Seminole Tribe Sues DraftKings Over Sports Event Contract Offerings in Florida

The Seminole Tribe of Florida has sued DraftKings in Florida state court, arguing that the company's sports event contract trading and certain daily fantasy sports products violate the tribe's arrangement with the state.

This is the first time a gaming tribe has specifically targeted DraftKings over sports event contract trading, but it's not the first time DraftKings and the Seminole Tribe have had competing interests in Florida.

The lawsuit could expand the judicial precedent on how federal law governing financial products and federal law covering tribal gaming intersect. That precedent will carry more weight if the case goes beyond a Florida county court.

Seminole Tribe asks Florida court to enjoin DraftKings' operations

The Seminole Tribe of Florida filed its complaint in the Broward County Judicial Court on Thursday. The brief gets straight to the heart of the Tribe's argument, stating that it wants the court to "enjoin Defendants from offering an illegal sportsbook in Florida in violation of Florida law."

The products that the complaint says constitute the illegal sports wagering include DraftKings' "Pick 6" fantasy sports game and sports event contracts that DKeX offers. The brief reminds the court of state laws and the tenets of the Tribe's gaming compact.

The Tribe says that under those terms, it has the exclusive right to offer sports wagering in Florida. For that reason, the complaint surmises, "every wager that Defendants now accept through their illegal sportsbook siphons away revenue that funds both the Tribe’s and Florida’s public programs and government services."

Seminole Tribe vs. DraftKings in Florida redux

The Seminole Tribe and the state of Florida reached those terms in 2021, when DraftKings also funded a ballot campaign to amend the state's constitution. Had the proposal qualified and voters ratified it, it could have opened Florida to additional sports wagering licensees.

The Seminole Tribe campaigned against the ballot initiative, and Florida did not put the proposal on the ballot in 2022. Since then, the Seminole Tribe's Hard Rock Bet online sportsbook has been operating in the state.

The Tribe's initiative in this litigation heightens animosity toward DraftKings. Other parties may yet involve themselves.

Florida attorney general, federal court involvement in dispute

While DraftKings faces the prospect of defending sports event contracts on DKeX in Florida in state court against the Tribe's lawsuit, the dispute may not proceed there.

Additionally, the Tribe might not be the only party opposing DraftKings.

In most cases involving prediction market activity in state courts to date, the defendants have petitioned to remove the proceedings to federal court. To be thorough, though, the claimants in those cases have been state attorneys general rather than tribal authorities.

That raises the question of whether Florida Attorney General James Uthmeier will get involved in this case. Uthmeier has been active in suing sweepstakes casino operators, arguing that their games violate state law and the Seminole Tribe's gaming compact.

Uthmeier could file an amicus brief supporting the Seminole Tribe. That would carry additional weight if the case remains in state court.

At either the federal or state level, the Indian Gaming Regulatory Act (IGRA) will likely be a key point of contention.

Court could weigh in on CEA vs. IGRA dynamics

Multiple federal courts across the United States are already grappling with how to interpret the Commodity Exchange Act (CEA) and IGRA in the context of sports event contract trading on prediction market exchanges. The Tribe argues in its lawsuit that DKeX's sports event contracts violate the IGRA.

The complaint refers to the IGRA as "the implementing law" for the compact between Florida and the Tribe, then calls DraftKings' offerings "incompatible" and "calibrated to undermine the Compact’s integrity and its long-term viability." Reconciling the CEA and IGRA hinges on two questions for the court.

First, whether DraftKings' Pick 6 and sports event contracts are protected under the CEA or other statutes. If that isn't the case, the question becomes whether they qualify as gambling products under federal and state law.

If they qualify, applying Florida gaming law and IGRA becomes clear. For the courts, it's more a matter of identification than application.

The Seminole Tribe has identified DraftKings as a threat to its sovereignty in court. If the court agrees, prediction markets could take a legal blow over conflicts with tribal governments.