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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Florida casino supporters vow to continue fight

20 February 2012

SUNISE, Florida -- Supporters of legislation that could land three destination-style casinos in South Florida weren't overly disappointed Feb. 3 when state lawmakers canceled a planned vote on the controversial bill.

The move seemingly ended the Sunshine State's gaming expansion talks for 2012 after 18 months of heated debate, but many said the battle is just beginning.

Analysts predict that full-scale casinos would eventually propel Florida past New Jersey and Pennsylvania as the nation's No. 2 gaming revenue market behind Nevada. With that kind of money at stake, officials from Las Vegas' major casino companies devoted much of last year to assessing Florida's gaming opportunities and lobbying for expansion.

Las Vegas Sands Corp. Chairman Sheldon Adelson met privately with Miami's mayor. Wynn Resorts Ltd. Chairman Steve Wynn paid a more public visit to the mayor of Miami Beach. He toured a potential casino site, dined at Joe's Stone Crab in South Beach, and gave interviews to selected media.

Officials with Las Vegas Sands, Wynn Resorts and MGM Resorts International separately explored the BankAtlantic Center in Broward County north of Miami with an eye on adding a major casino resort there. The 19,250-seat arena -- home to the National Hockey League's Florida Panthers -- has 90 acres of undeveloped land and is accessible from major highways. It's also adjacent to the 2.3 million-square-foot Sawgrass Mills Mall, a megaoutlet center considered the state's second-largest tourist attraction after Disney World, bringing in some 30 million annual visitors.

Meanwhile, Genting Group, a powerful and well-financed casino operator out of Malaysia, spent $500 million to assemble 30 acres with 800 feet of waterfront on Biscayne Bay in downtown Miami for Resorts World Miami, a planned $3.8 billion gaming, hotel and entertainment complex that analysts say would rival the Strip in annual gaming revenues, if ever built.

Opposing casino expansion are Florida's Seminole Indian Tribe, which operates Hard Rock casino properties in Tampa and Hollywood and four other casinos in the state; theme park operator Walt Disney Co., which doesn't want gaming infringing on its family-friendly businesses; and racetrack casino operators, who fear their slot machine-only facilities would be decimated by the competition.

But following a few hours of intense debate in Tallahassee on Feb. 3, the expansion bill was pulled, shelving the issue for this legislative session, which ends March 9. While the matter could come up again in a special session, there's also talk of a ballot referendum that would take the issue directly to voters.

Most casino backers said they expect the process to spill into 2013, based on similar fights in other states. It took several years before casinos were approved in Ohio, Pennsylvania and Massachusetts.

Florida supporters still plan to press forward.

"We were not overly optimistic it would pass this year," said Michael Yormark, president and chief operating officer of Sunrise Sports & Entertainment, which runs the NHL's Panthers and the BankAtlantic Center. "I think we looked at this as a two-year opportunity. The speculation is that the issue would have a better chance next year."

NOT A FOREIGN IDEA

Gaming is not a new concept to Florida. As of last year, the state had more than 18,000 slot machines in seven Indian casinos and five racetrack casinos, according to a report by Wells Fargo Securities.

"The idea of expanding gaming and bringing destination casinos is not a foreign idea," Yormark said.

Barry Johnson, president and chief executive officer of the Greater Miami Chamber of Commerce, agreed that a two-to-three-year approval process for casino legislation is likely. The chamber conditionally supports the destination gaming concept in expectation of a boost to tourism, tax revenues, and jobs.

"It's not out of the ordinary in Florida that something somewhat controversial gets delayed or moved around," Johnson said. "Gaming is certainly controversial. This issue was responsible for the hiring of the most lobbyists in Tallahassee that I can ever remember."

The potential for three South Florida destination casinos -- each with a minimum investment of $2 billion plus up-front licensing fees to the state -- is still alive, and proponents are acting as such.

Yormark said Sunrise Sports & Entertainment plans to announce a partnership with a Las Vegas casino operator by month's end. He called the arena site "the best casino location" in South Florida.

"If you were to draw a pin on the center of the South Florida marketplace, the pin would drop on this building," Yormark said.

A Spectrum Gaming economic feasibility study commissioned by Sunrise Sports determined a casino with a 3,000 "gaming positions" (both slot machines and table games) attached to a 1,000-room hotel and other amenities would be a global draw, though the company wouldn't release actual numbers.

"We're going to be a site that will appeal to the local community, but we will also be a site that will drive tourism," Yormark said. "Many of the people that shop at Sawgrass Mills come from South America. They would want to engage in our facility."

The NHL is being kept apprised of the casino plans, Yormark said.

Meanwhile, the team president has done his due diligence, making at least a dozen trips to Las Vegas in the past year.

"I have no doubt a destination casino would make this site a complete entertainment experience," Yormark said. "We're not discouraged by (the stalled legislation)."

GENTING UNDETERRED

Genting officials declined comment for this story, but on the day the bill was tabled they released a statement pledging to "continue to work" on Resorts World Miami.

The casino company, which operates Resorts World Sentosa in Singapore and the slot machine-only Resorts World Casino New York City at the Aqueduct Race Track, had the most chips in the pot.

Genting produced elaborate plans for a futuristic complex with four hotels and 800,000 square feet of casino space that, according to Spectrum Gaming's analysis, would produce $4.5 billion to $6 billion in annual gaming revenue.

