Florida has one of the most competitive gambling markets in the nation with a parimutuel industry that "resembles a circular firing squad," a regulatory environment that is a "mess," and any expansion of gambling -- such as destination resorts -- will result in more expansion because "the industry rarely shrinks."
Those are the candid first conclusions of the report released late Monday to the Florida Legislature by the Spectrum Gaming Group as lawmakers attempt to embark on an ambitious plan of rewriting the state’s gambling laws and deciding how much expansion to allow.
What may be the starkest conclusion of all: Florida may want to stay away from casinos or it will harm the state and Orlando’s tourist brand. Download FL_Gambling_Impact_Study_Part1A
"The brand equity of Orlando has benefits for the entire state" and "expanded gambling may fundamentally change the state of Florida as a place to live and visit," writes the New Jersey-based gambling consultants in the report. “Rather than benefitting the state, expanded gambling (especially casinos) could make Florida a less-attractive tourist destination.”
Those observations may come as a surprise to many, who expected that Spectrum would produce a report that advocates for expanded gambling. Spectrum said a third of its business relies on the industry and the remainder is for government.
But the head of the Senate Gaming Committee emphasized that the goal of the report is not to make recommendations but to provide lawmakers with a road map of the terrain.
“The report does not, and will not make policy recommendations,’’ said Sen. Garrett Richter, R-Naples. He said it will be the responsibility of the committee “to review gambling statutes, to address the ambiguities, inconsistencies, and exceptions in current law, and to craft an action plan.”
Crafting a state gambling plan has been an elusive goal for decades. As the state’s pari-mutuel industry has rapidly declined in popularity, the industry has pushed to offset its losses by installing card rooms and slot machines – a situation that the report notes has helped prop up and subsidize the declining greyhound, jai alai and thoroughbred racing industries.
Legislators paid Spectrum $388,000 to assess Florida's gambling market and this is the first of a two part report. The second report, on the statistical relationships between gaming and the economic impact on communities, is due in October.
Lawmakers plan to conduct a series of meetings to discuss the issue around the state in the fall, Richter said.
Among the other findings:
- Casinos provide competition but not necessarily cannibalization of existing businesses. “The evidence suggests that casinos are likely to have a negative impact on lotteries, and some other businesses may see decreased revenue as a result of a casino’s opening. But this is no different from what happens when any other business opens. Certainly some of the revenues for a new casino would come at the expense of other, existing gambling firms in Florida.”
- Reported revenues at Florida’s horse and dog tracks are wildly understated because Florida’s Division of Parimutuel Wagering “does not collect data on out-of-state generated handle, which is the single largest component of handle.”
- Gambling expansion is headed to the Panhandle. The Poarch Band of Creek Indians, based in Atmore, AL, has land in Escambia County and now operates the Gretna racetrack which is operating controversial flag drop races. The tribe “has options to own, or agreements to control 10 pari-mutuel permits along the Interstate 10 corridor between Pensacola and Jacksonville.
- Gambling is big businesses. Spectrum found that Florida’s gambling industry hires 4,983 people and, when factoring in the estimated number of additional jobs created by retailers selling lottery tickets, “Florida’s gambling industry was responsible for 55,648 direct jobs, 14,269 indirect jobs and 19,025 induced jobs.”
- Florida’s largest greyhound tracks are ready to give up their dog racing.With losses of $35 million from greyhound racing in the last year, only three tracks made a profit and that was because of revenues from cardrooms. Michael Glenn, general manager of the said his company would shut down the dog track if it could. “There just are not enough folks out there to come to the track and wager on these races,’’ he told Spectrum. “There is not any interest.” Jamie Shelton, CFO of Jacksonville Greyhound Racing, agreed.
- Florida legislators will narrow their options for regulation the longer they wait to rewrite the state laws. “Based on our research and experience in Florida and elsewhere, gaming will evolve in Florida whether or not the Florida Legislature develops a plan and puts that plan into action. Absent any plan, however, that evolution would be haphazard and would be far less likely to address or advance any public-policy goals.
- Expansion begets more expansion. “The industry rarely shrinks, and quite often, expands as a result of expansion.”
- Adding table games to the menu at racinos would increase revenues for slot machines, not reduce it. “The addition of house-banked table games such as blackjack to a slots-only casino can serve to increase slot revenue. This seems counter-intuitive (the natural assumption is that new table games would simply cannibalize existing slot play) but experience in markets that have added tables to casinos that previously offered only slot machines shows otherwise.”