Text of Steve Geller’s remarks to NCLGS on Sports Gambling. Discussion and case law of legality of Internet Sports; Does the Dormant Commerce Clause affect Sports Integrity laws?; What are appropriate tax rates for Sports Betting?
Below are the lightly edited remarks which I made at the National Council of Legislators from Gaming States (NCLGS) conference in Minneapolis on July 12. I was the Founder of NCLGS in 1995, served as its first President, and currently serve as General Counsel of NCLGS. I have added some case citations and slightly expanded one or two topics.
I have 5-7 minutes to discuss “Sports Betting – The results and lessons after one year.” There were several things I wanted to discuss, and realized that I didn’t have the time. So, instead of discussing one item, I’ll raise questions about 3 items. Most of this Session will be the Q & A, and I’ll be happy to elaborate on the questions I’ve raised in the Q & A.
First, let’s talk about the legality of internet sports wagering. Many states have permitted this, mostly through affiliations with land-based sports gambling sites. In some cases, actual physical registration at a land-based site is required. A different model, however, is the legislation which Maine Governor Janet Mills just vetoed which would not have required any affiliation with a land-based entity.
Many people think that when the US Supreme Court threw out PASPA in Murphy v. NCAA (832 F. 3d 389, 2018) that this meant that states could legalize sports betting, including internet sports betting. I disagree. The Wire Act (18 U.S.C 1084) is still valid law. There have been recent court challenges to the November 2018 OLC opinion that the Wire Act applies to types of gambling other than sports betting; in fact a Federal District Court in New Hampshire (New Hampshire Lottery Commission V. William Barr, opinion 2019 DNH 091P) recently ruled against the OLC opinion, but there has never been any question that the Wire Act applies to Sports Wagering.
Section 1084 (a) of the Wire Act creates criminal liability for using a “Wire Communication” for the transmission of bets or wagers in Interstate or Foreign commerce. Section 1084 (b) creates a “safe harbor” for transmitting information “assisting in the placing of bets… on a sporting event… from a State… where wagering on that sporting event or contest is legal into a State… in which such wagering is legal”.
There have been a series of cases that hold that the Internet is a wire communication, and further that even if a signal starts and ends in the same state, but has been transmitted through a hub, exchange, or server in another state, that means that it’s been used in Interstate Commerce. I have a series of cases which show this. (See, for example, U.S. v. Yaquinta, 204 F.Supp 276; U.S. v. Kammersell, 196 F.3d 1137 10th Cir, 1999; U.S. v. Cohen, 260 F.3d 68 2d Cir, 2001; U.S. v. Lyons, 740 F.3d 702, 1st Cir, 2014) Many people have claimed that the Wire Act didn’t apply in their cases because they were in locations where Internet gambling was legal, or for other reasons. They continued these arguments while they were serving their sentences in Federal Prisons. My advice is not to argue with the people with guns and badges.
Reading all of this together, it seems that there are two serious issues here.
First, it appears to me that unless a completely in-state based system is set up, and that’s what wireless gambling is based on, any type of internet or wireless gambling that goes out over existing systems is probably in violation of the Wire Act. Understand that geofencing is probably not sufficient, that the system would need to be set up in a fashion that ensures that no part of the signal ever leaves the state.
Second, even in land-based casinos, if information on a sporting event is transmitted from a state that hasn’t adopted sports betting, is that legal? Remember that the “Safe Harbor” applies to information on wagering “from a State… where wagering on that sporting event or contest is legal into a State… in which such wagering is legal”. If the Utah Jazz is playing a basketball game against Portland Trail Blazers, and the game is occurring in Utah, where all types of gambling are illegal, can a wager be placed on that game in California, assuming that sports betting is legal in California? I offer no opinion; I merely raise the question.
Second Topic – One that will really excite you – The Dormant Commerce Clause!! Simply put, this Constitutional interpretation says that a law can’t discriminate against out-of-state actors or have the effect of favoring in-state economic interests over out-of-state interests. Several states, for example Delaware, New Jersey, Illinois, and others permit wagering on sporting events in other states, but make them illegal or illegal for college sports in the state where the wagering takes place for integrity reasons. Does this mean that the states are protecting their own sports teams from improper acts, but don’t care about the integrity of sports teams in other states? If so, it probably violates the Dormant Commerce Clause.
Last Topic – What’s an appropriate tax rate?
Let me begin by saying that I don’t know, and I believe that no one else does. Tax rates on Sports Gambling are all over the map. Literally. Nevada is 6.75 %, New Jersey is 8.5% for land based, and up to 14.25% for racetrack based online, Mississippi is 12%, West Virginia is 10%, Delaware and Rhode Island are trickier to figure out because they’re Revenue Sharing models but appear to be 50 and 51%, and Pennsylvania is at 36%, plus very high licensing fees ($10 million).
Everyone thought that if the tax rate was too high on Sports Betting, that the Bookies would have an advantage, and cut into legal gambling. I believe that the Jury is still out on this, and that it’s too early to tell.
