$100 million question delayed
Fla. high court stalls Indian gaming issue
By Bill Cotterell
news-press.com Tallahassee bureau
© 2007 Ft. Myers News-Press

TALLAHASSEE — The stakes are high, politically and legally, and the side bets plentiful as the Florida Supreme Court considers a clash between Gov. Charlie Crist and the Legislature over casino gambling on Seminole reservations.

The executive and legislative branches have often asked the seven justices to resolve separation-of-powers issues. But this time, there's a $100 million ante on the table and a 25-year pact that pits some of the most powerful interests in Florida against each other.

"Our whole administration, we're committed to this," Crist said late last week. "We think it's the right thing to do."

The state's highest court Friday put breathing room in the legal clash. Oral arguments that had been set for Wednesday were rescheduled for Jan. 30. The break in time does nothing to diminish the constitutional tussle for power.

When Crist entered into the gambling compact last month, allowing Las Vegas-style slot machines and card games like blackjack at seven casinos on Seminole land, he said the U.S. Department of Interior forced his hand. If 16 years of negotiation with the Seminoles came up empty, Crist said, the federal government would have allowed the gambling any way — with no proceeds going to the state.

But House Speaker Marco Rubio asked the Supreme Court to quash the deal and the Senate joined in the argument Crist was changing Florida's gambling laws. Owners of Gulfstream racetrack and the city of Hallandale sought to kibbitz with friend-of-the-court briefs, since the pact affects their revenues and operations.

"This Court must hold that the governor alone is not sovereign and that he may not unilaterally bind the state to the compact," said Rubio, R-West Miami, in a brief filed last week.

The compact calls for the tribe to pay the state $50 million when the federal government approves the deal — followed by at least $100 million next year, $125 million the following year and $150 million in the third year. Afterward, the state's cut is 10 percent to 25 percent of the casinos' revenue.

But the contract also provides that the Seminoles don't have to pay if the state allows casino gambling in any new locales. House and Senate leaders said that provision, along with details like non-smoking rules and regulatory matters, are legislative decisions Crist can't negotiate alone.

"Further, a state-tribal compact cannot authorize games that are prohibited by state law," Gulfstream contends in its brief.

A 2004 constitutional amendment allowed local votes on slot machines at pari-mutuel locations in Miami-Dade and Broward County. Miami-Dade voters rejected the idea but Broward permitted 6,000 slot machines at tracks and jai-alai frontons.

The Seminoles, who are an independent nation by federal law, complained to the Interior Department. The federal government agreed, saying "this leaves the tribe on an unfair playing field" if the pari-mutuels could add Las Vegas-style gaming.

Considerations

In addition to the separation-of-powers legalities before the court, there are commercial and political considerations. Horse and dog tracks saw casino-style gambling as their salvation because they were losing business — and they don't welcome the Indian competition.

Pari-mutuels pumped more than $800,000 into Republican Party of Florida coffers in the July-September quarter. The Seminoles didn't contribute during the quarter.

Though there is no public issue for voters to decide, the tribe is running an advertising campaign that praises Crist for getting new revenue for the state. The tribe also has a Web site, fairshareforflorida.com, touting the deal as a blessing for Florida schools.

Although Crist can't commit the revenue, he has stated he wants to put 95 percent of it for education and 5 percent for aid to local governments affected by the casino crowds.

Tallahassee attorney Barry Richard, who represented the Seminoles, sent his clients and the governor's staff a draft legal opinion bolstering Crist's position that the executive branch could enter into such an agreement.

"I don't see that the Legislature has a role in it," Richard said of Rubio's complaint. "There is nothing in the Constitution that says the Legislature is the only body that can do these things. There's nothing in the compact that invades the legislative function."

Rubio also argued Crist negotiated the deal secretly and there would have been public hearings if it had gone through the legislative branch.

"This case is about protecting our system of checks and balances," he wrote in a memo to House members. "The decision to grant the Seminole Tribe an exclusive right to conduct gambling that is otherwise illegal in Florida is a major public policy decision. Such decisions should be made in the open."

