Florida's "destination casino" bill could be destined for a court challenge if it is not drastically redrafted or defeated outright at the Legislature, gaming observers say.
"My reading of the bill is that it will not stand a constitutional challenge," said William Thompson, an industry analyst at the University of Nevada, Las Vegas. "It is unconstitutional to charge one casino 10 percent and another 35 percent for the same kind of gaming."
House Bill 487 designates three destination resorts in Miami-Dade and Broward counties, with each venue's casino revenues taxed at a 10 percent rate. The measure, as written, would keep the gaming tax for pari-mutuel casinos at 35 percent.
Thompson says the principle of "horizontal equity" -- "equal taxes on equal objects" -- was upheld by the U.S. Supreme Court. The high court struck down an Iowa law that had set a 35 percent tax rate on slot revenues at racetracks and a 22 percent rate on slots at other casinos in the state.
The equity issue has fueled pari-mutuels' opposition to the Florida bill in its current form.
"Our message of parity is starting to resonate with the legislators we've spoken with," said Brady Benford, who represents Churchill Downs Inc., which operates the Calder Casino and Race Course.
Benford, government consultant with the law firm of Gunster, Yoakley & Stewart, said Churchill isn't attempting to scrap HB 487, but to change its terms to level the playing field.
"We're going to work to get parity in the bill to make it palatable. We want to be included in the bill," he said.
Bill sponsors Rep. Erik Fresen, R-Miami, and Sen. Ellyn Bogdanoff, R-Fort Lauderdale, did not respond to Sunshine State News' request for comment. But neither has publicly suggested a desire to deal on the fundamental terms of the legislation.
The Genting Group, the Malaysia-based gaming company that has purchased the Miami Herald's Biscayne Boulevard complex as the site of its planned Resorts World Miami casino, says a 10 percent tax rate will pay big dividends for Florida.
Resorts World Miami is encouraged to see a 10 percent tax rate being included as we feel it is very important that Floridas destination resorts have a tax rate that is competitive with other U.S. destinations of its kind, as well as the Indian casino operations that will not have to pay taxes if destination resort legislation passes," said Jessica Hoppe, general counsel and vice president of government affairs for the group.
"A fair tax rate will enable licensees to increase investment that creates more jobs in Florida, which maximizes the economic impact," Hoppe said.
The Fresen-Bogdanoff approach also is supported by the Associated Industries of Florida, which views HB 487's mega-resorts as a job builder.
"It is time to put paychecks in the hands of Floridians just waiting for a chance to get back to work," said Brewster Bevis, AIF's vice president of external relations.
But the Seminole Tribe, the biggest casino operator in Florida, sees HB 487 as a direct assault on its 20-year gaming compact with the state.
We will vigorously fight against any attack on our [gaming] compact with the state, said Seminole Tribal Chairman James Billie. We urge Florida legislators to step forward in support of our compact and refuse to pass any legislation that violates contractual agreements with the Seminole Tribe.
The Hollywood-based tribe, which operates seven casinos around Florida, holds exclusive rights on Las Vegas-style slots and banked card games outside South Florida under the agreement negotiated by then-Gov. Charlie Crist. The compact was ratified by both the Legislature and the U.S. Interior secretary.
If the Fresen-Bogdanoff bill were to pass in its current form, the Seminoles would stop making their contractual $250 million annual contribution to Tallahassee, said the tribe's attorney, Barry Richard.
To allay concerns over revenue losses at the state, Hoppe offered, "Any destination resort that would be granted a license if the legislation passes should be willing to guarantee a backstop of any tribe revenue that may be lost.
Richard said it may never come to that.
"At this point, I have not seen any indication that the Legislature is inclined to give up the verysubstantial revenue it is receiving from the compact with the tribe in order tosignificantly expandgambling," he said.
Then Richard added, intriguingly:
"If the Legislature is truly interested in expanding gambling in Florida, the most sensible thing for it to do is talk to the tribe," which he called "one of, if not the most successful gaming businesses in the world."
"If the state and the tribe were to reach an agreement to expand gaming beyond the present locations on the tribe's reservations, that agreement could provide for the state to continue to receive revenue from the compact as well as the additional revenue from expanded gaming.
"As an additional benefit, the profit to the tribe remains in Florida rather than going to a corporate headquarters out of the state or the out of the country."
John Stemberger, an Orlando attorney and a leading casino opponent, said the Seminoles' opposition to HB 487 "makes the odds of the bill less likely to pass."
"One of the practical problems with this bill is that it is such a big advancement at once. The gambling industry is used to a more sneaky incremental strategy, but this is bold, sweeping and significant.
"Therefore, it will naturally have more opponents, including those existing gambling operations which the new bill seeks to threaten or compete with," Stemberger said.
Reach Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
