Our august Supreme Court had the chance to decisively outline the parameters of the Indian Gaming Regulatory Act—and blew it. SCOTUS had been petitioned by parimutuel owner West Flagler Associates to block implementation of Florida‘s compact with the Seminole Tribe, one which gives the Seminoles exclusive rights to sports betting in the Sunshine State. The highest court voted 8-1 against hearing West Flagler’s appeal, made after activist appellate judges redefined “tribal lands” in IGRA as extending throughout cyberspace, which neatly turns the Act on its head. Only Justice Brett Kavanaugh realized that there were bigger issues at stake and was acutely aware of the IGRA contradiction. Would that he was not alone. The compact, he wrote, also “raises serious equal protection issues.” We’d like to hear those litigated and there’s a chance that West Flagler will get another bite at the SCOTUS apple, although the chances seem bleak. The Seminoles have been green-lit to start taking sports wagers and once that particular ship has sailed it will be difficult to sink it.
One could argue that Gov. Ron DeSantis (R) took the Seminoles to the cleaners, getting $250 million a year in return for something that’s not so lucrative. (The tribe also obtained long-sought roulette and craps, so it really balances out.) There’s also a silly ‘exclusivity zone,’ carved out so that Jeffrey Soffer and Donald Trump could develop casinos. But none of that is germane. As much as we respect tribal sovereignty, it seems at minimum odd that a sovereign nation, which is what the Seminoles are, now has exclusive dominion over important aspects of Florida’s airwaves and cyberspace.
A state court could still stay implementation of sports betting in Florida, as sub-federal challenges query various aspects of the DeSantis deal, especially its very constitutionality. In the meantime, it’s a win for the governor, for the Seminoles and for Interior Secretary Deb Haaland, who turned a blind eye to the IGRA overreach. We expect the tribe to attempt to incept sports betting rather than forfeit the NFL season, putting West Flagler and unlikely ally No Casinos on the defensive. In the meantime, expect a jailbreak of tribal sports-betting initiatives (all eyes on California, the juiciest enchilada), thanks to the inaction of the Supremes. As lawyers for West Flagler wrote, “The circuit [appeals court] opinion raises a question of nationwide importance regarding the ability of states and tribes to use IGRA compacts to provide for gaming off Indian lands.” Amen.
Yesterday saw the 3Q23 earnings release by Churchill Downs. On it like a hawk was Truist Securities analyst Barry Jonas. CHDN, he wrote, exceeded expectations, thanks largely to the performance of its TwinSpires online branch and purchase of Exacta Systems. He was hopeful about how Wall Street would respond to Churchill Downs’ outperformance after revenue misses by Boyd Gaming and Monarch Casino Resorts. The stock remained relatively flat, hovering just below an impressive $109/share. The company reported revenue of $573 million (a CHDN record) and cash flow of $218 million, in line with expectations. Electronic machines bailed out the horseracing division, generating $38 million from ‘historical horse racing’ slots in Virginia and at Derby City Gaming in Kentucky. The hotel at Derby City also provided a boost.
Black-market slots in Virginia have to be removed within a month, which should further boost Churchill Downs’ HHR business, as should the opening of a seventh slot parlor in the Cavalier State. As for the company’s signature event, “We should also hear more color on the upcoming 150th Kentucky Derby … on the call, and we expect booking trends have remained extremely strong.” Regarding the casino business, despite revenue growth in New York State and Iowa, it came in 2% under what The Street hoped. Both The Temporary at American Place and Bally’s Casino put “some competitive pressure” on flagship Rivers Des Plaines. But … “We do think the overall impact was less than some investors had feared, and do not expect a material leg down from here.” If management sheds any light today on progress at the Terre Haute casino or its prospects in next month’s election in Richmond, we’ll let you know.
Our homies at the Culinary Union staged a Theatre of the Absurd spectacle this week on the Las Vegas Strip. Among the inanities were the designation of a quota of 75 workers to be arrested (by prior arrangement with Las Vegas Metro) for “civil disobedience,” along a roped-off section of Las Vegas Boulevard. The protest was designed to ensnarl rush-hour traffic, hardly a gambit likely to win sympathy for all-but-striking casino and hotel workers.
Would Mohandas K. Gandhi be impressed? Given that talks between the Big Three and the Culinary resumed this week, the premise for this preposterous spectacle is difficult to discern. As Scott Roeben of Vital Vegas writes, the Culinary Union may not have a deep-pocketed strike fund, so this, er, preemptive strike (the term seems apt) is an obvious way to rattle its chains during ongoing negotiations. Unlike Roeben, however, we don’t doubt the Culinary’s resolve to walk if push comes to managerial shove.
Speaking of strikes, some high-profile tactics by the United Auto Workers delivered results in its fight with Detroit casinos. The union marched on City Hall, a move that prompted the City Council to unanimously pass a resolution that sides with the UAW and reiterates its talking points. The Council resolved that it “supports working people across every sector of our economy and recognizes that working people deserve respect, adequate workplace protections, and the right to a living wage.” Hardly fighting words, true. However, the council made clear where it stood, with the declaration that it “supports and stands in solidarity with striking Detroit casino workers … as they continue to seek a resolution to the strike that results in improved compensation and working conditions for its members working for MGM Grand, MotorCity Casino Hotel, and Hollywood Casino at Greektown.” Score one for the strikers. Well played.
Finally, down in Dixie, the Democrats in the Alabama Lege are planning to introduce pro-gambling legislation in the next session. This may be a fools’ errand, as they’ll need substantial Republican votes to pass anything. At best, the Alabama GOP is divided on the issue and even apartheid Gov. Kay Ivey (R) can’t make up her own mind on it. Also, as we saw in Texas, key hardliners can be counted on to prefer drinking their own urine to working across the aisle over getting something done. So we’re pretty pessimistic at this point. A lottery would seem to have the best chance of passing, despite one having been held at Golgotha. Sports betting also could have some mojo, what with competition on almost all borders. It’s difficult to rationalize letting betting dollars continue to flee the state but that matters little in faith-based politics. Casinos will be the toughest sell, especially in a state where the industry has been scandal-plagued.
The only sure winners in this scenario are the Poarch Band of Creek Indians, certain to keep their casino stronghold regardless of what finally is determined by the Lege. Considering that Democrats are outnumbered 104-35 at the state house, the Creek would justified to gloat, sit back and count their money, saved by legislative and gubernatorial stupidity.