When I first started to report on the gaming industry back in the early 1990s, every month or so I got a call from someone called Casino Stan. He was a Bronx native and long-time gaming aficionado-a veteran of the Las Vegas and Atlantic City resort scenes who decided to retire to bright and sunny Southern Florida.
Our talks always began with the weather; Stan would needle me about how tropical it was in Florida compared to the typically harsh weather I was living through in New York City. But eventually the conversation would turn to Stan’s favorite subject and latest raison d’être-his one-man attempt to bring full-scale casino gaming to his new home. For the most part, this consisted of him writing editorials to newspapers about the benefits of casinos and how South Florida-thanks to its weather, beaches and population-was ideally situated to make a killing in this industry. He would sign these letters Casino Stan, hope they would get published, and when they did he would give me a call to let me know what newspaper they were in and to grill me on recent gaming developments and if I had heard anything about resort casinos coming to Florida, which in those days I never did.
I lost track of Casino Stan over the years, but if he is still alive I imagine he’s walking tall and talking proud since it appears his dream may come to fruition. Two bills are currently wending their way through the Florida Legislature, the gist of which would allow the development of three multi-billion-dollar Singapore-style integrated gaming resorts in Miami-Dade or Broward counties. The gaming industry has been positively abuzz since the Destination Resorts Act was unveiled late last year, and for good reason. An economic study conducted by Spectrum Gaming Group determined that the three 5,200-room resorts could generate between $4.5 billion and $6 billion a year in casino win, eventually surpassing the Las Vegas Strip as the top grossing gaming market in the United States. “You’ve certainly got the population,” Spectrum Managing Director Michael Pollock told theFlorida Sun-Sentinelnewspaper. “You’ve got the tourism infrastructure. You’ve got access to multiple markets, many of which are untapped by gaming, such as Latin America.”
“South Florida is a huge market that is underserved with respect to resort gaming,” added Eugene Martin Christiansen, CEO and owner of Christiansen Capital Advisors, a New York City-based independent research and consulting firm. “It is also a market with year-around good weather, especially compared to other gaming destinations on the Eastern Seaboard which are very seasonable. In this respect at least, South Florida resembles Las Vegas. If you are a very big gaming company like Wynn Resorts or Las Vegas Sands and you have the whole world to choose from, there are definite advantages to investing in Florida.”
Indeed, Wynn, Las Vegas Sands and Genting Group immediately jumped on the South Florida integrated casino resort proposal, eyeing potential sites and announcing their attention to bid for one of the licenses if and when enabling measures passed through the state legislature.
Since that time, however, momentum for the Destination Resorts Act has lessened as it goes through the sausage-making process of becoming law. Detractors-a long and eclectic list that includes pari-mutuel operators, tribal gaming entities, local business groups and family tourism giant Disney-and their political allies voiced concerns about various aspects of the casino resort bill. In an attempt to placate these concerns and create legislation palatable to all involved, a once simple and straightforward proposal has morphed into separate, lumbering House and Senate versions that may be impossible to put back into a single compromise bill-if the measures even get that far.
“There’s been a political movement for the resorts bill and a gaming industry movement for the resorts bill and a lack of unified vision overall,” said Michael Soll, executive vice president of The Innovation Group, a provider of consulting and management services for the gaming industry. “It’s been a challenge to get everyone on the same page.”
The problem: time is quickly running out for agreement and compromise. Florida’s legislative session for new bills is brief and ends this month. The Destination Resorts Act has a long way to go before it’s assured of both House and Senate passage, and some are beginning to doubt it will make it this year.
“If you had asked me a couple of months ago, I would have said there was a greater than 50 percent chance of the casino resort measure passing,” said Suzanne Leckert, director of gaming, feasibility and land use for TMG Consulting, a New Orleans-based firm that provides market assessments and studies for the gaming industry. “Now I’d say it has less than a 50 percent chance. It doesn’t look like it will make it this go-around. Maybe now they’ll work on all the negotiations needed to make it pass in another year or so.”
GENTING CATALYSTThis measured observation is a far cry from the general euphoria that greeted the Destination Resorts Act when it was introduced last October. Sponsored by Sen. Ellyn Bogdanoff (R-Fort Lauderdale) and Rep. Erik Fresen (R-Miami), HB 487/SB 710 called for the licensing of three “destination casino” resorts that would require a $2 billion investment commitment from each prospective license holder and would have a 10 percent tax on slot revenue. The resorts could only be established in jurisdictions that had previously approved slots and pari-mutuel facilities, essentially paring potential locations to Miami-Dade and Broward Counties and circumventing the need for local referendums to approve the sites for gaming.
