Haves and Have-Nots

The only complaints I've read from Florida parimutuels about the new compact agreed to by Governor Charlie Crist (capping a busy few days for the Senate-minded chief executive) and the Seminole tribe (subject to approval by the legislature) are from the ones outside of Broward and Miami-Dade counties. Those fortunate operators located inside of those two counties, where slots were approved by referendum, are apparently satisfied with the prospect of a reduced tax rate (35% from 50%) and high stakes poker (limit raised from $5 to $50) conducted around the clock on weekends. (I can't imagine that there's too much levity around the poker table at 7:15 on Sunday morning. Actually, it sounds fairly grim.)

Whatsmore, those lucky seven (plus Hialeah) are not even completely prohibited from having table games of their own. They'd have to convince lawmakers however that the revenue such games would exceed the penalty clause in the compact. That provision would allow the Seminoles to reduce their percentage-based payments by half the amount of any year-to-year decline in its Broward County revenues. Seems like something the tracks may be able to work with perhaps?

But the various dog tracks located outside those counties, as well as Tampa Bay Downs, are pretty much screwed. Not only did the tribe get table games in all seven of their statewide locations, slots at these tracks would be essentially prohibited considering that, under the agreement, the Seminoles wouldn't have to make any payments at all should they be installed there. These non-Broward/Miami facilities would get the poker and a relatively token amount (300) of "historic racing games" and electronic bingo, whoppee, but that seems small consolation. Here's a typical reaction:

Isadore Havenick, vice president of Southwest Florida Enterprises, parent company of Flagler Dog Track and Naples-Fort Myers Greyhound Track, said Crist's new deal "goes far beyond the limited gaming expansion the Legislature strived for during the 2009 legislative session, and instead doubles the banked card game casinos in Florida." He said the compact "ends competition in Florida's gaming marketplace" by giving the tribe exclusive rights to casino gaming outside of Miami-Dade and Broward counties and that local governments "will lose hundreds of millions of dollars" if it is approved. [News-press.com]

Members of the Florida legislature, particularly in the more anti-gambling House, may not be happy with the compact either, particularly with the expansion of the Seminoles' table games. A proposal from the legislature earlier in the year limited them to three; two in Broward and one in Tampa. Governor Crist acknowledged that he didn't get the deal he wanted. "I think that we've gotten them as close as we can to the parameters that they set out.." [Tampa Bay Online]

Of course, in all fairness to the governor of the Sunshine State, it can't be easy to negotiate with an adversary which, under the auspices and blessings of the federal government, is empowered to act with near impunity. The Seminoles could operate slots and not pay the state a dime if it wanted to. And the state has been powerless to stop the tribe from operating blackjack games that are prohibited under state law. Florida Attorney General Bill McCollum, who fought for months to shut the games down, now concedes: "..we have no way to enforce that. It can only be enforced by the federal government." So Crist is probably relieved to get a 50% increase, to $150 million a year, in guaranteed payments, plus a progressive cut of the action which starts at 12% and goes as high as 25%.

Under the compact, the state is expected to pick up its first $150 million on Dec. 1 and repeat that amount a year later. The annual contribution will grow to $183 million by 2012, according to estimates provided by Crist, and go as high as $501.9 million by Dec. 1, 2029.

“The Seminole Tribe receives the exclusivity of certain gaming that it deserves,” Crist said in a letter to Mitchell Cypress, chairman of the Seminole Tribe. [Biz Journals]

Of course, the racetracks might argue that they're at least as deserving, given its long history of providing jobs and revenue for the state (not to mention some pretty great racing). At least the compact specifies as excluded from the tribe's exclusivity: The operation of Pari-Mutuel Wagering Activities at pari-mutuel facilities licensed by the State of Florida. The way the table is tilted against them, the tracks should probably be grateful for that.