by Amy Keller
Updated 12 months ago
In February 2012, after 18 months of debate, Florida lawmakers shelved legislation that would have allowed the development of up to three Las Vegas-style destination casino-resorts in south Florida. After taking a year to study the industry and Florida’s Swiss-cheese-like gambling laws, lawmakers will take on gambling again this spring.
Given how complicated and contentious the issues are, it’s unclear whether the Legislature can accomplish a wholesale revision of the state’s gaming laws this year. But many lawmakers, including Senate President Don Gaetz (R-Niceville) and House Speaker Will Weatherford (R-Wesley Chapel), think it’s important for the state to begin establishing a rational legal and regulatory framework for gambling in Florida.
Rationalizing Existing Laws
Greyhound racing revenue has plummeted nearly 70% over the past two decades in Florida, and if it weren’t for the revenue from card rooms at the tracks, many track operators might close their doors. But even though nobody’s watching the dogs run, track operators are powerless to scale back their racing operations because Florida law requires them to operate 90% of the total races they ran before they opened their poker rooms.
The rule is among the stew of confusing regulations governing Florida’s gaming industry, which has expanded over the years as gambling interests have created a host of exemptions to the law and exploited legal loopholes. Lax regulatory oversight, critics say, prompted a Gretna track in the Panhandle to turn a rodeo event known as barrel racing into a parimutuel betting event. Though not particularly lucrative on its own, Gretna’s barrel racing — which is the subject of a court dispute — was far cheaper to conduct than traditional quarter-horse racing and allowed the facility to open a card room.
Some lawmakers would also like to address the unintended consequences of last year’s ban on internet cafes, the simulated slots parlors that have proliferated in strip malls across the state over the past several years. Sen. Kelli Stargel (R-Lakeland), who is offering legisation to clarify the law, says last year’s bill created unintended problems for bowling alleys and amusement centers such as Chuck E. Cheese’s and Dave & Buster’s, and so-called “senior arcades,” which operate slot-like electronic games that operators say require a skill, thereby making them legal.
Gaming industry lobbyists are pushing for the creation of a strong gaming commission to regulate gambling activity in the state. Nick Iarossi, a lobbyist for the Las Vegas Sands, which wants to build a destination casino in south Florida, says the state should establish a gaming commission modeled after those in New Jersey and Nevada. Iarossi says a company like Sands would only be interested in operating in Florida if the rules are clear and fair. Marc Dunbar, a lobbyist for Gulfstream Park, says any new gaming oversight agency should also include a strong law enforcement arm that would police gambling statewide and crack down on illegal gaming. John Sowinski, president of the Orlando-based anti-gambling group No Casinos, counters that a state gaming commission is just a smokescreen for expansion: “We don’t need a bigger bureaucracy with more discretion in this state. That’s nothing more than rightsizing the regulatory structure to handle more gaming.”
“We’re lobbying very heavily for approval of at least one integrated resort permit in south Florida.”
— Nick Iarossi, Capital City Consulting, a lobbying firm that represents Las Vegas Sands
“The regulatory structure is all over the place. The parimutuel law is written by whatever lobbyist can get whatever for their track client each and every year, which does not make for a good overall system. There are a lot of ways we can improve Florida’s gaming environment and it doesn’t necessarily mean expanding it. I represent gaming interests, and I want an expansion, but gaming laws in Florida need to be rewritten and brought into the 21st century.”
— Brian Ballard, lobbyist for Genting, Palm Beach Kennel Club and Donald Trump
“Fix the regulatory structure. Don’t complain I’m exploiting a loophole on behalf of slot machine manufacturers when I’ve been pointing out to you the loophole exists for years.”
— Marc Dunbar, lobbyist for Gulfstream Park
Casino giants such as Las Vegas Sands, Wynn Resorts International, MGM Resorts, Boyd Gaming and Malaysia-based Genting Group are urging lawmakers to allow them to build Vegas-style casino resorts in south Florida. Genting has been the most active, buying up the former Miami Herald site in 2011 in hopes of building a $3.1-billion casino resort called Resorts World Miami. Following two years of inaction by the Legislature, Genting has announced new plans to partner with Gulfstream racetrack in Hallandale Beach and use the pari-mutuel’s permits to offer slots and off-tracking betting at Genting’s property in Miami. While big casino operators have the support of lobbying group Associated Industries of Florida, other business heavyweights, including Disney and the Florida Chamber of Commerce, adamantly oppose expansion.
Compacts with Native Americans
Indian tribes don’t pay taxes on their casino revenue, but a revenue-sharing agreement allows the Seminoles to operate blackjack and other card games at their facilities. That agreement, which generates about $233 million for the state each year and gives exclusive rights to operate slots outside of south Florida, expires in 2015. Sen. Gwen Margolis (D-Sunny Isles) and others have cautioned against a gaming expansion that might jeopardize that revenue stream to the state. Meanwhile, the state must decide whether to negotiate an agreement with the Poarch Band of Creek Indians that would allow the tribe to operate slot-style bingo machines at pari-mutuel facilities in north Florida.
Setting Tax Rates
Tax rates in Florida for gaming activities are all over the map. While pari-mutuel facilities pay a 35% tax rate on their slot machine revenue, pari-mutuels that operate poker rooms pay a tax of about 10% on their card room receipts. Taxation on traditional pari-mutuel wagering activities is complicated and ranges from 1% of the total sum wagered on quarter horse racing to 7.15% for jai alai to 5.5% for dog racing. Iarossi, the lobbyist for Las Vegas Sands, says a world-class freestanding resort casino would generate jobs and bring in new money from out-of-state visitors — but will work only if Florida enacts lower tax rates than the 27% to 35% rate proposed in a study written by Spectrum Group. Iarossi has proposed a 10% tax rate for destination casinos.
“Those casinos are inconsistent with Florida’s international brand around the world, where we’re thought of as a family-friendly destination with beautiful beaches and amazing theme parks.”
— David Hart, executive vice president, Florida Chamber of Commerce
The Legislature is likely to consider some form of cap to prevent gaming from spreading throughout the state. One idea by House Speaker Will Weatherford would be to require a statewide referendum on any local gambling expansion, which means 60% of voters would have to approve it — a likely bar to gaming growth. Advocates of increased casino activity would prefer allowing local governments to decide whether they want more gaming.