State Politics

Talks continue over how to limit but still expand gambling in Florida

Lisa Johnson of Bel Air, Maryland, watches the dealer deal a hand in blackjack at the Seminole Hard Rock Casino in Hollywood in 2011.
Lisa Johnson of Bel Air, Maryland, watches the dealer deal a hand in blackjack at the Seminole Hard Rock Casino in Hollywood in 2011. pfarrell@miamiherald.com

TALLAHASSEE The deadline has passed for the Seminole Tribe to complete its negotiations with the state over whether it will be allowed to continue operating lucrative blackjack games at its Hard Rock casinos but the cards are still on the table.

The stakes are so high for all the parties involved in Florida’s complicated gaming landscape that legislators and the governor’s office are trying to negotiate a way to turn a deal on the card games into a blueprint for gaming across the state by the onset of the legislative session on Jan. 12.

Among the issues: the prospect of another slots casino in Miami, slot machines in Palm Beach and Fort Myers, a requirement that future gambling licenses get statewide voter approval, and the promise of $3 billion in gaming proceeds directed into the state treasury over the next 7 years.

“We’re still talking, still hashing,” said Sen. Rob Bradley, R-Fleming Island, the Senate’s lead negotiator who, along with the House’s negotiator, Rep. Jose Felix Diaz, R-Miami, has been meeting with the governor’s general counsel, Tim Cerio, and lawyers for the Seminole Tribe.

“We know that the money is important to the governor,” Diaz said. “We know the constitutional amendment to limit gaming in the future is important to the House. We know that local requests are important to the Senate, because they need to pick up votes. But since there’s been no big agreement, everything has been in flux.”

The legal agreement, known as a compact, was first forged in 2010 to last 20 years. It gave the Seminole Tribe the exclusive right to operate slot machines at its five casinos outside of Miami-Dade and Broward counties in exchange for a share of its revenues to the state — about $230 million a year.

Under the agreement, the tribe agreed to pay at least $234 million a year in exchange for the exclusive right to operate slot machines at four casinos outside of Miami-Dade and Broward. The tribe also got exclusive rights to blackjack, chemin de fer and baccarat at the Hard Rock Casinos near Hollywood and Tampa, and three other casinos, but that provision expired July 31, 2015.

When the deadline passed last summer, the Tribe had a 90-day grace period to reach a new deal with the state or shut the games down. Despite efforts to reach a deal, nothing was settled and the grace period has ended.

Things are very different than they were in 2009, the last time the compact was negotiated.

Florida House negotiator Rep. Jose Felix Diaz, R-Miami

Faced with an inevitable lawsuit from the state, the Tribe sued the state first in October — saying that regulators have been violating the compact since 2011 by allowing competitors to operate look-alike electronic blackjack and baccarat with a live dealer by using slot machine software.

As a result, the Tribe argues that it has a right to start offering the banked card games at its Brighton and Big Cypress casinos, although it has not done so yet.

The state countersued and asked a court to shut down the Tribe’s blackjack tables. It argues that because there are 15 years left in the compact, it is not negotiating in bad faith.

Now, as the lawsuits move along the legal track, Florida lawmakers are trying to forge a new agreement along a political track. Any agreement to extend the card games must be ratified by the Florida Legislature.

For legislators, this is more than a fight over who holds the cards. In the last five years, Florida’s budget has become addicted to the Seminoles’ gambling money.

As the economy soured, the Tribe sent the state checks for $1.1 billion, which helped prop up a declining budget. This year the payments included bonus checks of about $45 million, extra money because the tribe’s profits exceeded the amount required for minimum payments and payments the Tribe agreed to make during the grace period.

If the governor and Legislature refuse to renew blackjack at the Tribe’s casinos, the compact allows the Seminoles to reduce payments, excluding revenues from its Broward casinos and its card games. That equates to a loss of about $100 million a year to the state’s treasury, according to state revenue forecasters.

But blackjack cards likely won’t stop turning at the Hard Rock casinos. Instead, the Legislature could do what South Florida’s horse and dog track and jai-alai frontons want them to do: replace the lost revenue by allowing their casinos to operate blackjack. Those proceeds would be taxed under state law and, under federal Indian gaming law, the tribe could keep its cards.

While much of the debate evolves around money, the compact offers the state more than money. It is also offers gaming opponents a means to limit gambling expansion in Florida and it gives competing gaming operators a vehicle to expand their games or lower their tax rates.

One proposal would allow for a portion of the revenues from the compact to supplement purses for thoroughbred horse races, now running at Gulfstream Park and Tampa Bay Downs.

Under the compact, only games authorized in Florida by Feb. 1, 2010, are allowed in the state unless they are offered by the Seminole Tribe, but the governor and legislators want to modify that and allow dog tracks in Palm Beach and Lee counties the ability to operate slot machines on the premise that voters in those communities have already approved the idea.

The Seminoles are opposed to any expansion of slot machines outside of Miami-Dade and Broward, Diaz said, making the issue a critical sticking point for negotiators.

Diaz said that while the resort casino proposed for Miami’s bayshore by Malaysian-based Genting is off the table, offering a license of another slots-only casino in Miami is being discussed.

“We’re still at the 30-thousand foot level so we’re not down to details yet,” he said. In addition to the Genting’s Miami site, owners of the Fontainebleau have also expressed an interest in a slots casino on Miami Beach.

Daily Fantasy Sports betting also could get snagged by the existing compact provisions, argue gaming lawyers Daniel L. Wallach and Marc W. Dunbar in an October article in Gaming Law Review and Economics.

Two legislators, Sen. Joe Negron, R-Stuart, and Rep. Matt Gaetz, R-Shalimar, have filed a bill declaring that the Fantasy Sports games are not gambling, but games of skill. But by passing a change in law, that could confirm that the games were previously not legal “and could jeopardize the exclusivity afforded the Seminole Tribe under that compact,” the lawyers argue.

For John Sowinski, president of the anti-gambling group No Casinos, Inc., the compact was sold to voters with a “zero expansion policy” and any attempt to use the renewal of the blackjack provisions to expand gambling would violate that promise.

“The banked card games portion of the compact was sold to the public as a ‘firewall against the further expansion of gambling in Florida,’ ” Sowinski wrote legislators last month. “The logic was that the revenue enhancements provided to the state for the Seminole Tribe’s privilege of operating banked card games would be sufficient to keep the state from violating strict exclusivity enjoyed by the Tribe.”

No Casinos wants no additional slot casinos outside Miami-Dade and Broward counties, proceeds from the compact used to buy back pari-mutuel licenses at struggling facilities, such as dog tracks that say their business model is no longer economically viable.

Gov. Rick Scott has already hinted he is open to expanding gambling in some places, and retracting it in others. In 2014, he tried and failed to negotiate a agreement that would have raised $2 billion over seven years, allowed the Tribe to build an eighth casino on its land near Fort Pierce, and allow the Seminoles to add craps and roulette.

But the governor failed to consult the Legislature before he signed off on the plan and the agreement fell apart when lawmakers rejected it.

This year, the governor’s negotiators have been more circumspect about the prospects of reaching an agreement. When Scott sent the Legislature a proposed budget last week, he excluded any anticipated revenues from the card games and the current budget also does not depend on the card game money.

“Things are very different than they were in 2009, the last time the compact was negotiated,” Diaz said.

“Then, the state was starved for money so they were going to do whatever they could do to get it done. This time, state’s in a little better position for money and the Seminoles are in a much better position than they were in 2009, too.”

Mary Ellen Klas: @MaryEllenKlas, meklas@miamiherald.com

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