law.
The Court also addressed the Plaintiffs’ non-IGRA arguments, which contended that the Compact was unlawful under (1) the Wire Act; (2) the Unlawful Internet Gambling Enforcement Act (“UIGEA”); and (3) the Fifth Amendment’s Equal Protection Guarantee. All three arguments, the Court concluded, failed on the merits.
The Plaintiffs contended that realistic implementation of the Compact would require use of wire facilities operating in interstate and foreign commerce, thereby violating the Wire Act. The Court rejected this argument for several reasons. First, the Compact did not independently authorize wagers placed by patrons located outside of Indian lands. Furthermore, the Court highlighted, the Compact contained express language that the Tribe “shall ensure” that its sports book operates in strict compliance with the Wire Act. Additionally, under the Plaintiffs’ theory, even online betting by patrons who are physically located on Indian lands would violate the Wire Act, “because some of those bets may be routed off of Indian lands into a state and then back.” The Court ruled that there was “no support” for such a “novel and sweeping” application of the Wire Act. Finally, even if the Compact did independently authorize activity outside of tribal land (which it did not), IGRA does not require the “Secretary to disapprove a compact based on hypothetical violations of federal criminal law that turn on how the Compact is implemented as well as the mens rea of the would-be bettors.” The Plaintiffs’ UIGEA argument failed for largely the same reasons.
Next, the Court turned to the Plaintiffs’ argument that the Secretary’s approval violated the Fifth Amendment’s equal protection guarantee because the Compact “impermissibly grants the Tribe a statewide monopoly over online sports betting.” The Court rejected this argument, reasoning that even if the Compact “authorized” all the activity in the Compact, it would survive rational basis review given the governmental interest in promoting the economic development of federally recognized Indian tribes, which was already recognized as a legitimate legislative purpose.
Finally, the Court upheld the District Court’s denial of the Tribe’s Motion to Intervene, albeit on different grounds than those articulated by the lower court. The Court concluded that given its ruling in favor of the Secretary, the Tribe would suffer little, if any, prejudice, were it precluded from intervening. The Court noted, “there is little practical difference between a Rule 19 dismissal on the one hand, and a judgment for the Secretary on the other.” Simply put, because the Judge had ruled in favor of the Secretary – ultimately upholding the Compact and providing the outcome sought by the Tribe– no prejudice would result from the Court’s denial of the Motion to Intervene.
Although the Court emphasized that its holding was intended to be narrow, the implications of its decision are undeniable. The Court’s interpretation of IGRA and the Compact itself will have a meaningful impact on the availability of sports betting in Florida. Indeed, perhaps other states will take note and utilize similar language in their own Class III gaming compacts.
