State Politics

Explosive growth of Florida slot machines possible with court ruling

TALLAHASSEE --When legislators finished their annual session last week without a gaming bill or a compact with the Seminole Tribe, they raised the stakes on the future of casinos in Florida, and it's precisely where gaming opponents want it.

Instead of lawmakers deciding the future of expanded gambling, that decision will now be made by the courts in pending lawsuits before the Florida Supreme Court and a federal judge.

The court could conclude lawmakers have no authority to authorize slot machines outside of Miami-Dade and Broward counties without statewide voter approval, thereby neutering the Legislature's influence. It could say only the Legislature can decide where to put new games.

Or a third option -- the most explosive of all and the one the plaintiffs are hoping for -- could open the door to unprecedented expansion of slot machines if the court rules Palm Beach and Gadsden counties could seek permits to install slots machines because local voters have approved it.

"It could become a free-for-all for slot machines across the state," said state Rep. Jose Felix Diaz, R-Miami, the House's chief negotiator who spent the last six months trying to work out a compact with the governor and the tribe, as well as a gaming bill that suited the Senate and the diverse interests of the pari-mutuel industry.

"If that happens, you can't put the genie back in the bottle. The pari-mutuels across the state will argue they have some vested right to slot machines, and they will fight tooth and nail to make sure their legislators are not voting against them."

In both lawsuits, if the court rules in favor of the tribe or the pari-mutuels the state loses big: the tribe could continue to operate just as it is today, but it would cease payments of nearly $250 million a year in revenue-sharing money and any progress made toward a new 20-year agreement over the future of gaming is lost.

Gaming opponents are confident the court will reject the industry argument and clarify once and for all that the constitution forbids lawmakers from expanding games of chance -- like the lottery, slots, craps and roulette -- without voter approval.

"We are heartened by the fact that nothing did happen because we're anxious to see how the Gretna case works out," said John Sowinski, president of Orlando-based "No Casinos," an anti-gaming group that does not reveal its donors. "We are confident Gretna will not prevail."

In an unusual move, former governor and Sen. Bob Graham filed a friend-of-the-court brief on behalf of No Casinos suggesting the Legislature has no authority under the state constitution to open the door to additional slot machines, or any other forms of gambling, without a statewide referendum. Graham also asked to be allowed to participate in oral arguments but the court denied his request last Friday. (March 11) Arguments are expected to be held in that case in May or June.

Gretna Racing LLC, which wants to bring slot machines to a rural horse track near Interstate 10 in Gadsden County, has joined with the Palm Beach Kennel Club to sue the state.

They argue state regulators erred when they failed to recognize that a loophole in the law allows them to operate slot machines at their racetracks because they received approval from voters in county-wide referenda -- just as Miami-Dade and Broward did in 2005. If the court agrees with them, at least four other counties -- Lee, Washington, Brevard and Hamilton -- could seek permits, too, because they have received voter approval to install slot machines at race tracks.

Depending on how the court rules, the Legislature's role in expanding gaming could be muted or enhanced.

"If we win, you're going to have the potential of at least 19 pari-mutuel facilities having slot machines," said Brian Ballard, lobbyist for the Palm Beach Kennel Club. "We're not crying wolf. The court has decided to take this case and we feel comfortable where we are."

The other case involves the Seminole Tribe and is set for an October hearing in federal court. The tribe accuses the state of violating the 2009 compact by allowing player-banked card games at Miami-Dade and Broward slots casinos. The compact gave them the exclusive right to operate banked card games at five of its casinos in exchange for revenue sharing with the state.

"Either one of those cases hits a hard reset button on everyone's negotiating," said Marc Dunbar, a Tallahassee lawyer who represents Gretna Racing LLC. He is among a group of lobbyists hoping to persuade the Legislature to come back in special session before November to finish the work they started this session. Both he and Ballard said their clients would likely drop the lawsuit, preempting a court ruling, if lawmakers pass legislation confirming that their communities are entitled to slots permits.

"If they choose not to come back, that is an affirmative act to say we are comfortable with what the court does," he said.

In the final days of session, it became abundantly clear the lawsuits have increased the pressure on all sides to seek a resolution.

Legislators had declared a bill to ratify a new 20-year agreement between Gov. Rick Scott and the tribe was dead. The tribe had agreed to give the state a guaranteed $3 billion over the first seven years of the compact in return for the exclusive right to operate its casino games at its seven casinos.

