With Recent FL Fallout, Could MN Use Tribal Compacts For Sports Betting?

When the US Supreme Court recently declined to hear a Florida case, it effectively left the Seminole Tribe in full control of the Sunshine State’s online sports betting market.

Speculation began immediately about what it could mean for other states with substantial tribal gaming interests. That includes Minnesota, which has failed to legalize sports betting through the legislative process the last few years.

The question is, could the state’s tribes bypass the Legislature and offer Minnesota sports betting on their own through tribal compacts?

No-decision creates a legal precedent

The Seminole Tribe of Florida garnered exclusive control of online sports betting by negotiating a new tribal gaming compact with the state in 2021. Under the deal, the Seminoles’ Hard Rock Bet app became the only online sportsbook available in the state.

Florida pari-mutuel betting operator West Flagler Associates filed lawsuits claiming the new compact was illegal. After a series of hearings and appeals in state and US District Courts, one case made it to the Supreme Court for its consideration.

On June 17, the High Court declined to hear the case. That left intact an Appeals Court decision that overturned a previous ruling that voided the compact for violating the federal Indian Gaming Regulatory Act.

The no-decision by the Supreme Court has set a legal precedent. Tribes can offer online sports betting through a gaming compact.

It was argued that tribal compacts should cover only gambling options on tribal lands. But Florida’s “hub-and-spoke” model, in which the sports betting operation’s servers are on tribal land but wagering online is permitted statewide, establishes a new framework other tribes could utilize via compacts.

Minnesota has gaming compacts with 11 tribes

There are some key differences between the Seminoles in Florida and Minnesota’s tribes.

First off, tribal gaming compacts are not uniform. Each state negotiates compacts with its tribes, and none are the same.

Another difference is the Seminoles are the only gaming tribe in Florida. Minnesota has negotiated 22 gaming compacts with 11 tribes, according to the Minnesota Department of Public Safety.

Adding sports betting would likely require negotiating new compacts with each Minnesota gaming tribe, a long and arduous process.

California is in the same boat as Minnesota. It has separate gaming compacts with 67 tribes, according to the California Gambling Control Commission.

Most MN gaming compacts date back 30-plus years

In Minnesota, there are two primary tribal compacts on Class III gaming. One permits video slot machines, video poker, and other video gambling games. The other allows blackjack card games.

The state began negotiating the compacts in the late 1980s. All 22 compacts were completed by 1992.

Compacts can be (and have been) amended between tribes and the state, with the governor signing off on any changes. They have generally been technical amendments related to existing games. But in the past couple of years, the blackjack compacts for a few tribes have successfully been amended to allow non-blackjack Class III card games.

Earlier this year, Minnesota’s Running Aces horse racetrack and casino filed a federal lawsuit that, in part, alleges that offering non-blackjack card games at the tribal casinos is illegal and not specifically allowed under the compacts.

While the Indian Gaming Regulatory Act considers sports betting as a type of Class III gaming. renegotiating Minnesota’s decades-old compacts with each tribe to add a new form of gaming would be a heavy lift that would almost certainly face legal challenges and political pushback.

MN tribal gaming compacts don’t include revenue-sharing

Another key difference between Minnesota’s and Florida’s tribal gaming compacts is the revenue-sharing components. The Seminoles agreed to a deal where the state gets a piece of their total revenue. On the other hand, Minneosta tribes and the state government don’t have that same agreement.

In other words, Florida has a substantial financial interest in negotiating the Seminoles’ compact to include sports wagering. The tribe pays the state 10% of its online sports betting revenue. According to the Seminoles, Florida received $357 million in revenue from online sports betting between December and May.

It’s unclear whether Minnesota’s state government would want to engage with the tribes to negotiate new compacts. Officials probably prefer waiting on state lawmakers to pass a bill.

In a recent sports betting measure, legislators decided not to tax revenue generated at retail sportsbooks on tribal lands. However, they would tax online sports betting revenue at a 22% rate.

Outside of negotiating revenue-sharing terms (a potential non-starter for the tribes), the state would receive no cut from statewide online sports betting if it was legalized via new compacts.