Florida on path against monopoly on table games

Mar 12, 2013 3:00 AM

For the ninth consecutive year Spectrum Gaming Group organized and produced the Florida Gaming Congress at the Seminole Hard Rock Casino in Hollywood, Florida, in late February – a day long gathering of the state’s “gaming who’s who” to discuss and prognosticate current and prospective business.

In the opening keynote address John Fontana, president of the Hard Rock, touted his company’s significant success. In his luncheon keynote speech former Senate President and current EVP of The Stronach Group, Mike Haridopolos, challenged the diverse groups to find common ground. He further stressed there is no longer a question that Florida is a gaming state and he cautioned that achieving any gaming consensus would be difficult at best.

In just about every session the definitive key phrase echoed by all pari-mutuels, Native Americans and resort properties was achieving a level playing field. Each participant presented an interpretation of their vision of a playing field, which generally was at odds with the others, resulting in a series of clashes further confusing lawmakers.

Gaming attorney and ex-GBP CEO/general counsel David Romanik in a panel on Public Policy the factions would never be possible.

Florida House, District 100, Representative Joe Gibbons’ district includes both Mardi Gras and Gulfstream Park. His primary concern is the current 35% state tax (on racinos) being too high. He also reminded casino operators that any 2013 proposed legislation would go nowhere, due to the pending study commissioned by the state assessing the economic impact of expansion. He reiterated that expansion will be difficult and cautioned it needed to be done within the current two year term. His reason: In 2015 Tallahassee’s political leadership will be more conservative. He felt some movement was possible in 2014, however, not comprehensive but incremental.

Alan Koslow, director of entertainment, hospitality and gaming law for the powerful Becker & Poliakoff law firm, was steadfast defending the current pari-mutuel operators. His expectation is destination casinos cannot ever expect to be approved without equal opportunities for current racinos.

The discussion group featuring current racing operators made another plea for a lower tax rate and the need for more products. The Broward County racinos in closest competition with the Seminole Hard Rock Casino want the tribe’s monopoly on table games lifted. Miami-Dade County racino operators complained about losing business to the “gray machines,” which (for years) operate illegally in the backrooms of food marts and bodegas throughout the county.

All racino operators found the majority of their players are locals. Magic City’s Izzy Havenick said they have a strong five mile radius. Another common element was a universally typical 50-plus demographic. A consensus expects a level playing field (table games, lower taxes, etc.) would create a younger and more mobile customer.

Perhaps the most interesting discussion panel was “Wall Street’s Focus on Florida.” Robert Heller, CEO Spectrum Gaming Group, moderated this panel of bankers and financial pros. Two distinct questions were discussed: When will expansion be accomplished? And, what is the future of destination casino resorts?

The panel, with experts from UBS, Deutsche Bank and Credit Suisse, cautiously predicted a phased in approach commencing in 2015, which would moderately progress to near saturation by 2018-2020. This panel articulated a variety of roadblocks – the tax rate, the number of licenses for destination facilities, and the economic condition of the globe/state/nation.

The panel warned about difficulties in forecasting anything concrete, considering the near term industry changes – including consolidation. Overall, the panelists seemed content to expect winning permits for Las Vegas Sands, Steve Wynn and Genting – not in any particular order. They felt Penn Gaming could also be a participant.

The general feeling at the meeting was mainly positive. There were, however, predictable naysayers: Florida Restaurant & Lodging Association and the Florida Chamber of Commerce were against any expansion. Some localities around Florida oppose any form of gambling, however, many counties in Florida held votes this past November approving expansion even though the Florida attorney general has indicated under current law it is not permitted.

Whatever the future holds, Florida seems a step behind the innovators as Internet gaming heats up in several states. Florida is studying how expansion through existing license holders, destination casino operators and the Seminoles can each have some exclusivity while competing on a level playing field, a daunting task for the upcoming legislature.

Though marginally aware of a gambling initiative, most legislators have constituents far more focused on jobs, education, and crime. The Miami-Dade delegation minimizes gaming expansion entirely. For the industry to cajole a senator or congressman to sponsor an expansion bill requires the best lobbyists, wads of cash and impeccable timing. The first two are in place.

Odds ’n ends

In their first press conference since unloading payroll to the Toronto Blue Jays, Miami Marlins owner Jeffrey Loria and team president David Sampson admitted their projections were way off. Sampson said they knew things were going the wrong direction when the interleague series with attendance juggernaut Boston Red Sox didn’t sell out…with the Marlins in first place at the time.

Loria and Sampson had projected a worst case scenario for 2012 attendance of 2 million. The reality through the turnstiles – 1.4 million.

Florida tribal gaming remains in the top five states in terms of revenue, based upon a report of 2011 action. California led the way scoring more than 25% of the total amount of revenue for Indian casinos across the USA. Nationwide, tribal gaming contributed 43% to the overall casino pot, and it’s thanks to a better economy.

Baird Thompson and William Hutchinson bring a combined 80 years of gaming marketing and administration experience to Gaming Today. Contact them at [email protected].

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