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Seminole Tribe Stops $350 Million Gambling Payments To State

Emily Michot
Miami Herald
Slot machines are available to play 24/7 at Seminole Hard Rock Hotel & Casino in Hollywood, Fl.

The Seminole Tribe of Florida made good on threats Tuesday by telling Gov. Ron DeSantis it is quitting a long-standing revenue-sharing agreement with the state after negotiations on a new gambling deal went nowhere this spring.

The tribe had warned it would halt the payments, which totaled nearly $330 million last year, because of controversial designated-player card games offered by many of the state’s pari-mutuel cardrooms. The Seminoles --- and a federal judge --- say the games violate part of a 20-year gambling deal signed by the tribe and the state in 2010. That deal, in part, gave the tribe exclusive rights to “banked” card games.

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Sen. Wilton Simpson, a Trilby Republican slated to take over as Senate president following the 2020 elections, worked throughout the legislative session that ended May 4 to finalize a new compact with the tribe.

But after receiving details of a proposed 31-year agreement less than two weeks before the session concluded, DeSantis said he needed more time to consider the plan. The Republican governor told reporters this month he plans to continue talks with the tribe throughout the summer and hopes to reach an agreement for lawmakers to vote on as early as September.

“The tribe believes that the compact and related legislation developed with Senate leadership would have resolved this issue and been mutually beneficial to the state and the tribe,” Seminole Tribal Council Chairman Marcellus Osceola, Jr., wrote in Tuesday’s letter to the governor. “However, the tribe respects your desire to take more time to review the issues and to resume discussions this summer. In the meantime, the tribe will follow its agreement with the state and suspend its revenue share payments until the illegal banked card game issue is resolved.”

Osceola noted that “the tribe and the state have engaged in numerous rounds of negotiations to resolve a number of important issues, including a mechanism to shut down the illegal banked card games,” which were the subject of a November 2016 ruling by U.S. District Judge Robert Hinkle.

Under the 2010 compact, the tribe agreed to pay the state at least $1 billion for five years in exchange for having the exclusive right to offer banked card games, including blackjack, at most of the Seminoles’ Florida casinos. The banked card game portion of the compact expired in 2015, prompting the Seminoles to file a lawsuit against the state over the designated player games.

Siding with the Seminoles, Hinkle ruled that the designated player games were banked card games and violated the exclusivity agreement.

Under the terms of the compact, the tribe is allowed to continue to operate banked games if the state permits "any other person" to conduct such games. Hinkle agreed with the Seminoles that the state-authorized designated player games triggered the exception to the five-year agreement and ordered that the tribe be allowed to continue to conduct banked games for the remainder of the compact's 20-year term.

In a July 2017 settlement between the Seminoles and former Gov. Rick Scott, the state agreed to drop its appeal of Hinkle’s decision and to take “aggressive enforcement action” against pari-mutuels operating banked card games that violate state law. In exchange, the Seminoles agreed to continue making payments to the state until the end of this month.

“Unfortunately, there has not been aggressive enforcement against those games, which have expanded since Judge Hinkle’s decision,” Osceola wrote.

The tribe made its last payment to the state in mid-April, spokesman Gary Bitner said in an email.

GOP leaders downplayed the significance of the Seminoles’ action, noting that the House and Senate did not include revenue from the tribe in their proposed 2019-2020 budget.

Katie Betta, a spokeswoman for Senate President Bill Galvano, said the tribe’s decision “comes as no surprise,” and noted that cessation of the payments won’t have any impact on the $91 billion budget finalized by lawmakers earlier this month.

“The tribe made it clear that payments would end after session. For this reason, President Galvano made the decision in March to take the payments from the tribe out of the budget,” Betta said in an email.

Since the Seminole payments weren’t used to calculate state revenues, “the fact that they will not be made has no financial impact on any government function,” House Speaker José Oliva, R-Miami Lakes, said in a prepared statement.

“While it is our hope that all parties can come to an agreement eventually, we are not relying on any future agreement in present planning,” he said.

DeSantis’ office echoed those remarks, saying the move “was expected,” and would have no impact on the state budget awaiting the governor’s action.

Similarly, Barry Richard, a Tallahassee lawyer who represents the Seminoles, said, “I don’t think it’s a surprise to anybody.”

“It was kind of an agreement that this was going to happen,” Richard told The News Service of Florida in a telephone interview.

Whether stopping the payments could help or hurt the Seminoles in their negotiations with the governor remains unclear.

“I don’t know that they’re thinking of leverage. Look, they’re paying a huge amount of money and what they’re paying for is the exclusive right primarily to offer these card games. And they’re not getting that right now,” Richard said.

The tribe “is not getting what it’s paying for,” he added.

“The tribe’s gone out of its way to be cooperative, by delaying for certainly the last year. The tribe didn’t receive anything for it. They just held off in order to work with the state. The tribe didn’t mean this to be an aggressive move or a punishment or anything. It’s just that they thought that two years of forbearance was fair,” Richard said.

But Nick Iarossi, a lobbyist who represents several pari-mutuels, accused the tribe of “trying to use a power move to leverage the governor and Legislature into agreeing to a one-sided compact to their benefit.”

And, he added, “I don’t think the tribe is going to create much goodwill by withholding payments from a state in which they’re making around $2.5 billion in revenue in exchange for a monopoly on casino games.”

DeSantis could jumpstart the payments again by shutting down the designated-player games, an action that would not require the Legislature’s involvement, Richard said. Designated player games, however, have been lucrative for pari-mutuels.

“To get the payments to resume, they just have to stop the pari-mutuels from violating the law,” Richard said.

In a somewhat conciliatory conclusion to his letter to DeSantis, Osceola said the tribe “looks forward to resuming discussions with you this summer and reaching an agreement that will allow the tribe to resume its revenue share payments as quickly as possible.”

The tribe and the state “have enjoyed a good relationship and we are hopeful that we will be able to reach an agreement that will strengthen that relationship for many years to come.”

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