The next question in determining tax rates is the question of why you’re having the Sports Betting. In Nevada, where they have a very low tax rate, it seems that the main reason for Sports Betting is to attract people to their casinos and hotels, generating other tax dollars and jobs. In Pennsylvania, the reason appears to be primarily about generating tax dollars. Both are valid, but very different reasons. Understanding this dichotomy, it appears that it may make sense to have different, higher rates for online sports betting, assuming that the online sports betting is set up in a legal manner. I say this because generally online sports betting doesn’t generate the same amount of jobs or economic activity in a state that gambling at bricks and mortar locations generate.
I feel very comfortable in saying that we still don’t know what the effect of higher tax rates will be on promoting illegal gambling, and that states need to look carefully at what their goals are when they set tax rates for sports betting. Is it to maximize gambling tax dollars, or to create jobs, tourism, and overall business taxes?
Proposed Amendment Three to the Florida Constitution (Voter Control of Gambling) is misleading and far more expansive than most people believe. The exact impact of the Amendment is unknown, and it may have an unintended impact on Florida’s two Indian tribes. If it is passed now, it will be extremely difficult to undo.
Summary: Proposed Amendment Three to the Florida Constitution (Voter Control of Gambling) is misleading and far more expansive than most people believe. The exact impact of the Amendment is unknown, and it may have an unintended impact on Florida’s two Indian tribes. If it is passed now, it will be extremely difficult to undo.
The Seminole Indian Tribe of Florida and Walt Disney World have been the two main funders of proposed Amendment Three to the Florida Constitution. This Amendment, entitled “Voter Control of Gambling in Florida”, takes away from the Legislature much of the Legislature’s authority to amend gambling laws in Florida (the extent of which is uncertain), and instead requires a “citizens’ initiative pursuant to Article XI, section 3, in order for casino gambling to be authorized under Florida law.”
Many people mistakenly believe that the “casino gambling” referred to in Amendment Three is limited to bringing in big new casinos. The wording of the Amendment cross-references 25 CFR 502.4, and includes
(a) Any House banking game, including but not limited to –
(1) Card games such as baccarat, chemin de fer, blackjack (21) and pai gow (if played as house banking games;
(2) Casino games such as roulette, craps, and keno
(b) Any slot machines as defined in 15 U.S.C. 1171(a)(1) and electronic or electromechanical facsimiles of any game of chance
(c) Any sports betting and pari-mutuel wagering, including but not limited to wagering on horse racing, dog racing or jai alai; or
The wording of the amendment specifically exempts pari-mutuel wagering by stating “As used herein, ‘casino gambling’ does not include pari-mutuel wagering on horse racing, dog racing, or jai alai exhibitions.” Note that there is no exemption in Amendment Three for the lottery language listed in 25 CFR! Depending on how Amendment Three is interpreted, this could have a significant negative effect on the Florida Lottery.
It is unclear what the actual effect of Amendment Three would be if it passes. This could be the Gaming Attorney/Administrative Law Attorney/Appellate Attorney full employment act. The Amendment may or may not be retroactive, meaning that it may or may not prevent types of gambling that are already legal in Florida. As the Florida Supreme Court determined when they ruled that the language could go on the ballot:
“The opponents primarily argue that the Initiative should not be placed on the ballot because it is unclear whether, if passed, the amendment would apply retroactively and what effect, if any, the amendment would have on gambling that is currently legal in Florida—including gambling that was previously authorized by general law rather than by citizens’ initiative. However, as the sponsor points out, the opponents’ arguments concern the ambiguous legal effect of the amendment’s text rather than the clarity of the ballot title and summary.” (Florida Supreme Court SC16-778, SC16-871)
Thus, the Florida Supreme Court specifically stated that the Amendment has “an ambiguous legal effect” and declined to rule whether or not the amendment is retroactive. If they haven’t determined if it’s retroactive, and say it’s ambiguous , how can voters know what it will do?
The wording of Amendment Three states that “Florida Voters shall have the exclusive right to decide whether to authorize casino gambling in the State of Florida.” What does that mean? Slot machines at Pari-Mutuels in Miami-Dade and Broward Counties are authorized by the Florida Constitution. Would it require a new Constitutional amendment to authorize it in different Counties, or at locations other than Pari-Mutuels? The Florida Lottery has certain types of games. Would a new Constitutional Amendment be required to change the tickets, add locations, or sell the tickets in a new style? Could the Florida Lottery use its existing authority to add keno? Would “skill-based gaming” be permitted as a variation on slot machines, or would they require a new constitutional amendment? Can slot machine manufacturers even bring out new styles or themes of slot machines? There are far more questions than answers.
If Amendment Three is construed broadly, so as to require an initiative for any new types of gambling in Florida, I believe that would eventually bring gambling at Florida’s pari-mutuels to an end. A few decades ago, slot machines were electromechanical. Today they are electronic, and video poker, video blackjack, etc. have been determined to be slot machines because they contain random number generators. I can’t predict what new types of gambling will occur in the decades to come, but I do know that there will be new types of gambling, and if the Seminoles and/or the rest of the U.S. can keep up, but the Florida pari-mutuels and Florida Lottery can’t, then the pari-mutuels and Lottery will fall by the wayside. Would any significant number of people gamble today at a quasi-casino that only had electromechanical games?
