Report says Florida can easily absorb more gambling

10/07/2013 7:28 PM

10/07/2013 9:06 PM

Florida’s gambling terrain is already so saturated — particularly in the populous Miami-Dade and Tampa regions — that the arrival of resort casinos, and even the expansion of slot machines to 23 dog tracks and jai alai frontons, would have “minimal economic” and social impact on the state.

That is the central finding of a $400,000 report done for the Florida Legislature and presented to the Senate Gambling Committee on Monday by Spectrum Gaming Group., a New Jersey-based research firm hired to assess the economic effects and social costs of expanded gambling in Florida.

“Florida is already a gambling-rich state,” Joseph Weinart, executive vice president of Spectrum Gaming, said at a three-hour hearing before the Senate committee to discuss the report. It concludes that “the expansion of casino gambling, whether on a small scale or very large scale, would have, at best, a moderately positive impact on the state economy.”

But the most interesting findings of the nearly 1,000-page report may not be what’s ahead, but what’s already here: One in three Florida adults who live within an hour of a casino gamble there at least once a year, and Florida residents account for 93 percent of the $2.4 billion in estimated revenue collected by existing casinos.

The average Florida gambler spends $866 each year — 16 percent less than the national average, the report concluded, and half of all residents who live within five miles of the casinos in South Florida gamble.

The Spectrum report is intended to serve as a benchmark for lawmakers as they decide whether to allow the horse tracks, jai alai frontons and dog tracks outside South Florida to install slot machines in place of pari-mutuel events, and whether to invite mega casinos to come to Florida to build so-called “destination resorts.”

Spectrum did not assess the local and regional impact of the expanded games but concluded that “there are likely to be only mild positive impacts on local and statewide employment and wages” because “casinos would not represent a large expansion of their local economies” particularly in larger Florida counties.

Weinart told senators that because of the proliferation of gambling in major metro areas, “the evidence suggests that social costs will not dramatically change with the expansion of gambling.”

An online survey by the University of Florida done for the report found that expanded gambling could draw more tourists. Almost 15 percent of its tourists responded that they would stay longer to gamble, while nearly 4 percent of tourists said they would be less likely to come to Florida if it were a gambling haven. Gambling fans were estimated to spend $412 per person more, the survey found.

Other Spectrum researchers said that most people view gambling as a form of entertainment and that if gambling expands people will shift their disposable income from spending on other forms of entertainment to gambling. That will result in net revenue to the state, since slot machine gaming is taxed at 35 percent while other entertainment options are taxed at the 6 percent sales tax rates.

But if legislators allow expanded gambling, Floridians would continue to make up 93 percent of the casino industry’s revenues, said Michael Pollock, Spectrum’s managing director. An estimated 5 percent of the revenues come from out-of-state visitors, with nearly 3 percent from Florida’s snowbird population.

Those conclusions prompted criticism from legislators who noted that the numbers differ from a 2011 report done by Spectrum on behalf of Genting’s Resorts World Miami. The company was aggressively attempting to persuade the Legislature to open the door to three resort casinos in South Florida and predicted they would draw at least 20 percent of customers from out of state.

At the time, Genting promised it would guarantee nonstop flights between Asia and Miami for high-rollers, purchase thousands of Disney tickets for resort patrons and draw thousands of new tourists to Florida.

“We only market to people who already have loyalty cards with other casinos,” Colin Au, president of Genting Americas, said in a 2011 interview with the Herald/Times. “Other than that, we get zero money from the local people. It is not a sustainable model in the long run.”

Pollock responded that the report didn’t take into consideration the aggressive marketing options suggested by the gaming companies.

Those distinctions prompted some legislators to doubt the report.

“There are some real issues about credibility of this report,” Sen. John Thrasher, R-St. Augustine, said after the meeting.

The Spectrum researchers told the committee that Florida’s failure to regulate gaming in the past two decades has effectively allowed the expansion of gambling, and the best time to control it is before expansion is allowed.

“Will the Legislature guide the future of gaming or be guided by it?” asked Pollock, Spectrum’s managing director.

It’s a premise that John Sowinski, spokesman for No Casinos, challenges.

“Because your plumbing is bad, doesn’t mean you tear down the house,” he said. “There’s a lot of things that need to be fixed.”

Spectrum has close ties to the gaming industry and has done work for the states of Pennsylvania and Massachusetts and performed three modeling exercises to determine what effect expansion of gambling would have on the state economy. Because of incomplete analysis, the company is revising its report to include updated numbers on the potential tax revenue from expanded games, Pollock said, and the new numbers will not affect the conclusion that expanded gambling will have a modest impact.

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