Genting Fights Disney, South Beach Over Miami Casino-on-the-Bay
Genting Bhd. (GENT)’s plan for a $3.8 billion casino-and-hotel complex along Miami’s Biscayne Bay has turned into a fight over gambling and jobs pitting the Malaysian developer against Walt Disney Co. (DIS), local hoteliers, restaurant owners and betting parlors.
Florida lawmakers will take up bills in January to allow three casino licenses in Miami-Dade County and Broward County to the north for companies investing at least $2 billion. Ellyn Bogdanoff, the Fort Lauderdale Republican sponsor of the Senate measure, said it has only a 50 percent chance of passing. Governor Rick Scott, also a Republican, said he’ll consider any measure that’s “fair” and “locally decided.”
Genting, whose 10,000-room Casino de Genting in Malaysia is the world’s largest by number of accommodations, began buying about $500 million of Miami properties even before the bills were filed. The first was the 14-acre bayfront site of the Miami Herald newspaper for $236 million in May. Las Vegas Sands Corp. (LVS) and MGM Resorts International (MGM) said they’re also looking.
So-called destination resorts, such as the 5,200-room complex Genting proposes, may bring Florida as many as 100,000 jobs, said Jessica Hoppe, the company’s general counsel. That may help Scott fulfill a campaign promise to create 700,000 positions over seven years in a state where the unemployment rate was 10.6 percent in September, 1.5 percentage points higher than the national average at the time.
Florida voters rejected casino permits three times since 1978 in statewide referendums. Now, two factors may favor them: a decision by the First District Court of Appeal on Oct. 6 that may dispense with a state ballot and a Florida economy that’s seen tax revenue decline almost 15 percent since fiscal 2006.
Diverting gamblers from the Caribbean, Las Vegas and Atlantic City, New Jersey, would boost the $63 billion tourist industry, proponents say. Florida is trying to recover from the fourth-steepest decline in economic health of any state over the past five years, according to Bloomberg Economic Evaluation of States Index data.
“What you’re talking about is capturing a market of high- end Venezuelans, South Americans, Latin Americans, Western Europeans that love coming to Miami,” Representative Erik Fresen, a Miami Republican who sponsored the House casino bill, said in an interview in Tallahassee, the capital.
Florida isn’t the only state considering casinos as they try to close fiscal 2013 deficits. The projected gaps are an estimated $46 billion, according to a June 17 estimate by the Washington-based Center on Budget and Policy Priorities, which advocates for low-income families.
States at Work
Massachusetts lawmakers are working on bills that would allow three resort-style casinos. Illinois Governor Pat Quinn supports elements of a bill for five casinos in his state. In New York City, Genting’s casino at the Aqueduct racetrack in Queens, which opened Oct. 28, estimates it will contribute $350 million a year to the state for education.
Florida already allows gambling at seven casinos run by the Seminole Tribe and one by the Miccosukee Tribe of American Indians. It also permits poker at horse and greyhound tracks, jai-alai frontons and other sites. Slot machines are offered at five places in Miami-Dade and Broward.
Competition from operators such as Genting will cost Florida millions in lost revenue from the tribe, say the Seminoles, whose headquarters is in Hollywood, north of Miami.
Deal With State
The tribe agreed in 2010 to pay Florida at least $1 billion over five years for the exclusive right to offer blackjack and other so-called house-banked games at some of its casinos. The deal would be nullified if others are allowed to have them, Gary Bitner, a spokesman, said in a telephone interview.
For the Florida Chamber of Commerce, Florida Restaurant and Lodging Association, anti-gambling groups and existing gaming operators, more and larger casinos aren’t the answer to reviving the state’s economy.
“When you move into an already established tourism market like Miami, you’re going to take money out of existing business and move it into the new big casino,” Mark Wilson, president of the state chamber, said in a telephone interview.
A 1994 study commissioned by the Florida governor’s office found that building casinos would cost the existing tourism industry as much as $2.5 billion as visitors shift spending from amusement parks, restaurants and hotels to gambling.
“Any benefit to Florida will never outweigh the heavy cost,” Carol Dover, president of the restaurant and hotel association, said in an October statement.
More gambling is “inconsistent” with “efforts to diversify Florida’s economy through research, innovation and entrepreneurship,” Marilyn Waters, a spokeswoman for Disney’s World Resort in Lake Buena Vista, which contains the world’s most-visited theme park, said in an interview.
“Casinos are the death knell of any neighborhood,” said Tony Goldman, chief executive officer of Goldman Properties, which owns two restored 1930s-era South Beach hotels across the bay from Miami.
Casino operators may overstate economic benefits of their projects to get lawmakers’ backing, said Earl Grinols, who teaches economics at Baylor University in Waco, Texas, and who wrote the book “Gambling in America: Costs and Benefits.”
That’s what happened in Florida after 2004, when voters allowed slot machines in Miami-Dade and Broward, said Paul Seago, a board member of the anti-gambling No Casinos lobbying group. An advertising campaign said the measure could bring $500 million a year in tax revenue. Last fiscal year, slot machines raised about $125 million for Florida, according to state economists.
The proposed licenses would impose a 10 percent tax on new casinos’ revenue. That’s “penalizing” for existing companies, which must pay 35 percent on slot machine income, said Dan Adkins, vice president of Mardi Gras Casino Inc. in Hallandale Beach in Broward County.
Genting said it will proceed with its Miami plans whether the casino licenses are approved or defeated.
Las Vegas Sands has looked at a site north of downtown Miami, Andy Abboud, vice president of government relations, said in a telephone interview. MGM Resorts is “looking all over the state,” said Alan Feldman, a spokesman. Deanna Pettit, a spokeswoman for Wynn Resorts Ltd. (WYNN), and Gary Thompson, at Caesars Entertainment Corp., didn’t comment.
South Florida’s natural attractions, including its beaches, are an advantage over other U.S. destinations, said Bogdanoff.
“It is probably the only place in the country that will give Vegas a run for its money,” she said.
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