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South Florida gambling: The key word is "uncertainty"
Like slot players watching reels spin, South Florida casino executives are holding their breath.
Horse track and dog tracks are waiting for the state to lower a 50-percent tax rate on slots, worried about increased competition and adapting to a down economy.
Casinos operated by the Seminole Tribe of Florida are stuck waiting on an agreement with the state that spells out whether they can have blackjack and other table games -- because they'd like to build hotels at their Coconut Creek and Immokalee casinos.
And all are angling for the Florida state legislature to listen to their arguments as a gambling compact is being negotiated.
But at least all of them were in the same room Tuesday for the Florida Gaming Summit at the Seminole Hard Rock Hotel & Casino in Hollywood.
Three horse track and dog track owners said they're losing money, and would be even if the economy hadn't tanked.
"If we were a stand-alone property, with no corporate structure, we wouldn't be here," Mardi Gras' Dan Adkins said. Gulfstream Casino & Racing and Isle Casino & Racing officials made similar comments.
"By any stretch, performance has been poor," said gambling industry analyst Adam Steinberg of Morgan Joseph and Co. For example, casinos operated by horse and dog tracks expected to make $350 to $500 per slot machine. The latest figure by the Division of Pari-Mutuel Wagering puts it a $124 per machine in September.
Steinberg said the projections were too high, because they couldn't compete with the Hard Rock.
"They knew coming in they were going against an 800-pound gorilla," he said.
Mardi Gras VP Dan Adkins suggested a lower tax could help the casinos work to develop tourism. The state will lower the slot tax to 35 percent, if the compact is approved. The legislature might discuss it at a special session in December.
"Florida is so primed for drawing outside dollars. It's what we need to be focused on," Adkins said. "If we could be a full casino [with blackjack and other games], people would take visiting us over, for example, Biloxi. Why not?"
Currently, more than 90 percent of his customers are locals, Adkins said, while New Orleans, for example, has about 65 percent locals and 35 percent tourists.
But analyst John Maxwell of Jefferies & Co. said: "It's going to be difficult to go beyond being a local casino. You don't have much capital to put in."
Adds Steinberg: "Florida gets a lot of tourism, but it's the wrong kind for gambling. It's families with kids." He noted that Disney, for example, would not take kindly to Florida being marketed as a gambling state.
Meanwhile Seminole gaming CEO James Allen said the Hollywood Hard Rock and the six other Florida casinos operated by the tribe would be hurt if parimutuels statewide added blackjack, as Adkins and others request.
The overall expansion of gaming stresses the market, Allen said, noting how more gambling in Pennyslvania has contributed to a free-fall in Atlantic City.
"The days people drive 2-3 hours to go to a casino are slowly diminishing," he said. Internet gambling also "is coming, and it's coming incredibly rapidly."
Allen said if the compact were approved giving the Seminoles exclusivity, Florida could receive $3 billion over 20 years from the tribe.
The parimutuels could produce $10 billion over the same period, said Isle of Capri Casinos CEO Virginia McDowell, launching the first of many grenades during a luncheon speech. The Isle in Pompano Beach is among her casinos.
"Despite participating in a process to design a legislative solution, the Tribe has now decided they still want more," she said. "The expansion of gambling on tribal land does little to benefit the citizens of Florida, as the tribe is not required to pay taxes. Not a dime."
Further complicating matters is the opening of Miami-Dade casinos. Flagler opened as the Magic City Casino last week and Calder Race Course, on the Broward-Dade line, will open in a couple of months.
"As it expands, are we just splitting more of a fixed pot?" Chris Jones of Telsey Advisory Group asked.
The Seminoles started gambling in 1979 with a Hollywood bingo hall and have been trying to work with the state on an agreement ever since, Allen said. In 2007, Gov. Charlie Crist and the Tribe came to an agreement that would bring blackjack in exchange for $150 million in payments, but the courts determined that Crist had no authority to negotiate such a compact.
