At Odds: Should South Florida Roll the Dice on Casinos?
PrintBy Suzette Parmley, Inquirer Staff Writer
MIAMI – In this glamorous gateway city overlooking Biscayne Bay, a debate is being waged: whether to allow up to three lavish casino resorts in South Florida.
The debate has split state lawmakers, residents and the business community. And its outcome, some gaming-industry analysts say, could influence where players of slots or table games in states such as New Jersey and Pennsylvania take their gambling dollars when the weather turns cold.
“We believe Florida casino development could lead to modest revenue cannibalization in both Atlantic City and Las Vegas in the winter months,” said analyst Dennis Farrell, of Wells Fargo Securities L.L.C. The shorter flight from the East Coast to Miami rather than Vegas could be a factor, he said.
A proposal to expand gambling to Miami-Dade and Broward Counties is pending in the Florida Legislature in Tallahassee. One state Senate committee has passed it, with another committee scheduled to vote this legislative session, which ends March 9. A House version of the measure stalled in committee Feb. 3.
All sides are girding for a long fight. Already, intense jockeying has begun for coveted casino licenses and prime locations.
Lawmakers in favor of additional gambling say it could generate new tax revenue as Florida deals with a $1.5 billion budget shortfall, declining real estate tax revenue, and high unemployment.
Genting Corp. of Malaysia is among a handful of gambling giants along with Las Vegas Sands Corp. that is eyeing Florida, and it proposes to build a $3.8 billion casino resort that some say could easily fit six Bellagios. Last year, Genting spent nearly $500 million for the land where the Miami Herald sits, as well as three other parcels totaling 30 acres, to build Resorts World Miami, even though the gambling bill has yet to pass.
“Our decision to invest … was fueled by the city’s strong tourism industry, attractive climate, diverse business base, [and] vibrant cultural landscape,” said Christian Goode, Genting’s chief financial officer in the United States. “Miami’s international appeal … will draw a new segment of the global market.”
Meanwhile, the Florida Chamber of Commerce, which counts Walt Disney Co. as one of its biggest and most powerful members, is working just as hard to defeat the bill, to preserve what it calls “the Florida brand” as a world-class, family-friendly vacation destination.
“We will defend the future of Florida from these gambling interests that want to forever change that brand,” said chamber spokesman Brad Swanson. “Our position against the expansion of casino gambling is 20 years old… . We reaffirmed that position last year.”
Results of a poll of 400 registered voters released Jan. 22 showed Miami-Dade residents evenly divided on the issue, but opposition appeared to be growing. Eight out of 10 likely voters said they wanted the issue put to a statewide referendum.
“I went here for a cruise,” a 10-day Caribbean trip, said Hans Bergen, 59, of Malaga, Spain, who was staying with his wife, Ruth, at the Hilton Miami Downtown Hotel. “I could care less if Miami has a casino. It makes no difference. People come here for Disney World and whatever.”
Philadelphia resident Mark Sabaj Pérez, 42, came for the beaches. He and his wife, Cristina, 39, and 3-year-old daughter Sofia spent Christmas and early January with in-laws in Key Biscayne.
“I think it’s a waste of time, money, and resources,” he said while having burgers at Johnny Rockets in Miami with his daughter. “I lived through the whole discussion in Philadelphia over Foxwoods… . I’m not opposed to gambling … but I don’t see the need to build new casinos with money that should be spent on building new schools.”
“If you want to gamble, go to Atlantic City or Las Vegas,” said Sabaj Pérez, an ichthyologist at the Academy of Natural Sciences who lives in Mount Airy. “You don’t need it here.”
Another formidable rival?
For Atlantic City, new gambling competition could mean yet another fissure in its already eroded revenue base.
Just five years after opening its first casino, Pennsylvania is on the verge of surpassing the Shore resort as the second-largest U.S. gambling market after Las Vegas. Atlantic City’s 11 casinos grossed $3.3 billion last year; Pennsylvania’s 10 casinos grossed $3.1 billion.
“Regardless if more competition emerges, Atlantic City needs to continue to build upon its strengths to differentiate itself from gaming offerings in other states … and we are in the process of making many positive changes to build upon that important distinction,” said Joe Lupo, senior vice president of operations at the Borgata Hotel Casino & Spa.
In 2011, New Jersey Gov. Christie instituted regulatory changes and created a state-run tourism district in Atlantic City as part of a 10-year plan to broaden its offerings and enhance the year-round visitor experience. The changes, Christie said, were to position Atlantic City “to become the destination resort it was meant to be.”
The Casino Reinvestment Development Authority board approved the master plan for the new tourism district Feb. 1, 31/2 months before Revel, a $2.4 billion Vegas-style megacasino being built with $261 million in state tax credits, is set to open on the Boardwalk.
