Recently re-elected Florida Governor Rick Scott almost reached a seven-year compact renewal agreement with the Seminole Tribe of Florida, but Scott’s representatives and tribal negotiators could not agree on the state’s portion of gaming revenues. The compact would have the tribe to add roulette and craps at its South Florida casinos, build a casino in Fort Pierce and block construction of any Las Vegas-style casinos during the seven-year compact term.
The compact gives the tribe exclusivity to offer blackjack and other card games in Florida for a five-year period that will expires automatically on May 1, unless lawmakers renew that provision. The legislature will reconvene March 3 to May 1. In return for the exclusive rights, for 2013-14, the tribe gave $237 million, with $230 million going to the state and $7 million to local governments.
However, if the card-games provision is not renewed, the Seminoles still would pay money to the state through slot-machine taxes and other levies, state records show. Recent gaming revenue estimates without card games indicated the tribe would pay the state $116 million by 2019-20, about half of this year’s payment.
The 54-page compact signed by then-Governor Charlie Crist and Tribal Chair Mitchell Cyprus April 2010 states, “In the event that the authorization to offer card games is terminated, the Tribe shall have ninety (90) days to close such games.”
State officials do not seem to be panicking over the loss of card-game revenues from Seminole casinos. The new state Senate President Andy Gardiner, a gambling opponent and longtime supporter of the Walt Disney Company, said the state should not rush into another deal with the tribe. “I think we need to take a step back and not assume that this has to be done. We have to take a comprehensive look. The Senate started that last year, really looking at gaming in the state as a whole. We’re open for the discussion,” he said.
Gardiner spokesperson Katie Betta noted his statement does mean the compact could end. “However, with the economy improving, he believes we need to thoughtfully consider the policy as well. The revenue is certainly important, but Senator Gardiner believes the decision is about more than the revenue. He believes lawmakers should consider the fact that the compact is $200 million within a $70 billion budget and make a thoughtful decision based on policy, not just on revenue,” she said.
Still, the Seminoles may have legal grounds to keep offering card games. Tribal attorney Barry Richard said although tribes are sovereign nations, Indian gambling is governed by the 1988 federal Indian Gaming Regulatory Act. The U.S. Department of the Interior has authority on tribes’ contracts with states. “The tribe would take the position they can continue” to offer card games, but “they’re also not looking to be in an adversarial position with the state. This agreement certainly has been lucrative for all involved,” Richard said.
Jim Allen, chief executive officer of Seminole Gaming said the tribe is willing to adapt to whatever rules the legislature wants. However, he noted, “I certainly think that the state is truly divided. If you get out of Miami-Dade and Broward it really gets conservative in a rapid way. We’ve told the state, ‘Look, tell us what you want to do. There’s a business model for anything.'”
State Senator Bill Galvano, who helped draft the compact when he served in the House and who will be Gardiner’s Senate majority leader for 2014-2016, said he believes lawmakers finally will have the gambling debate they have been putting off for years. “I would expect that all of the issues, including resort ‘destination’ facilities and expansion of gaming opportunities, are going to be discussed, one way or another, as we make a decision on the card game component of the compact. I can’t imagine that before we would say ‘keep it going’ or ‘stop it’ that the many members who have different constituencies would not want to weigh in on the myriad of issues in the industry,” Galvano said.
Florida casino and racino interests believe the state legislature should find ways to help existing operators, rather than try to lure new gaming companies to Florida, said Steve Calabro, general manager at Hialeah Park. “We have very good operators here, but they don’t have magic dust,” Calabro said. Parimutuel owners note the Seminole Tribe gives about 12 percent of its gambling revenues to the state and is allowed to offer blackjack and other table games. Racino owners pay 35 percent and offer only slots and poker. Donn Mitchell, administrative officer for Isle of Capri Casinos, which has a racino in Pompano Beach, said, “The market is basically driven by whatever the Seminoles’ whims are. Any time we go out with a meaningful promotion, they will match that and beyond, typically by two to three times.”
Wall Street analysts believe expanded gambling, particularly in South Florida, is not the way to go. The market is saturated with five casinos within 15 minutes of each other in South Broward County and three in Miami-Dade. The three South Florida Seminole casinos earned more than $1 billion for the fiscal year ending July 1. The parimutuels took in about $531 million. South Florida also is home to seven racinos and four casinos operated by Indian tribes in Broward and Miami-Dade.
Adam Rosenberg, managing director of Fortress Investment Group, a specialist in gaming and leisure investments, said, “It’s a regional market that’s achieved a certain degree of maturity and saturation. For there to be some other form of expansion, you’d need a catalyst.”
Another issue, noted Macquarie Securities analyst Chad Beynon is that “The sub-$100 player who left when the economy slumped simply isn’t coming back. And there has been some negative growth because the Baby Boomer generation is simply shifting its entertainment dollars.” He added younger adults avoid casinos because they want more amenities to go with gambling.
Dave Jonas, chief executive officer at Casino Miami said it’s even more challenging in South Florida where “you’re up against not only other casinos but everything out there, restaurants, night clubs and festivals. If we don’t have something going on in our facility there’s no way to attract people other than those who live in our neighborhood.”
Daniel Wallach, of Becker & Poliakoff law firm, suggested linking casinos to fantasy sports and to sports gambling, which attracts a younger demographic than current casino players. He pointed out 41 million people play fantasy sports and paid $15 billion in entry fees. Also, Wallach said, sports gambling generates nearly $500 billion annually, with almost $10 billion in bets on the Super Bowl. Wallach suggested the Florida legislature consider approving those activities for casinos, which would increase tax revenue for the state and bring new customers to the casinos.
Meanwhile, the state Revenue Estimating Conference said the state stands to lose about $3 million from the closure of Dania Casino & Jai-Alai. The games will continue through December 30 but slots already have been removed. The casino said it would close for at least a year for a $50 million renovation. The Dania facility has formed a partnership with West Flagler Associates, which owns the Magic City Casino in Miami.
Amy Baker, coordinator of the state Office of Economic & Demographic Research, said the loss of revenue from Dania Casino would not make a difference in Florida’s gaming revenues, which grow about 1.5 percent per year. The state revenue from slot machines is an estimated $181.7 million, Baker said, and that figure will be adjusted if the state’s compact with the Seminole tribe ends.
