Florida’s liquor license lottery can make you a ton of money. So why is it such a secret?

Published February 16
Updated February 16

Every year, millions of people play the Florida Lotto. Their chances of winning are about as great as those of being struck by a comet.

Fewer than 12,000 enter a much lesser known lottery that also is run by the state. Yet the odds of winning are vastly better and the payoff can be hundreds of thousands of dollars.

It’s the annual drawing for quota liquor licenses.

This year’s picks by Florida’s Division of Alcoholic Beverages and Tobacco likely will be drawn within the next few months. But forget about entering this time — if you didn’t submit an application by Oct. 23, you’ll have to wait.

"It’s not a well-advertised lottery," says Horace Alexander Moody, a former Levy County sheriff who owns the private Beverage Law Institute in Tallahassee.

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Florida is one of 17 states with quotas on the number of liquor licenses they issue, and it is among even fewer that distribute new licenses via a lottery. A county gets one license for every 7,500 increase in population — in last year’s drawing, 46 new licenses were available for Hillsborough, Pinellas and other growing counties.

Unlike most beverage licenses, which are limited to beer and wine or a specific location, quota licenses are coveted because they can be used almost anywhere in the county that zoning permits. And the only ways to get one are to buy it or win it.

Businesses can enter the drawing, but 44 of the 46 winners last year were individuals including an actress, a retired postal worker and a former pro football player, Laveranues Coles. If history is a guide, most will sell their licenses to somebody who actually wants to use it. Licenses can bring $500,000 or more, depending on the county and the demand. Among the going rates in the Tampa Bay area: $280,000 for Pinellas, $135,000 to $145,000 for Hillsborough and about $120,000 for Pasco.

"When you win, Publix immediately comes hounding you if the license is somewhere they want to expand," says Randall Scott Sweet, a Fort Lauderdale man who has won licenses in Polk, Palm Beach and Sumter counties. (He wouldn’t say if he had sold to Publix; Publix did not respond to several requests for comment.)

The odds of winning are good enough to attract applicants who view the licenses as a smart investment. Donna St. Hillier, a mental health counselor in Tallahassee, says she would sell her license if she won and use the money for retirement.

"I see it as a way to hopefully get a little windfall," she says.

But St. Hillier, who entered this year’s lottery, wouldn’t have known about the drawings except for a friend who had won. And that’s okay with her.

With less publicity, "the odds are higher for winning," she says.

Arizona’s Department of Liquor puts out a press release announcing its "Liquor License Lottery," but Florida’s Department of Business and Professional Regulation relies on notices on its web site and Facebook page. The agency, which includes the division of alcoholic beverages, "has consistently sought opportunities to increase the quality and quantity of publicly available information," a DBPR spokesperson said in an email.

The agency says more people are becoming aware of the lottery as shown by an increase in the number of entries — from 7,883 in 2011 to 11,847 last year.

By law, entries are accepted for 45 days starting on the third Monday in August. (The deadline was extended to Oct. 23 last year because of an active hurricane season.) You can enter online or by mail for as many counties as you want, but you must pay $100 per entry and can enter only once for each county.

The computerized drawing, held the following year, is double-random. For each county, a name is drawn, then a placement number. Joe Smith’s name could be the first selected but he’s out of luck if he places third and there are just two licenses.

Winners have 45 days to apply for the license. They must be fingerprinted and have no felony convictions in the last 15 years. They also must pay a license fee, which varies by county, and a one-time fee of $10,500, which goes into a state fund for alcohol and drug abuse education.

Then they can they "transfer" or sell the license.

"People like to say it’s a winners list, but honestly, it’s an eligibility list," says Moody, whose company is among the many that broker the sale of licenses. "It’s not like going to the casino and suddenly everyone gets the cash and is happy. You have go through a whole process."

Still, the odds of becoming eligible --- with a potential six-figure payout -- were as low as 1 in 450 last year.

For the Florida Lotto, they were 1 in 22,957,480.

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Liquor quota laws in the United States date back to the 1933 repeal of Prohibition. Although that 24-year experiment in forced abstinence proved a failure, many politicians still felt that Americans needed to be protected from the evils of drink.

In Florida, quota licenses originally were doled out by directors of the state beverage division, sometimes to their buddies.

"That was not a very transparent system," says John J. Harris, a liquor-law consultant with the GrayRobinson law firm in Tallahassee. "Then we had a former high-ranking FBI official that became director of the division and he noticed that this needed to be a lot more sophisticated."