Amendment Three could be construed more narrowly and be interpreted as saying that this would only prevent new people from entering legal gambling in Florida. It could be interpreted as saying that because Florida’s current Constitution specifically permits casino gambling at pari-mutuels and specifically permits the Lottery, that casino gambling is already permitted at those locations (maybe just in Miami Dade and Broward, maybe not). Therefore, while no other new operators can be permitted to operate places where casino gambling as defined above occurs, any type of casino gambling would be permitted at the current locations authorized in Florida’s Constitution. It is impossible to tell at this time what the Amendment actually does.
Also, the wording of the amendment seems perhaps intentionally confusing. As a County Commissioner in Broward County, Florida, and a former State Senator, I am frequently asked questions about the proposed amendments. Broward has generally been supportive of casino gambling. Many people seem to be supporting this amendment because they are supportive of expanded gambling in Florida, frustrated with the inability of the Florida Legislature to expand this gambling, and therefore believe that passing this will give more local control, enabling the voters of Broward to pass expanded gambling.
The summary of the Amendment says that “Florida voters shall have the exclusive right to decide whether to authorize casino gambling”, but unless you follow the cross-reference to Article XI, section 3 of the Florida Constitution, the summary never explains whether the vote is a local vote or a Statewide vote. For example, the Platform Subcommittee of the Broward Democratic Party voted to support Amendment Three, because “#Homerule. Gives citizens the right to decide on casinos being built in their cities, instead of Tallahassee”. That is almost exactly the opposite of what the Amendment does. When I explain that Amendment Three requires a statewide petition drive, followed by a statewide vote (not a local vote) and passage by 60%, Broward voters seem horrified, and then oppose it. Please note that the Supreme Court ruling permitting the existing wording was approved by a vote of 4-2. Two Supreme Court Justices ruled that the Ballot Title and Summary were misleading.
In order to begin the initiative required by Amendment Three, it would require signatures from 8 percent of the voters in each of ½ of the state’s Congressional districts, and 8% of the total voters statewide, based on the number of votes cast in the last Presidential election. This is an amazingly high bar, and normally requires an extremely high expenditure of funds for paid petition gatherers. The Supreme Court of Florida would have to approve the wording of the proposed Petition. If all of this occurs, the proposed initiative would need 60% of the votes cast in order to pass. It is worth noting that many experts believe that Amendment Three will pass despite these obstacles. As of the date that I write this, it is estimated that the supporters of Amendment Three have raised over $27 million dollars, without any well-funded opposition thus far.
It seems quite clear that if Amendment Three does pass, it would be extremely difficult and expensive to try and rewrite the Constitution again to undo or amend this language to permit additional types of “casino gambling” in Florida. It is clear that an investment of tens of millions of dollars would be required to attempt to change the gambling laws, with no guarantee of success. Few if any companies would be willing to make that commitment. It may make sense for the Seminole Tribe to invest over ten million dollars because if Amendment Three passes, they believe that they would have a monopoly on all new types of gambling on Florida, including Sports Betting. It would make far less economic sense for any one company, which would be one of many companies engaging in gambling in Florida, to put up similar dollars without the same exclusivity that the Seminoles (and potentially the Miccosukees) would enjoy.
Finally, one of the biggest questions remaining is whether or not the Seminole Tribe of Florida may suffer from the law of Unintended Consequences. The Seminole Tribe clearly intended Amendment Three to not apply to Seminole Gambling. The wording of the Amendment states “In addition, nothing herein shall be construed to limit the ability of the State to negotiate gaming compacts pursuant to the Federal Indian Gaming Regulatory Act…”(emphasis added) However, because of the wording that is used in the Amendment (and in a twist that only Lawyers can love), this may not be sufficient.
On November 14, 2007, and against my advice, Governor Charlie Crist signed a “Compact” with the Seminole Tribe of Florida. Former Governor Crist is a close friend, and I warned him in advance that the Governor does not have the authority to enter into a compact under the Indian Gaming Regulatory Act (IGRA). The Governor has the authority to negotiate a compact, but he does not have the authority to execute the compact without Legislative approval. When Crist signed the Compact, he was sued five days later by the Florida House of Representatives. The Florida Supreme Court decided this issue in Florida House of Representatives v. The Honorable Charles J. Crist, Jr., (999 So. 2d 601). The Court chose not to take up the general question of whether the Governor has the authority to enter into a Compact with Florida Indian tribes under any circumstances without Legislative approval, although they cited to several other State and Federal decisions, and in each cited case, the Governor was ruled not to have such authority. Following judicial principles of deciding cases on narrow grounds when possible, the Supreme Court ruled that it would violate the Constitutional Separation of Powers for the Governor to enter into a compact with the Indian Tribes when the compact gives the Indians a type of gambling otherwise illegal in Florida. The Court stated at page 613:
“The House claims that the Compact violates the separation of powers on a number of grounds.8 We find one of them dispositive. The Compact permits the Tribe to conduct certain Class III gaming that is prohibited under Florida law. Therefore, the Compact violates the state’s public policy about the types of gambling that should be allowed. We hold that, whatever the Governor’s authority to execute compacts, it does not extend so far. The Governor does not have authority to agree to legalize in some parts of the state, or for some persons, conduct that is otherwise illegal throughout the state.”