The site includes The Miami Herald building -- the newspaper will move in May 2013 -- and the Omni Center, a mixed-use development that has an empty retail mall, corporate offices and the Miami Downtown Hilton. It's adjacent to the city's Adrienne Arsht Center for the Performing Arts and several of Miami's museums.

Johnson, whose office is in the Omni Center, said the chamber hasn't specifically endorsed the Genting project, but backs destination casinos in concept.

Miami is home to just two Fortune 500 companies and is considered a small- to medium-size business market. The lure of some 30,000 permanent jobs associated with Resorts World, along the potential of a second destination casino in Dade County, is too much to ignore.

Johnson said Genting's average casino job would pay close to $43,000 a year, exceeding Miami's average salary.

"The first floor of our economy has always been tourism," Johnson said. "We're the No. 1 destination in America for international tourists. Destination casinos would be designed as an addition to the rich fabric of attractions in Miami."

The vote by the chamber's board was not without conflict, Johnson said. Some small businesses, especially restaurant operators and small hotel owners, worry "they would be eaten alive," he said.

Johnson said similar fears were expressed in Orlando decades ago when Disney came to town. Now, "there are far more hotels and restaurants in Orlando than before Disney ever showed up."

DIFFERING OPINIONS

Floridians are split on gambling expansion.

A statewide poll conducted for The Miami Herald in January found opposition narrowly outweighing support, 44 percent to 42 percent, with an overwhelming 81 percent saying any changes to the gambling law should be subject to voter approval.

Some residents don't understand the controversy.

Downtown Miami restaurant owner Luis Garcia, 41, whose family has operated Garcia's Seafood Grille and Fish Market next to the Miami River since they fled Cuba in the 1960s, passionately supports the development. He said that even with 50 restaurants, Resorts World Miami wouldn't hurt his business, which is about 25 blocks away and caters mostly to locals.

"To me, it means more people coming through Miami and more jobs for my customers. And that means more business for my restaurant," said Garcia, whose 250-seat restaurant employs 53 and has open-air seating with a view of the new $515 million Miami Marlins stadium.

"This type of development is good for Miami, and that's good for my business," Garcia said.

Garcia is not alone in that view.

"Why not? We love the idea," said Kevin Delucca, of Boca Raton, Fla. He and three friends, Miguel Olivera of Boca Raton, Mark Petrie of Fort Lauderdale, and Axel Lopez of Lakewood, Fla., were drinking beer at the BankAtlantic Center between periods of a Florida Panthers-Winnipeg Jets game on Feb. 3. They were disappointed the casino bill had stalled.

"I like to go to the (Seminole) Hard Rock (Hollywood) to gamble," Lopez said. "It would be nice to have a casino near the arena."

But hockey fans John and Betty Valek of Parkland, Fla., were skeptical.

The Valeks, who moved to Florida from New Jersey, voted in favor past gaming expansion initiatives because they thought tax revenues would help schools. But with a few years hindsight, they don't believe gaming made Florida's education system any better.

Still, John Valek said he and his wife would back a casino next to the arena, with caveats.

"I wouldn't want it closer to where we live," he said. "The money would have to go toward education."

PREPARING FOR THE NEXT ROUND

While they appear to have won a battle this year, opponents of casino expansion aren't claiming victory. They believe the issue will resurface in some form.

The Seminole Tribe, both a political and economic force in Florida, is preparing for the next round. Seminole Gaming CEO Jim Allen is quick to note that if destination casinos are allowed in Dade and Broward Counties, the tribe would no longer be obligated under its compact to pay the state any gaming revenue proceeds, which are expected to amount to $234 million in the current fiscal year.

"We're not allowed to pay for the scope of gaming if it's offered somewhere else in the state," Allen said. "That's federally approved by the U.S. Department of Interior."

Racetrack casino operators, meanwhile, say they've been left out of the process and will fight to protect their interests.

St. Louis-based Isle of Capri Casinos, which operates the Pompano Park racetrack near Fort Lauderdale, has 1,460 slot machines, 40 electronic blackjack tables and a 38-table live poker room. But the facility could be dwarfed by a full-scale hotel-casino 26 miles to the east at the BankAtlantic Center. Already, the small casino competes for customers with the Seminole Coconut Creek and the Seminole Hard Rock Hollywood.

Also, racetrack casinos pay a 35 percent tax on slot machine revenues, far above the 10 percent proposed for destination resorts.

"You don't have all the casino companies together on this," said Isle of Capri Chief Administrative Officer Donn Mitchell. "We would be put at a competitive disadvantage. At some point you have to level the playing field for the existing casinos."

THE FINAL TEST

The biggest hindrance to Florida casino expansion may actually be in what legislation finally passes. The language, tax rates, and other items could keep Las Vegas companies on the sidelines.

The bill that was tabled Feb. 3 was the product of an eleventh-hour rewrite by legislative staff. Among the changes was eliminating an independent gaming commission in favor of a regulatory agency controlled by politicians.

Andy Abboud, vice president of government relations for Las Vegas Sands, said that change alone is a deal-breaker for his company, which would rather have an independent regulator considered less susceptible to politics.

Abboud also said three destination casinos might be too many for South Florida.

Yormark, however, is more pragmatic. He said he just doesn't want Florida lawmakers to approve something that won't work.

"It's got to be the right bill, or else it just doesn't make any sense," Yormark said.
Florida casino supporters vow to continue fight is republished from Online.CasinoCity.com.