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A big bet on casinos

The brash bid to build three destination casinos in Florida features big money and flashy plans. Yet as the 2012 legislative session opens this week, the extraordinary wager, dramatically rewritten just last week, faces long odds due to the sheer scope of its ambitions.

Little noticed, however, is the potential collateral damage if lawmakers get so distracted with casinos they do nothing else on gambling. The Legislature needs to address the spread of unregulated Internet cafes and consider the surprising push by a nascent North Florida parimutuel to add slot machines. Both potentially jeopardize the millions the state receives under a compact with the Seminole Indians. Regardless of what happens to casinos, legislators once again need to define when, where and how gambling is legal in Florida.

Florida has long been conflicted about gambling. Three times, voters have rejected allowing full-fledged casinos in the state. Yet over the years they have embraced jai alai and dog and horse racing, approved the state lottery and authorized slot machines at parimutuels in Miami-Dade and Broward counties. And the explosion of Indian gaming has created a multibillion-dollar enterprise for the Seminole Indians in Tampa and Hollywood.

Into that contradiction jumped Sen. Ellyn Bogdanoff of Fort Lauderdale and Rep. Erik Fresen of Miami. They claimed to have a scheme to finally contain gambling in Florida, paradoxically by reversing decades of anti-casino policy. Their bid would allow up to three $2 billion casino resorts in counties where voters had agreed to allow parimutuels to have slot machines. Currently that would include just Miami-Dade and Broward, though other counties have signaled they would seek casinos if the bill passes.

Under the bill (SB 710 and HB 487), the casinos would pay the lowest gambling tax in the state, just 10 percent. Bogdanoff and Fresen justified the low rate as a way to drive gamblers to the luxury casinos, thereby starving Florida's longtime parimutuels with higher tax rates and, for the first time, bringing competition to the Seminole Indian casinos. They trumpeted the added jobs but said nothing about those that might be lost at competing hotels, restaurants and parimutuels.

As late as last month, the odds of approval looked to be even. The group No Casinos and other gambling opponents such as Disney, the Florida Chamber of Commerce and the Florida Restaurant and Lodging Association geared up for the fight, but other key opponents, such as former Gov. Jeb Bush and U.S. Sen. Marco Rubio, stayed on the sidelines. The family values Republican Party didn't seem so opposed anymore. And the plan to quarantine the experiment to South Florida bought off some opposition in Central Florida and beyond. The prevailing sentiment: With Florida's tough economy, a state budget in need of revenue, and a generation more used to gambling, it could happen.

One of three international casino companies, Genting, even snapped up the waterfront headquarters of the Miami Herald and released plans for a visually stunning 5,000-plus-room casino hotel.

The parimutuels, long a political force in Tallahassee, quickly responded. Even as casino operators flooded the capital with lobbying money and campaign contributions, Florida's dog and horse tracks and jai alai frontons pushed back. They argued lawmakers would be picking carpetbagger companies over decades-old, in-state businesses.

A growing cadre of Florida leaders — including all three Cabinet members, former Republican House Speaker Allan Bense of Panama City and former Democratic U.S. Sen. and Gov. Bob Graham — joined many of the editorial boards at major state newspapers, including the Tampa Bay Times, in raising objections: It is not worth risking Florida's reputation as a family-friendly destination to woo an industry that makes its money from persuading the majority of its customers to make losing bets. Lawmakers should be focused on attracting high-tech and other high-wage industries, not one that will increase Florida's dependence on gambling revenue and all the social ills that accompany gambling, legal or otherwise.

The Legislature's economist illustrated the fiscal shell game that would occur if casinos were allowed. Amy Baker, director of the Office of Economic and Demographic Research, estimated in the first year of operation, 2015-16, three operating casinos could generate from $59.5 million to $137.2 million in additional revenue for the state. But Baker also noted that if one casino was built outside Broward and Miami-Dade counties, it would cost $99 million in Indian gaming revenue. And the new casinos are expected to cannibalize up to 41 percent of business from nearby parimutuels, greatly reducing their slot machine taxes if not putting them out of business.

It was all too much. Former House Speaker John Thrasher, now a Republican state senator from St. Augustine, signaled the tide had turned. He argued lawmakers shouldn't be entertaining casinos but spending more time reining in Internet cafes and addressing the fact that parimutuels outside Miami-Dade and Broward counties were seeking to add slot machines — all of which could upend the compact with the Seminole Indians.

Under the 2010 compact with the state, the tribe has exclusive rights to offer so-called table games and slot machines outside those two counties in exchange for providing a minimum of $1 billion to the state over five years.

"I just think the (loopholes) are important to address before we get to the policy considerations that are in this particular bill," Thrasher said. "I think this legislation is a major change in the culture and brand of the state of Florida. … We need to go slow."

So far, lawmakers have heard no separate bill to regulate or ban Internet cafes — which give phone card buyers a chance to play computer games with cash payouts. Several Florida counties have taken steps to block their expansion, including Pinellas and Hillsborough. And it remains unclear if state law will even allow the Gretna parimutuel to get slot machine licenses if local voters approve them in a vote later this month.

Now Bogdanoff is retreating from reining in parimutuels' ambitions. Last week, she rewrote her bill to regulate Internet cafes and ban new parimutuel permits, but also to guarantee any county's voters the authority to give slot machines to their parimutuels — a sure threat to the Seminole compact. The big question now: Is anyone going to fight to save the compact's millions of dollars in annual revenue?

Joni James can be reached at jjames@tampabay.com.

A big bet on casinos 01/05/12 [Last modified: Friday, January 6, 2012 5:52pm]

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