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Federal watchdog examines Seminoles' gambling profits

By Sally Kestin And Peter Franceschina
Staff Reporter
Copyright © 2007, South Florida Sun-Sentinel
Saturday, December 8, 2007

A team from the National Indian Gaming Commission arrived this week at the headquarters of the Seminole Tribe as part of an ongoing investigation into the tribe's spending of gambling profits.

The review will also examine findings uncovered in a South Florida Sun-Sentinel series published last week, said Phil Hogen, chairman of the commission, which regulates how tribes spend gambling profits.

"There were things mentioned in the articles that we knew something about. There was also new information. We're going to inquire as to those things," Hogen said.

The commission also has notified the Federal Bureau of Investigation in Washington, D.C., that its staff members want to meet with FBI agents in South Florida, but as of Friday a meeting had not been scheduled, said Judy Orihuela, an FBI spokeswoman in Miami.

"I think they just wanted to share the results of the audit with us, but I don't know when that is going to be. I don't know if they have done anything yet," Orihuela said. "It is all through headquarters that we are getting this information."

Shawn Pensoneau, a spokesman for the commission, said Friday he could not comment on any FBI involvement.

"We don't comment on potential reviews and investigations," he said.

Gary Bitner, a spokesman for the tribe, said the commission notified the tribe on Oct. 25 that its staff would arrive Tuesday.

On Oct. 9, the Sun-Sentinel interviewed Hogen, who said the newspaper's findings "cry out for some inquiry, and they will receive that."

In the series last week, the Sun-Sentinel detailed spending by members of the elected Tribal Council. Among them was a practice by certain council members of requesting checks under $10,000 without any other approval. In one eight-month period in the fiscal year that ended in September, more than $1 million in checks went to council member David Cypress and his children, all in round amounts under $10,000. Outside auditors who examined the tribe's 2005 spending warned that the practice created an increased risk for fraud.

The newspaper also found that council members have spent more than $280 million since 2000 from discretionary funds they control on tribal members and events.

Council members have paid tribal members' bills, financed their vacations and bought them cars, motorcycles, furniture, televisions and computers. Some council members and their families especially benefited. Cypress alone spent more than $160 million since 1999.

Increases in spending around elections, which occur every two years in May, have helped in part to keep a majority on the council in power for more than a decade, the Sun-Sentinel found.

Through at least 2004, council members' discretionary funds included gambling profits, which under federal law can be used only to benefit the tribe as a whole. Their spending came under scrutiny by the commission nearly four years ago. The commission characterized such things as purchases of luxury cars for individual members as an "egregious misuse" of gambling profits.

After a series of meetings with the tribe, the commission launched an investigation in October 2005.

That review was completed this year. In a May 11 letter to the tribe, the commission said the Seminoles were still not in compliance with federal law but praised the tribe for "noticeable progress" and "positive steps." The letter also outlined 13 problem areas.

The agency has taken no enforcement action against the tribe related to its spending. The commission has the power to fine tribes, close their casinos and make referrals for criminal prosecution.

Marcia Green, adviser to Tribal Chairman Mitchell Cypress, and Bitner have said the tribe has made considerable progress since the commission first raised its concerns. Neither the tribe nor the commission would say what records are currently under review or what the commission's investigators found this week.

Testifying before the Senate Indian Affairs Committee in February 2006, Hogen said the commission's "approach to expenditures is that where gaming revenues are spent in a manner that does not benefit the tribal government or tribal membership as a whole, then the NIGC will investigate."

Hogen testified the commission has found instances while reviewing the spending of other tribes where gambling profits benefited tribal officials or factions, not the tribe as a whole, and where tribal money was used to influence elections.

"I should also note that in a number of circumstances, our investigation discovered evidence of possible criminal activity," Hogen testified. "As required by [federal law], we referred the relevant information to the appropriate law enforcement agency for further investigation."