Miami Herald: Weighing the odds for gambling’s impact on South Florida
May 3, 2010
By MICHAEL VASQUEZ
PATRICK FARRELL / MIAMI HERALD STAFF
Ileana Diaz places a bet with dealer Heidi Tieken at a Black Jack table as Albert Rogueiro looks on at the Seminole Hard Rock Casino in Hollywood.
It’s the fourth local slots parlor Ferguson has visited on this day — “I made my rounds,” the 55-year-old says — and she’s pondering adding a fifth: Gulfstream Park in Hallandale Beach. Already she’s been to the Seminole Casino in Coconut Creek, then east to Pompano Park’s Isle Casino, south to the Seminole Hard Rock in Hollywood, and now Calder.
It’s a sign of gambling’s growing presence in South Florida that Ferguson’s casino-hopping is even possible. Just a couple of years ago she would have had to get on a plane to Vegas or Atlantic City to do that. Now there are nine casinos to choose from in Miami-Dade and Broward counties, and that number could rise to a dozen in the coming years.
By placing — and potentially losing — their wagers right here at home, Ferguson and other gamblers are helping pay the salary of slots attendants, poker dealers, and the myriad other employees required to keep each casino going.
All told, Florida’s casinos amount to a nearly $2 billion-a-year industry, according to the Innovation Group, a leisure and hospitality consulting firm.
Casino operators argue that’s one of many reasons why when people play, the whole community wins. Each new slots casino that’s built requires construction crews to get it off the ground, and often hundreds of new, permanent employees after opening.
Calder’s four-month-old slots casino cost $85 million to build. At historic Hialeah Park, owner John Brunetti Sr.envisions building not only a two-story slots casino, but also a hotel and nongambling entertainment options such as a movie theater or bowling alley.
The project would be phased in over seven to 10 years, with a cost approaching $1 billion.
The promise of new jobs from gambling has been key to state lawmakers’ decision to allow the games to become more high-stakes and widespread.
“This is like building the Hoover Dam during the Depression,” Brunetti has said.
Gambling opponents, however, say the industry isn’t accounting for the sizable social costs of gaming — costs that ultimately make casinos a drain on local economies, not a boon.
So who’s right?
There is some truth to both sides — which makes a precise cost/benefit analysis challenging. It’s unquestionable that South Florida’s new casinos have been on a hiring blitz, accounting for nearly 8,800 permanent casino jobs these days in Miami-Dade and Broward counties — more than triple the industry tally of six years ago. The hiring surge is all the more valuable because much of it came during Florida’s recent period of record-high unemployment.
Gaming industry employees tend to earn about the same as other workers in the hospitality industry — with managers receiving middle-class, though not exorbitant, salaries and tip-based employees doing well or poorly depending upon their personality and/or location. The federal government estimates the average salary for a “gaming supervisor” at $46,560. Both restaurant waiters and casino card dealers are estimated to earn in the low $20,000s (both average a bit above $9.50 per hour), though the best of both occupations typically make much more than that.
On the cost side, some who play slots or poker will inevitably get addicted, and as the number of overall players grows (which it does when casinos are closer to home), so too do the number of individuals and families shattered by compulsive betting.
The link between problem gambling and crime is well-established. For example, about a third of the 2,800 calls per year to the state’s compulsive-gambling helpline come from gamers who say they’ve committed some sort of crime, such as fraud, embezzlement or theft.
Casino operators stress that only a small percentage of patrons are diagnosed as pathological gamblers — an estimated 1 percent of the U.S. population, according to the National Council on Problem Gambling. Another 2 to 3 percent are considered problem but not pathological gamblers, as they do not meet all the full-blown addiction criteria but are still adversely affected by their gambling.
Applied to Florida, those tiny percentages equal a sizable number: roughly half a million problem or pathological gamblers in the state.
A 2004 study commissioned by the U.S. Department of Justice also suggested that problem gamblers have an impact on crime that is greater than their modest percentage of the population.
The study profiled arrestees in two very different cities that offer gambling: Las Vegas and Des Moines, Iowa. The results showed that problem or compulsive gamblers accounted for more than 14 percent of total arrestees in Las Vegas, and more than nine percent of arrestees in Des Moines.
“You’re going to have crime, you’re going to have social problems, it’s going to be a drain on city dollars,” said Bill Bunkley of the Florida Baptist Convention. “The gaming industry likes to talk about gross dollars, but they don’t like to talk about net effect.”
