DraftKings, FanDuel Fight to Crack Tribe's Sports-Bet Monopoly

(Bloomberg) -- The Seminole Tribe, whose gambling empire rakes in $3 billion a year for its 4,200 members, is fighting a campaign by some of the biggest names in gambling to take a piece of its Florida sports betting monopoly.

Two wager giants, DraftKings Inc. and FanDuel Inc., have pumped $10 million each into getting a referendum on Florida ballots next year to legalize sports betting outside Seminole lands. Las Vegas Sands Corp. kicked in $17 million for a separate referendum to open up gambling in Jacksonville and the Panhandle. They've hired hundreds of signature gatherers, backed by high-powered lobbyist-consultants, and launched a media campaign for a piece of the tribe's gambling deal, recently enshrined in a so-called compact with Governor Ron DeSantis.

A Miami casino, Magic City, and other opponents have filed lawsuits to block the compact signed in May, which gives the Seminoles a 30-year lock on sports-betting in Florida. The tribe pledged to give Florida a cut of the riches, forecast to top $20 billion over the life of the deal.

There are other challenges. On Friday, a federal court in Washington is hearing a lawsuit seeking to stop the compact from going into effect. Rival casinos, Florida business leaders and gambling opponents say the deal violates federal law as well as the Florida constitution, which says voters have a say in any expansion of gambling.

"People don't want a monopoly, they want competition," said Christina Johnson, a spokeswoman for Florida Education Champions. That's the political action committee behind the DraftKings and FanDuel campaign to allow any gaming company to offer sports betting. "They want a free market, they want to be able to choose where they want to bet."


The Seminole Tribe is pushing back with its own campaign. It's spending at least $10 million on a media blitz and has deployed its own army to gather signatures for a non-binding petition to protect its control over sports betting, slots and some card games. The Seminoles are even hiring away paid petitioners to make it harder for DraftKings, FanDuel and Sands to gather voters' signatures. They need the names by February 1 to get their referendums on the 2022 Florida ballot.

The tribe argues that its compact guarantees the state the most money for the fewest casinos, preventing an unseemly proliferation of gambling parlors.

"The Tribe is prepared to spend whatever it takes to protect the Compact, the billions of dollars guaranteed to the state and the Tribe's Florida businesses," the Seminole's spokesman, Gary Bitner, said in a written statement.

Since 2018, when the U.S. Supreme Court allowed states outside of Nevada to offer sports betting, the practice has exploded to 31 states. But with 17 million adult residents and tens of millions of visitors every year, Florida is among the most lucrative. Within three years, Florida could reap $10 billion annually in sports wagers, generating $1 billion of operating revenue, according to industry news site PlayFL.com. Under the compact, the Seminoles could allow operators like DraftKings and FanDuel to run online betting platforms, but only if they give the tribe a 40% cut of wagers and park their servers on tribal lands.

DraftKings, FanDuel and Sands declined to comment.

The compact also allows the tribe to open three new casinos and offer roulette and craps. In exchange, the state can license new casinos as long as they're at least 15 miles from the guitar-shaped Seminole Hard Rock Hotel & Casino near Fort Lauderdale.

That clause has led to speculation that it's designed to allow former President Donald Trump, a close ally of DeSantis, to offer gambling at Trump National Doral Miami. Eric Trump, the ex-president's son and an executive at the family company, has suggested Trump Doral would be an ideal venue for gambling. The Trump Organization didn't respond to a request for comment.

Some opposed to the compact say this is why they are fighting it.

"The reason that the existing compact is so grotesque is not just the expansions that it authorizes, but it's also these non-tribal expansions that it opens the door to," said John Sowinski, an Orlando political consultant specializing in ballot campaigns who wrote a successful 2018 constitutional referendum requiring voters' approval for more gaming. Sowinski's No Casinos advocacy group is a plaintiff in one of the Washington lawsuits.

The Seminoles got into the gaming business around 1971 with bingo halls and opened the first casino when the National Indian Gaming Regulatory Act permitted it, in 1988. Until the 1970s, most of the tribe lived in poverty on sliver-like reservations across Florida after surviving four centuries of war with Spanish and U.S. Forces. In 1953, the U.S. House unsuccessfully tried to terminate the Seminoles' official recognition.

They bought Hard Rock International in 2007, in one of the largest corporate expansions by a Native American tribe.


Now the Seminoles have one of the biggest gambling empires in America, with seven casinos in Florida and dozens of other Hard Rock properties around the world. The tribe doesn't disclose its financials, but Moody's estimates it reaps $3 billion of annual revenue. "They're probably the most profitable Indian gaming business," said Keith Foley, a Moody's analyst.

The tribe paid the state more than $300 million annually before halting the payments in 2019, arguing that Florida had violated an earlier compact by allowing casino expansion elsewhere. Under the new compact, the Seminoles say Florida will get at least $500 million a year in taxes in each of the first five years.

The Florida legislature approved the compact by a wide margin, but some lawmakers say the state could have done better.

"I don't understand why we had to give them a monopoly," said Republican state Senator Jeff Brandes, one of the few dissenters in Tallahassee. "Ultimately, it came down to money. They saw all that instant money and didn't think of the longer-term implications."

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