ONLINE GAMING: Adelson uses Republicans to step on states’ rights

The Restore America's Wire Act (RAWA) would impose a federal ban on all Internet gambling, including online state lotteries and poker. Currently, online gaming is alive and well -- and regulated -- in New Jersey and Nevada, while online lottery tickets are available in a handful of states.

RAWA is based on the original 1961 Wire Act, “originally intended and long understood as a narrow and targeted weapon to assist the states in preventing organized crime from taking bets on sports.” The Department of Justice’s current position on the original Wire Act as it applies to online gambling is that it only applies to online sports betting; a 2011 decision effectively allowed individual states to decide whether to allow online gambling.

RAWA was introduced by Republican lawmakers in the House and Senate in 2014, in the House (HR 707) in 2015. The only proponents of the Act appear to be Sheldon Adelson and his Las Vegas Sands group, and the Republican lawmakers hoping for campaign funding. The Act was by some reports actually written by Adelson’s lobbying group. Senator Lindsey Graham (R-SC) has not hidden the fact that his support of the bill is tied to Adelson’s support of his Presidential run. He introduced the Act in 2014 and his people say he intends to introduce it “soon” this year.

Opponents include casino groups including Caesars and MGM, conservative and Republicans and libertarians, who see the Act as an infringement on states’ rights, a number of Democratic representatives, and Native American groups who point out that the Act would infringe on their Tribal Sovereignty (more on this to come). 

Are Skills-Based Slots Coming to the Southeast?

Nevada governor Brian Sandoval recently signed a bill enabling regulators to adopt rules allowing slot machines to add a skill-based element. The bill was proposed by the Association of Gaming Equipment Manufacturers following a study examining the effect of technology on gaming. Sandoval believes the games could appeal to a new generation of visitors.  

Attracting Millennial gamblers was a very hot topic at the Southern Gaming Summit earlier this month. At a panel on Millennials, panelists agreed that adding a skills-based element to slot machines could attract those who are more familiar with video games or, more importantly, social gaming such as Candy Crush. With Millennials spending an estimated 12 hours per week on average on social gaming, it is widely expected that introducing aspects of social gaming to slots would be highly attractive to the newest generation of gamblers.

Earlier this year, the Borgata in New Jersey offered a free throw-shooting competition. It was the first skills-based game to pass under the New Jersey First law, which encourages the development of casino games featuring social and skills-based elements. It was seen as highly successful, bringing unique visitors to the Borgata from across the US.

Will we see skills-based games in our region anytime soon? Not likely. Basically, each state determines whether to allow skills-based competitions for cash prizes, and determines whether a game is based on skills or chance with one of several tests. Of the 40 states that allow gambling, only 3 states allow games of chance – Nevada, Delaware, and New Jersey. 

In southeastern states, where the demographic skews more conservative, politicians are unlikely to risk supporting, much less introducing, a bill to expand gambling. The southeastern region will not lead the way -- however, if skills-based gaming becomes more widely accepted across the US, look for the southeast to follow suit.  

The Three Ring Circus Comes to Tallahassee

Florida Legislators returned to Tallahassee March 3^rd for the 2015 session.  One of the main topics and tasks is the casino and racino discussion. The legislators were met with a 323 page bill regarding gaming. 

Center Ring – Center ring hosts the best act, the premiere event of the day. The main event in 2015 is the compact between the State of Florida and the Seminole Indian Tribe. I’ve included the two other Indian Tribes in this event. This is the big show, the one everyone is waiting for, yet everyone is pretending it doesn’t matter, there are other gaming matters to deal with. Let’s get real. The Seminole Tribe is arguably the most powerful gaming entities in the U.S. It is the most powerful in Florida. Throw in the Hard Rock ownership and you have one of the strongest and best casino companies in the world. The Seminole Tribe is a great asset to Florida.

The Seminole dominance is noted in sheer numbers. Their Florida casinos have an estimated 11,779 slots, the seven racinos combined have 7,066. The Miccosukee Tribe of Florida has 1,700 slots.  The Seminoles currently have exclusive rights in Florida to house-banked card games like blackjack and baccarat.