State lawmakers in Tallahassee for years viewed gambling in a similarly negative light. During this spring’s legislative session, however, the Legislature approved a gambling compact with the Seminole Tribe that not only legalizes blackjack and other “banked” card games at five of the tribe’s seven casinos, but also increases the stakes of poker games held at both Indian casinos and parimutuels, such as horse and dog tracks.
One key factor in lawmakers’ about-face: a 2004 state constitutional amendment authorizing slot machines at parimutuels in Miami-Dade and Broward Counties. The amendment also had the effect — perhaps unintended by voters who approved it — of bringing Vegas-style slots to Indian casinos statewide. That’s because federal rules guarantee tribes the right to the same games as any parimutuel. Those rules also require any revenue-sharing agreement between tribes and the state to include some sort of additional economic concession to the tribal casino — such as allowing for blackjack and other table games.
This provision strengthened the tribe’s hand in negotiating a compact with the state; lawmakers could take the tribe’s offer of at least $1 billion in revenues over the next five years in exchange for table games, or risk the tribe getting federal permission for slots while paying the state nothing.
Sealing the compact’s approval: state government really, really needs that billion dollars as it struggles through what has been a series of tough budget years.
“The reason this passed is the same reason the cigarette tax passed last year — it’s they couldn’t balance the budget without the money,” Rep. Jim Waldman, a Coconut Creek Democrat, said on the day the compact won House approval.
It’s possible the Seminole Tribe will respond to the compact by constructing additional hotel rooms or meeting/convention space, but tribal spokesman Gary Bitner said it’s too soon to say. The Seminoles’ two Hard Rock casinos already have some hotel space — 500 rooms in Hollywood and 250 in Tampa. The Hollywood facility also features a wide variety of restaurants, nightclubs and boutiques, with Tampa’s Hard Rock boasting some of the same amenities, though on a smaller scale.
“If you look at the two existing Seminole Hard Rock complexes that together employ thousands of people and have pumped probably billions of dollars into the local economy. . .obviously the economic impact of gaming is very real,” Bitner said. “It’s here. It exists now.”
Yet some would argue that much of the money flowing into Seminole casinos existed before the Hard Rock properties were built.
Amy Baker, the Legislature’s chief economist, says the cash people gamble with often comes out of the same discretionary income that supports movie theaters, nightclubs, and other recreational activities.
“They’ve got an entertainment budget, and largely they’re just reallocating their entertainment budget,” Baker said.
That means some of the “new” jobs created at Seminole properties come at the expense of other jobs that disappear when business slows at competing establishments — a process referred to as “cannibalization.”
To be fair, casinos aren’t alone in taking credit for jobs that may or may not be new. Commercial real estate developers have long persuaded local governments to grant zoning changes on the basis of the jobs that this new strip mall or town center will produce.
But a new Home Depot can drive that older hardware store down the street out of business.
NO SALES TAX
There’s one particular wrinkle when it comes to new businesses on Indian land — they don’t pay sales tax to the state. For jobs that are merely transferred to Seminole properties at the expense of existing tax-paying jobs, state revenues could suffer.
Michael Soll, an executive vice president for the Innovation Group, which has conducted economic studies for various gambling industry clients, acknowledges that some cannibalization does take place with new casino properties. Still, Soll said casinos have the ability to lure additional money into the local economy.
For example, sometimes it’s better for visitors to choose a casino over a night at the movies, Soll said.
“If someone comes down from Michigan and they spend $10, and they choose instead to go to a casino and spend $35 or $40, they weren’t going to see four movies,” Soll said.
Tourist gambling, when viewed strictly though its economic impacts on Florida, can also be advantageous because some of the negative social costs — the need for gambling addiction counseling, or prosecuting a gambler for illegal activity — are ultimately borne by the visitor’s home state.
A tourist gambler may or may not go broke, but they almost always go home.
But for now, at least, most of the gamblers placing bets in South Florida casinos are locals, not visitors. An estimated 15 percent of patrons at Broward parimutuels are from outside of the region. The Seminole Tribe, while not providing exact figures, says the lion’s share of its business is from nearby residents.
Nicki Grossman, president of the Greater Fort Lauderdale Convention and Visitors Bureau, believes there’s still some value to gambling when it comes to selling the Fort Lauderdale brand. Casinos aren’t popping up on every block, so they haven’t fundamentally altered Fort Lauderdale’s upscale sun-and-fun image, she said, but her organization routinely promotes gambling as one of the area’s many entertainment options.
“We’ve got Butterfly World, we’ve got Wannado City, and we’ve got five land-based casinos,” Grossman said.