Gambling officials feeling fallout from Wall Street's woes
By John Lantigua
Palm Beach Post Staff Writer
© 2008 Palm Beach Post
Thursday, October 09, 2008
HOLLYWOOD — Professionals in the gambling business have some pretty pointed opinions about the Wall Street titans who brought you the current financial crisis.
"The problem is they were playing with other people's money," says a stern-faced Alexander Havenick, whose firm, Southwest Florida Enterprises, runs poker parlors and dog racing tracks in the Miami and Fort Myers areas. "Would you do that with your own money?"
In Havenick's business, everyone places his or her own bets, whether on a racing greyhound or three kings. Handing money over to Wall Street middle men with a taste for crumby mortgages has turned out to be a bad wager for the American public, he says.
Charles Anderer, publisher of the Casino Journal and Indian Gaming Business magazines, couldn't agree more.
"It's a mug's game," says Anderer, speaking of the state of affairs in the roller-coaster stock market and the other dealings by those financiers. "They say Wall Street has been operating like a casino lately, but that's an insult to the casinos.
"The casino business is run strictly by the numbers and is much more strictly regulated than Wall Street."
Havenick and Anderer were among dozens of gambling business professionals who attended the fourth annual Florida Gaming Summit this week at the Seminole Hard Rock Hotel and Casino.
The gaming industry professionals are not happy with the cards that Wall Street has dealt the nation and their industry in the past month. They say that while slot machines return about 90 cents of every dollar wagered to the gamblers, Wall Street is coming up short of that lately.
The professionals have their own portfolios to worry about, like everyone else, and they are looking at fewer customers over the next year as would-be gamblers tighten their belts.
The summit host tried to be optimistic.
"Here's the good news: The Florida gaming market has been growing double digits all year," says James F. Allen, CEO of gaming operations for the Seminole Tribe of Florida, which controls the bulk of the state's $1.6 billion Indian gambling industry.
But then he has to add: "I haven't seen September numbers yet."
Most attending the summit figure that the "take" at betting venues will suffer.
Rising home values had made Americans feel flush in recent years and spurred gaming. But the housing bubble has burst and rising unemployment won't help, either.
"People are still going to gamble, but a little less frequently, and they're going to spend less each trip," says Joel Simkins, a gambling business specialist for Macquarie Capital in New York, who spoke at the summit.
Already, word has reached Florida from Las Vegas and Atlantic City that credit to build new venues has frozen up, a new situation for the modern gambling industry.
"We've never encountered anything like this before," says Dennis Farrell, a gaming industry analyst for Wachovia Capital Interests.
Seminole Gaming is also facing its own particular challenge. A compact signed in November 2007 with Florida Gov. Charlie Crist allowed the Seminoles to introduce Class 3, Las Vegas-style slot machines, which feature larger jackpots than machines previously used in Seminole casinos.
The compact also allowed the Seminoles to run casino table games, such as blackjack, baccarat, and Pai Gow poker. In exchange for those new machines and games, the tribe would give the state at least $100 million a year for 25 years.
But the Florida Legislature sued, claiming the governor had no right to enter into an agreement without the involvement of the legislative branch, and in July the Florida Supreme Court agreed.
If the Seminoles and the state do not reach a new accord soon, the National Indian Gaming Commission may order the removal of those popular machines and games in accordance with federal law. Crist has promised to try to broker a new deal.
"We're in kind of limbo," says Jim Shore, general counsel of the Seminole Tribe.
Meanwhile, the Seminoles say they still offer a better place to take your money than Wall Street - at least for the moment.
"Buying subprime mortgages in bulk, that's a real gamble," says Gary Bitner, a spokesman for the Seminole Tribe. "Gambling here at the casino has fewer long-term consequences."
Alan Koslow, director of gaming, entertainment and hospitality law for the Fort Lauderdale law firm of Becker & Poliakoff, is in accord.
"If you double down every time, you can't lose," he says of his own betting strategy. "And on Wall Street, there is no loyalty. Here at the Hard Rock, if you're a good customer, you get a free room."
Don't bet against Seminoles in high-stakes battle
Michael Mayo
News Columnist
© 2008 South Florida Sun-Sentinel
Thursday, October 9, 2008
The biggest casino of all — Wall Street — is crumbling and our 401(k)s have become 201(k)s, but the chips keep flying at the blackjack and baccarat tables at the Seminole Hard Rock Hotel & Casino in Hollywood.
Three months after the Florida Supreme Court ruled Gov. Charlie Crist didn't have the authority to sign a gambling compact without legislative approval, the Seminoles haven't tabled the table games or slots.
Instead of closing the disputed games, which is what Florida Attorney General Bill McCollum wants, the tribe might soon open blackjack tables at its other casinos, including Coconut Creek and Seminole Casino Hollywood, known by locals as Hollywood Classic
At a gambling industry conference at the Hard Rock on Tuesday, tribal attorneys said they consider the compact valid.
The tribe has been given a soft Oct. 17 deadline by the National Indian Gaming Commission to express "its intentions regarding the continued play or discontinuation of Class III gaming."
In a Sept. 25 letter, the commission requested "a detailed legal explanation and analysis" from the tribe.
In an Oct. 4 letter to McCollum, the commission said it was "still studying" his request for a temporary closure order. Commission attorney Penny Coleman noted the state Supreme Court "did not specifically declare the [compact] ... invalid."
The commission has the authority to fine or close the Seminoles' casinos if it finds the tribe in violation of federal law. Under Indian gaming law, tribes need a valid compact to offer games in which gamblers play against the house.
State Sen. Steve Geller, D- Cooper City, said the Legislature won't approve a compact that includes table games, which are prohibited elsewhere in the state. He said the best the tribe could hope for is a new deal with slots only and lower voluntary payments to the state — 3 percent of net revenue, not the 10 percent first negotiated.
But the tribe could be entitled to slots without paying the state at all.
Seminole attorney Jim Shore said the tribe has already endured 17 years of stalling by the state.
"We've been at this thing since January 1991," Shore said. "If there's some frustration out there, it should be on our part. ...We keep trying to find ways to give the state of Florida millions of dollars, and they keep saying, 'No.'"
If the tribe expands table games to other locations, it could be viewed by Tallahassee as a provocative act. But the Seminoles might figure it's best to exploit the legal gray zone now, because it might bolster an "irreparable harm" argument later.
Said Seminole Gaming CEO Jim Allen: "We're in a dilemma. ... We're required under federal law to comply with the compact and maximize revenues for the tribe."
Meantime, the state's budget troubles continue and the three Broward pari-mutuel slot racinos keep complaining about their 50 percent tax rate and disadvantage without table games.
Because this is Florida, where nothing relating to gambling policy makes sense, expect another long year of fighting.
If the state did things right decades ago, it could have reaped billions while limiting casinos to the tribes or a few resorts. Instead, there's been a piecemeal expansion with the state getting shortchanged, and frustrated gamblers getting more confused at every step.
"No question the best solution is for the state and tribe to come to an amicable solution," said George Skibine, Acting Deputy Assistant Secretary of the U.S. Department of the Interior.
Good luck with that.