Legislation was today (Wednesday october 26) introduced which, if passed, could negatively affect the equine harness racing racing/breeding interests in Florida, its pari-mutuel racetrack stakeholders and the economic impact created by the equine industry.
The Destination Resort Act sponsored by Rep. Erik Fresen (R-Miami) and Sen. Ellyn Bogdanoff (R-Fort Lauderdale) would provide exclusive full casino licenses to three new destination resorts. These resorts would be taxed at 10%, reportedly among the lowest rates in the US and below the 35% currently paid by pari-mutuel tracks/racinos.
The legislation would also replace the Department of Pari-Mutuel Wagering with a new Department of Gaming Control. The new destination reports would be selected from among competitors willing to pay $50 million to compete and then those selected would be required to invest $2 billion in each facility.
The affect on current racinos and casinos is reported to include:
- higher taxes than the new resort casinos
- restriction that the legacy facilities may offer only pari-mutuel and slots products
- the Seminole Indian monopoly would end and they would lose their exclusive offering of blackjack, baccarat and other table games
The Miami Herald article published this morning is shown below. We will report future developments on this matter as they occur.
CASINO BILL SACRIFICES HORSE AND DOG TRACKS FOR MEGA-RESORTS
By Mary Ellen KLAS
Herald/Times Tallahassee Bureau
In a move designed to shift Florida’s gambling focus, two new bills to be filed Wednesday would award exclusive full-casino licenses to three massive “destination resorts” and leave the struggling pari-mutuel industry to wither.
The goal of the proposals by Rep. Erik Fresen, R-Miami, and Sen. Ellyn Bogdanoff, R-Fort Lauderdale, “is to reduce gaming in the state and have the kind of gaming that is actually going to produce revenue,’’ Bogdanoff said.
That would mean no equal treatment for South Florida’s eight racinos — race tracks and casinos — which would pay higher tax rates than the new casinos and be allowed to operate only pari-mutuel and slot machines. It would mean no more monopoly for the Seminole Tribe, which would lose its exclusive right to operate blackjack, baccarat and other table games at their seven Florida casinos and would stop making annual payments to the state.
Instead, the bill would allow full Las Vegas-style games at three locations in South Florida in exchange for a $2 billion investment each in high-end “destination resorts.” Applicants would pay $50 million for the right to compete for the licenses and would be judged on their ability to draw tourists from Latin America, Asia, Europe and across the U.S., Bogdanoff said.
“Florida is considered the fourth largest gambling state in the nation, but it has let the industry drive policy decisions and that has produced the worst kind of gaming,’’ she said Tuesday. “To me, no kind of gaming is good, but we, as policymakers, have to decide, do we want gaming with five-star hotels or Internet cafes in strip malls?”
To that end, the authors have carefully cleansed the bill of any emphasis on gambling. The 142-page overhaul of state gambling regulations never uses the word “casino” but instead refers to the facilities as “limited gaming” and calls the legislation the “Destination Resort Act.”
Bogdanoff concedes that while her goal is to reduce gambling by allowing the pari-mutuel industry to shrink, that industry is a powerful political force that will work to insert provisions into the casino bill to protect themselves. Florida’s 55 horse and dog tracks, jai-alai frontons and card rooms have been financially stagnant for the past decade and have been forced to return to the Legislature every year to get additional games, lower tax rates and longer hours to remain profitable.
Bogdanoff believes that in order for the bill to pass the Senate, where the influence of Florida’s horse and dog tracks is strong, it may need to be modified to give the pari-mutuels the same tax rate as the casino resorts would get — 10 percent, a drop from their current 35 percent rate.
“That bill will look like a dog chewed on it when it gets out of the Senate and the House will have to decide what it wants to do,’’ she said. “We’re going to have to let it play out.”
Dan Adkins, president of Mardi Gras Gaming and Racetrack in Hollywood, wants his industry to be treated equally to the resort casinos, but urged Fresen and Bogdanoff to slow down before they leap ahead with the massive bill.
