November 14, 2007
Information by: Sun-Sentinel's Broward news columnist Michael Mayo

It's official. Gov. Charlie Crist just announced a gambling agreement (better known as a compact) with the Seminoles that allows Class III slot machines, blackjack and baccarat at the tribe’s seven casinos.

But before you go running off to the Hard Rock Casino in Hollywood, Florida to double-down on 7-4, be aware that this could take awhile to go into effect.

Here’s a quick Q&A about the deal:

Q. With the compact announced today, how come I can’t sit at a blackjack table this weekend?
A. There are certain logistical hurdles when it comes to setting up table games, although the Seminoles have been prepping for this day for a while and could probably have them ready to go within a month. The main hurdle will be legal fights that could take months, if not years. Dan Adkins, the executive in charge of Mardi Gras Casino in Hallandale Beach, vowed “to run to the courthouse to file suit” as soon as a compact that allowed table games was announced. And then there’s the matter of the Legislature, whose leaders argue that they must ratify any compact before it takes effect.

Q. Is it true that the Legislature must ratify a compact?
A. We don’t know, but it will likely fall into a judge’s hands to decide.

Q. Would the Legislature ratify this compact?
A. That’s unknown. House Speaker Marco Rubio, who has been invaded by the sanctimonious spirit of former Gov. Jeb Bush, said he opposes a compact that includes table games like blackjack, which are prohibited by state law. He might have enough votes to block it in the House.

Q. How can the Governor negotiate something that’s illegal in the state without legislative approval?
A. Again, this will be a matter for the courts. Indian tribal lands (including their casinos) are considered sovereign territory. That means they aren’t subject to state law, but they are subject to federal oversight (through the Department of Interior). The Department of Interior allows Class III gambling when states and tribes reach compacts.

Q. Is this a good deal or a bad deal for the state?
A. A little of both. First off, let’s give Gov. Crist credit for waking up to the realities of the gambling situation in Florida (unlike his predecessors) and getting this deal done. Any revenue for the state is better than no revenue.

But before we congratulate him too much, the fine print suggests this might not be such a great deal. The Seminoles have a lot of escape clauses that might excuse them from making the expected $100 million-a-year payments, which amounts to less than 10 percent of their current gambling revenues. The Broward pari-mutuel casinos pay the state 50 percent in taxes.

Q. Can South Florida pari-mutuels also get table games like blackjack?
A. It would take legislative changes, but the answer is yes. According to an October draft, the agreement allows for pari-mutuels in Broward and Miami-Dade to get table games without automatically voiding the compact. But this is where it gets tricky. Seminole payments to the state would stop if the tribe’s gambling profit dipped below current levels (placed at around $1.3 billion). The tribe’s payments would resume once their profit returned above that threshold. It’s unclear how the Seminoles’ bottom line would be impacted if pari-mutuels got table games. The expectations are that everyone's revenues would grow.

Q. So what’s with all this talk about the Seminoles getting gambling exclusivity?
A. The legal jargon in the compact refers to “limited but substantial exclusivity.” That means the Seminoles will not have to make payments if Class III slot machines or table games are allowed in any other Florida county besides Broward and Miami-Dade. Miami-Dade voters will decide on Class III slot machines at pari-mutuels Jan. 29.

Q. What about the Miccosukees?
A. This compact only includes the seven Seminole tribal casinos, including three in Broward (Seminole Hard Rock, Seminole Hollywood and Seminole Coconut Creek), not the Miccosukee tribe’s lone casino in west Miami-Dade. The Miccosukees have taken a wait-and-see approach, but will likely try to reach a similar revenue-sharing agreement with the state soon.

Q. Anything else to look for in the fine print?
A. The most interesting thing will be seeing whether the Seminoles agree to conform to state law when it comes to poker room hours. Currently, the Seminoles’ poker rooms are open 24/7. Pari-mutuel poker rooms can only operate 12 hours daily. According to the October compact draft, the Seminoles said their poker rooms would adhere to state rules when it came to “hours of operation, wagers and pot sizes.” If this provision stayed in, it would tick off plenty of insomniac poker players.

TALLAHASSEE - Gov. Charlie Crist and Seminole Tribal Chairman Mitchell Cypress today signed a gambling compact agreement that lets the tribe dramatically expand its casino operations in exchange for giving the state a share of the proceeds.

Members of the tribal council joined Crist for a news conference in Tallahassee, and at the end of it they signed a 25-year deal that brings to a close 16 years of negotiations.

The deal allows the Tribe to operate Las Vegas style slot machines and banked card games, like baccarat and blackjack, at the seven casinos they now operate around the state. Additionally, six no-limit poker games will be allowed each year, with 70 percent of the revenue going to charity.

In return, the state will get $50 million from the Tribe as soon as the federal government approves the compact. After that, the state will get guaranteed minimum annual payments of $100 million. Starting in the third year of operation, the state will receive between 10 and 25 percent of the gambling revenue, based on how much money the Tribe takes in. The Legislature will appropriate the money, but Crist is asking that 95 percent be earmarked for education and the remaining 5 percent go to local governments impacted by the increased activity at the Seminole casinos.

