Lawmakers To Work Out New Gambling Deal Tuesday
By Dara Kam, The News Service of Florida // February 26, 2015
5-year gambling agreement expires in July
TALLAHASSEE, FLORIDA – A high-stakes deal with the Seminole Tribe set to expire this summer has lawmakers, pari-mutuel operators and out-of-state casinos wrangling over who gets what as the Legislature is once again poised to consider thorny gambling issues during the session that begins Tuesday.
A lucrative portion of an agreement inked by the state and the tribe five years ago, and $116 million a year that goes with it, giving the Seminoles exclusive rights to offer banked card games such as blackjack will expire in mid-July.
That is putting pressure on lawmakers, who’ve been leery until now to pass any gaming legislation despite intense pressure from in-state and out-of-state gambling operators.
But the deadline also gives the Legislature the upper hand when negotiating with the tribe, at least according to Republican leaders who have pointedly omitted the Seminole’s cash from early budget plans for next year.
Senate President Andy Gardiner, R-Orlando, has repeatedly said he would be more than fine if the card games went away.
Gardiner’s district lies in the shadow of gambling expansion-loathing Disney World, and he is closely linked with the Florida Chamber of Commerce, another gambling foe.
Gardiner has tapped Senate Majority Leader Bill Galvano, the Legislature’s chief negotiator on the Seminole deal five years ago, to oversee the process again.
Any other gambling legislation is inextricably tied to the future of the banked card games portion of the agreement, known as a compact, according to the Senate leaders.
“Until that issue gets resolved it’s hard to know if the Senate or the House is interested in even doing anything,” Gardiner, R-Orlando, told The News Service of Florida.
Under the existing agreement with the state, the Seminoles agreed to pay a minimum of $1 billion over five years in exchange for exclusive rights to table games at seven of its nine facilities.
The deal allows the Seminoles to halt the payments if slot machines exist anywhere outside of Broward and Miami-Dade counties, excluding those operated by other tribes.
The tribe can also reduce its payments if South Florida pari-mutuels are allowed to have banked card games, or if slots are authorized at any facilities that weren’t already operating in Broward or Miami-Dade, except for Hialeah Race Track, when the deal was signed in 2010.
“The banked card game component of the compact is the cornerstone of any gaming discussion going forward. But the compact itself does not need to be amended in any way. It will exist for the next 15 years. And there’s a very real possibility that the component containing card games will just self-execute and the tribe will have to remove the cards at the end of 90 days after July,” Galvano, R-Bradenton, said.
“I’m not pulling your leg. We thought about that going in.”
When asked about the compact, Gov. Rick Scott’s office offered little insight.
“We will take the time that’s needed to get the best deal for the state,” Scott spokeswoman Jackie Schutz said.
As in the past, the elements of any new pact hinge on the tribe’s exclusive rights to have certain games, even if only in specific geographic areas, and revenue paid to the state.
Federal law requires any revenue-sharing agreement with the state to include something of value for the tribe, and the feds have to sign off on any compact struck between Florida and the Seminoles.
But, as Galvano pointed out, the state is now in a very different position than when the original deal was crafted.
Lawmakers at the time were at a slight negotiating disadvantage, in part because then-Gov. Charlie Crist had already signed a deal with the Seminoles, who had already begun offering the card games.
The Legislature sued Crist, and the Florida Supreme Court agreed with lawmakers who argued that they should have the final word on any agreement with the tribe.
Faced with the possibility of a drawn-out lawsuit, the Legislature instead reworked the deal.
And, at Florida’s economic nadir, the money pledged by the Seminoles was impossible to ignore.
“The tribe’s position was that we would become very accustomed to the dollars — they are significant, there’s no question about that — and there would be an automatic relationship going forward. The difference is, five years ago, the budget situation was drastic. Our budget was very austere. The negotiating position between the state and the tribe was quite dubious given where the governor had been, given that the cards were already being operated,” Galvano said.
Galvano says the newly installed Senate president isn’t bluffing.
“I don’t think there’s any question that President Gardiner is serious when he says he doesn’t feel compelled to act. I myself don’t feel compelled to act. The provision was inserted as part of a 20-year deal, not as the deal itself,” Galvano said.
Timing may also be on the Legislature’s side.
The deal gives the Seminoles 90 days to wrap up the card games, meaning they would have until mid-October to discontinue the lucrative hands.
Because the legislative session begins in January next year, committees will meet in October, giving lawmakers time to quickly approve a new agreement if necessary.
Scott, whose talks with the tribe blew up last year, appears to be looking for the Legislature to re-up or craft a new deal — or let the old one die off.
“I think the governor is prepared to defer to us to the extent necessary to make sure we approach it as a unified front,” Galvano said.
