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State, Seminoles Spar Over Card Games

Nearly a year after the expiration of a high-stakes gambling agreement, the Seminole Tribe of Florida and state regulators made pitches last week in a federal lawsuit over the tribe’s right to operate “banked” card games, such as blackjack.

The dispute involves 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.

The five-year agreement regarding the cards expired on July 31, 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, and 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. The tribe contends those games violate the compact’s exclusivity provision involving banked card games.

But the state, which is asking a federal judge to order the Seminoles to stop operating the card games, insists that the blackjack-like games are, in fact, slot machines, and that the designated-player games authorized by the state do not violate the compact.

“The state of Florida cannot permit what its laws expressly prohibit. Beyond this, as a matter of fact, the games at issue are not banking games,” lawyers for the Department of Business and Professional Regulation wrote in a document filed in federal court in Tallahassee.

Florida taxpayers have paid more than $260,000 to private lawyers to represent the state in the dispute with the Seminoles.

Regulators in 2011 first approved the designated-player — also called “player-banked” — games, in which the “bank” is another player, instead of the “house.” The designated players at pari-mutuel facilities almost always are employees of third-party companies.

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.

The designated-player games have become wildly popular with gamblers, and have eclipsed other types of card games at most of the state’s pari-mutuels that operate cardrooms.

After years of operating with little or no interference from regulators, the games became the focus of intense scrutiny as Gov. Rick Scott’s administration hashed out a new gambling agreement with the tribe last year.

The same day that Scott and tribal leaders signed a proposed deal in December, Department of Business and Professional Regulation investigators — who were given a template for complaints — fanned out across the state to observe the games in more than half-a-dozen facilities. Less than a month later, regulators filed administrative complaints against 17 cardrooms. Lawmakers never approved the agreement signed by Scott.

The crackdown on the designated-player card games was directly related to the compact, John Lockwood — a lawyer who represents a number of the pari-mutuels who were hit with complaints — alleged during an administrative hearing involving the Jacksonville Kennel Club, also known as bestbet Jacksonville, earlier this month.

In the administrative case and in the Seminole lawsuit, the state insists that the designated-player card games approved by regulators — which include varieties of two- and three-card poker — are legal.

And, although there have been few if any changes since the games have been in play, regulators now contend that the manner in which the card games are played violates state law.

In a footnote in the  37-page filing, lawyers for the state pointed out that “it is vital to distinguish” between poker games that comply with state law and the operation of banked card by pari-mutuels and card rooms ” who have departed from the internal controls submitted” to regulators.

“If the games are not operated in accordance with the DBPR’s regulations or the games as actually played in the cardrooms meet the definition of a banking game, then the DBPR initiates an action to enforce the prohibition on banking games,” the lawyers wrote, referring to complaints filed on Jan. 25 and noting that the state is “actively prosecuting” the complaints.

The state also maintains that it is not obligated to negotiate a new deal with the tribe because the overall 20-year compact is still in effect.

But the Seminoles allege that federal law requires the state to go back to the bargaining table.

“The state refused to participate in any negotiations regarding such games unless they were part of a renegotiation of the entire compact. It also demanded a substantial increase in the state’s revenue share as a condition of such an amended compact without specifying any new benefits for the tribe that would justify the increase sought,” the tribe’s lawyers, Barry Richard and Joseph Webster, wrote in a motion for summary judgment in June.

by Dara Kam, The News Service of Florida