Crist negotiated a Compact with the Seminoles, but it required Legislative approval or ratification. The wording of Amendment Three only exempts negotiation of a Compact from Amendment Three. Of course, the New Governor of Florida will be able to negotiate a compact with the Seminole or Miccosukee tribes, as Governor Crist did. However, there is nothing in the language of Amendment Three that appears to exempt Legislative approval or ratification from Amendment Three. I believe that it would have been far clearer if Amendment Three said ““In addition, nothing herein shall be construed to limit the ability of the State to negotiate and ratify gaming compacts pursuant to the Federal Indian Gaming Regulatory Act…”(emphasis added). The word ratification is missing from Amendment Three. I know that the Seminoles feel that the wording of Amendment Three is sufficient to cover both negotiations and ratification. I know that other Lawyers who I respect have a different opinion. I offer no conclusion here, but I believe that this is another ambiguity which may need to be decided by the Florida Supreme Court, if Amendment Three passes by the required 60% vote.
After review of legal literature, I slightly revise my opinion of Sports Betting over the Internet
On May 31, 2018, I spoke at the GigSe conference in Miami on the topic of Sports Betting after the recent Supreme Court ruling invalidating PASPA. My comments reflected the same position that I made in my last blog post, that the Wire Act still appeared to prohibit Sports betting, even from states where such gambling is legal to states where such gambling is legal. During the Question and Answer period, one person asked me if I was familiar with Former U.S. Solicitor General Ted Olson’s remarks that because PASPA was gone, that meant that Sports Betting among states could be legalized, and therefore the Wire Act would no longer apply. I advised that I had not heard that Olson had made these remarks, but that I’d check.
I cannot find anywhere that Olson has flatly come out and said that the Wire Act doesn’t apply any longer. I have located articles where he has questioned whether the Wire Act still applies. I have reviewed the literature on this, and I have reached several conclusions. These conclusions are my current opinion, are based upon my own knowledge and the opinions that I have read from or discussed with other experts in the field. They are still preliminary, and are subject to change, as I have not researched this area as thoroughly as I would if I was representing a client in this area. With all of those caveats, here is my opinion.
The majority of the opinions from people that I respect seem to range between saying that the Wire Act still applies to saying that the Wire Act may still apply, but that they have some questions. The majority seem to believe that the “safe harbor” section of the Wire Act would permit sharing of information from a state where sports betting is legal to a state where sports betting is legal, although it would not permit the actual betting over the internet, even if sports betting is legal in that state.
I have largely ignored the many articles written by non-lawyers, who appear to believe that if they want it to be legal, it must be legal, or whose major source of information is what they read in a general purpose newspaper. In reading articles, papers, and presentations written by attorneys, the predominant position seems to be “that’s a good question.”, or “The Wire Act currently seems to prohibit it, but it would require litigation or a ruling from the USDOJ to conclusively respond”, or some variation thereof.
Having now reviewed the literature, I slightly amend my prior position, from saying “it currently appears to me that the clear wording of the Wire Act and the December 2011 DOJ memo both, at a minimum, continue to prohibit internet wagering on sports betting” to saying that that “the clear wording of the Wire Act and the December 2011 DOJ memo both, at a minimum, appear to continue to prohibit internet wagering on sports betting but it would require litigation or a ruling from the USDOJ to conclusively respond”.
U.S. Supreme Court ruling on Sports Betting may have less impact in Florida than many believe
The United States Supreme Court has issued its ruling in Christie v. NCAA, Case 16-476, stating that the Professional and Amateur Sports Protection Act (PASPA) is unconstitutional. Many people mistakenly think that this has legalized Sports Betting. I expect the ruling to be far less consequential than many think, especially in Florida.
No one knows how much is wagered on illegal Sports Betting in the US today because it’s, well, …illegal. I’ve seen estimates ranging from $107 billion to $300 billion. I think that today’s accurate number is probably somewhere between $150 billion and $200 billion, based on averaging the numbers I’ve seen, even though they’re only guesstimates. Some people assume that all of those wagers and more will immediately go into legal Sports Betting. I disagree.
People enjoy the traditional Office Pool on things like the NCAA Basketball tournament, and other events. Most of those people won’t stop the pools to go wager at a casino. Some people wager on credit with illegal bookies who have “creative” ways of collecting debts. Those people will still go to bookies because of the credit issue. States will tax sports betting (some will do so with heavy taxes), private operators will want to make a profit, and the Sports Leagues have already demanded a cut. I think that the Sports Leagues and states are expecting a larger cut than will prove to be feasible. With all of those takeouts, a bookie should be able to offer better odds.
