From bingo barns to casino glitz
The Seminole Tribe's deal for the Hard Rock brand creates a gambling powerhouse.
By Steve Huettel, Times Staff Writer
Published March 11, 2007
TAMPA- A voice cuts through the beeps of flashing video bingo machines on the 2-acre floor at the Seminole Hard Rock Casino. An announcer directs the packed house to look up to a tower of video screens that display the name of the $1,000 hourly drawing winner - if he appears in two minutes.
A gray-haired, pudgy guy huffs to the Center Bar and pulls out his picture ID. Wait till 9:30, the announcer calls out, for the grand prize award: a new Cadillac XLR.
The payoffs for these Wednesday night gamblers only hint at the huge gambling enterprise Florida's Seminole Tribe built with its 3-year-old casinos in Tampa and South Florida with the Hard Rock brand.
Annual gambling revenue from the Hard Rocks and five smaller, unbranded casinos is estimated at more than $1-billion and growing at 25 percent a year.
The Seminole Hard Rock Hotels & Casinos rake in the lion's share, attracting as many as 40,000 customers a day in Hollywood and 15,000 in Tampa during the winter season, says James Allen, CEO of Seminole Gaming. The four-diamond hotels average a remarkably high 95 percent occupancy rate, often at nightly rates of $300 or more.
That financial muscle powered the tribe's newest venture: the $965-million purchase last week of the Hard Rock franchise. It's believed to be the first time an American Indian tribe bought a major international company.
The tribe expects big things for the company, which owns or franchises 124 Hard Rock Cafes in 45 countries and has licensed rights to seven hotels and five casinos.
Allen hopes to add 25 to 50 Hard Rock hotels in the next decade. Tribal officials say it's possible to double the company's profit of $78.4-million last year on revenue of $502-million.
"That might be too high or too low," says tribal council member Max B. Osceola Jr. "We're going to try to improve it to the maximum possible."
But the deal highlighted an ugly split with the tribe's development partner in the Tampa and Hollywood properties.
Power Plant Entertainment said in a December lawsuit that the tribe won the bidding through under-the-table dealings with Hard Rock management.
Last summer, the Seminoles sued to break the Power Plant development contract, which they claim violated Indian gaming law. Attorneys for the company responded that the suit demonstrated the tribe's "astonishing greed."
The Seminoles figured out in the 1970s that they could leverage their sovereignty into big bucks. But not without a fight.
First came a tobacco shop on a South Florida highway that sold cigarettes without charging state sales tax. A judge agreed the tax didn't apply to sales on tribal land.
In 1979, the tribe opened a high-stakes bingo hall in Hollywood. Games paid $5,000 jackpots at a time when Florida law capped top prizes at $100, once a night.
When Bob Butterworth, then Broward County sheriff, tried to close them down, the Seminoles won an injunction in federal court. The U.S. Supreme Court affirmed the tribe's right to set its own jackpots.
That opened the door to American Indian gambling, an industry that generated $22.6-billion in revenue in 2005. Congress regulated Indian gaming in 1988 to give states a role deciding what games tribes can offer.
Seminole casinos are limited to games in which gamblers play against each other: bingo machines and poker.
Talks with the state to permit Las Vegas-style games failed to produce an agreement, called a "compact," under two previous governors.
Gov. Charlie Crist and the tribe have begun negotiations to allow slot machines at Seminole casinos.
A deal could bring the state millions in new revenue.
"The governor looks forward to further discussions with the expectation of achieving a compact," said Kathy Torian, a spokeswoman for Crist.
Rolling the dice
Seminole leaders realized in the late 1990s their bingo halls, while highly profitable, had limited appeal.
A consultant visiting the Tampa casino noted the bingo and poker rooms were busy. But two-thirds of the bingo machines sat empty. The hall was smoke-filled and had only a small bar and cafeteria-style restaurant.
The Seminoles wanted to build casinos with high-end hotels, fine-dining restaurants and hip nightclubs to bring in a younger, more affluent crowd.
All the major gaming companies turned down the offer, worried that casinos without blackjack, roulette and other table games couldn't make money.
The tribe hooked up with Hard Rock and in 2001 announced a $400-million plan to build Seminole Hard Rock Hotels & Casinos in Tampa and Hollywood.
Both were immediate hits upon opening three years later. A feasibility study estimated the projects would make combined profits of $460-million by 2006.
The Power Plant lawsuit last year said profits were more than $500-million. Other observers estimate the number at $700-million or more.
Taste of Vegas
Allen, the tribe's gaming chief, won't comment on finances. The casinos are among the world's most successful, he says, and indistinguishable from others except for lacking table games besides poker.
"When you look at it from a volume standpoint, the design standpoint, the look and feel, the differences are almost impossible to identify," Allen says.
Unlike the bingo halls with beer bars and lunch buffets, the Hard Rock casinos are full-fledged attractions.
In Tampa, there's a spa, Mediterranean-style restaurant and "dress-to-impress" night club that's open from 11 p.m. to 6 a.m.
The Hollywood Hard Rock and adjoining Seminole Paradise have an Improv Comedy Club, a dozen bars and a 5,600-seat arena with upcoming shows by Chicago, the Who, Vince Gill and Aaron Lewis of Staind.
"It's the evolution of the industry," says Joseph Weinert of Spectrum Gaming, a consulting firm outside Atlantic City. "People look at casinos as much more than gaming."
Seminole Hard Rock does a slick job marketing the casinos as upscale, hip places to have fun, says David Schwartz, dean of the Center for Gaming Research at the University of Nevada at Las Vegas.
"The last thing you think of is blue-haired ladies with bingo cards," he says.
Steve Huettel can be reached at email@example.com or (813) 226-3384.