At the time, Florida’s governor was Reubin Askew, a teetotaler who wasn’t about to issue liquor licenses. So state lawmakers created the lottery, which began in 1981 with names and placement numbers initially drawn from bingo-style cages .

"And that’s how it all got started," says Moody of the Beverage Law Institute. "The state has been holding these double-random drawings, which has been about as fair as you can be."

In 1980, Moody left his sheriff’s post to become chief of enforcement for Florida’s beverage division. He spent seven years in that job before starting the institute, originally to instruct businesses on how to avoid selling alcoholic beverages to minors.

The company still offers that and other services but has long since expanded to brokering the sale of liquor licenses. At no charge, it also helps people apply for the lottery. State records show that more than 250 individuals listed Beverage Law Institute as their mailing address on applications for the drawings in 2017 and this year.

"We’ve gotten our name out there over the last 30 years so we get calls from all kinds of people," says Moody. "I say, ‘Listen, this is almost like gambling; you’re just throwing your name in a hat.’ But if they win — and I go to the drawings — it’s great to call and say, ‘Congratulations.’"

Lottery applicants helped by Moody aren’t required to use him as a broker if they decide to sell their license. Of course he would like them to — commissions typically run about 10 percent, though sometimes that is split with another broker.

And at least 95 percent of winners wind up selling, Moody estimates.

"A lot of people toy with the idea, they want to open a restaurant, then they win and ‘Wow, there’s is a lot of expense; let’s just sell it,’’ he says. Then there are people who from the get-go say, ‘I’m in it for the money.’"

Prices are based on supply and demand. In the upcoming lottery, three Hillsborough licenses will be available — enough to temporarily drive down prices. Licenses in Miami-Dade, which already has the most of any county, now sell for around $175,000 while in little Monroe (Key West) and Walton (the Panhandle), licenses can go for $500,000 or more because so few are available.

Other counties where licenses have been commanding hefty prices are Duval ($450,000) and tourist-heavy Orange ($350,000).

As with closing costs in a home purchase, the $10,500 one-time fee is often taken out at the time of sale. The seller also has to pay 15 times the annual license fee ---- transferring a Hillsborough license, for example, would cost $27,300 --- the regular fee is $1,820.

"The state realizes that a lot of people aren’t entering (the lottery) to use the license and could elect to so sell, so that’s what the 15 times is all about --- we’re going to charge you some money if you sell," Moody says.

At the same time, permitting the sale of newly issued licenses keeps prices from going ridiculously high.

"If there weren’t any (new licenses) available, it would be $2 million," Moody says.

But even market prices make it hard for legitimate businesses to expand or open up in the first place.

"A reputable hospitality guy like me that uses their own money to invest and build a restaurant or bar (is) forced to pay market price on liquor licenses that are now $280,000 in Pinellas,’’ says Jon Reno LaBudde, a partner in the Pelican Pub and The Landing in downtown St. Petersburg.

LaBudde considers Florida’s liquor lottery "fairly fair" but suggests limiting it to applicants who can show they would use the license "instead of putting it on the open market and getting free money."

In Arizona, rules for the liquor lottery help ensure that winners will use the license themselves. The state sets a fair market price based on previous sales and gives winners 105 days to pay a non-refundable, 50 percent deposit. In Maricopa County (Phoenix), where six new liquor licenses were available at $245,100 each last year, winners had to pay at least $122,550 by Jan. 16

"It is assumed… that they intend to open the type of establishment for which they entered the lottery,’’ says Nathaniel Snyder, a supervisor with Arizona’s liquor department.

In Florida, by comparison, winners can place their licenses in escrow for six months while they decide what to do. After that, they can request a one- year extension. Then they effectively have 155 days in which they must use the license or transfer it. If they don’t, they could lose it.

"In 2008, when people weren’t expanding their businesses, there were a lot of licenses that stayed put or were lost," says Harris, the consultant with the Tallahassee law firm.

With Florida booming again, many applicants boost their chances of winning by entering for every county in which licenses are available — a total of 51 in 26 counties this year, including Pinellas, Pasco and Hillsborough. Over the past decade, five people have won twice and three have won three times, state records show.

Moody himself has entered the drawing, winning a license for Hernando in 2009. (He sold it.) Three of his children, including Brent, a partner in the Beverage Law Institute, also have each won a license.

As for Harris, he is entered for several counties this year, hoping his luck picks up.

"I’ve won twice," he says, "but that was 20-plus years ago."

Susan Taylor Martin can be contacted at [email protected] or (727) 893-8642. Follow @susanskate

 
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