Are destination resorts coming to Florida?

by Boardroom Brief Staff on November 04, 2011

One of the hot-button issues already under debate in Tallahassee, and subsequently throughout the state, is the expansion of gaming, specifically a bill that was introduced by Senator Ellyn Bogdanoff, R-Fort Lauderdale and Representative Erik Fresen, R-Miami. Although the gaming bill (SB 710 / HB 487) may look like a completely different animal by the time it passes through committees and makes its way to the floor for legislators to vote on, here’s a highlight of some key points from the 142 pages that make up the bill as it stands today.

Destination Resort Act

The gaming bill, titled the Destination Resort Act, would allow for three destination resorts with Las-Vegas-style gaming to operate in Miami-Dade and Broward Counties, which are the two counties where voters already approved expansion of gaming through a referendum. Other counties may be considered if residents approve a constitutional amendment as well.

Companies seeking to operate a destination resort would have to prove they would invest a minimum of a $2 billion in new facility development and construction in South Florida. There are specific requirements outlined for the destination resorts in building their facilities, including using no more than 10 percent of it for gaming and requirements for separate entrances and exits that give patrons the option of completely bypassing the casino.

First-Ever Florida Gaming Commission

Currently, the Department of Business and Professional Regulation (DBPR) oversees gaming activities in Florida. The gaming bill eliminates DBPR’s role in gaming regulation and permitting and creates a separate department called the Department of Gaming Control and a seven-person gaming commission. Members of the Florida Legislature will appoint the gaming commissioners and the Governor appoints the chair.

The commission would be based “in the district” located near the destination resorts in South Florida. The commission tasks would include awarding destination resort permits and overseeing regulatory control over the state’s gaming industry. This responsibility would be independent, giving it the ability to hold closed door meetings and work with the Florida Department of Law Enforcement to conduct investigations. Additionally, the commission could investigate casinos; collect fees and taxes; and have rulemaking authority.

Criteria for Destination Resorts

The bill outlines several criteria for companies to be eligible to compete for permits to operate a destination resort. A company would need to demonstrate its ability to best serve Florida residents; increase tourism by attracting travelers from across the U.S. and Latin America; and to train and provide jobs to local residents. Preference would be given to facilities that operate in areas with high unemployment and could begin construction within 12 months.

Operating Details

As drafted, the bill specifies a 10 percent tax rate for the destination resorts, which is lower than the 35 percent tax rate that existing pari-mutuels would continue to pay. The new Department of Gaming control would oversee the gaming operations of the Seminole Tribe in Florida. The bill does not refer to the word casino but does define the facilities using “limited gaming,” which is defined as, “…including, but not limited to, those commonly known as baccarat, twenty-one, poker, craps, slot machines, video gaming of chance, roulette wheels, Klondike tables, punch-board, faro layout, numbers ticket, push car, jar ticket, pull tab, or their common variants, or any other game of chance or wagering device that is authorized by the commission.” Casinos would be allowed to operate 24 hours a day, every day of the year.

Owners and partners of casinos would have to abide by strict rules, including background checks and screening; members of the gaming commission would have some of the same restrictions.

The upcoming 60-day Legislative Session is set to begin in January. Although the gaming bill is comprehensive, it is likely that the bill will be changed and amended throughout the legislative process. We anticipate that protections for the South Florida pari-mutuel industry will be built in to the bill before it reaches the floor for a full vote. By the time legislators debate and vote on the bill, it may look completely different from what it is today.

For more information about this bill, you can read the full text here and this recent Miami Herald article.