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Finally Florida

With the U.S. Supreme Court denying an injunction, Florida was added to the list of states that have legalized sports betting with a monopoly for the Seminole tribe

Finally Florida

When Florida Governor Ron DeSantis sat down in May 2021 with Jim Allen, the chairman of Hard Rock International and the CEO of Seminole Gaming, to sign an all-encompassing compact with the Seminole Tribe, few believed it would be more than two years before the details of that compact would go into effect.

It was three years since sports betting had been legalized when the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act (PASPA). More than a dozen states at the time had permitted legal sports betting within their borders and Florida was poised to become the next.

But a challenge arose when West Flagler Associates, which represents the only commercial gaming permitted in the state—the racing and track companies—filed suit and the compact was called into question. The suit challenged the compact by contending it violated a recently passed amendment to the state constitution that required Florida voters to approve any expansion of gaming.

But because the online sports betting wagering was deemed by the compact to be taking place on tribal land, the suit has hung up in the courts for two years. That is, until the U.S. Supreme Court removed a stay on the compact that had been imposed by Chief Justice John Roberts.

While the removal of the stay allows online sports betting and the other aspects of the compact to go into effect, it doesn’t stop the challenge from West Flagler. Supreme Court Justice Brett Kavanaugh said the compact “raises serious equal protection issues” but nonetheless removed the stay. He questioned whether the gaming is occurring off-reservation despite the failure of the Department of the Interior to block the compact.

“The state law’s constitutionality is not squarely presented in this application, and the Florida Supreme Court is in any event currently considering state-law issues related to the tribe’s potential off-reservation gaming operations,” Kavanaugh wrote.

“The denial of the stay by the U.S. Supreme Court is very good news,” said Gary Bitner, a spokesman for the tribe. “The Seminole Tribe of Florida is heartened by this decision.”

Allen was pleased that the stay was lifted but was more circumspect when it comes to the legal case.

“We want to be very cautious about where we are in the legal process,” he told GGB. “We certainly acknowledge and understand that there is still a pending case in the Florida Supreme Court, and then separately we do not know if the United States Supreme Court will take up the case in regards to the definitional side of the scope. They unanimously ruled in our favor not allowing the plaintiffs any emergency injunctive relief, but the case will go on.”

For Florida, the tribe will pay $2.5 billion over the next five years and as much as $6 billion over the next 30 years for exclusivity in gaming and sports betting in the state.

Working the Process

While the Seminoles were able to take in-person sports wagers at their South Florida casinos for the past two years, they were not able to accept any mobile bets off reservation because of the challenge to the compact. Once the stay was lifted, it only took a couple of weeks to get Hard Rock Bet up and running.

“The first thing that we’re very proud of—and we recognize these things move up and down at times—if we look at the national rankings of all the apps associated with sports betting and iGaming, Hard Rock Bet is No. 1,” Allen says. “That’s from the patrons not associated with Hard Rock, so we’re very excited about that. The platform has been literally amazing. It has held up perfectly and really has done some great things from a compliance standpoint. And candidly, the volumes are what I think most people would anticipate—it’s very strong here in the state of Florida.”

But it’s not as if Hard Rock hadn’t been preparing for this over the last several years. Allen says the company has been investigating iGaming and sports betting for many years. In 2020, the company established Hard Rock Digital and hired the team that made PokerStars such a force in online gaming in the early part of the 21st century.

Rafi Ashkenazi was hired as the Hard Rock Digital executive managing director and executive chair. Marlon Goldstein became executive managing director and CEO, while Matt Primeaux was named executive managing director and president and his brother Michael Primeaux is managing director, product at Hard Rock Digital. They joined Hard Rock Digital after selling PokerStars to Flutter and after serving their non-compete period.

“They were really the brains behind the Stars Group, and in the most challenging times in the space when other companies were losing billions of dollars a year, they were making right around a billion dollars a year in EBIDTA,” Allen says. “Those guys have had an amazing history. Now we have (more than) 400 people in that company. We, Seminole Hard Rock, are the super majority owner, but they are the operators day-to-day, and are responsible for all of the technology and how all that works, obviously utilizing the global brand of Hard Rock.”

Allen says the potential for Hard Rock Bet is unlimited.