“There could be huge negative impacts on surrounding businesses like hotels, restaurants and retailers,’’ he said Tuesday, “not to mention the loss of revenue and jobs from the existing casino-racino industry and the Seminole compact.’’
The 10 percent tax rate proposed for the resort casinos is the lowest in the nation, except for Nevada’s 6.5 percent tax rate on gambling. Pennsylvania, West Virginia and Ohio have tax rates in excess of 30 percent.
“A detailed thorough study is the only way to prevent a negative irreversible situation,’’ Adkins said.
Bogdanoff and Fresen have no plans to slow down. Their bill not only shifts the state’s focus, it creates a new state agency to do it and it puts in place a steady timeline that could have the state awarding licenses by July 2013, one year after the bill would become law.
Awaiting the opportunity to bid on a “destination resort” license are several companies, including Genting Americas. The Malaysian-based company purchased The Miami Herald property in May and is leasing the land back to the company for two years, rent free, as it works to persuade Florida lawmakers to authorize resort casinos.
Here are some of the major components of the 142-page bill, which would be taken up when the Legislature holds its two-month session beginning in January:
- Three resort casinos would be authorized in Miami-Dade and Broward, the two counties that now offer slot-machines gaming.In return for the exclusive licenses, casino operators must commit to investing at least $2 billion on entertainment, convention center and resort complexes intended to draw tourists and high-rolling gamblers. The price tag to participate is $50 million, refunded if the state rejects a company’s bid.
- Casinos would pay 10 percent tax on net revenues. That is less than the 35 percent tax rate now imposed on the revenues of the state’s eight pari-mutuels with slot machine licenses in South Florida.
- Casino space must be no more than 10 percent of the total square footage of the facility.
- Casino games would include slot machines, roulette wheels, craps, poker, blackjack, baccarat and other table games.
- The casino space would be segregated from other attractions, so that a visitor can attend the resort without ever having to see the gambling venues.
- Applicants for the “limited gaming” license would be judged based on their ability to “increase tourism, generate jobs, provide revenue to the local economy and provide revenue to the General Revenue Fund.”
- The bidders would be scored based on a system that gives 35 percent weight to the proposal’s design and location, 10 percent to the company’s management expertise, 35 percent to the speed with which it can get its plans to market, 10 percent to its access to capital, and 10 percent to its community plan.
- Key employees of the casinos would have to pay a $5,000 application fee for an occupational license and undergo an extensive background check. Suppliers would pay a $25,000 license and each resort would pay a $50,000 alcoholic beverage license.
- Casinos would be open 24 hours a day, every day of the year, and be allowed to serve alcohol during all of those hours.
- Resorts would have to prove financial strength and ability to “train and employ residents” including training of “low-income persons.”
- A State Gaming Commission would be created to select the winning bidders. It would be headquartered in South Florida and have broad authority to not only issue the licenses but to investigate and issue subpoenas, take enforcement action, collect taxes and impose fees and penalties. It would be exempt from public disclosure rules for some financial data and would be allowed to hold some of its meetings in secret.
- The commission would serve as the head of the Department of Gaming Control, the state agency that replaces the current Division of Pari-mutuel wagering.
- The commission would be composed of seven members with staggered four-year terms. They would be appointed by the governor and include an accountant with gaming experience and a veteran law enforcement officer. Three names would be nominated for each post by a nominating committee of legislators appointed by the House speaker and the Senate president.
- Commission members would be paid $125,000 yearly and the chairman, named by the governor, would be paid $135,000.
- Strict limits would be placed on who can serve on the commission, including a ban on banning anyone with a personal or financial relationship to any of the applicants or anyone who has been under indictment or been charged with a gambling violation or fraud.
- All casino owners and partners would have to undergo strict background checks, including financial screening.
- The Department of Gaming Control would contract with the Florida Department of Law Enforcement to assist in investigations and enforcement and contract with the Department of Revenue to assist in tax collection and investigation.