Florida Casino Bill Considered Controversial
By Jim Freer
Wednesday, October 26, 2011

Two identical bills that would authorize three destination resorts with full-scale casinos, including roulette and other table games, in the southeast Florida counties of Miami-Dade and Broward were introduced in the Florida legislature Oct. 26.

The bills are generating controversy, partly because they do not authorize any new gaming products or tax breaks for Florida's 27 pari-mutuel facilities.

Officials at Gulfstream Park, whose property is in portions of each county, had previously told The Blood-Horse the track and its parent company, The Stronach Group, are interested in being considered for a destination resort license. On Oct. 26 Gulfstream president Tim Ritvo said officials would not have any immediate comment on the legislation.

The bills list government entities as the only organizations that would not be eligible for destination resorts.

Officials at Calder Casino & Race Course, in Miami-Dade County, also said they do not have immediate comment on the legislation and its potential impact.

It is striking that Pennsylvania and New Jersey generate almost the exact same amount of taxes for their states, $472.8 million and $474.7 million, respectively. However, Pennsylvania, with an effective tax rate of 54 percent, generated 4,877 jobs, while New Jersey, with a tax rate of up to 10.5 percent, generated 41,672 jobs.

Under the schedule set out in the bills, new destination resorts would be able to open as soon as 2014.

The bill would set a 10% tax rate on revenue from Las Vegas-style slot machines at destination resorts. The tax rate is 35% on those machines at Calder, Gulfstream, and the three other pari-mutuel facilities that have casinos in Miami-Dade or Broward counties.

Pari-mutuel facilities in other Florida counties, including Tampa Bay Downs, cannot have Las Vegas-style slots or video lottery terminals.

Applicants for destination resort licenses would be required to submit application fees of $50 million by late next year to a new state gaming commission that would select winning bids based on factors that include proven ability to attract tourists. Each facility owner would be required to invest at least $2 billion to build a hotel/convention property that could have a casino in up to 10% of its space.

Another controversial issue is that the bill would limit the new resorts to just one area of Florida. In addition, opposition is expected from many House and Senate members who are opposed to any expansion of gaming.

Those are among reasons Sen. Dennis Jones, who heads a committee with initial jurisdiction over gaming issues, gives the bill "a 50-50 chance of passing at best" during the legislature's 2012 regular session that will run from Jan. 10-March 9. Jones, a Republican from the St. Petersburg suburb of Seminole, is chairman of the Senate Regulated Industries Committee.

A final example is the lottery. It has been clearly shown that lottery ticket sales increase during rollovers, when the prize pool gets larger. Some politicians believe that states can reduce the percentage of payouts, take the unclaimed prize money and cut advertising budgets without adversely affecting the amount of total dollars generated for the state. Repeated meetings of the Committee on Lotteries of NCLGS have shown those beliefs to be in error.

Citing similar reasons, former state senator Steve Geller said he does not expect the bill will be approved by both houses in 2012. Geller, a partner in law firm Greenspoon Marder in Fort Lauderdale, is a former minority leader of the Florida Senate and a former president of the National Council of Legislators from Gaming States.

Jones said he will consider supporting a destination resorts bill because of the projected job creation and tax revenue that destination resorts could bring to Florida. He noted that casinos would have a maximum 10% of space at the facilities, with the remainder for hotels and convention centers.

"But there is little reason to assume that a bill of this magnitude should limit these destination resorts to just two of Florida's 67 counties," he said.

During the weeks prior to the bill's filing, Jones was contacted by numerous senators and business people who said they believed their counties should be eligible for destination resorts. He said the Tampa Bay area would be a good location because of its large population, its short distance from several other major Florida markets, and popularity with tourists.

Jones' committee will hold public workshops on the bill in November and will consider any recommended changes from legislators, pari-mutuel industry officials, and other groups.

In addition to authorizing destination resorts, each bill would establish a new regulatory system that by the end of 2012 would eliminate the Florida Division of Pari-Mutuel Wagering that now regulates the state's three Thoroughbred tracks and other pari-mutuel facilities.

The bill would create a gaming commission, with its seven members appointed by Florida's governor. The commission would select winning bidders for destination resorts and be the parent agency for a new Department of Gaming Control that would replace the Florida DPMW.

The proposal would return Florida to a system that would have more racing commission-like features than the current system. The Florida DPMW is part of the massive Florida Department of Business and Professional Regulation, which regulates several dozen industries.

Genting Group, a large Malaysian casino and hotel owner, is the most prominent of the expected bidders for a casino resort license. Genting has bought the Miami Herald's building along the bayfront near downtown Miami and has announced plans to build a casino resort on the property, whether or not a casino is permitted.

Several other Las Vegas-based and Asian-based casino companies are expected to be among bidders.

Issues the legislature will consider include the likely impact of destination resorts on revenue Florida receives from gaming at the Seminole Tribe of Florida's seven casinos, as well as the potentially huge impact on pari-mutuels outlets.

Last year the Seminoles agreed to make their first payments to the state—starting with a total of at least $1 billion over the first five years. In return, they gained exclusive rights to blackjack and baccarat in Florida.

But the Seminoles could stop making payments entirely if any new types of gaming are permitted outside Broward and Miami-Dade counties. They could reduce payments if any new gaming products are permitted in those two counties.

The bill would permit destination resorts to have blackjack, baccarat, roulette, craps, and Las Vegas-style slots. They would not have sports books or be able to take bets on pari-mutuel events.

The legislature has not yet done a study on the possible economic impact of destination resorts.

Jones expects the tax revenue would far outweigh money lost from the Seminoles. In that situation, Florida also could recoup some Seminole-related revenue by allowing VLTs at pari-mutuel facilities outside Broward and Miami-Dade counties, he said.

Other issues include whether Gov. Rick Scott, a Republican, would sign a destination resorts bill and whether the legislature will require designated counties to hold votes on permitting them.

Geller's only current pari-mutuel client is Mardi Gras Casino, formerly known as Hollywood Greyhound Park. It is in Hallandale Beach, about a mile north of Gulfstream.

Mardi Gras would not oppose the opening of destination resorts in southeast Florida if it is given parity on products and tax rates, Geller said. "From what I understand, several of the other pari-mutuels in Broward and Miami-Dade have a similar position," he said.

Geller expects that some legislators from those two counties will not support a destination resorts bill that does not provide such parity to their local pari-mutuel facilities. He also expects that some legislators from other counties might not support a bill that permits VLTs at in their districts.

Geller said many legislators recognize the long-term contributions pari-mutuel facilities have made to the Florida economy, and that he hopes a gaming commission would consider that history if a pari-mutuel company applies for a resort casino. He expects that a Gulfstream application would be in partnership with a major hotelier and a major casino company.