“Hard Rock Digital also intends to pursue strategic branding and distribution opportunities both within the U.S. and globally,” he says. “In the U.S. alone, the potential future market size is estimated at $7 billion for sports betting and $14 billion for online gaming.”

In addition to Florida, Hard Rock Bet is also live for sports betting in Arizona, New York, New Jersey, Iowa, Virginia, Indiana, Tennessee and Ohio.

In New Jersey, the online casino option is available. Allen says there’s a unique online option available in Florida, however.

“The scope of the compact does not allow for iGaming,” he explains. “The scope of the compact does allow for historical sports betting outcomes to be utilized in a casino-style game. So that’s a very unique scope of the compact that certainly we have at our disposable if we desire to do that. But I think every state now that sees the success of sports betting looks at what’s happening with the profitability and the additional tax or revenue share that’s available via iGaming. I think those conversations are changing more rapidly today than what they were three years ago, let alone five years ago.”

Allen says the compact implementation is good news for the state of Florida.

“The land-based business has grown so much,” he explains, “but unfortunately, the gray market gains and all the illegal activity that the state was having challenges with certainly created a pause. The relationship between the tribe and the state, including the House, the Senate, this governor, and the previous four governors, has always been very positive. There is no doubt that no one wants to turn Florida into Las Vegas, whether it be the number of land-based operations, or sports betting or iGaming. But they don’t want the illegal activity that’s happening with offshore companies in the betting sector.

“Then the question becomes, do they want to have money that’s guaranteed from the only investment-grade company from all three rating agencies, or do they want to take the risk of not taking that money and trying to get something done legislatively, which they cannot do, because they’ve got to go the referendum route?

“And that’s where we ended up as to the legal position of the state and the tribe. We’ve always said if the state wants to put gaming all over the state of Florida, please don’t ask the tribe for any money. And the state might make more money in that scenario; we’ve always acknowledged that. But the state—everyone that I’ve ever spoke to in leadership, but the House, the Senate, or the governor’s office—says, we do not want that to occur.”

Table Talk

Another factor in the Seminole compact was the tribe’s ability to add non-card games to its offerings, basically meaning craps and roulette. Allen says that they have been very popular since they were implemented late last year.

“We certainly knew roulette would be incredibly successful based upon the penetration of the Central and South American populations,” he says. “You look at places like Brazil and Argentina, they love to play roulette. But craps has been a pleasant surprise.

“It’s a fascinating game. It can be one of those games that is very intimidating to the average person, but certainly when a great game is occurring on the casino floor, there’s just tremendous excitement. It’s not going to make or break the $700 million a year we’re going to pay to the state of Florida this year, but it really creates some great excitement, and we’re very appreciative of getting that game into our scope.”

Because of the additional games being offered, Allen says the tribe created a lot more jobs for the state.

“We hired for craps and roulette separate from sports betting,” he says. “But together we’ve added around 1,000 employees in all different job classifications.”

In addition, Allen says the addition of craps and roulette means Hard Rock will have to go outside the company to hire people with real-time experience in those games.

“We’ve had our own dealer school for many, many years, but we’re actually out recruiting in other markets right now because we’re enhancing and increasing the number of games, and we just can’t get the people through school quick enough.”

Hard Rock has recently debuted the Unity players club. Unlike a Caesars or MGM Rewards situation, establishing Unity was much more difficult because of the Hard Rock status in the individual casinos it operates across the country and around the world.

Some Hard Rock casinos, like the ones in Florida, are owned by the tribal gaming enterprise. Others, like Hard Rock Atlantic City, the tribe only owns a piece of the property, but operates the property for the majority owners. And still others, like Hard Rock Biloxi, it’s just a branding situation. Hard Rock International does not own or operate the property; the tribe just takes a branding fee. So setting up a players club that would satisfy all those different situations was tricky. And the same situation is duplicated in the Hard Rock Cafés the tribe also owns.

“You’re trying to get 300 partnerships in 70 different countries under 11 different currencies, and I forget how many different languages,” he laughs. “It was a monumental task. But now, whether you’re in a Hard Rock Café in South America or if you’re in a hotel in London, it is all one program. And that has been a major uplift for us. It probably took longer than we would’ve liked but certainly we’re very proud of it.”

To hear and view a full podcast of this interview with Jim Allen, go to Allen talks about plans for Hard Rock around the world, including an interesting slant on Hard Rock’s application for a casino in New York City.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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