The biggest issue about the size of the market is whether or not Sports Betting will be able to be offered online. Most boosters say yes, but I don’t know why. I believe that Sports Betting will, at least initially, be limited to bricks and mortar casinos.
Many people think that the famous December 23, 2011 “Christmas Surprise” ruling from the United Stated Department of Justice, Office of Legal Counsel, authorized internet gambling, including Sports Betting. Incorrect. The OLC ruling was much more limited. It was based on an acknowledged conflict between the prior interpretation of the Wire Act of 1961, and the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA). The interpretation of the Wire Act had been that any type of Internet Gambling was illegal, but UIGEA specifically excluded Intrastate online gambling from penalties. OLC issued the Christmas Surprise ruling announcing that their longtime previous interpretation of the Wire Act was incorrect, and that the Wire Act should only apply to Sports Betting, and that only Sports Betting is illegal over the internet. Department of Justice Ruling December 2011 on Internet Gambling. Let me include quotes from that opinion:
“We conclude that interstate transmissions of wire communications that do not relate to a “sporting event or contest,” 18 U.S.C. § 1084(a), fall outside of the reach of the Wire Act. Because the proposed New York and Illinois lottery proposals do not involve wagering on sporting events or contests, the Wire Act does not, in our view, prohibit them.”
“The Criminal Division’s conclusion that the New York and Illinois lottery proposals may be unlawful rests on the premise that the Wire Act prohibits interstate wire transmissions of gambling-related communications that do not involve “any sporting event or contest.” See Crim. Mem. at 3; Crim. Supp. Mem. at 2. As noted above, both Illinois and New York dispute this premise, contending that the Wire Act prohibits only transmissions concerning sports-related wagering… We conclude that the Criminal Division’s premise is incorrect and that the Wire Act prohibits only the transmission of communications related to bets or wagers on sporting events or contests.”
This provision contains two broad clauses. The first bars anyone engaged in the business of betting or wagering from knowingly using a wire communication facility “for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.” Id. The second bars any such person from knowingly using a wire communication facility to transmit communications that entitle the recipient to “receive money or credit” either “as a result of bets or wagers” or “for information assisting in the placing of bets or wagers.” Id.5”
“Reading the entire subsection, including its second clause, as limited to sports-related betting also makes functional sense of the statute. Cf. Corley v. United States, 129 S. Ct. 1558, 1567 n.5 (2009) (construing the statute as a whole to avoid “the absurd results of a literal reading”). On this reading, all of subsection 1084(a)’s prohibitions serve the same end, forbidding wagering, information, and winnings transmissions of the same scope: No person may send a wire communication that places a bet on a sporting event or entitles the sender to receive money or credit as a result of a sports-related bet, and no person may send a wire communication that shares information assisting in the placing of a sports-related bet or entitles the sender to money or credit for sharing information that assisted in the placing of a sports-related bet.”
Based on the DOJ opinion, a consensus has emerged among serious attorneys that the Wire Act prohibits interstate internet gambling, but permits intra-state internet gambling if authorized by the legislature of that state. It is not clear if interstate compacts are permitted. Information on shared pari-mutuel pools through the internet, although apparently otherwise prohibited by the Wire Act, are expressly permitted through the later Interstate Horse Racing Act.
It currently appears to me that the clear wording of the Wire Act and the December 2011 DOJ memo both, at a minimum, continue to prohibit internet wagering on sports betting. It is not clear to me at this time if even sports betting at local brick and mortar casinos in states that authorize sports betting would be permitted if that wagering is part of interstate pools. Remember that the Wire Act prohibits not only wagering on sport events, but also prohibits “ information assisting in the placing of bets or wagers.”
Finally, the prospects are even worse in Florida. Florida is unlikely to have an opportunity to have a Special Session of the Legislature prior to the elections. There will be a referendum on the November ballot pertaining to voter control of gambling that may or may not impact sports betting. It is also certainly possible that competition between the different gambling industries in Florida, and opposition from the same forces that are pushing the anti-gambling referendum (such as Disney) may result in an inability of Florida to pass any sports betting legislation.
I Was Right! No Special Session.
Two days ago I predicted that there would not be a Special Session on Gaming in Florida. I said that the issues were too complex, that the House and Senate were too far apart, and that the Seminole Tribe would have to pay less or nothing in taxes to the State, depending on how much exclusivity they still had.
Yesterday evening, the Legislature declared that they had reached an impasse, and would not be holding a Special Session on gaming. According to the Tampa Bay Times, “The decision came after weeks of backroom diplomacy between Sen. Bill Galvano, R-Bradenton, the incoming Senate president and Rep. Jose Oliva, R-Miami, the incoming House speaker. ” An additional reason that was stated for not calling a Special Session was fears that other things might get added, and that the Session would get pout of control.
