Should Florida Bet Its Future on Expanded Gambling?
By Tom Zucco
Associate Editor
They’re like a couple who dated forever and are finally talking about tying the knot.
Florida has been carrying on a relationship with gambling for more than a century. It began when railroad tycoon Henry Flagler opened a couple of illegal casinos along the state’s east coast in the 1880s, and exploded statewide with bolita, an illegal numbers game imported from Cuba.
In time, the relationship went legitimate. Florida legalized horse racing in 1931, set up a state lottery in 1988, and allowed the Seminole Tribe of Florida to operate card games and Las Vegas-style slot machines on its reservations in 2004.
But Florida and gambling have never turned walk-down-the-aisle serious as Nevada, Mississippi and New Jersey have. There are slot machines in Miami-Dade and Broward counties, but the state still doesn’t allow full-fledged casinos outside of Seminole reservations.
Yet, the groundwork is being laid that could change all that.
Opponents say gambling produces little more than a group of people with less money than they had before. They also say it shifts the focus away from investment in technology and other industries that could provide a more stable, long-term benefits. But like offshore oil drilling, gambling could look very attractive to a state that needs money and jobs right now.
Ardent Foes Shift Attitude
Two of the Legislature’s staunchest opponents of expanded gambling, Rep. Ellyn Bogdanoff, R-Fort Lauderdale, and Rep. Alan Hays, R-Umatilla, have altered their thinking and now want the state, not the Seminoles, to be the main beneficiary of Florida’s $2 billion casino-gambling industry.
Bogdanoff, a ranking Republican in the House, says she supports a free-market approach to gambling and is pushing the Florida Gaming Equalization Act. The idea is to tie gambling with tourism and get investors to build five to seven beachside hotel-casinos that would also have movie theaters and shopping centers. Besides tax revenue, the casinos would add thousands of jobs.
Hays takes that a step further and wants the state to dive headfirst into the gambling business by owning the casinos and hiring operators to run them. And he cites some interesting numbers to make his case. Hays told the Orlando Sentinel that under Gov. Charlie Crist’s proposed deal with the Seminoles, if the tribe were to make $4 billion in gambling profits, the state would net around $800 million. The Seminoles would get the remaining $3.2 billion.
“That one line right there shows you there is a ton of money that can go into Floridians’ pockets,” Hays told the newspaper. “We can reduce taxes or we can certainly fund a whole lot more education with $3.2 billion than we can with $800 million.”
$7 billion-a-year industry
At the heart of all this, of course, is money. Gambling is a $7 billion-a-year industry in Florida when you include the state-run lottery, 27 pari-mutuel facilities, eight Indian casinos, 5,620 slot machines, and the unregulated and untaxed cruises to nowhere, on which casinos open once a ship is 3 miles offshore in international waters.
So in many ways, the state is already at the altar.
But it’s not likely that the vows will be coming soon. It would take a statewide vote to allow slot machines outside of Broward and Miami-Dade counties, and local referendums to authorize casino construction.
Hays says his idea would likely take two or three years to get through the Legislature. There is support for expanded casino gambling, especially in South Florida. But House Speaker Larry Cretul has all but ruled out any action this year, and has said reaching a new deal on a gambling compact with the Seminoles is the first priority.
That’s important because Crist wants the Legislature to adopt his $69.2 billion state budget for 2010-11, which would rely heavily on three revenue sources: new federal stimulus money, revived tax collections from a resurging Florida economy, and $433 million from a gambling deal with the Seminoles.
So will Florida expand casino gambling outside Indian reservations?
Legal and Political Hurdles
Before he left the Florida Senate in 2008 because of term limits, Steve Geller served as president of the National Council of Legislators from Gaming States.
“Neither of their plans will succeed,” Geller says of Bogdanoff and Hays. “You have legal problems and political problems. Most casinos make their overwhelming profit from slot machines, typically 80 percent-plus. Can you have casinos without slots? No. Can you put slots in South Florida legally other than the locations where they already are? Maybe. There will be people who will tell you the constitutional amendment (that allowed slots) only permits them at those facilities.”
Then there are political questions. “Ellyn (Bogdanoff) is introducing it this year because most things take a couple of years to pass,” Geller says. “And I’m not sure the pari-mutuels are happy about sharing. So if you get the friends of pari-mutuel industry to combine with the friends of the Seminole Indians, who don’t want competition, and the anti-gambling forces, I’m not sure you have enough political support to pass a referendum.”
Geller also questions whether casino giants such as Wynn and Bellagio would come to a state that likely would hit them with a 25-to-35 percent tax rate when they currently pay less than half that in Nevada. “I’ve said for years that the product you get is determined by the tax rate,” Geller says. “At 5 percent, you get Bellagio. At 30 percent, you get a very nice Hilton convention hotel. At 70 percent, you get slot machines at the Magic Mart.”
As for Hays’ proposal that the state operate the casinos, Geller believes that Florida doesn’t have the stomach for that. “Look how we hamstrung the lottery,” he says.
A better idea, Geller thinks, is to keep casino gambling on reservations, but allow the pari-mutuels in Miami-Dade and Broward to expand and compete.
“We should expand gambling,” he says, “but not force it on communities that don’t want it. The voters near Disney World in Orange County don’t want it. (The voters will say) ‘Let South Florida have it, but I sure don’t want it here.’
“There are some people who think there’s very little more you can do to corrupt South Florida.”
