Carving up the compact: Feast for tribe, famine for state?
Michael Mayo
News Columnist
Copyright © 2007, South Florida Sun-Sentinel
Thursday, November 22, 2007
Somewhere between the negotiating table and the signing ceremony last week, something went wrong with the gambling compact between the state and the Seminoles. A draft released in October was flawed but palatable. The final version is simply a bad deal.
The state gave up too much for too little, and the agreement gives the Seminoles too many escape clauses from making payments, a concern given the tribe's recent history of breaking gambling-related contracts.
"The state gave away the store," said Dan Adkins, chief gaming executive at Mardi Gras Racetrack and Gaming Center in Hallandale Beach, one of three pari-mutuel casinos in Broward County and a competitor of the Seminoles. "There are too many outs and loopholes."
Especially when you consider the way the Seminoles bailed on long-term revenue-sharing contracts with developers of their Coconut Creek and two Hard Rock casinos. In each case, the tribe argued the casinos had become so successful that their payments would be excessive. The tribe eventually reached settlements with the firms.
As much as I'd like to credit Gov. Charlie Crist for bucking Florida's anti-gambling tradition and brokering a revenue-sharing deal with the Seminoles, his negotiating team made too many last-minute concessions.
There's also too little state regulation and no day-to-day oversight of the Seminole casinos, issues the sovereign tribe wouldn't budge on.
Don't bet on doubling down at a blackjack table at the Seminole Hard Rock Hotel & Casino any time soon. Even though the U.S. Department of Interior could approve the compact by the end of December, challenges by the Legislature could halt it from going into effect for months, if not years.
"My guess is between a year and two years before this all plays out," said Robert Jarvis, a gambling law expert and professor at Nova Southeastern University.
The compact calls for an annual minimum $100 million to the state for 25 years, with the tribe's payments eventually based on a sliding scale of 10 percent to 25 percent of gambling profits. In exchange, the Seminoles' seven casinos get blackjack, baccarat and Vegas-style slot machines.
Under the final terms, if the state allows table games or slot machines outside Broward and Miami-Dade counties, the deal would be voided.
The Seminoles could also stop paying if Miami-Dade voters approve pari-mutuel slots in a Jan. 29 vote and the tribe's annual net gambling revenue dipped below $1.37 billion, which tribe lead negotiator/attorney Barry Richard said is the current level.
The Seminoles could also stop paying if South Florida pari-mutuel casinos get table games and the tribe's annual net gambling revenue dropped below $1.37 billion.
South Florida pari-mutuel casinos, whose slots profits are taxed 50 percent by the state, want blackjack and baccarat to compete with the Seminoles. The only way they'd get table games is if the Legislature changed state law.
The biggest change between the October draft and the final compact signed last week: The exclusivity provisions were broadened to effectively thwart the expansion of Class II video slot machines around the state.
The October draft covered only Class III slot machines, in which gamblers play against the house. Florida's struggling pari-mutuels want Class II slots, in which gamblers play against other gamblers. The Legislature briefly explored the option earlier this year, as Class II slots could produce up to $1 billion annually for the state.
It's simply bad policy for the state to give the Seminoles such broad exclusivity for so little.
"The state keeps telling us how they're going to get $100 million-$150 million a year from this deal," said Allan Solomon, executive vice president of the Isle of Capri, which owns the Isle Casino at Pompano Park. "But look at all the potential revenue they're giving up. It doesn't make sense."
Michael Mayo's column runs Tuesday, Thursday and Sunday. Reach him at mmayo@sun-sentinel.com or 954-356-4508.
Battle over gambling heats up
Greyhound track could lose out
By Mark S. Krzos
Copyright © 2007 Fort Myers News Press
mkrzos@news-press.com
Saturday, November 24, 2007
Izzy Havenick — one of the owners of the Naples-Fort Myers Greyhound Track — lost a big hand last week, but he says he and other pari-mutuels around the state haven't folded just yet.
One week after Gov. Charlie Crist dealt Florida pari-mutuels a bust card by approving a deal that will allow Indian casinos to install Las Vegas style slots and card games at its seven casinos, Havenick said the fight is just beginning.
"We're playing the wait-and-see game right now," said Havenick, about an hour after House Speaker Marco Rubio, R-West Miami, challenged Crist's gambling compact with the Seminole Tribe of Florida.
On Monday afternoon, Rubio asked justices to void the compact, which would allow the tribe to offer blackjack and other high-stakes games in exchange for hundreds of millions of dollars that Crist wants to spend on education.
"Rubio just filed suit, so we have to wait and see what happens," said Havenick, adding that he had spoken with a few other pari-mutuel owners about Crist's agreement.
"What's really going on? I don't know. We're going to reconvene next week."
By getting Crist to agree to the compact, Jim Allen, the CEO and president of Seminole Gaming, says Immokalee would reap the benefits of increased gaming.
He said a casino similar to the Hard Rock Casino in Hollywood is feasible and would significantly improve the city's economy.
"We've had a very good day," Allen said following the agreement. "Now we just have to wait and see what happens."
He said he envisions building a completely new gaming facility in Immokalee "complete with retail, restaurants, nightclubs, possibly a golf course and a resort hotel."
Dick Rice, executive director of the Immokalee Chamber of Commerce, said this will have a "significant impact on the economy of Immokalee."
"It'll mean more jobs and solidify our plans for the downtown area."
The compact came following years of negotiations.
U.S. Secretary of the Interior Dirk Kempthorne earlier this year had ordered Florida and the Seminoles to come to an agreement.
"This historic agreement comes after 16 years of negotiations between the state of Florida and the Seminole Nation," Crist said.
