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Lack of a Seminole Gaming Compact Proving Very Costly to Florida

The Legislature did not ratify a new Seminole Gaming Compact last session and as a result, the state has already potentially lost nearly $250 million and could lose out on another $2 billion over the next seven years. 

Governor Scott and the Tribe negotiated a new compact in December 2015. The compact required legislative ratification but some lawmakers balked at what they saw as an expansion of gambling. Other gaming issues muddied the water and the compact never made it to a vote in either chamber during the 2016 Session. 

The original compact, ratified in 2010, gave the Seminole Tribe exclusive rights to offer certain games. Slots were allowed at all seven Seminole casinos and banked card games (such as blackjack) were allowed at five casinos. In exchange, the Seminoles would pay the state an amount based on the net win. While the compact has a twenty-year term, the authorization for banked card games expired on July 31, 2015. Upon expiration, the terms of the compact provide that the state no longer receives any gaming revenue from banked card games nor from all gaming activity at the Tribe’s Broward facilities. 

The new compact would have allowed the Seminoles to offer banked card games, as well as live table games such as craps and roulette, at all seven facilities. In return, over a seven year period beginning July 31, 2107, the Tribe would make payments to the state ranging from $325 million the first year to $500 million in the seventh, for a total of $3 billion. After that, payments could increase. And in a big concession from the Seminoles, the compact would have also allowed the Legislature to authorize limited non-Seminole gaming without affecting the Tribe’s payments to the state.

However, without ratification, the authorization ceased and the state is not entitled to any revenue from those games. While the compact provided that the banked card games cease within 90 days of the authorization’s expiration, the Tribe is still offering the games. The Tribe continues to make revenue share payments to the state of $19.5 million per month, but the money is being held in reserve and can’t be spent by the state.

A new compact could still be negotiated but a recent court ruling increased the Tribe’s already considerable leverage. The Tribe and the state sued each other. The state said the banked games must end and the Tribe countered that the state violated the compact by allowing pari-mutuels to offer “designated player” games, where a player acts as the bank. Federal judge Robert Hinkle sided with the Tribe, declaring that these games were an "egregious example of the cardrooms' attempt to evade the prohibition on banked card games." As a result, the Tribe can continue to offer banked card games for the 20 year term of the original compact and does not have to share revenue with the state. 

Other Indian gaming is still expected to provide the state with $131 million in revenue during the current fiscal year. However, this is far less than would be coming in under either the old or new compact. The state General Revenue Fund receives 97 percent of this revenue and 3 percent is distributed to affected local governments.

Both House Speaker Richard Corcoran and Senate President Joe Negron have indicated the 2017 Legislature will consider a new compact and both support a deal that brings more revenue to the state. But they may not be totally on the same page. The Speaker said the House is conservative, so the compact must be conservative, resulting in a reduction of gaming in the state. The Senate President, however, is open to legislation that may increase gaming.

With it now appearing Florida will be facing a budget shortfall next session, the state cannot afford to leave this revenue on the table. Seminole gaming is going to continue and the Tribe has proven to be a willing partner. While it may be difficult to negotiate a compact as lucrative as the last one, the 2017 Legislature needs to focus on ratifying a Seminole Gaming Compact and not let peripheral gaming issues get in the way.

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