As a carrot to conservative politicians likely to look askance at gaming expansion, the Destination Resorts Act also called for the creation of a state gaming commission and a new Department of Gaming Control to regulate all gambling in Florida. Surprisingly, the Sunshine State is the fourth largest gaming jurisdiction in the U.S., home to tribal casinos, racetrack slots, video poker outlets, quasi-legal internet gaming parlors and a lottery, all operating without a oversight from a unified statewide authority.
“This is the opportunity to actually control and harness it for the first time,” Bogdanoff told National Public Radio shortly after the Destination Resort Act was unveiled. “We have a proliferation of gaming in this state, and I don’t even know that the public understands just how much it’s growing. It’s growing tremendously-and it’s growing in the wrong direction.”
Ostensibly, the goals of the bill are to bring in outside investment to the state, create jobs, generate tax revenue and boost lagging tourism and convention trade. Hence the reason for the size and scope of the proposed resorts, according to Bogdanoff. “We have to focus on the type of resort that brings in the trade shows and the conventions and the national tours,” she told the Sun-Sentinel. “I’m not just looking for another casino.”
Another motive for the legislation may have been to placate Genting Group, which had just made a major land purchase in Miami, buying the shuttered Miami Herald building and the 140 acres of waterfront land surrounding it for $236 million in June. At that time, the company announced it would invest $3 billion in a 20-year build-out at the site to create Resorts World Miami, a multi-purpose complex that will include a luxury hotel, convention and entertainment centers, restaurants, retail, commercial and residential real estate, and, potentially, a casino. Mike Speller, the New York-based president of Genting’s Resorts World U.S. subsidiary, let it be known that a green light on a commercial casino for the site would accelerate the pace of development and cement the company’s monetary commitment.
Whatever the reasons for its creation, the gaming industry responded to the Destination Resort Act and potential South Florida integrated casinos in a big way. Resorts World Miami upped the ante, unveiling plans to build a sprawling $3.8 billion complex with six hotel towers totaling 5,200 rooms, 50 restaurants and two casinos
Genting was not alone in declaring its intentions for the South Florida marketplace. Las Vegas Sands, Wynn Resorts, Caesars Entertainment and MGM Resorts International expressed interest in competing for one of the $2 billion destination resort licenses, and began eyeing potential sites and partnerships in and around Miami.
“A lot of these same players have expressed interest in the Massachusetts market for pretty much the same reasons,” Christiansen said. “These are large markets and an investment should generate a reasonable return.”
As interest in the destination resort licenses grew, so too did the potential economic impact of the projects. Officials from Genting, probably sighting a best case scenario, told a senate committee that the resort casinos would generate millions of dollars in tax revenue, create 100,000 jobs (although Las Vegas Sands predicts a much more modest 12,000 jobs per resort) and subsidize 12 new flights from Asia to Miami each week. The Spectrum Gaming study reported Resorts World Miami alone could rake in $1.4 billion to $2 billion in yearly revenue. Other analyst firms found this figure low, believing the completed resorts could bring in between $2 billion and $3 billion each year.
Revenues aside, the job creation numbers quickly caught the attention of labor groups, considering South Florida is currently saddled with a 10 percent unemployment rate. Associated Industries of Florida, Associated Builders and Contractors, the Florida Concrete Products Association, the Florida United Business Association, the Florida Transportation Association, the Latin Builders Association and other labor entities have come out in support of the Destination Resorts Act.
The general public was also starting to take a shine to the resorts legislation. A January poll of 1,412 registered voters by Quinnipiac University found that 48 percent wanted commercial casinos and that 61 percent believed commercial casinos could improve the state’s economy.
POWERFUL OPPOSITIONDespite these projected benefits and public support, the Destination Resorts Act was far from universally acclaimed. The pari-mutuel industry immediately assailed the measure, primarily decrying the fact that the proposed resorts would be taxed at 10 percent of machine win, while they were yoked with a 35 percent slot tax rate. Racino operators began pushing for parity-either by lowering their tax rate or increasing the resort rate so all operate on a level playing field.
