U.S. Supreme Court refuses to hear challenge to Florida's online sports betting compact

Sports betting stocks closed higher Monday after the U.S. Supreme Court refused to hear a challenge to an agreement giving the Seminole Tribe in Florida exclusive rights to handle online betting.

The case stems from a 30-year Compact between Florida Governor Ron DeSantis and the Seminole Tribe back in 2021 giving exclusive rights to handle online sports betting through servers placed on Indian reservations in the state.

The agreement was challenged by West Flagler Associates and the Bonita-Fort Myers Corp, which operate racetracks and poker games in the state. The group argued that the Compact between DeSantis and the Seminole Tribe provides a “backdoor” way out of a requirement that a citizen’s initiative is needed to expand casino gambling outside of tribal land.

“Through this artifice, the Compact transparently attempts to get around the Florida Constitution [by providing] a hook for dodging Florida’s constitutional requirement of a popular referendum to approve off-reservation sports betting,” the attorneys for West Flagler Associates and Bonita-Fort Myers Corp argued.

However, attorneys for the State of Florida and legislative leaders maintained that sports betting is different from casino gambling and is therefore not prohibited by the state constitutional amendment.

The Seminole Tribe, which currently has more than 5K members descended from Native Americans that populated the Florida Everglades, operates seven casinos across Florida and launched online sports betting late in 2023. The venture has already brought in more than $120M to the state with economic forecasters predicting that Florida’s share of tribal online gambling could total $4.4B over the next 5 years. Monday’s decision by the U.S. Supreme Court opens the door for other tribes to follow Florida’s example to operating online gambling from within the reservation.

As a result, shares of DraftKings (NASDAQ:DKNG), PENN Entertainment (NASDAQ:PENN), and Flutter Entertainment (NYSE:FLUT) were 6%-7% higher at Monday’s close.