This spring, the legislature offered a compact to the Seminoles, who sat down with Crist and made a counteroffer in the summer. The legislature could have called a special session this fall to vote on it, but declined.
"We 100 percent want a compact, I think you can say it's gone on too long," Allen said. "We want to work with the governor, we want to work with the legislature and we want to work with the parimutuels."
Allen repeated Tuesday what he has been saying: The Seminoles can live without paying the state anything, and just competing, and he points to federal law supporting that the Seminoles would be within their right to do that. Or, the Seminoles could pay the state an amount, and have some form of exclusive product. But the state can't get both Seminole money and give other gambling venues the same games. By his count, he has heard from 138 lobbyists, representing a variety of interests.
"For the time being, it's a mess," Oppenheimer analyst David Katz said. "And a range of outcomes favorable for all concerned doesn't seem all that clear. The pieces have moved around so much."
Steve Geller, a former state senator and recognized as a gambling authority, said the compact talks broke down because Crist, the Seminoles and the legislature need to all negotiate together, rather than the state send a compact to Crist and the governor to then send it back.
"Without a three-party negotiation, it's doomed to failure," said Geller, who was term-limited from the legislature and is running for Broward County Commission. He was the president of the National Council of Legislators from Gaming States from 1995-2007.
And Dania Jai-Alai, which Boyd Gaming bought with the intention of rebuilding into a full casino and hotel, remains just a jai-alai fronton. The company says opening a casino under the current conditions would not be prudent.
"Boyd Gaming was the smartest one," Geller said. "At least they didn't pay $200 million to build and get deeper in debt."
Meanwhile, Allen called the Tampa Hard Rock "possibly the world's leading performer in casino profitability," a testament to a.) the operation and b.) the casino's niche as the only game in the Tampa-St. Pete area.
The Hard Rock brand, which the Seminoles acquired a few years ago, is the magic word, he said.
"There's not a shortage of opportunities, both in gaming and the restaurant business," he said. He left to fly to Budapest for a meeting.
OK, folks, that's what I got from the summit. Please, give me some comments.
NICK SORTAL began playing 3-card "gut" and "Indian poker" on high school band trips, early training for his...
Comments
Your right,Boyd-gaming was smart,now if the state of Fl is smart they will lower the tax rate on slots to about 28% or 30% at the highest and things for Fl will boom..
With the United States de-industralizing and Fl depending on tourism they need an injection.
If I recall their first year in business the Hollywood Seminole Casino netted 700 million,and they want more..give me a break!!!
Posted by: Bill | October 20, 2009 5:35 PM
Your right,Boyd-gaming was smart,now if the state of Fl is smart they will lower the tax rate on slots to about 28% or 30% at the highest and things for Fl will boom..
With the United States de-industralizing and Fl depending on tourism they need an injection.
If I recall their first year in business the Hollywood Seminole Casino netted 700 million,and they want more..give me a break!!!
Posted by: Bill | October 20, 2009 5:35 PM
Its ridiculous the onerous tax rate of 50%! The Seminoles pay nothing? Any person who goes to the Seminoles should be ashamed, until the rate is lowered so the Isle (which I go to, and its smoke free) and Mardi Gras, etc can compete on a level-playing field.
Posted by: Steve/Deerfield | October 20, 2009 7:45 PM
make it fair to all paticipants. see how long the indians can play with the cowboys
Posted by: John | October 20, 2009 8:07 PM
What is the problem? Just get the casinos to get some high price ladies and some high dollar lobbyists to make the case for the casinos.
Sheesh that is a no brainer.
Posted by: charles | October 20, 2009 8:15 PM
good! is there a more despicable social group than gamblers? let's legalize crack too! typical florida trash who go for this stuff. why not just mail your cash in envelopes to the tax districts?
Posted by: white | October 20, 2009 8:23 PM
Boyd Gaming is smart for not investing in DANIA JAI-ALAI !!!! Jai alai is DEAD
and should cease operating.
The sport is boring and draws about 80 fans nightly. Benny is trying to encourage youths to play now, what a waste of time !!!!!!! Get a life to all the Jai-alai losers !!!!!!!
