Report: Expanding gambling could make Florida ’less attractive’ tourist destination
07/02/2013 11:37 AM
07/02/2013 7:35 PM
If Florida decides to expand casino gambling, the move could harm the state and Orlando’s tourist brand, according to a new gaming report commissioned by the Florida Legislature.
The broad-ranging report, released late Monday by the Spectrum Gaming Group, found that Florida has one of the nation’s most competitive gambling markets with a parimutuel industry that "resembles a circular firing squad" and a regulatory environment that is a "mess.” It concluded that any expansion of gambling — such as destination resorts — will result in more expansion because "the industry rarely shrinks."
"The brand equity of Orlando has benefits for the entire state" and "expanded gambling may fundamentally change the state of Florida as a place to live and visit," the report said. “Rather than benefitting the state, expanded gambling (especially casinos) could make Florida a less-attractive tourist destination.”
The 320-page report by the New Jersey-based gambling consulting firm will serve as a foundation for the legislature’s attempt to rewrite the state’s gambling laws next session. Lawmakers will also decide whether or not to allow the expansion of casinos, such as those sought by Genting and Las Vegas Sands in Miami, and whether to renew the gaming compact with the Seminole Tribe.
Legislators paid Spectrum $388,000 to assess Florida’s gambling market and this is the first of two parts. The second report, on the economic impact of gaming on communities, is due in October.
But the head of the Senate Gaming Committee emphasized that the goal of the report is not to make recommendations but to provide lawmakers with a road map of the terrain. Lawmakers plan a series of meetings around the state, beginning in the fall, to discuss the issues.
“The report does not, and will not make policy recommendations,’’ said Sen. Garrett Richter, R-Naples, in a statement. He said it will be the responsibility of the committee “to review gambling statutes, to address the ambiguities, inconsistencies, and exceptions in current law, and to craft an action plan.”
Crafting a state gambling plan has been an elusive goal for decades. As the state’s pari-mutuel industry has rapidly declined in popularity, the industry has pushed to offset its losses by installing card rooms and slot machines — a situation that the report notes has helped prop up and subsidize the declining greyhound, jai alai and thoroughbred racing industries. During that time, technology has advances to make it possible for games that mimic slot machines to be operated on video terminals and for casino games, such as roulette and craps. to be operated on slot machine platforms.
The result has been a patchwork of regulations and major gaps in the law. If Gov. Rick Scott and the legislature remain silent on revising the statutes, “gaming will evolve in Florida whether or not the Florida Legislature develops a plan and puts that plan into action,’’ the report concluded. “Absent any plan, however, that evolution would be haphazard and would be far less likely to address or advance any public-policy goals.”
Among the report’s findings:• Casinos provide competition but not necessarily cannibalization of existing businesses. “The evidence suggests that casinos are likely to have a negative impact on lotteries, and some other businesses may see decreased revenue as a result of a casino’s opening. But this is no different from what happens when any other business opens. Certainly some of the revenues for a new casino would come at the expense of other, existing gambling firms in Florida.”
• Gambling expansion is headed to the Panhandle. The Poarch Band of Creek Indians, based in Atmore, AL, has land in Escambia County and now operates the Gretna racetrack which is operating controversial flag drop races. The tribe “has options to own, or agreements to control 10 pari-mutuel permits along the Interstate 10 corridor between Pensacola and Jacksonville.
• State tax revenue from parimutuel gambling has plummeted 99 percent for jai alai and greyhound racing since their hey day of 1985 and dropped 39 percent for horse racing.
• Florida regulators fail to collect accurate data. The report found that the Division of Parimutuel Wagering made no effort to independently verify information supplied by the tracks and the Isle of Capri Pompani harness track “grossly overstated” its purse numbers from 2009-2012 and Gulfstream Racetrack understate simulcast revenue by $605 million.
• Florida’s largest greyhound tracks are ready to give up their dog racing. With losses of $35 million from greyhound racing in the last year, only three tracks made a profit and that was because of revenues from cardrooms. Michael Glenn, general manager of the said his company would shut down the dog track if it could. “There just are not enough folks out there to come to the track and wager on these races,’’ he told Spectrum. “There is not any interest.”
• Expansion begets more expansion. “The industry rarely shrinks, and quite often, expands as a result of expansion.”
• Adding table games to the menu at racinos would increase revenues for slot machines, not reduce it. “The addition of house-banked table games such as blackjack to a slots-only casino can serve to increase slot revenue. This seems counter-intuitive (the natural assumption is that new table games would simply cannibalize existing slot play) but experience in markets that have added tables to casinos that previously offered only slot machines shows otherwise.”
• Destination casinos that offer mix of resort and convention space are not panaceas “nor do we ignore the downside or the challenges they present to local communities. By definition, they increase traffic and create other demands on public services. The more successful they are in generating revenue, the more such demands increase.”
• Olando should stay away from casinos. “In our view, Orlando’s ability to grow its conventions and meetings business in the face of this national trend underscores an important asset in this market: Orlando’s strength in attracting business travelers is growing without gaming, and that absence is to some degree fueling that growth. Orlando has carved out a significant, profitable niche in that national market, and gaming would clearly be antithetical to that image and its ability to dominate that important segment.”