The situation is that the Seminoles signed a 20-year agreement with the Florida to have banked card gaming with a renewal provision each five years.  In return for having exclusive rights for banked cards at their casinos the Seminoles would pay and have paid at least one billion dollars over the five years. The first five years is up July 31, 2015 unless the Legislators approve a renewal or revision which will have to be negotiated with Governor Scott. Florida Legislators are taking a maybe-maybe not stance, and maybe we should allow destination resort casinos and more racinos in the state. Bob Jarvis, professor of gambling law at Nova Southern University in Fort Lauderdale says he believes the lawmakers are bluffing…and he believes a new Seminole deal will get done.

Alongside the mighty Seminole Tribe in the Center Ring is second Federally Recognized Tribe in Florida, the Miccosukee and their single casino operation. They provide an excellent casino resort to South Florida and Dade County.

Standing just outside the center ring is a third Florida Tribe, the Muscogee Nation of Florida located in the Florida panhandle with headquarters in Walton County. Muscogee Nation is awaiting findings on their petition for Federal Recognition.  The Office of Federal Acknowledgement will publish their findings on or before April 30, 2015…a few weeks from today. Their territory delineated by the Bureau of Indian Affairs is the panhandle area from the Escambia River to the Tallahassee area of Florida.

This Center Ring is the core of Florida Casino gaming and needs to be recognized as the main event.

The Second Ring – Florida currently has seven racinos; casinos paired with para-mutual facilities in Dade and Broward Counties.  Of the seven, four are thoroughbred horse racing, two are greyhound racing and one with jai-alai fronton pairing.  Para-mutual Facilities in Florida are allowed to offer poker, those in Dade and Broward Counties can have slot machines. There are apparently a number of provisions in the proposed 2015 gaming legislation to de-couple the para-mutual business from the casino business, the dream of every dog track in Florida; to reduce the tax rate paid by the racinos; to allow one or two destination resort companies such as Las Vegas Sands or Genting to establish large casino resorts in South Florida, and more.

First, the horse tracks.  I’ll admit, I like the ponies.  And I like the four thoroughbred racino facilities in Florida. Each one has the land and financial capacity to become a destination resort. Each one does a magnificent job with their casino and racing. Going forward it appears each of the four horse track casino facilities will expand its footprint. Plans are published at Hialeah and Gulfstream and on the drawing boards at Calder and Pompano Park. Each has large developable property as part of their current facility. Each of the four has ownership capacity to finance and fund expansion to be regional or destination resorts. Let’s let these four be given the opportunity to become your South Florida gaming future.

How to address the plight of jai-alai and greyhound business? Tough love again….don’t reward people or businesses who make bad business decisions.  

Third Ring – Bring in the clowns. Yes, this circus does have clowns. The Poarch Creek Indians of Alabama have put forth efforts to “take over” the North Florida casino and racino business.

Their first effort was to have barrel racing declared a para-mutual event. In 2011 the Florida State Department of Business and Professional Regulation effectively created a new rule regarding what constitutes a horse race without going through the necessary rule-making process. The Poarch Creek Tribe responded by promoting their new status at the Gretna Fair Grounds as a site for a future Florida casino. The Thoroughbred horse owners Association of Florida sued and the judge ruled against the poarch, that barrel racing is not a para-mutual event. The Poarch appealed and in 2014 the 1^st District Court of Appeals ruled against the Poarch Tribe again.

Their second effort is ongoing. A February 28, 2015 Associated Press article stated, “Poarch Creek may sell marijuana if Florida denies gambling deal.  Rebuffed by Governor Scott, the Poarch Creek Band of Indians, a small Alabama-based Indian tribe, wants to expand its gambling operations into the Sunshine State…The Alabama-based tribe is suggesting it might adopt a hardball stance: let us have gambling in a few Florida locations, or we could consider growing and selling marijuana on our [Florida] property.”

The tribe owns a one-acre tract of land in northeastern Escambia County of Florida. Governor Scott’s legal office responded to the Tribe that it was premature to begin negotiations and that the Tribe needs additional recognition from federal officials.