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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Florida remains the Holy Grail for casinos

2 May 2011

LAS VEGAS, Nevada -- Florida continues to be the gaming industry's Holy Grail.

And, like the line from the Monty Python movie, casino expansion advocates hope the issue is not dead yet.

There's too much money to be made from the Sunshine State.

In 2010, Florida's four racetrack casinos produced $217 million in gaming revenues. That's a pittance compared with the $2.05 billion in revenues collected in 2009 by the state's eight Indian casinos, according to Casino City's Indian Gaming Industry Report.

That's more than 2.2 billion reasons why Las Vegas Sands Corp., MGM Resorts International and Wynn Resorts Ltd., have lobbyists patrolling the Florida Legislature.

Most experts, however, believe chances for Florida lawmakers to approve any gambling legislation this year are fading like a sunset over the Gulf of Mexico.

"For a very tourist-dependent state, gaming makes sense on many levels," Hudson Securities gaming analyst Robert LaFleur said. "But (gaming) faces significant hurdles. There is too much opposition."

The most widely discussed bill calls for five Las Vegas-style hotel-casinos, one each in Tampa, Jacksonville, Orlando, Miami and a site in state's panhandle region. The casino proposals would require voter approval in each community.

The arguments in favor of adding gaming are the same as in any jurisdiction: millions of dollars in potential tax revenues and employment -- an estimated 20,000 new jobs according to the Florida proponents.

But Florida is not Tunica, Miss., or Detroit, which added casinos to revitalize economically depressed markets.

The state has a favorable climate and scenic beaches that attract millions of visitors. There are other tourism destinations and attractions, such as the Everglades and Orlando's theme parks.

Does Florida really need casinos?

"Clearly, Florida has sufficient attributes to attract tourism without expanding gaming," LaFleur said.

Some Florida markets fit a gaming model.

Miami, which Las Vegas Sands is eyeing, has the South Beach nightlife scene. A Sands' development would include high-end retail, restaurants and a convention center.

The Seminole Indian Tribe operates the Seminole Hard Rock Hotel & Casino Hollywood, between Fort Lauderdale and Miami, which has 130,000 square feet of gaming.

The tribe's largest Hard Rock property, the Seminole Hard Rock Hotel & Casino Tampa, is along Interstate 4, about 10 minutes east of downtown Tampa. It has a Strip-sized 178,000-square-foot casino and 250 hotel rooms.

The Seminoles' success has piqued the interest of the gaming industry.

"Parts of Florida could be incredible gaming destinations," one casino insider said.

Orlando, however, is not a gaming target.

Experts said Orlando residents would reject a casino, which could take away from theme parks operated by Disney and Universal, two of the area's largest employers.

Orlando is also showing signs of shaking off the recession.

An independent travel research firm found that Orlando's hotel occupancy in March was at its highest levels in three years. Eight out of every 10 hotel rooms was filled during the month. Downtown Orlando hotels increased occupancy by 19 percent.

Convention attendance is up while occupancy increased at hotels in Lake Buena Vista and Kissimmee, which surround Disney attractions.

LaFleur, a gaming advocate, would argue against an Orlando casino.

"It would change Orlando's dynamics," he said.

Families are Orlando's target market. Walt Disney World and Universal Studios drew thousands of families during April's spring break week.

The Wizarding World of Harry Potter, which opened last year at Universal's Islands of Adventure, is the park's top attraction. It also offered an economics lesson pointed out by my 16-year-old daughter.

Butterbeer, a nonalcoholic treat made famous in the Harry Potter books and movies, sold for $5, plus an extra $6 if you wanted the plastic souvenir mug.

Replica wands from the various characters probably cost a few dollars each to produce in bulk, but sold for $32 apiece plus tax.

That's better a payoff for the house than the tightest slot machine.