FL Tracks Wary as Tribal Gaming Expands

Tribal gaming is poised to expand in Florida, but racetracks have lawsuits pending.

The Seminole Tribe of Florida is preparing for the June 22 launch of blackjack and baccarat at its Hollywood, Fla., casino located 10 miles from Gulfstream Park, one of the racetracks that filed suits to stop the Seminole gaming expansion.

The Seminoles will be Florida’s only casino operator with those two popular table games. They are “gaining another advantage while all we are striving for is a level playing field,” said Steve Calabro, vice president of gaming for Gulfstream parent Magna Entertainment Corp.

A compact the Seminoles signed Nov. 17, 2007, with Florida Gov. Charlie Crist gives them exclusive rights to blackjack and baccarat at their seven Florida casinos. The compact also permitted the Seminoles to upgrade from Class II slot machines to Class III Las Vegas-style machines, and requires them to begin paying state government a portion of their gaming revenue.

Gulfstream, harness track Isle Racing & Casino at Pompano Park, and Greyhound track Mardi Gras Race Track and Gaming have Class III machines on which their tax payments to the state are at a higher percentage than the Seminole payments.

The Supreme Court of Florida is preparing to rule on a suit filed against Crist by Florida House Speaker Marco Rubio, in which Gulfstream has an amicus brief. The suit, filed Nov. 19, 2007, seeks to overturn the compact and require the state legislature to approve any agreement with the Seminoles on slots and other gaming.

On June 4, Pompano Park filed a suit in U.S. District Court in the Northern District of Florida seeking an injunction to prevent the Seminoles from offering blackjack and baccarat. Defendants are Crist and two top officials of the U.S. Department of the Interior, which regulates tribal gaming.

Marc Dunbar, an attorney who represents Gulfstream and MEC, said he expects Florida’s Supreme Court will rule on Rubio’s suit before it begins a five-week recess July 11. That court may not have ruled yet because it might not have a unanimous decision, said Dunbar, a partner in the Pennington law firm.

If the court rules in favor of Rubio, Dunbar expects Crist could call a special session of the legislature to seek approval of his compact or a similar version. Rubio’s suit focuses on separation-of-powers issues. But some legislators also believe the Seminoles should pay a higher rate of their revenue to the state.

The Seminoles are not a defendant in either suit. They have installed Las Vegas-style slots at their three South Florida casinos, including the glitzy Seminole Hard Rock Hotel and Casino, where they are putting in their first blackjack tables.

Barry Richard, an attorney representing the Seminoles, said the tribe believed it had a duty to “act expeditiously” in adding new slot machines and table games because of the revenue they will provide to the Florida government. Court rulings that would require the Seminoles to cease their new gaming “are among possibilities,” Richard said.

“We will comply with the law,” he said, emphasizing that the Seminoles are adding games under an agreement approved by the Interior Department.

Had Crist not signed an agreement with the Seminoles, they would have been able to upgrade to Class III slots without making payments to the Florida treasury. The federal Indian Gaming Regulatory Act allows a tribe to offer any games offered by other casinos in a state.

The Seminoles’ payments start at $100 million this year and can rise to as much as 25% of their annual net gaming revenue in Florida. Indian Gaming Report, which monitors Tribal casinos, estimates the Seminoles had more than $1 billion in gaming revenue in 2006.

Gulfstream and the two other racetrack casinos in Broward County pay the state 50% t of net slots revenue. Calder Race Course would pay that tax rate on slots if parent Churchill Downs Inc. builds a casino at the track in Miami Gardens.

Calder is located six miles from the Seminole Hard Rock. Officials at Calder and Gulfstream maintain that the Hard Rock’s expansion is providing it some gaming dollars that local residents might otherwise spend betting on horse races.

In several quarterly earnings reports and during analyst calls, MEC has termed results of Gulfstream’s casino as disappointing. But Gulfstream’s slots results have been improving this spring, according to the Florida Division of Pari-Mutuel Wagering.

Gulfstream had $26.2 million in slots play on 1,221 machines in May 2007. Its slots play rose to $42.2 million on 823 machines in May 2008, according to state statistics.

Gulfstream opened its casino in November 2006, and has faced a challenge in generating casino traffic in months other than its January-April live racing season. This year, Gulfstream is benefiting from a better mix of slot machines and an improved program for marketing and giveaways of cars and other prizes, Calabro said.

Calabro noted that Gulfstream now offers afternoon simulcasts, including Calder and Belmont Park, and that some racing fans also are playing slot machines. Last spring, it could not begin offering full-card simulcasts until 6 p.m.