Posted by: auggie soffer | October 20, 2009 8:31 PM
depends on the gambler.. a lot of poker players are the most ethical people around.
and to the other posters bashing indians. if you mess with them too much like the legislature is doing then they will do what they did in NY and set up a trust and tell the state to get off their lands.
Posted by: gambler | October 20, 2009 8:49 PM
depends on the gambler.. a lot of poker players are the most ethical people around.
and to the other posters bashing indians. if you mess with them too much like the legislature is doing then they will do what they did in NY and set up a trust and tell the state to get off their lands.
Posted by: gambler | October 20, 2009 8:50 PM
auggie soffer for someone who thinks jai-alai is dead you sure seem to follow it closely. You know how many people are there nightly, you know about the (very recent) move to have Benny develop amateurs, etc.
What's the matter....did you miss your quiniela bet on the last point?
You need a pelota crammed down your throat and a cesta rammed up your fatass!
Posted by: pelotari | October 20, 2009 11:30 PM
Go full Class 3 Casino in Dade and Broward (keeps Mickey and the upsouth moralists happy) at the parimutueals and hotels over 1,000 rooms - and give Atlantic City, Vegas, the Bahamas and the Cruise ships a Run for their money.
Everyone in the Eastern Time Zone would flock to Florida Beachinos while AC is Frozen and it beats a 3 hour time change to Vegas, any day of the week(end) - and the customs hassle of going to the Bahamas.
Lower the states take to 20% on the games.
That would prop up room rates, sell condos, and derive more in property taxes than any paltry 150 million buck a year deal with the Tribes to maintain their monopoly.
Its time to worry about bringing Tourists back to South Florida.
Posted by: Yes we SHOULD go Class 3 | October 21, 2009 9:52 AM
OK, I'm planning on doing another post on some of this but am caught up in another project. But just wanted to clean up some things:
1.) I don't have the exact language here, but Allen has a pretty good point; there's no language in the rules for gambling established by the U.S. government that call for a tax. None. The tribe is merely offering a business deal; give them something and they'll give the state something.
2.) The Class 3 commenter: Very good points, but one panelist made a good point Tuesday. The terms "Class II," "Class III," etc. are references to Indian gaming law and the U.S. government. In the rest of the world it's pretty simple: there are either "legal" or "illegal" games. So to talk of Class III games at paris is kind of a misstatement.
3.) Pelotari and Auggie give me a thought: how about full-contact jai-alai... perhaps in an octagonal fronton?
Posted by: Nick Sortal | October 21, 2009 10:10 AM
Christ spend a lot of time dealing with them about the money they should pay and allowing Vegas type gambling. Wow that is job creation! What a joke. Most of Tourists come here for the beaches and weather, not to gamble. Most of the people that goes there are locals waisting their money and not spending it in our economy. They got buses that pick up the elderly that spends their goverment's checks in gambling. Come on! Why they dont pay taxes like we do? They are part of the US. If they are another country let them fend for them self. We voted against gambling years ago.
Posted by: capejoe | October 21, 2009 10:23 AM
Jim Allen on his self centered high horse is concerned that by allowing the racinos to have blackjack it will hurt the Seminoles. Allowing the Seminoles to have blackjack and smoking hurts the racinos. In the long run the racinos are more important to the state of Florida. Their success is success for all of us taxpayers.
Plus, having all casinos in the state operating on the same field is better for patrons - as they compete against each other for business, the offers to gamers will be better. The racinos can't afford to offer the perks that the Seminoles can.
The $150 million a year the Seminoles are proposing is such a ridiculously small percentage of the take, I say forget about the compact, lower the tax to a reasonable number (20%) and let the racinos succeed and expand.
Posted by: john hughes | October 21, 2009 10:37 AM
It is so irresponsable of state legislatures to keep dragging their feet on this. The state is bleeding money and tourism is low. Gaming is expanding all over and Florida is going to be left out of that market all together. I'm sure some of you say "so what". Well...you can't count on our beaches to draw tourists. One oil spil can damage that for years. The weather is a HUGE draw. We will always have mild winters...which means tourism.
