Sports betting in Florida: Has its time come or run out for this legislative session?
Has time run out for a gambling deal this session?
For weeks, negotiators for the Seminole Tribe of Florida and Gov. Ron DeSantis worked on an agreement for a gaming compact. Then, late Monday, the governor made what was likely a final offer: Florida would become the largest state in the nation to legalize sports betting, and the Tribe would control it. The Tribe would not stand in the way if legislators were to allow Miami Beach to become home to a controversial new casino. And the Seminole Tribe would give the state hundreds of millions of dollars in annual payments.
It was an ambitious proposal designed to capitalize on the revenue stream of the exploding and popular online gaming industry, provide a new revenue source to the declining parimutuel industry, and open the door to a Miami Beach casino permit for Jeffrey Soffer, the real estate mogul who has used his superyacht, his friendship with the Tampa Bay Buccaneers’ Tom Brady, and $1.1 million in contributions to influence the governor and legislators.
But, as with every gaming deal that has emerged in the final days of a legislative session in the last 20 years, it was fraught with obstacles. By the end of the day Tuesday, the Tribe would reject the governor’s offer, according to several sources who were briefed on the negotiations but who told the Herald/Times they are not authorized to speak on the record. The biggest source of conflict: How much of the proceeds from sports betting to split between the Tribe and the parimutuels.
Like many gaming proposals before it, the governor’s offer was a casualty of the suffocating tangle of economic interests needed for a new gaming compact in Florida.
In order to get legislative approval, the needs of the state’s casinos, poker rooms, horse tracks and jai-alai facilities have to be sufficiently met, and the deal must provide the state with sufficient new revenue. But in order to get the Seminole Tribe to agree to a compact, and the federal regulators to approve it, the deal must sufficiently benefit the Tribe, which presently operates a casino monopoly outside of Miami-Dade and Broward counties.
A Senate priority
Reaching a deal is a priority of Senate President Wilton Simpson, who a month ago joined with DeSantis to tell the state’s parimutuel industry owners they were “getting close” on an agreement to provide the state’s parimutuels with the ability to license sports betting operations from the Tribe.
With just over two weeks left before session adjourns, time is running out. Neither Senate leaders nor the Tribe are giving up.
“Negotiations and discussions with the Tribe are still ongoing at this time,’’ said Sen. Travis Hutson, R-St. Augustine, chair of the Senate Regulated Industries Committee on Tuesday.
“Negotiations are ongoing,’’ said Gary Bitner, the Tribe’s spokesperson.
What is remarkable is that negotiations have lasted as long as they have this session, after years of barely making it off the ground. Also noteworthy is that DeSantis did not back away from the most controversial element of his plan: a pitch to allow Soffer to transfer his casino permit from his Big Easy Casino in Hallandale Beach to his Fontainebleau Hotel in Miami Beach.
The idea is fiercely opposed by Miami Beach and Miami-Dade County officials, who consider the transfer a violation of the state Constitution. The cities of Miami Beach and Coral Gables have passed resolutions opposing gambling expansion in their communities. Miami-Dade business leaders Norman Braman and Armando Codina have hired lawyers and vowed to sue. And community leaders, such as the director of Art Basel, have spoken out saying they are strongly opposed to gambling expansion in Miami-Dade.
Under the framework of the rejected offer, DeSantis agreed to give the owners of the Hard Rock Hotel & Casino the exclusive right to operate craps and roulette at the Tribe’s seven casinos and to operate as a sports betting hub for booking agents who would be housed at professional sports stadiums and existing casinos, slots facilities and parimutuel poker rooms.
The Tribe would have been allowed to add up to three additional casinos on existing tribal property, leasing its new hotels to casino operators such as Wynn Resorts, Sands and MGM. It would have been able to take a cut out of every sports bet placed. It would agree to drop its objection to having existing parimutuels operate designated-player card games, a hybrid between blackjack and poker which the Tribe considers competition to its blackjack operations.
And the Tribe would not object to legislation allowing Soffer to transfer his casino permit to Miami Beach, a move that has not been drafted in formal legislation and would require lawmakers to preempt local zoning laws.
Miami Beach move is controversial
The fact that DeSantis and the Tribe are even considering including the Soffer permit transfer in the compact has angered local leaders.
“It jeopardizes everything we are trying to accomplish in this community — by having the financial community move here, high tech move here, and it opens the door for an environment that is destructive to our community,’’ said Braman, the Miami auto magnate, after hearing of the governor’s offer on Tuesday.
“If this is this governor’s vision of Florida, we have a very big difference of opinion,’’ said Codina, who built a real estate empire.
In return for the compact, the Seminole Tribe would have guaranteed annual payments to the state for the next 30 years. It stopped paying the state $350 million in annual revenue sharing in 2017, after former Gov. Rick Scott refused to crack down on parimutuels operating designated-player games. Some estimates say that if the governor’s offer were accepted, after the first five years the annual payments could have been as much as $1 billion annually.
But the prize for DeSantis in the deal was the promise of sports betting. At least 28 states and the District of Columbia now allow some form of legal sports betting. If Florida was added to the list it would have become the largest state and perhaps rival Nevada as the biggest gambling tourist destination.
“Florida has the potential to really be a true sports gaming destination,’’ said Daniel Wallach, a Hallandale Beach lawyer who specializes in sports and gaming law. “Florida’s metrics — third highest population size, the fact that it draws in excess of 100 million visitors annually, along with the warm weather and the fact that the peak betting periods in U.S. sports are the winter months — and it becomes a perfect storm for sports betting success.”
The American Gaming Association has estimated that if Florida were to legalize mobile sports wagering, allowing anyone to bet from their laptop or phone, and tax it as other states do, the state could generate more than $110 million in annual tax revenue.
Instead, the proposal being discussed with the Tribe would not be full-blown mobile sports wagering but instead allow the Tribe to create a hub and spokes system, whereby bets are received and processed by servers located at tribal casinos and people could go to professional sporting events or casinos, racetracks or poker rooms to place bets on their teams. In return, the professional sports operators and parimutuels would get a cut of the proceeds.
Sports betting generates low margins and requires high volumes to be profitable, said Michael Pollock, managing director and co-founder of Spectrum Gaming Group, a gaming consultancy company. But the key benefit is that as an ancillary offering, properties develop a database of players, capturing names and details about their playing habits that they can leverage and market to them to lure them to their restaurants and sell them other products.
“Sports betting is a stream of revenue, with a different demographic, a complementary demographic, to traditional casino operations,’’ he said.
But even if legislators overcome the obstacles and craft an agreement in time for legislators to approve it by April 30, there will be legal hurdles.
Would the deal violate the constitutional amendment passed by voters in 2018 that requires voter approval of any gambling expansion?
John Sowinski, director of No Casinos, which initiated the petition drive to get the amendment on the ballot thinks it would.
“The bottom line is, the voters just spoke,’’ he said “If it’s so wildly popular and everybody wants to do it, what’s wrong with just asking voters to decide? What are they afraid of?”
Staff writer Nick Nehamas contributed to this report.
Mary Ellen Klas can be reached at meklas@miamiherald.com and @MaryEllenKlas
