Failure of gambling bills in Florida leaves industry in limbo

Failure of gambling bills in Florida leaves industry in limbo
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Thousands of gray-market slot machines could pop up in sports bars and strip malls, full-scale slot machines might launch in at least eight counties and several new cardrooms could open in South Florida, thanks to lawmakers' failure to pass gambling legislation this session.

The potential for a massive expansion of gambling could be the result of recent court decisions, as well as a looming Florida Supreme Court case. Republican leaders attempted to address the court cases in the ultimately doomed legislation prior to folding on the thorny gambling issue Tuesday.

The impasse over the House and Senate gambling plans also dashed hopes, at least for now, of a new deal with the Seminole Tribe that could have reaped the state $3 billion over seven years.

Lawmakers were trying to establish the parameters for a new agreement, called a “compact,” with the tribe after a federal judge sided with the Seminoles in a lawsuit centered on “banked” card games, such as blackjack. The state is appealing the decision.

A portion of a 2010 compact that gave the Seminoles exclusive rights to offer the banked card games expired in 2015. But the federal judge ruled that the tribe could continue to conduct the games for the remainder of the broader 20-year agreement because the state violated the exclusivity provisions by allowing lucrative “designated player” games at pari-mutuel cardrooms.

Other lawsuits having an impact on the gambling industry include a case focused on electronic machines —- known as “pre-reveal” games — recently found legitimate by a Tallahassee judge, over the objections of state regulators.

This year's failed legislation was designed to address the designated-player and “pre-reveal” issues, but ultimately, left the Seminoles and pari-mutuels in a state of limbo.

In a separate decision siding with a South Florida greyhound track in a case about an archaic “summer jai alai” law, an appellate court —- ruling against gambling regulators —- recently opened the door for several new cardrooms in Miami-Dade and Broward counties.

But another court case could have even more sweeping implications.

The Florida Supreme Court is poised to decide whether pari-mutuel facilities can add slots in counties where voters have approved the machines, without the express permission of the Legislature. The lawsuit was filed by Gretna Racing, a tiny horse track in Gadsden County, but could affect seven other counties —- Brevard, Duval, Hamilton, Lee, Palm Beach, St. Lucie and Washington —- where voters have also given slots a thumbs-up.

Whether to allow slots in the referendum counties was at the heart of the stalemate between House and Senate leaders. Senate President Joe Negron insisted that the will of the voters should be honored, while House Speaker Richard Corcoran balked at what he considered an expansion of gambling.

Allowing slots outside of Broward and Miami-Dade counties could also affect the revenue-sharing agreement with the tribe that lasts until 2030.

“All parties involved would like to see a resolution of this issue. They just have different visions of what that resolution should be,” said John Lockwood, a lawyer who represents a variety of pari-mutuels and recently won the summer jai alai decision on behalf of West Flagler Associates, which operates Magic City Casino in Miami.

The Legislature's failure to pass a comprehensive gambling package —- or any measure dealing with the myriad legal issues —- creates uncertainty for the Seminoles, the pari-mutuel industry, and the state, experts agreed.

The inaction will likely stymie expansions at Gulfstream Park and the Seminoles' Hard Rock casinos in Hollywood and Tampa, something that could cost jobs and revenue for the state.

“When you don't have certainty, particularly around the Seminole Tribe's compact and what is legal and what is illegal gambling in Florida, you really don't get the meaningful capital investment that could turn some of these properties into destination properties,” Marc Dunbar, a partner with the Jones Walker law firm who represents Gulfstream and is also an owner of the Gretna facility, said. “It guarantees to the policy-makers that you arguably have the kind of gambling that you don't want to have, the kind that preys primarily on your constituents, as opposed to the tourists. That, again, is a policy call by these guys.”

The tribe and pari-mutuels are especially concerned about the expected proliferation of electronic games that have blossomed in other states and are popping up in convenience stores, sports bars and other locales throughout the state.

The controversy centers on electronic games known as "Version 67," produced by Blue Sky Games and leased by Jacksonville-based Gator Coin Inc. The companies sued the state after investigators with the Division of Alcohol, Tobacco and Firearms confiscated the machines, alleging that the computer games are effectively illegal slot machines.

In March, Leon County Circuit Judge John Cooper sided with the manufacturer and the distributor of the machines, finding that they don't violate prohibitions against slots because the games include a "preview" feature advising players of the outcome "before the player commits any money to the game by activating the 'play' button."

In a letter to Gov. Rick Scott, the Seminoles called on the Legislature to address the issue or risk having the state lose millions of dollars from a slots revenue-sharing plan.

Allowing the proliferation of the electronic machines —- which have blossomed in other states —- could be problematic in Florida.

The tribe maintains that the designated player games and the electronic machines are infringements of its agreement with the state, which could give the Seminoles an upper hand if Florida officials decide they want to pursue a new compact.

“The question now is whether the state is going to stop those infringements or not. That's up to the state,” Barry Richard, a lawyer who represents the Seminoles, said in a telephone interview Wednesday. “People are going to keep trying to circumvent the law, and the state has to make that decision. If they don't stop it, then the tribe has the option of not making payments.”

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