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Seminoles Left Out Negatives, Economist Says

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By CATHERINE DOLINSKI

cdolinski@tampatrib.com

Published: March 21, 2009

TALLAHASSEE - The Seminole Tribe has exaggerated the economic benefits of a planned $3 billion expansion of its casino and convention sites, which will take workers and business away from existing Florida companies, a top state economist said Friday.

The tribe told state lawmakers last month that it will expand its Florida hotels and casinos - including the Hard Rock in Tampa - if the state ratifies the gaming compact that Gov. Charlie Crist negotiated with the Seminoles in 2007. The compact authorizes table games like blackjack as well as Vegas-style slots at Seminole casinos.

All told, said Jim Allen, head of gaming for the tribe, the planned $3 billion expansion would create 45,000 jobs and have a $4.5 billion positive economic impact on the state.

But on Friday, Amy Baker, director of the state Office of Economic and Demographic Research, said the Seminoles had left out key factors - among them, the nearly $100 million in business that Florida's other convention- and tourism-related industries will lose as a result.

Given the dysfunctional state of the U.S. credit market, she said, she questioned how quickly the Seminoles can execute their plans. But as they expand, "they're going to be in direct competition with other resorts and luxury hotels in Florida," she told a House committee reviewing the gaming compact.

"We call this, in the economics world, cannibalization, meaning that you're gaining but you're doing it at the expense of other businesses that are already in place," she said.

A Price Tag For Government

Likewise, she said, the expansion would not increase jobs in Florida so much is it would pull them from existing businesses in the state.

The Seminole's "cannibalization" of existing business carries a price tag for government, too. Legally, the tribe is a sovereign nation, meaning that state and local governments cannot tax its sales, property or gambling revenue. Lost sales tax alone, she said, adds up to about $6 million.

Reached late Friday afternoon, Allen said he had not read Baker's report but stood by his estimates "100 percent."

He said the economic benefit the Seminoles presented to the state was based on a study by a leading firm in the gaming and hospitality industry. He said the Seminoles will continue to press their case for the compact.

"When groups present numbers that are inaccurate, we will present numbers that are correct," he said.

Baker had a warm reception from the House compact review committee, which has been critical of the tribe and the compact. Chairman Bill Galvano said the panel intends next week to propose new parameters for a compact with the Seminoles that authorizes Class-III slots but leaves out the table games.

Galvano, R-Bradenton, said Baker had shed light on the economic reality of the compact. "You cannot look at it in a vacuum. There are impacts elsewhere that chip away or roll back the expectations that you would have if you just looked at the four corners of the document."

Crist's compact gave the Seminoles exclusive rights to offer the card games, in exchange for payments to the state of at least $100 million per year. The state Supreme Court ruled last summer that Crist exceeded his authority by executing the compact without involving the Legislature. But the tribe has continued to offer both slots and card games, placing money in escrow for the state.

Florida authorities cannot touch the money until they ratify a compact; doing so, according to the tribe, would net the state an instant $288 million to build into their budget for the coming fiscal year. Crist has been urging lawmakers to approve his compact and take the money.

Skeptical About Potential Revenue

That's not going to happen, said Galvano, who was also skeptical about a plan building in the Senate that would expand gaming in the state to gain $1 billion for Florida. Galvano said he doubts Florida would actually net $1 billion - at least, not next budget year.

He also plans, he said, to introduce legislation to set nontribal parimutuels on a more level playing field with the Seminoles. Parimutuels pay a state tax rate of 50 percent on slot machines, plus additional local fees and charges, in addition to property and sales taxes.

If the Seminoles had to pay the same state taxes on their existing and anticipated new machines, Baker said, it would cost them $272.5 million.

Meanwhile, on Friday the business-backed Florida TaxWatch released its study of the compact terms negotiated by Crist. The fiscal watchdog group thinks that a compact is needed, but that the governor's terms would not bring in as much as other analysts have claimed. Independent consultants to the state House have priced the state's gain from Crist's compact at $2.9 billion over 10 years.

But given the adverse impact on state revenue from the Lottery, parimutuels, slot machines, and card rooms - plus loss of sales tax - Florida would lose 61 percent of the money coming from the Seminoles, TaxWatch concluded. Net gain for the state: only $1.12 billion.

Reporter Catherine Dolinski can be reached at (850) 222-8382.

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