I had warned in my last post that the House wanted to oppose expansion of gambling, while the Senate was willing to expand it. I also commented on the discussions about “designated player” or “player banked” card games.
According to the Tampa Bay Times “Among the proposals under consideration between the House and Senate was a plan to allow the tribe to reduce its payments to the state by about $160 million a year. To make up the lost revenue, lawmakers proposed allowing the lucrative “designated player” card games, such as Three-Card poker and Ultimate Texas Hold ’em, at parimutuels and applying a tax to those proceeds.
Designated player card games have become the latest opportunity to breathe new life into ailing dog tracks around the state. Melbourne Greyhound Park and the Jacksonville Kennel Club, for example, have been able to hire dozens of new employees because of the revenue. But a federal court has declared the games also violate the compact because they play like banked card games, and the tribe has threatened to withhold payments to the state if regulators don’t halt those games by May 2019.
However, in order for many in the House to claim success in the chamber that opposes gambling, they needed to be able to say there has been significant gaming reduction in the state’s gaming footprint. Oliva had proposed requiring the parimutuels that add slot machines to obtain a gaming license from an existing brick and mortar operation, including cardrooms.
[Senate President Joe] Negron said that proposal, however, was objectionable to many in the Senate, where legislators representing rural areas expressed concern about losing jobs.”
The link to the Tampa Bay Times Article can be found here: http://www.tampabay.com/florida-politics/buzz/2018/04/26/expand-gambling-in-florida-lawmakers-fold-will-let-voters-decide/
Now we’ll have to see what happens with Amendment Three, the proposed Amendment to the Florida Constitution on voter approval of gambling changes.
Will the Florida Legislature Call a Special Session in the near future to try and pass a gambling bill?
There has been discussion of whether we will have a Special Session in Tallahassee to discuss and hopefully pass comprehensive gambling legislation. I will discuss the possibility of whether a Special Session will be called, and, if so, whether or not it will result in actual legislation.
During the twenty years that I served in the Florida House and Senate, I learned the most basic rule of Special Sessions: “Don’t call one until you have an agreement on what the Legislature will pass.” I can say definitively as of today that the Legislature has not reached an agreement (yet), so as of today, they will not be calling a Special Session.
There are reasons why a Special Session may be called. There is a proposed amendment to the Florida Constitution known as Amendment Three which would take away from the Legislature most authority to amend gambling legislation and would instead require voter approval of any changes. This Legislation has been largely funded by the state Amusement Park industry (especially Disney), and has also received substantial support from the Seminole Indian Tribe. I will write more about Amendment Three in a future blog post, but it is sufficient for now to say that many in the Legislature think that a Special Session may be their last chance to make major revisions to the gambling laws of Florida.
Another reason to call a Special Session is more basic politics: Money. Fundraising. The Florida Legislature has finished its Regular Session and is not scheduled to meet again until after the November elections. The current Speaker of the House, Richard Corcoran, is widely believed to be running for Governor of Florida, although he hasn’t formally filed yet for that position. His best remaining chance of substantial fundraising is from the Gambling industry, if there are discussions of having a Special Session. The two negotiators from the House and Senate on gambling are Speaker-Designate Jose Oliva, and President-Designate Bill Galvano. Their duties as Speaker/President Designates are to raise money for their candidates in their respective Chambers. I regard all three people I’ve mentioned as honorable people, but the ability to raise some additional money for their caucuses should not be overlooked.
I have been told that the current President of the Florida Senate, Joe Negron, who is not running for anything and who has even discussed resigning his seat in the Senate when his term as President is up, has given a deadline to reach an agreement, as he doesn’t want this issue lingering. I was told that the original deadline expired last week, and that the Designates have a short time remaining to reach an agreement. As an aside, I must add an editorial comment that I think Joe Negron has been a great Senate President, and I personally would hate to see him resign and miss his last two years in office.
At the end of the day, I believe that there either will be no Special Session, or the Special Session will be unsuccessful. They’re simply too far apart. The Speaker, who certainly has been sounding like he’s running for Governor, needs to try and be the most conservative guy in the room to do well in a Republican primary. That means he needs to at least sound like he’s passed a conservative bill, reducing gambling. The Senate has been in favor of permitting slot machines in the approximately eight other counties where referendums have passed permitting slot machines, and the Senate has also been in favor of continuing “designated player games”, also known as “player-banked games”, as opposed to House-banked games. Those at least sound like expansions of gambling, and the proposed compromise of closing down some dormant pari-mutuel permits sounds like an insufficient reduction to be seen as a reduction in gambling, if the other items are added.
Many legislators don’t seem to understand the concept of exclusivity under the Indian Gambling Regulatory Act (IGRA). The Seminoles are currently paying the State of Florida nearly three hundred million dollars per year. In exchange for this, the Seminoles have been given statewide exclusivity on house-banked card games, and regional exclusivity on slot machines. Some legislators seem to think that slot machines can be expanded statewide without affecting the regional exclusivity, and thus the required payments under the existing Seminole Compact. I believe that they’re wrong.
