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Legislators
set 50% tax rate as 6,000 slot machines approved for Broward
As
reported by Sun-Sentinel.com
TALLAHASSEE,
Florida - Broward pari-mutuels Thursday won a long-awaited
legislative go-ahead to install Las Vegas-style slots, but their
joy was muted by projections that a high tax rate on their profits
will stifle plans to build the glittering entertainment and
hotel complexes they hoped for.
"I
imagine we'll have to go back to the drawing board," said
Dick Feinberg, general manager of Pompano
Park Harness Track, which is owned by Isle of Capri Casinos.
"The higher the tax, the more difficult it is to justify
an investment."
In finally
passing the slots legislation -- exactly nine months after Broward
voters demanded it -- legislators set a 50 percent tax rate,
one of the highest in the country. Combined with requirements
for the pari-mutuels to hand over some of their profits to the
county and local cities as well as horse and dog breeders and
owners, some officials said the actual tax on profits will be
closer to 65 percent.
"I
think it's setting them up for failure," warned Sen. Steve
Geller, D-Hallandale Beach, one of the Legislature's vocal gambling
proponents. "I believe they are doing this so the governor
can lead a repeal campaign and say, `See? Look what you have
instead of those nice facilities you were promised.'"
The regulations,
approved by the House in a 110-8 vote and then by the Senate,
23-14, allow the county's four pari-mutuels to each install
up to 1,500 machines.
Owners of
the area's jai-alai fronton and three racetracks had planned
to renovate their aging facilities once they were allowed to
install slot machines, adding restaurants, nightclubs, entertainment
stages, hotels and convention centers. But those plans were
based on legislators agreeing to a lower tax rate and more machines.
Feinberg's
Pompano
Park had envisioned a $150 million complex that included
two hotels, restaurants, a 157,000-square-foot "racino"
and even a water park.
Plans unveiled
in the spring for Hollywood
Greyhound called for a Mardi Gras theme with one or two
entertainment stages, at least three themed bars, a restaurant,
a simulcast theater and the casino.
On Thursday,
Dan Adkins, vice president of Hollywood
Greyhound, said he would now likely spend $35million to
$45 million to remodel an existing building.
"The
grand plans I have for expansion I still have, and if I can
make it work under this tax rate and environment and compete
with the [Indian] tribes then I'll have to decide later whether
to go ahead," said Adkins, the leader of the drive to get
slots approved by voters statewide and then in Broward.
Broward
County Commissioner Ilene Lieberman, who backed the slots referendum
this spring, said, "It's unfortunate that the Legislature
has once again thwarted the will of the voters. By imposing
such a high tax rate, they guarantee that less money will be
raised for education than promised by the constitutional amendment."
Still, the
legislative compromise is expected to raise $209 million for
public schools by the 2007-08 school year.
Hallandale
Beach Mayor Joy Cooper said pari-mutuels would still make a
profit. "You're already seeing redevelopment at Gulfstream,
and we'll see more as the community grows."
Gulfstream
Park has undertaken a massive renovation, including a new
track and 300,000-square-foot, three-story building.
Gov. Jeb
Bush, who called legislators into special session this week
to enact the slots regulations and revamp the state's Medicaid
program, said he doesn't view slots as an economic development
issue. Although an outspoken opponent of gambling, he said he'll
sign the slots bill into law.
"It's
not going to feel good," he said. "The fact that there's
going to be a bunch of slot machines in Broward County doesn't
warm my heart."
Bill Thompson,
a professor of public administration at the University of Nevada-Las
Vegas who has long studied the gambling industry, said the Florida
tax rate is so onerous that little investment will likely be
made and most of the slots clientele will be local. Because
of that, he predicted gambling-related social problems could
be worse and other businesses will see little benefit.
"They
will be dumps that just extract money from local pockets,"
he said.
Thursday's
vote came a year after state voters agreed to let Broward and
Miami-Dade voters decide whether they want slot machines within
their borders. In March, Broward voters approved the idea, but
Miami-Dade voters rejected it.
Broward
legislators often faced an uphill battle in getting their colleagues
to implement the constitutional amendment. The House and Senate
were unable to reach agreement during their spring session but
appeared more motivated to act this week from fears the courts
could end up writing slots regulations if the Legislature didn't
act.
Some of
the stiffest opposition to implementing the slots rules came
from Orlando-area legislators who warned that the spread of
gambling could hurt Florida's family friendly tourism industry.
Allowing
slots in Broward County, argued Sen. Dan Webster, R-Winter Garden,
would lead to "the degradation of our moral compass, of
our family friendly state."
"In
my mind, casino gambling is really the crack cocaine of gambling,"
Webster said. "It is addictive."
Former No
Casinos Chairman Rep. Randy Johnson, R-Celebration, warned,
"The pari-mutuel industry has spent millions of dollars
imposing its will and this is just the beginning."
Johnson
has pledged to lead the fight to repeal the constitutional amendment
approved by voters statewide last November, and Bush said he
would like to be part of that effort.
The new
casinos -- which will open in six months or less -- will join
a competitive gambling market in South Florida, where the Seminoles'
Hard Rock Hotel & Casino and day cruises are a strong lure
for bettors.
Now Bush
must forge an agreement with the Seminoles and Miccosukees,
who operate a casino in Miami-Dade County.
Neither
tribe has been forthcoming about how much they are willing to
be taxed. But Geller doubted they would agree to pay the equivalent
of the 50 percent tax rate the pari-mutuels will be charged,
predicting instead the tribes could pay as little as 1 to 2
percent of their revenue to the state.
Local tourism
officials, meanwhile, said there would be no change in how the
area is marketed to tourists and conventions. "The addition
of a couple thousand slot machines doesn't change us from greater
Fort Lauderdale to an alternative to Atlantic City," tourism
director Nicki Grossman said.
Next move
Here's what
happens next after the state Legislature on Wednesday passed
a bill allowing slot machines at four Broward pari-mutuel venues:
The state
Division of Pari-mutuel Wagering must write regulations to allow
the slot machines to begin operating in six months.
The pari-mutuel
owners of Dania
Jai-Alai, Pompano
Park harness racing, Hollywood
Greyhound Track and Gulfstream
Park thoroughbred racing must review their proposed plans
to see what kind of facilities they think they can afford.
Each facility
would have to pay a $3million license fee, of which $250,000
would be put toward a program to help compulsive gamblers.
All tax
revenue coming from slots will go toward public schools.
Competing
Indian pari-mutuel operators will continue to pursue a compact
with the state enabling them to set up Las Vegas style slots.
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