Seminole deal may not add up

Other states' records suggest open gambling more profitable

By Bob Rathgeber
© Ft. Myers News-Press
Sunday, November 29, 2009

Potential taxes from new casinos could trump Gov. Charlie Crist's proposed deal with the Seminoles if Florida voters ever approve open gambling.

Using a few Rust Belt states as examples, the right kind of deal with casino operators could easily earn the state more over a 20-year deal than the $6.8 billion projected by Crist's plan.

For instance:

- The 11 Indiana casinos have paid that state $7 billion since voters approved gambling on the Ohio River and Lake Michigan in 1994.

- In Detroit, just three casinos have paid the state more than $1.3 billion in taxes since opening in 1999.

- Since 1993, 10 Illinois riverboat casinos have paid more than $8 billion in taxes.

That's one reason why a growing number of state legislators are railing against the deal Crist signed in August with the Seminoles and why they are floating ideas to allow residents to vote on gambling on a county-by-county basis.

One is state Rep. Julio Robaina, R-Miami.

"It's a bad deal," Robaina said of Crist's negotiations that would give the Seminoles exclusivity for blackjack and other table games.

"He stuck a dagger in the back of the pari-mutuels," Robaina said. "I disagree with the governor over this."

The deal would guarantee the state a minimum of $12.5 million a month for 30 months, or $375 million. After that, the state would net about $150 million annually or a percent of the tribe's profits of between 12 percent and 25 percent up to $4 billion. According to some in the pari-mutuel industry as well as at least one state legislator, that amount is less than 10 percent of the tribe's gaming win.

In Indiana, Michigan and Illinois, casino operators pay a considerably higher tax rate, up to about 25 percent, which accounts for the large pay days for the states.

But in Indiana and Illinois, the state-controlled casinos have no competition from the Indians. And in Michigan, the state's only three nontribal casinos are in downtown Detroit.

For that reason, at least one gambling expert said opening up the state might not necessarily be the financial bonanza it seems on the surface.

"The tax rates play a big role in this," said Dave Schwartz, head of the Center for Gaming Research in Las Vegas.

"You have to remember that the Seminoles have a tremendous leg up already with the Hard Rock name brand."

The tribe has Hard Rock casino-hotels in Hollywood and Tampa, five other casinos - including one in Immokalee - and has talked about building a hotel and golf course in Collier County.

Like a growing number of his counterparts in the House, Robaina is for allowing state voters to declare yea or nay to legalized gambling on a county-by-county basis.

"As a lawmaker, I think we should let the people decide," Robaina said.

"Right now there is a groundswell of people looking closely at gambling. There is a citizens initiative to get it on the ballot."

Robaina, who is a member of the Select Committee on Seminole Indian Compact Review in the Legislature, said the group will meet next month and discuss how to deal with the Crist-Seminole deal.

He said that if there is no agreement, and the federal government continues to allow the Seminoles to run their casinos, he believes that the Legislature will work with pari-mutuels.

"I think we'd take the compact portion to help the struggling pari-mutuel industry in lowering the tax structure from 50 to 35 percent. I think we'd pass that portion of the compact."

That's sweet music to the ears of Izzy Havenick of Miami, whose family has owned the Naples-Fort Myers Greyhound Track in Bonita Springs for more than 40 years.

"Any solution where we are put on an equal playing field is all we are asking," Havenick said. "We've always asked for a seat at the table to be heard. We would love for the legislature to give us the opportunity."

The Center for Gaming Research's Schwartz said that if there were both Indian and state-controlled casinos in the state, competition would be fierce.

"One of the biggest misconceptions is that a casino is a license to print money," he said. "Competition is very costly, especially in marketing."