Seminole Tribe sues DraftKings over Florida prediction market

The Seminole Tribe of Florida filed suit against DraftKings in a Florida court, alleging that DraftKings is operating prediction market contracts in the state without authorization under the Tribe's gaming compact — the agreement that gives the Seminoles exclusive rights to certain forms of wagering within Florida's borders.

The timing is not incidental. The CFTC's interim final rule, which took effect on publication in the Federal Register on October 9, explicitly excludes traditional sportsbook wagers from the federal definition of a swap. That exclusion was designed to clarify what the CFTC does not regulate. What it did not settle — and what the Tribe's complaint now puts directly before a Florida court — is whether prediction market contracts traded on a federally licensed exchange fall inside or outside the compact's coverage.

This is the structural problem the CFTC's two-track rulemaking created. By carving sportsbook wagers out of the swap definition and simultaneously proposing to bring event contracts in, the Commission drew a line between two categories of product. The Tribe's argument, in its prior filings, is that DraftKings has been relabeling what are functionally sports wagers as exchange-traded contracts to step across that line. The Commission's new framework does not resolve that argument. It sharpens it.

The legal standard that governs here is one federal courts have applied before: whether a product is substantially different in structure and function, or whether the structural difference is cosmetic. The CFTC itself supplied the test when it distinguished prediction contracts from sportsbook bets on the basis that prediction markets allow multiple parties to trade against each other at exchange-determined prices, while traditional books set odds and take positions directly. If DraftKings' Florida-facing product operates through a multi-party exchange mechanism, the interim rule's sportsbook exclusion does not apply to it. If it does not, the CFTC may lack jurisdiction to protect it.

I've watched compacts become jurisdictional weapons before, in contexts where a federal regulatory claim and a tribal exclusivity right occupied the same space. The compact does not disappear because a federal agency draws a new line. It sits beside the federal framework and asserts a prior claim. Florida's compact with the Seminoles predates the CFTC's event contract rulemaking by years, and the Tribe's legal position is that nothing in Dodd-Frank or the interim rule preempts a compact right that was never contemplated in either.

Whether federal preemption under the Supremacy Clause overrides the compact depends on whether Congress, in enacting Dodd-Frank's swap framework, clearly intended to displace tribal compact rights over sports wagering. Courts applying the Indian Gaming Regulatory Act have required that federal displacement of compact terms be explicit. The CFTC's interim rule says nothing about tribal compacts.