Florida Teeters on Cusp of Allowing Slot Machine Operations

If approved, average facility would likely have 3,000 machines in operation

Horne, once an antitax crusader and chairman of the Senate Finance and Tax Committee, told the House Business Regulation Committee that his group is committed to working with legislators to find the right balance between holding the industry accountable to the state and earning enough money to keep its promises.

"We're going to pay the highest tax rate," he said. He warned that the tracks' competitors, the Indian gaming parlors, pay no tax and face no regulation. "You keep on going and tax us to death, we miss the opportunity for a revenue stream."

Scott Fisher, managing director of the Innovation Group and the coalition's business consultant, said the optimal regulatory arrangement for the industry would include:

  • Allowing each of the seven facilities to purchase its own machines.
  • Taxing revenues at 30 percent, producing as much as $500 million a year for education.
  • Contributing $300 million to local governments in the form of sales taxes and local distributions to offset the cost of traffic, law enforcement, local administration and problem gambling.
  • Letting the industry set the payout and race purse amounts, with 42.5 percent of revenues returned to payouts and purses.
  • Using remaining revenues for upgrades, marketing and development.

Fisher said the average facility would have 3,000 machines and would need 12,000 visitors a day to break even. Smaller facilities would serve 10,000 people a day.

Casino experts say those projections would give Florida some of the largest slot machine halls in the nation.

For example, the Charleston Races in West Virginia, a "racino" that features slot machines and horse racing, has 3,500 slot machines, said Steve Bourie, a Fort Lauderdale resident and author of the American Casino Guide. The MGM Grand Hotel, the largest casino in Las Vegas, has 3,200 slot machines.

Fisher, the industry consultant, told the House committee that the stimulation of the struggling parimutuel industry will have a ripple effect on local communities.

He predicts that the seven facilities will spend $1.2 billion on the first phase of development -- building the gambling halls -- and will create at least 10,000 jobs.

Senate President Lee said that despite his warnings, the dollar signs will likely persuade most legislators to pass something this year.

"This is a classic case of a camel's nose under the tent," he said. Even gambling opponents are hesitant to object "to passage of this because they think casino gambling is coming to a theater near them someday soon -- if they just be quiet and let Jeb Bush ride off someday into the sunset."

With the governor and his threatened veto gone after his term ends in 2006, Lee said, "they can get a more gambling-friendly governor, who will enter into compacts with the Indians, who will allow for the proliferation of these slot machines and perhaps other forms of...gambling in Florida.

"That's the endgame."