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Card games like blackjack at heart of trial pitting Florida vs. Seminole Tribe

Lisa Johnson of Bel Air, Maryland, and Louis Cohen of Delray Beach watch the dealer during a hand of blackjack at the Seminole Hard Rock Casino in Hollywood, Wednesday June 22, 2011.
Lisa Johnson of Bel Air, Maryland, and Louis Cohen of Delray Beach watch the dealer during a hand of blackjack at the Seminole Hard Rock Casino in Hollywood, Wednesday June 22, 2011. pfarrell@miamiherald.com

Lawyers for the state and the Seminole Tribe fired opening salvos Monday in a legal battle that could determine whether the tribe can continue to offer “banked” card games, such as blackjack, at most of its Florida casinos.

The case centers on the Seminoles’ “exclusive” right to operate banked card games at five of the tribe’s seven casinos, part of a broader, 20-year deal, called a compact, signed with the state in 2010. A five-year agreement regarding the card games expired last summer, but the Seminoles have continued to offer the games.

The tribe is accusing the state of failing to negotiate in good faith on a new agreement. Its case is centered on two types of games — controversial “designated-player” card games and slot machines that simulate blackjack — authorized by state gambling regulators at pari-mutuel facilities.

But the state wants a federal judge to order the Seminoles to stop operating the banked card games. It insists that the blackjack-like games at pari-mutuels are, in fact, slot machines, and that the designated-player games authorized by the state do not violate the compact, even if the manner in which they are being played at some cardrooms might.

The “seminal issue in this case is exclusivity,” the tribe’s lawyer, Barry Richard, told U.S. District Judge Robert Hinkle at the outset of a trial Monday morning. The trial could wrap up as early as Wednesday.

“Everything … really flows from that issue,” Richard said.

The 2010 agreement gave the Seminoles the exclusive rights to operate slot machines outside of Miami-Dade and Broward counties and also gave the tribe exclusivity regarding banked card games, in which players compete against the “house” instead of each other, as they do in games such as poker. In exchange for the banked card games, the tribe promised to pay the state a minimum of $1 billion over five years, an amount which it has exceeded. The terms of the compact gave the Seminoles a 90-day “grace period” after the agreement expired on July 31, 2015, to continue operating the banked card games.

But after mediation failed, the tribe filed a lawsuit against the state, alleging that Florida officials had failed to negotiate in good faith on a new deal. The tribe is accusing the state of forcing the Seminoles to negotiate an entirely new compact, instead of focusing on the card games alone.

“The governor and Legislature said to the tribe, ‘We will not negotiate a renewal … unless you renegotiate the entire compact and give us a whole lot more money,’ “ Richard said Monday morning.

The Seminoles requested negotiations regarding the cards in 2014, 2015 and 2016, according to Richard.

The tribe and Gov. Rick Scott at one point reached a proposed agreement, but it needed legislative ratification. Lawmakers requested a “wish list” from the Seminoles, Richard said. The Legislature never responded to the “wish list,” and never approved the proposed compact, which surfaced during the final days of the 2015 legislative session.

Scott and the tribe struck another deal in December. Under the new proposal, the Seminoles agreed to pay the state $3 billion over seven years in exchange for being able to offer craps and roulette.

But lawmakers failed to approve that compact during this year’s session, which ended in March. A measure that passed out of a committee instead would have allowed slot machines in counties where voters approved them, something that Richard said “undermined” the tribe’s exclusivity without any reduction in revenue-sharing from the Seminoles.

Compacts between the state and tribes are governed by the federal Indian Gaming Regulatory Act, also known as IGRA.

“By any standard, by any standard under the IGRA, this is not good-faith negotiating by the state,” Richard said.

Much of Monday’s hearing focused on “designated-player” games, first approved by gambling regulators in 2012 for pari-mutuel facilities. The issue is important because the tribe argues that the way the games have been allowed to operate has violated the compact. Such a violation would be justification for the tribe to continue offering games such as blackjack and would affect whether the tribe has to pay the state to be able to offer the games.

After years of allowing the games, regulators in January filed complaints against more than two dozen cardroom operators, alleging that the way the games were being conducted violated a legal prohibition against banked games at pari-mutuels. Those complaints and a move late last year by gambling regulators to repeal a rule governing designated-player card games touched off legal battles in state administrative courts.

Under Florida law, a “banking game” is defined as one “in which the house is a participant in the game, taking on players, paying winners, and collecting from losers or in which the cardroom establishes a bank against which participants play.” Pari-mutuel cardrooms are allowed to conduct games in which players compete only against each other.

Even if the state turned a blind eye regarding the games, banked card games still are prohibited in Florida, J. Carter Andersen, an attorney with the Tampa-based Bush Ross law firm who represents the Department of Business and Professional Regulation, told Hinkle on Monday.

Gambling regulators have been forced to walk a fine line between enforcing the prohibition against banked card games and allowing the designated-player games, Andersen said.

“Many in the industry push the limits of state law” and do “whatever they can get away with,” he said.

Still, he insisted that the state Division of Pari-mutuel Wagering has not decided and will never decide what is allowed.

“There will not be any evidence to suggest this division either intended to permit or actually permitted a banked card game” outside of the tribal casinos, Andersen said.

Seminole Gaming CEO Jim Allen said the five-year limitation on the banked card games was a “look-back” intended to be renewed if the Seminoles ran the games properly.

“The understanding was that we would renew the table games as long as the tribe ensured the integrity and the standards of the games,” Allen said.

The 2010 compact replaced an earlier agreement signed by tribal leaders and then-Gov. Charlie Crist in 2007. The Florida House of Representatives, under the leadership of then-Speaker Marco Rubio, sued Crist over the deal. The Florida Supreme Court sided with the House, saying that the governor did not have the authority to enter the agreement without the Legislature’s blessing.

Allen said he suggested the five-year provision in order to get the necessary votes to ratify a compact.

“Very politely but candidly, we were in the middle of a dispute between Rubio and Crist,” when the compact was being renegotiated in 2009, Allen said.

Allen said Rubio told him he had no problems with the compact or the tribe.

“I have a problem with the governor,” Allen said Rubio told him.

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