Scott last year considered allowing the Seminoles to open more casinos — including one on a 50-acre property owned by the tribe in Fort Pierce — and add roulette and craps to some of their existing facilities.
The scuttled deal would also have allowed the tribe to expand its Broward County operations as well as its facility in Brighton.
In return, the Seminoles had agreed to a hefty price tag of $2.5 billion over seven years, which is higher than the Seminoles’ current $250 million minimum annual obligation that includes a share of revenues from both slots and cards.
But the proposal was dead on arrival in the Legislature when the potential deal leaked out in the waning days of last year’s session.
Galvano is taking a simpler approach.
“It’s not a time for the tribe to reopen the compact. That’s not what this provision is about. It’s cards or no cards. Once we become comfortable with where that is, that gives us something to gauge a game equity for the existing pari-mutuels against, or resort destination casinos. I’m not saying that any of those are off the table. But you build from there,” he said.
The Seminoles are playing their cards close to the vest.
A spokesman would say only that the tribe hopes to seal a new portion of the compact that would benefit both the state and the tribe.
In previous years, the typically more-moderate Senate has signaled willingness to pass gambling legislation, but conservative Republicans have stymied the possibility of getting a measure through the House.
That may change this year, however, under the auspices of new House Speaker Steve Crisafulli, a Merritt Island Republican who said he is “agnostic” on the issue.
Crisafulli appears open to the idea of “destination resorts” — casinos coupled with hotels and/or retail space — that have failed to gain even Senate support in the past.
And, as before, any gambling measure runs the risk of being overloaded with wish lists from industry operators, including pari-mutuels in Broward and Miami-Dade counties that already have slots but want a lower tax rate and card games to better compete with the nearby Seminole Hard Rock Hotel & Casino in Hollywood.
“To me, destination resorts are no different than what Seminoles currently have. I mean, they’re hotels with casinos in them. So I think destination resorts are something that have been labeled, but at the end of the day for Florida it’s about deciding do we want more of a presence of one or two or whatever the conversation is being had on those. Or do you want to just let the Seminoles continue to do what they’re doing and renegotiate a compact with them, clean up some of the pari-mutuel stuff, make it so they have a more competitive environment to operate in and move on,” Crisafulli said in an interview.
In contrast to previous sessions, South Florida pari-mutuels appear to be in agreement regarding a gambling proposal.
With the exception of Gulfstream Park, the seven Broward and Miami-Dade operators are lobbying jointly to lower taxes they pay on slots from 35 percent to 20 percent; the Seminoles’ revenue-sharing agreement amounts to about a 12 percent “tax” rate on earnings.
Apart from the card games, the pari-mutuels are also angling for other changes they claim would put them on equal footing with the tribe.
“It goes beyond parity of tax rate and games. We have limited hours. We have limited alcohol. We want a business parity solution,” said Dan Adkins, vice president of Hartman & Tyner, which owns Mardi Gras Casino Florida in Hallandale Beach.
“We want the same type of table games and we want all the other conditions.”
Operators outside of South Florida — where voters opened the door for slot machines in 2004, thereby allowing the Seminoles, who, like all Indian tribes, are entitled to the same types of gambling permitted elsewhere in the state — also want “parity,” but with their Miami-Dade and Broward counterparts.
“Currently, there are three licensed thoroughbred horse tracks in Florida, two in South Florida and one in Tampa. Tampa Bay Downs believes we are all part of the same industry and should be treated equally. Tampa Bay Downs respectfully requests parity with South Florida horse tracks. Parity would benefit horsemen with increased purses, patrons with better racing and provide Tampa Bay Downs the opportunity to be competitive both locally and nationally,” Tampa Bay Downs Vice President and General Manager Peter Berube said in an e-mail.
But allowing slot machines outside of Broward and Miami-Dade would stop all of the payments from the Seminoles, something that has kept the Legislature from approving similar proposals despite passage of local referendums supporting slot machines in several counties, including Palm Beach.
Also on the table: the possibility of creating a gambling oversight commission, an idea that appeals to Crisafulli but which, in the past, Scott has opposed.
“The biggest component to me that interests me the most is the regulatory side of it. I believe that Florida being what we know is the third largest gaming state in the country should be focused first and foremost on the regulatory component of gaming by having some sort of commission in place that regulates this industry versus (regulation by) the Department of Business and Professional Regulation,” he said.
Getting the support of the industry and enough legislators to pass a gambling bill will be “an enormous, gargantuan lift,” said House Majority Leader Dana Young, a Tampa Republican in charge of the issue in the House.
“People talk about three-dimensional chess. This is a Rubik’s cube. Will we be able to come up with something that addresses the wants of everyone? That’s highly unlikely. Can we come up with something that’s in the best interest of Florida that can pass? Maybe. But that’s a tall order,” she said.