The industry would not take no for an answer. The compact serves as a limit on the expansion of gaming because any authorization of new games violates the exclusivity provisions of the compact so the industry wants to be sure the final deal does not prohibit their opportunity for growth.

Working behind the scenes with Jim Allen, the president of the tribe's Seminole Hard Rock Casinos, Dunbar and Ballard brought together the warring factions within the pari-mutuel industry to find an alternative that would make everyone happy.

The elements of the deal, which was never completed, would have given Palm Beach fewer slot machines than authorized in the governor's proposed compact and it would have phased them in over two years, sources close to the proposal said. Gretna also would get slot machines, as would counties that have already received voter approval -- Brevard, Lee, Washington and Hamilton.

In Tampa Bay, where the tribe's Seminole Hard Rock is competing with Tampa Bay Downs and two dog tracks, the proposal would have given pari-mutuels slot machines if voters approved -- but the slot machines would be operated by the tribe.

In Hallandale Beach, where Mardi Gras Casino wants to end dog racing and move its gaming and entertainment center to western Broward County, the company owners, Hartman and Tyner, would be allowed to partner with the owner of the Florida Panthers hockey team to build a casino at the team's BB&T Center in Sunrise.

The proposal would have guaranteed $3 billion over seven years, the same amount under the proposed compact signed by the they governor, but it would have been a combination of revenues from the tribe and the expanded games, the sources said. In exchange, the tribe would be allowed to open an eighth casino -- running only poker and slots machines at the tribe's Fort Pierce property -- but it would be given craps and roulette at and its other seven sites.

"We had the framework for an agreement but it was probably a week too late," Ballard said. He predicted that had they completed it they could have gotten "81 votes in the House, no less than 26 in the Senate."

State Sen. Jack Latvala, R-Clearwater, a longtime opponent of to giving the Seminoles more games without helping the local pari-mutuels in return, said the proposal "took my concerns into account."

"They were probably closer to a deal than they have ever been before," he said. "I would be supportive of coming back in special session and getting this deal done because we're leaving money on the table."

Diaz agreed the House, which has traditionally been averse to passing any gaming legislation, "took this farther this year than anybody else has been able to do." He said he hopes to return to the negotiating table with the Seminoles this summer, using the compromise language as a starting point. end print trim

Will lawmakers be back before the November elections to vote on it?

"I think it's a long shot," said state Sen. Rob Bradley, R-Fleming Island, the Senate's lead negotiator. "I don't see us meeting again in Tallahassee until after November."

He said he was "never fully briefed" on the details of the late-session proposal but he blames the industry for wanting too much. "For two years, the clear message was sent that the Legislature wasn't going to sign off on a massive gaming expansion. For whatever reason, people refused to believe it," he said.

Diaz agrees "the likelihood is very low that all parties can come to the table again without the fear of wasting taxpayer dollars.''

"Time is of the essence -- not only because of the calendar and the court but also because of elections," he said. "If there were to be a special session, it would have to be sooner rather than later."

Ballard, who has been trying to get slots at the Palm Beach Kennel Club for more than a decade, said he feels like Sisyphus, the Greek mythological character who was forced to roll a giant boulder up a hill, only to watch it roll back down every time.

"We were so close this year," he told the Herald/Times. "Literally on the lip of the cup."

For that reason, he said, he hopes the House and Senate leaders will capitalize on the progress and call a quick, narrowly drawn special session.

"We would rather not go to the court and would much rather resolve it legislatively."

Conventional wisdom is Senate President Andy Gardiner, R-Orlando, does not want a bill expanding gambling to be the last bill passed of his 20-year legislative career, and incoming House Speaker Richard Corcoran, R-Land O'Lakes, rejects the idea as well.

The tribe is also prepared to wait it out.

"The tribe is also now waiting to see what happens at the Florida Supreme Court and at federal court in Tallahassee and to see if those outcomes motivate the Legislature to act," said Gary Bitner, spokesman for the Seminole Tribe. "In the meantime, the table games will continue."

Meanwhile, No Casinos is preparing its backup plan.

If the court allows for the expansion of games of chance without statewide voter approval, the group has prepared a constitutional amendment and is getting signatures to put it on the 2018 ballot, Sowinski said. It would say that no additional gambling is allowed in Florida without 60 percent of the state's voters signing off.

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