Economists say casino bill too uncertain to give it a revenue number
The uncertainty behind the timeline and the possibilities of three destination resorts make it too difficult to project a firm revenue number, economists say.
BY MARY ELLEN KLAS
HERALD/TIMES TALLAHASSEE BUREAU
TALLAHASSEE — If three destination resort casinos are constructed in Florida as envisioned in a bill before lawmakers, the South Florida economy could reap $206 million in new construction, the state could draw millions of new tourists and the state’s coffers could grow by as much as $455 million over the next four years, the state’s chief economist predicts.
Or maybe not. It’s anyone’s guess.
After three meetings, and much lobbying from the gambling industry, a panel of economists for the state Revenue Estimating Conference couldn’t come up with a firm number on how much the state will rake in from the mega resorts.
The estimates were too “squishy,’’ they said, the variables too uncertain, and the ambitious timeline too susceptible to delay.
“Its a choice of either saying it’s indeterminate or put a number down and say it’s highly uncertain,’’ said Don Langston, economist for the state House of Representatives.
Instead of a firm estimate, the economists will issue a range of numbers and remind legislators the impact is uncertain, said Amy Baker, the state’s chief economist.
Baker, however, did the math on the potential impact. Her calculations may be instructive for many in Florida trying to decide what impact the casino plan could have on future and existing businesses.
Baker assumes that the tight timeline outlined in the bill sponsored by Sen. Ellyn Bogdanoff, R-Fort Lauderdale, and Rep. Erik Fresen, R-Miami, will be followed, that construction will finish and games will begin by the 2015-16 budget year.
The estimates, however, could vary depending on resort locations, the date they open for business and the types and numbers of casino games offered.
Here are the highlights of Baker’s projections:
Tourism. Baker estimates that the destination resorts will draw four kinds of visitors each year: 1) Florida residents who would have travelled outside of the state to gamble (153,000 to 370,000); 2) new tourists who would have gone to Las Vegas or elsewhere in the country but now come to Florida or who came from other countries, particularly Latin America and Asia (823,000 to 1.6 million); 3) current tourists who come to Florida for the destination resorts or add it to their visit while in Florida (4.3 million to 10.6 million) and 4) local residents who will make day trips to the casinos (1.2 million to 1.3 million).
Tax revenues. Baker assumes the average out-of-town visitor stays 4.7 nights and spends $151 a day on all expenses, based on Visit Florida data. Those without children are projected to spend three to four hours a day gambling and lose between $125 and $466 per trip, based on Las Vegas numbers. All told, Baker estimates patrons to Florida’s destination resorts would spend between $1.2 billion and $2.5 billion a year on gambling. Their visits would generate $11 million to $15 million in sales tax a year and produce gambling revenue for the state of between $98 million and a of $255.3 million.
Construction. The bill requires each casino applicant to invest at least $2 billion and state economists assume the investment will not be limited to the construction of the resort but include furnishings and gaming equipment. As a result, they estimate that the total amount spent will be closer to $1.3 billion per facility. If all three resorts are constructed, they predict the sales tax generated from both the construction and furnishings will add up to between $172 million and $206 million in one-time sales tax revenues for the state.
Indian gaming compact. Economists assume something the bill sponsors do not: that one of the three casino resorts will be located outside of Miami Dade and Broward. If that happens, it automatically triggers a provision in the 2010 gaming compact between the state of Florida and the Seminole Tribe and the tribe would cease payments to the state. In 2015-16, when the casinos open, that would mean an estimated annual loss of $99 million in revenue to the state.
Cannibalization of pari-mutuels. Baker estimates the biggest impact of the resort casinos will be on the Seminole Tribe and its Hard Rock Casinos in Hollywood and Coconut Creek, which offer black jack, baccarat as well as slot machines. She estimates the tribal casinos will lose between $420 million and $307 million in gaming activity and that’s off their $1.7 billion base. The local pari-mutuels will lose between $129 million to $240 million, down from their current $364 million base.
Baker, however, debunks critics of the casino legislation. She believes there is enough demand for a larger Florida casino market. She notes that the number of people who enjoy gambling as a pastime has doubled in the last 17 years and estimated that Florida can withstand another $5.4 billion in gambling dollars before the market is saturated. “We have plenty of capacity,’’ she said.
Baker also suggested that Florida should compare itself to Indiana, Iowa, Louisiana and Pennsylvania, not Las Vegas.
“Only two percent of the people who come to Florida today say their primary activity is gambling, while 80 percent say they go to Las Vegas to gamble,” she said. “Will Florida be the new Nevada? I just don’t see that.’’