"It's the right thing to do," Crist said of the agreement. "If we don't, the feds will and the state will get zero."

As for those who don't like the idea of expanded gambling, the governor said, "If people don't like gambling, they shouldn't go."

The sealing of the long-sought deal on Seminole gambling comes one day before the deadline set by the U.S. government for the state and tribe to reach accord and the same day state economists are likely to reveal that tax revenues may fall up to $2 billion short of what's needed to fund the current state budget.

Last week the U.S. Department of Interior gave the state until this Thursday to complete the deal with the tribe or the federal government would impose "procedures", a process where the Indian casinos would get expanded gambling without a guarantee of any financial benefit for the state.

Federal officials have cautioned the state that the Tribe was left an "unfair playing field" after voters approved Class III, or Las Vegas-style, slots in Broward County. The Indian casinos now are allowed to offer only Class II slot machines that offer bingo odds and are not as lucrative for the player or the casino.

Both sides have said for months that they were close to agreement, but Crist has been on a trade mission to Brazil for the past week, only returning on Monday and apparently agreeing to the deal Tuesday.

Linda Kleindienst can be reached at lkleindienst@sun-sentinel.com

By John Holland | South Florida Sun-Sentinel
November 15, 2007

It's being sold as a windfall for taxpayers and the Seminole Tribe, but Florida's cut from an agreement to expand tribal gambling is dwarfed by some others negotiated around the country, industry analysts and public records show.

What's more, the 25-year agreement signed by Gov. Charlie Crist and Seminole Chairman Mitchell Cypress at the state Capitol on Wednesday provides for less state oversight and no permanent regulatory presence inside the tribal casinos.

Still, analysts said that given the Seminoles' already solid financial base and the threat of federal government intervention, Florida didn't have much leverage to push for a better deal.

"This would fall somewhere in the middle range compared to other compacts," said Alan Meister, an economist with the Analysis Group in Los Angeles, a consulting firm. "There are states with higher scales, but it's a fair deal for the state when you factor everything in."

The compact calls for Florida to pocket at least $100 million in the first year of the tribe's expanded casino operations, including an advance payment of $50 million when the deal is approved in Washington.

Payments escalate to at least $125 million the following year, and not less than $150 million in the third year before dropping back to a minimum guarantee of $100 million in the fourth, with the prospect for more.

In comparison, last year the state of Connecticut received $430 million from the Mohegen Sun and Foxwoods casinos, which hand over 25 percent of all slot machine revenue to the state, according to the Connecticut Division of Special Revenue.

California will receive more than $400 million next year using a sliding percentage rate that increases as tribes install more slot machines.

Florida's compact, which is almost certain to face numerous legal challenges, calls for the Seminoles to hand over 10 percent of the take on the first $2 billion in revenue. They pay a 25 percent royalty fee only on the portion of revenues above $4.5 billion — a figure analysts called unlikely.

In contrast, Broward County's non-Indian pari-mutuel operators, who have slot machines but aren't allowed to host the blackjack or baccarat games now permitted the Seminoles, must pay 50 percent of their take to the state. They denounced the compact as unfair and said Florida would be hurt in the long run, since their annual payments of $150 million into state coffers were certain to drop.

"The tribe and the governor are using smoke and mirrors to make it look like this is a great boost to the state of Florida," said Dan Adkins, vice president of Mardi Gras Casino and Racetrack in Hallandale Beach. The agreement also provides for laxer official oversight over the tribe's casinos than in New York and Connecticut, which require that state officials be furnished offices in facilities where gambling takes place. The Florida Department of Law Enforcement also has full-time investigators at Broward County's race tracks, something not allowed under the new compact.

That agreement allows state inspections on Seminole land only during business hours and on a limited basis, although an independent financial audit is required annually.

While the differences in gambling regulations between states seem glaring, gambling industry experts said the Seminoles had significant advantages that gave them leverage in negotiations.

Steven Light, a political scientist and co-director of the Institute for the Study of Tribal Gaming Law and Policy at the University of North Dakota, said the tribe's robust financial health made it less desperate to cut a deal for Class III gambling.

The biggest factor encouraging agreement, he said, may have been the federal government's warning that if an accord weren't reached by today Florida might not get any money at all.

National gambling revenue statistics and studies show many Midwestern and Southwestern states are moving toward deals with tribes that bring smaller shares of gambling revenues, making it easier for tribes to expand their operations, potentially bringing in more revenue. Arizona has a sliding royalty scale of 1 percent to a high of 8 percent.

In that context, Florida should still fare well, even if it doesn't charge the high royalty percentages levied by California or Connecticut, analysts said.

"There is a tremendous latent demand for Class III gaming in Florida, especially when you have a continual influx of tourists and [snowbirds]," Light said. "Gov. [Charlie] Crist realizes that, and certainly the Seminoles have realized that for a long time. It wouldn't surprise me to see the revenue numbers increase dramatically."

John Holland can be reached at jholland@sun-sentinel.com or at 954-385-7909.