When considering how far apart the House and Senate are, and when further adding in the affect that offering additional slot machines to pari-mutuels throughout the State would have on the Seminole Compact, I believe that there either will be no Special Session on Gambling, or, if there is, it will be unsuccessful.
My former Law Firm, Greenspoon Marder (GM), urged me to discontinue my blog in 2015, so I did. GM is a National Law Firm, and I was their Government Affairs Director and Chaired their Gaming Law Practice Group. When I was elected to the Broward County Commission in November of 2016, representing about 250,000 people in 7 cities, I reluctantly had to resign from GM because of conflicts with them appearing frequently in front of the Broward County Commission. I still have great respect and affection for GM, and still think that they’re a great firm.
Since November of 2016, I’ve had my own law firm, named, not surprisingly, Geller Law Firm. I continue to do a substantial practice in Gaming Law, and continue to speak and be interviewed on Gaming Law issues. For example, last weekend I spoke at the American Bar Association Business Law Section Spring Meeting. The topic was Indian Gaming Law in general, and the Seminole Indian Gaming Compact in particular. I will be speaking at the next National Council of Legislators from Gaming States (NCLGS) conference in July in Cleveland. I’ve continued to advise national Banking and Investment houses on gaming issues, and have continued to offer advice and legal opinions to clients and the media.
My new website should be completed within the next few weeks, and I’ll give the website address when it’s finalized. In the meantime, anyone that needs to reach me can reach me at Steve@gellerlawfirm.com .
I will be starting to blog again, and should have a gaming-specific article posted by next week.
Feel free to contact me.
Greenspoon Marder and Steve Geller play major roles at Florida Gaming Conference; Questions arise as to whether portions of the Seminole Gaming Compact will be renewed; NBA commissioner Adam Silver writes in favor of legalizing Sports Wagering; Florida Revenue Estimating Conference meets, discusses impact of Dania Casino and Seminole Compact; “Adult Arcade” raided in North port, Florida, attorney claims arcade completely legal.
- Greenspoon Marder was the Presenting Sponsor at the Florida Gaming Conference, hosted by Spectrum Gaming, held November 10 and 11 at the Hyatt Hotel in Downtown Miami. I Spoke on the panel “Gaming Outside of South Florida – The Right Move?”, Moderated the panel “Legislative Update – What’s Next for Florida”, and introduced both Keynote Speakers, Senator Maria Sachs, and City of Miami Mayor Tomas Regalado.
- Numerous stories were written about the Florida gaming congress, including by Nick Sortal from the Fort Lauderdale Sun Sentinel, who wrote about the fears that the South Florida Casino market is saturated, and Nick Wingfield, who wrote that Churchill Downs is buying mobile games company Big Fish Games.
- Probably the biggest issue facing Florida this year is whether or not that portion of the Seminole Compact restricting anyone other than the Seminoles from having banked card games will expire or be renewed. The Compact has a 20 year term, but that portion dealing with banked card games and increased revenue sharing was only for 5 years, and expires in 2015. The Tampa Tribune wrote an article entitled “New Senate head puts tribal gaming into question”, which discusses the possibilities that the Compact may not be renewed. Although Governor Rick Scott, a proponent of the Compact, was re-elected, the article discusses that the Legislature may be more assertive on these issues this year, and may not be supportive of extending the Compact. The new Senate President, Andy Gardiner, is from Orlando, where Disney World, which opposes gambling, is influential. Gardiner opposes gambling, and has said that with Florida’s recovering economy, he is prepared to do without the Seminole revenue sharing. Senate Majority Leader Bill Galvano, who is expected to play a major role in any gambling bill, says that when the Senate discusses the Compact, he expects that all other gambling issues will be discussed as part of compact negotiations.
- NBA Commissioner Adam Silver has written an op-ed in the New York Times stating that wagering on NBA games should be legalized. This is the first time that I have seen that the head of any Major League Professional Sports League in the United States has come out in favor of legal sports wagering, which would violate the Professional and Amateur Sports Protection Act (PASPA). Silver said that Congress should pass legislation to tax, regulate, and reform wagering on Sports betting. Silver did not provide specifics on what type of legislation he would like to see.
- The Washington Post wrote an excellent story talking about Silver’s call for legal sports gambling, and wrote about the history of sports and gambling, including a discussion of where sports gambling stops and fantasy sports wagering begins.
- The Tampa Bay Times covered the meeting of the State of Florida Revenue Estimating Conference, which estimated that the closing of Dania Casino and Jai Alai should cost the state about $3 million dollars in lost tax revenue. The Revenue Estimating conference described that loss as relatively insignificant compared to the potential loss if Florida does not renew the Seminole gaming Compact.
