Deal emerges to trade stagnant gaming permits for slots

Lawmakers are hoping for an early resolution to the standoff over the expansion of slot machines and the fate of the gaming compact with the Seminole Tribe.
Lawmakers are hoping for an early resolution to the standoff over the expansion of slot machines and the fate of the gaming compact with the Seminole Tribe. Patrick Farrell, Miami Herald staff

Florida lawmakers have inched closer to renewing a 20-year, multi-million dollar gaming compact with the Seminole Tribe of Florida by allowing owners of declining parimutuels to sell their permits to others who want to install slot machines at newer facilities outside of South Florida.

Sen. Bill Galvano, R-Bradenton, and Rep. Jose Felix Diaz, R-Miami, have been actively negotiating with the Tribe and the governor’s office on a new gaming compact after a portion of the current one expired in October 2015, but the state can’t count on the revenue just yet.

Progress is so close the Senate has started starting drafting a bill but then canceled a meeting to hear the plan this week and will hear it later this month when lawmakers return to Tallahassee for pre-session hearings, Galvano told the Herald/Times.

For the first time in years, House leaders appear ready to allow some expansion of slot machines outside of Miami-Dade and Broward counties to appease members from industry-heavy districts. But, in return, they are also abiding by House Speaker Richard Corcoran’s wishes to contract gaming that will lead to a net reduction of live, active permits throughout the state.

The idea, said Diaz, is to allow owners of stagnant dog track or jai-alai fronton operations to sell their live gaming permits to others seeking to obtain a slots license, and to “put the dormant permits out of their misery.”

“A lot of us would like to see a true contraction of gaming and a focus on better quality,” said Rep. Carlos Trujillo, R-Miami, the House Appropriations Committee chairman. “There is a predatory nature in most gaming. We would like to see a transition from predatory to higher quality. Revenue is secondary. If good revenue is an outcome, that’s great but it’s not the priority.”

“Early indications are, we will see some progress this year,” said Diaz, the House Commerce Committee chairman who has spent the last three years in some form of compact negotiations.

Another part of the draft bill is to define daily fantasy sports leagues as gaming, regulate them and address the growing popularity of E-sports, video based competitions that involve an element of chance, said Galvano, who was a principle negotiator in the current compact ratified by lawmakers in 2010.

The goal is to find a consensus soon, he said, so that the details can be hammered out in time for what could be as much as $250 million in annual revenue that could be added to this year’s budget calculations.

“If we are going to do something we are going to get done sooner than later,” Galvano said. “There isn’t any appetite on the part of the president to have this issue hang over the session unless we’re really making progress. The indications I get from the House are the same. The Tribe is willing to work, but they are dubious.”

For the past two years, Gov. Rick Scott and legislators appeared to make progress on renewing the compact and then things fell apart. In December 2015, Scott signed a $3 billion deal with the Tribe that would give their seven casinos exclusive permission to operate craps and roulette, in addition to black jack, and continue their monopoly to operate slot machines outside of Miami-Dade and Broward counties.

In exchange, the state would receive nearly $2 billion more over the life of the compact than the current agreement. The dog track in Palm Beach would get slot machines and the parimutuels in Miami-Dade and Broward could add black jack, but if lawmakers approved of any gaming expansion beyond that, the Tribe could stop paying the state.

Although the measure passed a Senate committee, it was then postponed indefinitely after senators attached a companion measure that authorized six additional slots licenses outside of Miami-Dade and Broward counties, thereby imperiling the exclusivity clause of the compact.

Despite the setback, the Tribe has continued to make monthly payments to the state that totaled $306 million in 2016 and said in a statement Monday that the Tribe’s representatives “have met with Gov. Scott as part of their ongoing effort and continuing desire to finalize a new gaming compact with the State of Florida.”

But the parimutuel industry is restless. With revenues continuing to decline at horse and dog tracks, owners continue to push for approval to install slot machines, in violation of the existing 2010 gaming compact with the Tribe that guarantees it exclusive operation of slot machines outside of Miami-Dade and Broward.

Diaz said it is unlikely the Tribe will agree to allow slot machines in counties close to its facilities. Hillsborough County is home to the Tribe’s most lucrative Hard Rock Casino in its empire, and Lee County, which has approved a referendum for slots, is close to the tribe’s Immokalee Casino.

“We don’t think every single county that has passed a referendum is going to be able to get slots,” Diaz said. “We don’t think it’s possible with the conversations we’ve had with the Seminoles. At the end of the day, they decide what is exclusivity and what is not.”

The 2015 compact is “the floor” of the negotiations this year, Galvano said.

“There is an openness with both chambers and the governor’s office as well as the Seminole Tribe to work in earnest to see if something can be accomplished,” said Galvano, who helped to negotiate the current gaming compact when he was in the House in 2010. “Given the history since the last compact, nobody considers it an easy task and, quite frankly, there is a lot of doubt that we can get there. Having said that, there is a real commitment to try.”

Overshadowing any progress in the next few weeks, however, is the pending ruling from the Florida Supreme Court over slots expansion at a newly established race track in Gadsden County. The court could rule either that lawmakers cannot authorize gaming expansion without a statewide constitutional amendment, or the court could agree with Creek Entertainment in Gretna that counties may add slot machines without legislative consent.

If the court sides with Gretna, the prospects of a compact with the Tribe diminish immensely, Galvano and Diaz said.

“It makes it very difficult to have any kind of retraction at that point,” Galvano said. It also complicates any attempt to give the Tribe an exclusive product, which is required for the state to receive any tribal revenues, under federal Indian gaming law.