Yet the debate in Miami touches on several issues Atlantic City now confronts, such as whether it devoted too many years and too many resources on gambling venues and not enough on attractions that appeal to families and those who do not gamble.
In TV ads that appeared last month and continue to run on the BadBetforFlorida.com website and on YouTube, Atlantic City’s predicament is cited by the state Chamber of Commerce as an example of why casinos do not belong in Miami. The chamber is leading a coalition that is sponsoring the ads.
One ad, featuring Ben Stein and school-age children and called “Bad Bet for Florida: It Doesn’t Take a Kid, Duh?” details how megacasinos in Atlantic City spelled economic disaster for local retailers. A second ad shows parallel problems in Atlantic City and Las Vegas – bankruptcies, foreclosures, crime – after casinos arrived.
“We believe … [casinos] hurt jobs and cannibalize businesses,” the chamber’s Swanson said. “You need not look further than Atlantic City. Within the first year of bringing gambling, they had a 30 percent closure rate of their retail establishments and 40 percent of their restaurants. There’s nowhere … this has worked in established tourism economies.”
Other Florida business groups and commissioners for Fort Lauderdale and Miami Beach have rallied against adding casinos, as has the Seminole tribe of Florida, which operates seven casinos on federal trust reservation lands under an exclusive compact with the state.
“Every dollar spent in a casino is one less spent in a local hotel or restaurant,” said Carol B. Dover, president and chief executive officer of the 10,000-member Florida Restaurant and Lodging Association.
Disney, whose senior vice president is the Chamber of Commerce’s board chairman, argues that more gambling in Florida – in addition to the tribal casinos, there are also five racetracks with slots – would drastically alter the state’s postcard image. Disney owns four theme parks, two water parks, and 24 hotels near Orlando. Many say Disney was a big reason for the bill’s collapse in the state House committee.
“The expansion of casino gambling … is inconsistent with Florida’s brand as a family-friendly destination, and with efforts to diversify Florida’s economy through research, innovation, and entrepreneurship,” said Disney spokesman Bryan Malenius.
Genting has had a presence in Miami for the last decade: It co-owns Miami-based Norwegian Cruise Line. But it makes most of its money from gambling, with casinos in Malaysia and the Philippines. It opened a megacasino resort in Singapore two years ago, and more recently opened Resorts World New York at Aqueduct Racetrack in Queens.
“It all depends on how [Genting] does it,” Deutsche Bank AG analyst Andrew Zarnett said of the company’s Miami casino plans. “If it’s like Singapore, where they built two giant casinos with convention facilities, retail, large hotels, and gaming floors, it will have an impact on other gaming markets and on South Florida.”
The gambling bill requires an investment of at least $2 billion per project. Resorts World Miami, at $3.8 billion, is being billed as one of the world’s largest casino resorts, with five towers with up to 5,200 rooms, 1,000 condos, 50 restaurants, 700,000 square feet of meeting space, a retail galleria, and a 3.6-acre lagoon.
Genting says its footprint in Asia could bring in a prized clientele for the Miami casino: Asian high rollers who typically visit Las Vegas.
An expected boost
With Florida real estate values in the tank – one out of every 360 housing units is in foreclosure – and jobs scarce, the casino proposition is attractive to some. The state has a 9.9 percent unemployment rate, 10.2 percent in South Florida, above the 8.3 percent national average.
Sen. Ellyn Bogdanoff (R., Broward/Palm Beach), prime sponsor of the Senate gambling bill, said the measure, if approved, would shift Florida gaming from “mostly predatory and regional” to having a wider, more lucrative appeal.
“Let’s bring in the dollars from elsewhere, the conventions and trade shows that ultimately produce … economic development,” she said.
Genting says Resorts World Miami would create more than 40,000 direct and indirect jobs and attract 2 million to 3 million new visitors annually, mostly from out of state.
“We want them to … build it as soon as possible because we need the investment and jobs it will create. We’re hurting bad,” Clifford Gebara, 54, said as he sat behind a sales counter at Bayshore Design Center, a shop his sister owns at the DoubleTree Grand Hotel Biscayne Bay, not far from the Genting site. “This area has been depressed for a long time, ever since real estate values went down.”
The 250-room DoubleTree Grand Hotel also has a retail mall and 840 condos. Gebara, who lives there, said his building was a prime example of Florida’s real estate downturn.
Condos at the DoubleTree, he said, used to sell for a half-million dollars to $1 million each three or four years ago; they now go for between $150,000 and $300,000. Gebara envisions workers building the massive casino snatching up properties in his building, and tourists flocking in.
“People from South America have the money to gamble,” he said. “And Latin Americans love Miami.”
