State's gaming deal a winner, experts say
The Seminole pact may deliver over time.
By STEVE HUETTEL, Times Staff Writer
Published November 16, 2007
Is the state's deal to expand gambling at casinos owned by the Seminole Tribe of Florida a jackpot or bust for taxpayers?
The initial payoff looks like a pittance compared with revenues in big Indian gaming states like California and Connecticut. Florida parimutuels scoff that the $100-million minimum the first year won't even offset the state's tax losses as tribal casinos cut into their business.
But Indian gaming experts say that considering their weak bargaining position, state officials cut a fair deal this week that should pay off if the tribe aggressively expands its casinos to leverage new slot machines and card games like blackjack.
The 25-year deal puts Florida "in the same league as the biggest states," said Steven Light, co-founder of the Institute for the Study of Indian Gaming Law and Policy at the University of North Dakota. "You can't just look at the immediate future. It's a very lucrative deal for the state in the next few years."
Florida would get at least $100-million for the first year, half of which would come when the Interior Department approves the agreement, called a "compact." The state would receive minimum payments of $125-million in year two and $150-million the following year.
Last year, Connecticut received $430-million as its cut of $2.5-billion in revenue from the Foxwoods and Mohegan Sun casinos. Under a 1994 compact, they pay the state 25 percent of slot revenues for exclusive rights to run a full range of casino games.
With nearly 60 tribal casinos that collected $7.7-billion in revenue in 2006, California is far and away the largest Indian gaming state. With new compacts that require tribes to pay 10 percent to 25 percent of revenue, the state expects to collect more than $400-million next year.
Florida's compact has the same percentage range after the second year. The Seminoles would pay 10 percent of "net win" -- money wagered less payouts -- on the first $2-billion annually. Revenue above that would be taxed on a sliding scale that reaches 25 percent of revenue over $4.5-billion a year.
That could take a long time, even with the new slots and card games. The tribe now generates $1.2-billion a year at its seven casinos, including the Seminole Hard Rock Hotel & Casino in Tampa, mostly from bingo-based gambling machines.
Florida officials were negotiating from a weak position, said Indian gaming expert Alan Meister of Analysis Group, financial consultants in Los Angeles.
The Interior Department was threatening to unilaterally give the Seminoles Las Vegas-style slots -- and cut Florida out of any money -- if officials didn't sign a compact by Thursday. And the tribe had a thriving gambling business without Florida's help. "I don't think the state had a lot to work with," said Meister.
Still, the state stands to make $1-billion over the first five years and as much as $500-million annually over the remainder of the 25-year compact, said George LeMieux, chief of staff for Gov. Charlie Crist. "We got ourselves a very competitive deal," he said.
Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.