State Gambling In Judges' Hands After Lawmakers Fold
Lawmakers called it a heavy lift, a three-dimensional game of chess and a Rubik's cube.
Whatever the label, a comprehensive gambling plan that would have authorized a $3 billion deal between Gov. Rick Scott and the Seminole Tribe proved too arduous a task for the Legislature to complete this session.
But the face of gambling in Florida could undergo major changes before lawmakers meet again next spring, as a result of decisions coming not from policy makers but from the courts.
In one of two gambling-related lawsuits, the Seminoles are alleging that the state breached a 2009 agreement that gave the tribe exclusive rights to operate banked card games, such as blackjack, at most of its casinos. If a federal judge agrees with the tribe, Florida stands to lose hundreds of millions of dollars each year in revenue the Seminoles now shares with the state.
The stakes are even higher in another case pending before the Florida Supreme Court that could open the door for slot machines at pari-mutuels throughout the state. That lawsuit could also cost the state money gleaned from the Seminoles.
Gretna Racing filed the lawsuit after Florida gambling regulators refused to allow the tiny horse track west of Tallahassee to add slot machines to its operations. The Gadsden County track contends that it should be allowed to have the lucrative slots because local voters approved them, but the state insists that only the Legislature has the authority to sign off on the games.
Making matters even more complicated, former Gov. Bob Graham, who was allowed to file a friend-of-the-court brief in the case, believes that the addition of slot machines at any pari-mutuel outside Miami-Dade or Broward counties requires approval from voters statewide. Statewide referendums require 60 percent approval from voters for passage.
The Supreme Court late last year accepted jurisdiction in the Gretna Racing case after a split appellate court reversed an earlier decision and ruled against the pari-mutuel.
In both decisions, the appellate judges asked the Florida Supreme Court to weigh in on the issue of whether pari-mutuels can have slot machines if local voters approve, or if the games require the express say-so of the Legislature.
The Supreme Court's ruling will likely affect gambling operations in Gadsden and at least five other counties --- Brevard, Hamilton, Lee, Palm Beach and Washington --- where voters have also approved referendums authorizing slots at local pari-mutuels. State regulators have denied applications for slots in four counties, and the Palm Beach Kennel Club, which was appealing its slots rejection when the Supreme Court decided to take the Gretna case, has joined the lawsuit.
A decision from the court agreeing with Gretna would affect another component of the 2009 agreement, called a "compact," between the state and the Seminoles. The 20-year deal, finalized in 2010, gave the tribe exclusive rights to operate slot machines, outside of pari-mutuels in Broward and Miami-Dade counties. The state reaps about $120 million a year from the revenue-sharing agreement.
"If they rule in a way that resulted in slots being granted to Gretna and potentially being granted to other places, it makes it more difficult to unwind and to un-ring that bell, legislatively," said Sen. Rob Bradley, a Fleming Island Republican who worked with Rep. Jose Felix Diaz as the Legislature's chief negotiators in talks with the Seminoles and Scott's administration over the past year.
The state and the tribe were trying to come up with a new compact after a portion of the 2009 agreement dealing with the banked card games expired last summer, prompting the Seminoles to file the federal lawsuit.
Scott and the Seminoles signed a proposed compact in December that would have allowed the tribe to add roulette and craps --- and keep banked card games and slots --- to its casino operations. In exchange, the Seminoles agreed to pay the state a minimum of $3 billion over seven years in a 20-year compact that would have netted Florida about $9 billion over the life of the contract. The tribe also signed off on slots for the Palm Beach Kennel Club and at a new facility in Miami-Dade County.
A House committee gave preliminary approval to a measure that would have authorized the compact and allowed slots in Palm Beach County and at the new Miami-Dade facility. But a Senate committee agreed to a much more expansive bill that would have permitted slots in at least five counties.
Sen. Joe Negron, who takes over as Senate president after the November elections, backed the effort to expand the Senate proposal, crafted by Bradley. Negron insisted that, without his proposed expansion, the Senate Regulated Industries Committee would never have approved Bradley's plan. The committee signed off on Negron's proposal, but that was as far as it went.
Negron, R-Stuart, said he plans to make approval of a new compact a priority after he becomes president.
"It's important for us to have predictability and certainty in the gaming industry in Florida," Negron said. "I would love to be able to use the additional revenue that would come from the Seminole compact to fund some of the higher-education priorities that I have. ... I don't understand why people say it's so complicated. It's not. It can be done."
Although they did not reach consensus this year, Diaz said lawmakers' reactions to the gambling proposals were instructive for future attempts at resolving the issue.
"At least we know now, having gone through session and seen all the changes that were attempted, what many of the legislators want out of the gaming compact, so we're in a stronger place to negotiate," Diaz, R-Miami, said.
Federal law requires that tribes have "exclusivity" regarding some aspect of gambling in order to justify state revenue-sharing agreements, which must be approved by the U.S. Department of the Interior, something that appears to have been lost on many state legislators.
"I don't think the members truly understand just how much leverage the Seminole Tribe has. I don't think the membership truly understands just how complicated federal Indian gaming law is … and how everything that we do here has to be approved by the federal government," Diaz said.
In its lawsuit against the state, the Seminoles are accusing state regulators of breaching the exclusivity portion of the compact by authorizing "player-banked" card games at pari-mutuels throughout Florida. In those games, players bet against each other instead of the "house."
But even if lawmakers, or regulators, ban the player-banked games, the Seminoles would still be entitled to keep operating them, according to the tribe's lawyer, Barry Richard.
"Once it's authorized, then we have the right to it and that's the end of the story. They can't just yo-yo us that way," he said.
The lawsuit also accuses the state of acting in "bad faith" in negotiations regarding the banked card games because, instead of focusing on the card-related portion of the deal, the state forced the Seminoles to rework the entire 20-year agreement, Richard said.
"They would not negotiate the card games unless it was tied to the whole big enchilada, and that was tied to pleasing the pari-mutuels. And, in my opinion, that's not good faith," Richard said. "The rest of the compact is set in stone until 2030…The parties together can mutually change that. But they can't say the only way we're going to negotiate the renewal of the card games is if you agree to give us more money on the rest of it. That's not good faith."