- The Sarasota Herald Tribune wrote an article which demonstrates the difficulty in enforcing the laws against internet cafes and “adult arcades” in Florida. Law enforcement agents raided “The Spin Depot”, a North Port, Florida arcade. Law enforcement removed machines and records from the arcade. Three people, including a former City Commissioner, were booked into the County Jail. The attorney defending the arcade and the Commissioner stated that he believed that the business “operated lawfully as an arcade amusement center and that no illegal activity took place.
DCA rules in favor of Magic City on Pari-mutuel permit, racing date battle between Gulfstram and Calder ends, New Cruise-to-Nowhere in Jacksonville, Steve Geller speeches
The last month has been very busy from both a gaming law perspective here in Florida, both in terms of new issues to deal with in Florida, as well as my own speaking schedule.
- The First District Court of Appeals in Florida has recently entered a ruling on a long-standing dispute over whether West Flagler Associates, Ltd. In Miami, the parent company of Magic City Casino, is entitled under Florida law to one or more summer jai-alai permits under a law that has existed for many years, but has not been used until the last three or four years. There have been different interpretations of this law, and the DCA entered an order overruling the interpretation of the Florida Division of Pari-Mutuel Wagering. According to Miami Today, The DCA ordered the DPMW to reconsider its ruling; it is not clear whether the DPMW will actually issue the permit. As of the time of writing this blog, it is not clear whether either side will seek to appeal the ruling to the Florida Supreme Court. A similar case involving an application from Hialeah Park is currently pending in front of the Third DCA.
- The battle over thoroughbred racing dates in Miami Dade County has existed since before the County was called Miami Dade County. It now appears to be over. Originally, this was a three way battle between Hialeah, Gulfstream, and Calder racetracks. Hialeah then ceased thoroughbred racing, and Gulfstream and Calder remained to fight. Now, according to the Tampa Times, the parent company of Gulfstream (the Stronach Group), and the parent company of Calder (Churchill Downs) have reached an agreement where Churchill Downs will no longer operate thoroughbred racing at Calder. Instead, the Stronach Group will operate the racing dates located at Calder, while Churchill Downs will continue to operate the casino operations at Calder. Under Florida law, there must be a minimum of 40 days of thoroughbred racing at Calder for them to continue to keep their cardroom and casino permits. This deal also provides for Churchill Downs to sell its 50% stake in HRTV (a racing broadcast network) to Stronach.
- According to Jacksonville.com (the Florida Times Union), a new gambling boat based in Mayport is set to begin operations. Cruises to Nowhere are governed by the Johnson act. Gambling is only permitted outside of the territorial limits of the United States (three miles from Jacksonville). While South Florida was once home to many Cruises to Nowhere, the presence of Indian and pari-mutuel casinos has greatly diminished the presence of Cruises to Nowhere in Florida.
- According to multiple news sources, Sheldon Adelson , casino magnate from the Las Vegas Sands, has contributed $2.5 million dollars to the Drug Free Florida Committee, a group formed to oppose Amendment Two to the Florida Constitution. Amendment Two would permit the legal use of Medical Marijuana. The major committee funding efforts to pass Amendment Two is United for Care. John Morgan is both the major funder of United for Care, and is the senior Partner of Morgan and Morgan, the firm which employs and has been so helpful to Governor Charlie Crist. Adelson has been a substantial contributor to Governor Rick Scott. It is widely speculated that Adelson’s contribution to Drug Free Florida is designed to help Scott in his reelection campaign.
- I have had a busy early summer. On May 20 I was at the Borgata Hotel Casino in Atlantic City as the Moderator of the East Coast Gaming Conference panel entitled “Florida- Ripe for Major Expansion?” The Panelists were Florida State Representative Jim Waldman, the Ranking Democrat on the Florida House Gaming Committee; Isadore (“Izzy”) Havenick, VP of Magic City Casino and Naples /Fort Myers Dog track; Lonny Powell, CEO of the Florida Thoroughbred Breeders and Owners Association; and Rod Matamedi, Senior Economic Associate, REMI. I also attended the National Council of Legislators from Gaming States meeting at the Hyatt Regency Hotel in La Jolla, where I spoke on several committees. I spoke at the Pari-Mutuel Committee on innovations in pari-mutuel wagering, I gave the Committee on Casinos an update on enforcement in Florida of the ban on “Internet Cafes”, and I spoke to the State-Federal Relations Committee on the current state of federal Internet Gambling laws, and my prognosis for additional Federal Legislation this year. To the best of my recollection, this was the only time any speaker has spoken at three different committees at any NCLGS meeting.
Steve Geller, Esq., is the former Minority Leader of the Florida Senate, and a Shareholder at Greenspoon Marder, P.A. He served on the Gaming committees of the Florida Legislature during the entire 20 years that he served in the House of Representatives and Senate, including serving as Chair of the Committee. He is an “A-V” rated lawyer, and chairs the Gaming Law Practice Group at Greenspoon Marder, where he has represented State and National clients. Greenspoon Marder is a law firm with approximately 160 attorneys in Florida, and the Gaming Law Practice Group can call on the expertise of other attorneys in the firm, in areas such as transactional law, labor and employment law, litigation, appellate law, etc.