The Department of Interior had given the state until Nov. 15 to work out a contract with the Seminoles, or it would have allowed untaxed gaming on the tribal lands.
"The Secretary of the Interior has 45 days to sign off on this," said Thomas Philpot, a spokesman with Crist's office in Tallahassee. Kempthorne's office gave no indication of when that might happen.
Crist said the Seminoles will pay Florida $50 million as soon as the federal government approves the compact, with guaranteed annual payments of $100 million a year. Starting in the third year of the agreement, the state's share will increase on a sliding scale between 10 percent and 25 percent of revenue from the gambling operations.
The basic elements of the exclusive agreement allow blackjack and baccarat as well as Las Vegas-style slots in the Hard Rock casinos in Broward County, Tampa and Immokalee, but no craps or roulette, said Seminole Tribe lawyer Barry Richard.
Allen wasn't sure when blackjack might begin in Immokalee.
He said documents still must be signed and the talk of legal challenges could set plans back.
Allen said, providing everything goes smoothly, blackjack could appear in the Indian casinos within four to six months.
The deal immediately came under fire from ranking members of the state Legislature, including some in Crist's own Republican party.
Rubio said the House is of the legal opinion that any gambling compact is invalid without legislative approval, and raised the prospect of a court fight.
Senate President Ken Pruitt, R-Port St. Lucie, said his chamber's lawyers hadn't yet evaluated the compact or decided what, if anything, the Senate may do.
"There is no provision in our constitution for ratification of this compact, and it is not our intention that the Legislature will ratify it," said Crist's chief of staff, George LeMieux.
Because of the exclusive deal with the Seminoles, Florida's pari-mutuel industry, which includes the Naples-Fort Myers Greyhound Track, will not share in this increased gambling.
"I have to be honest, it's worse than we thought," Havenick said. "It's a bad deal for the pari-mutuel industry, the people who work here and the state of Florida."
Unlike pari-mutuels, which have to pay taxes on all revenue collected, the Seminoles will pay taxes only on the profit, Havenick said.
"When we get taxed, it's before we pay our employees," Havenick said.
"This is more than being just ticked off. We're scared. The governor gave us a raw deal," Havenick said. "We weren't even given a seat at the table."
After learning of the deal, Havenick said he phoned his immediate family plotting the next move. Because of the relative proximity — 37 miles — between the dog track and the casino in Immokalee, Havenick's family fears gamblers will follow the money.
The only kind of gambling allowed at state race tracks in addition to betting on dogs and horses is no-limit poker.
Bonita Springs City Manager Gary Price said he believes that once the dust settles, pari-mutuels will get the same gambling rights as the Seminoles.
"It's no secret why they haven't sold that 100 acres in front of the track," Price said.
"We're going to put an item before the legislative delegation that says (if they get a gaming license), some of that money has to come back to the municipalities for things like improving Bonita Beach Road, the interchange and police enforcement," Price said.
Seminoles and slots, continued
By Mark Lane
Daytona News-Journal Columnist
© 2007 News-Journal
Sunday. November 25, 2007
Readers may recall a column that appeared in this space last week with the downer headline "Better than nothing." The piece was about the state's pact with the Seminole Tribe of Florida and the heading nicely conveyed my enthusiasm for the undertaking.
The burden of the thing was to explain an interesting political contradiction. Namely, that many people who don't like big casino gambling support Gov. Charlie Crist's compact with the Seminole Tribe of Florida. A compact that allows expanded casino gambling.
This is not a position that gives me warm feelings of being in the right. Instead, it's a case of supporting the less-bad outcome. One that would benefit the state as a whole while South Florida and, to a smaller extent Hillsborough County, absorb the social and economic costs. One that would penalize future gambling expansion.
Yup, we need to allow more gambling to keep it from spreading.
Ain't Florida politics wonderful?
Conversely, people who would like to see more casino gambling in Florida and want the state to get into the video lottery business are against the compact. Foremost among them are parimutuel owners -- the people who run dog and horse tracks and jai alai frontons.
They want to limit Indian gambling in order to spread casino gambling.
And now there's a new wrinkle in the dispute. Florida House Speaker Marco Rubio filed suit Monday to void the agreement with the Seminole Tribe because it usurps the Legislature and violates the principle of separation of powers.
From the time the Seminoles first opened bingo halls in 1979, the state has been negotiating and litigating over their gambling operations. And yet, nowhere in the state constitution is anything authorizing the governor to work out compacts with Native American tribes. Nothing says he can't, either. And ambiguities like that are why we have lawyers.
It surprises most people to discover that Florida gets no tax money from current Seminole gambling operations. That's because there is no compact between state and tribe to do this.
This happened because the past two governors opposed any agreement that might recognize and tax Indian operations. After Gov. Lawton Chiles refused negotiations, the tribe sued and the state wound up losing a major U.S. Supreme Court case in 1996.
Gov. Jeb Bush took more of a passive-aggressive approach to the tribe's proposals -- negotiating only to the degree that the federal government mandated, and maybe not quite that.
But everything changed after 2004 when voters approved local-option slot machines for Broward County. Under federal law, if a state allows casino games, then it must allow Indian tribes the same games.
Under a federally-imposed deadline, Gov. Crist got a resoundingly just-OK deal for the state that would give Florida a cut of Seminole gaming.
So here's the worse-case scenario for the lawsuit opposing that deal: The compact gets voided by the courts. The feds then allow expanded slot machines in Seminole casinos with no taxation or oversight by the state. Then Florida, stuck with casinos anyway, gets in the video lottery business and allows casinos all over the place.
Yet why are many Republicans cheering on this suit? Because it fights casino gambling.
Am I missing something here?
mark.lane@news-jrnl.com