“There is enough business to go around,” said Izzy Havenick, vice president of Miami-based Magic City Casino, which is located at the Flagler Dog Track. “People are going to go where they want to go, but if everyone is competing on the same level, there is enough for everybody. So we’re not going to let go of parity; parity of tax rate, product or regulation. We think it’s only fair that if you’re in the casino business, you’re treated the same and that’s that. That for us is the number one point.”
Leckert agrees. “I think parity will help the track facilities,” she said. “In our models, we are seeing there is really enough demand out there that everyone can do well. Florida is such a destination for international tourist and we are seeing that tourist numbers are going up from emerging markets such a South America. I think there is room for everyone.”
Equally upset with the resort destination bill was the Seminole Tribe of Florida, operators of seven casinos in the state. The tribe currently pays the state $250 million a year for the exclusive right to operate casinos, and was less than thrilled to hear the new integrated resorts would house Las Vegas-style gaming operations.
“From the beginning, when we first heard about the current legislation to significantly expand gaming in Florida, the Seminole Tribe of Florida has stood squarely in support of the gaming compact the tribe signed with the state of Florida in 2010,” wrote Seminole Tribe of Florida Council Chairman James E. Billie and Board President Tony Sanchez Jr. in a prepared statement. “We have called upon Governor Rick Scott, his Cabinet and the Florida Legislature to protect this agreement, signed in good faith, against all attacks against its integrity.”
Opposition to the gaming resort measure also came from outside the gaming industry, most notably from Walt Disney World, the Florida Chamber of Commerce and other organizations concerned about the scale of the proposed commercial gaming enterprises and the potential harm they could have on the state’s image as a family vacation getaway.
The resorts act was also something less than popular among many state politicians. Despite being introduced by two Republican legislators in an overwhelming Republican legislature, a number of representatives and senators came out against the measure, including the governor’s entire cabinet, according to some reports.
LEGISLATIVE UNCERTAINTYPressure from these politicians and special interest groups forced changes to the formerly matching Senate and House version of the Destination Resorts Act. To make the senate version of this bill palatable to her colleagues and survive a committee vote, Bogdanoff was forced to drastically expand the scope of gaming in the measure. SB710 still calls for three $2 billion resorts, but allows them to be located anywhere in the state so long as they are approved by local referendum; allows pari-mutuel facilities to offer the same games as any destination casino located in their county, equalizes the tax rate at 10 percent for both the resorts and pari-mutuel facilities and allows any pari-mutuel facility in the state to have Las Vegas style slots if approved by local referendum.
“This is a big lift and there’s a lot of stuff in here,” Bogdanoff toldBloomberg Businessweek. “Call it what you want. Call it an expansion. Call it a reform. Call it a redirection.”
Meanwhile, the conservative nature of the Florida’s representatives has forced the House version of the Destination Resorts Act in the opposite direction. Like SB710, HB487 calls for three resorts, a uniform 10 percent machine tax rate for pari-mutuel facilities and resort casinos and countywide referendums before a casino is approved for a jurisdiction. Unlike the Senate version of the bill, HB487 still calls for the casinos to be located in Southern Florida, repeals 17 dormant pari-mutuel permits, prohibits the state from issuing future pari-mutuel permits, and bans Internet wagering cafes and maquinita parlors that were allowed to operate slot-like machines.
The changes “scale back existing gaming and ensure there is no additional gaming,” Fresen told theMiami Herald. Even with these changes, Fresen acknowledged he may not have enough support to secure passage when the bill comes up for a floor vote.
Some wonder if there is a compromise to be had between two such divergent bills if and when it comes to presenting reconciled legislation to the Governor. And the measures still have to go through a number of committees-two in the Senate and three in the House-before they come up for a vote.
For these reasons, some politicians are already talking about next year for any destination casino resort legislation. “We can’t do this in one year,” Sen. Maria Sachs, (D-Delray Beach) told theSun Sentinel. “We need to go slow. We need to be careful. And we need to go in the best direction for Florida.”
Sen. Charlie Dean, (R-Inverness), echoed these sentiments toBloomberg Businessweek. “I think we’re reaching way too far; we’ve gone too fast and in too big a hurry.”
Still, there is some urgency to get resort destination debated and approved while gaming companies are still interested and money and jobs remain on the table. “It isn’t every day in this economy you have companies stepping forward willing to spend billions,” said Sen. Miguel Diaz de la Portilla (R-Miami).