Why let Disney dictate anything? Gaming and Disney can live in harmony. Regulation of the number of casinos can prevent an oversaturation and can keep them away from Orlando. You really think that the tourist aiming for Disney would stay away because there is a Hotel Casino 30 miles away? Come on. I agree that we don't need a 'Las Vegas' type attitude when it comes to gaming...the 'what happens..stays' is too adult and already done.
Full casinos at race tracks would be an ideal solution for tax revenue. Cut their tax rate to allow them to invest in their property and aim for the tourist market. Heck...I bet many locals would even do mini-vacations at some of the properties if they are more of a 'resort'. Crime isn't any worse...neighborhoods arn't that worse off either. Imagine if the W Hotel on the beach had a casino. Man...they money would come rolling in once the economy recovers a bit.
Give the Racinos full gaming...and a tax cut to compete with the Seminoles. Allow the Seminoles to have the same games and see where the competition lands. Maybe even have some 'rules' on racinoes saying that they must build a hotel/resort ...which would promote tourists and revenue.
Come on Florida...don't screw this one up.
Posted by: mark | October 21, 2009 11:24 AM
2.) The Class 3 commenter: Very good points, but one panelist made a good point Tuesday. The terms "Class II," "Class III," etc. are references to Indian gaming law and the U.S. government. In the rest of the world it's pretty simple: there are either "legal" or "illegal" games. So to talk of Class III games at paris is kind of a misstatement.
Nick - agreed Class 3 is a reference to Indian(Federal) Gaming Laws - thats why I referenced it -it tells you the level (FULL CASINO) that I see - as opposed to this Class I, Class 2 twostep deal dictated by the Federal Indian Gaming Commission.
Its meant to show - that if Florida goes C-3 - so does the Indians - and its a fair fight getween the Tribes and the Racinos/Beachinos instead of this convoluted FALSE and ridicously low payoff offered by the Seminoles.
Posted by: Yes we SHOULD go Class 3 | October 21, 2009 11:43 AM
Of course nick - you have to unerstand that I my persepctive on 150 million is forever screwed up - ever since Harry Reid told us that 52 BILLION in savings on TORT REFORM was chump change.
And since 52 BILLION is only about 13 BIllion LESS than the 65 BILLION buck Florida Budget - the 150 million is real CHUMP CHANGE - compared to the property taxes(which the tribes don't pay) of MULTIPLE Racinos/Beachinos - plus the tax gaming tax to the state, and the local bed taxes(which the tribes don't pay)
Thats why the 150 million is an insult.
Posted by: Yes we SHOULD go Class 3 | October 21, 2009 11:52 AM
Great points Mark and Yes we should!
Does anyone know if the compact includes any type of state regulation for the Seminoles?
Right now at any Seminole casino there is no one policing the win and the accuracy of the slot machines
There is no state health department overseeing the safety of the food
They don't have to build to safety codes or fire codes that every other building/hotel has to abide by.
You can't sue them if for some reason you are injured or killed by their negligence.
If more people realized the above they wouldn't want to spend much time on Seminole land!
Posted by: john hughes | October 21, 2009 12:46 PM
PLEASE CLOSE JAI-ALAI FOREVER !!! ITS A CANCER....
GAMES ARE FIXED, FRONTONS ARE NOT UP TO CODE, AND THE FOOD IS DEPLORABLE.
Posted by: auggiesoffer | October 24, 2009 1:47 AM
Remember, Disney put all the small theme parks around Florida out of business when they opened. I don't have any sympathy for them.
http://www.lostparks.com/
As for the racinos, they pushed through this slots amendment knowing it would give gambling to the Seminole tribe. That was their goal from the start. Pass the slots amendment, complain they can't compete with the Seminoles, get full casino gambling. Simple answer, put it on the ballot to repeal the slots amendment and close them all down.
Posted by: DannyK | October 31, 2009 9:40 PM