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All Bets are Off

A recent Supreme Court ruling has opened up the gates for states to legalize sports betting, but the future of Florida’s gambling industry was already in question.

In May, the Supreme Court struck down a 1992 federal law that prohibited the legalization of sports betting in most states. Now that the law has been tossed out, states are considering whether or not they should get in on the game, but with Florida’s checkered history on gambling, it may not be in the cards for the Sunshine State, at least not any time soon.

Some states were ready for the ruling. New Jersey, which challenged the federal law, has already enacted a bill allowing people to make sports wagers. And Mississippi, West Virginia, Rhode Island and Pennsylvania have all made moves to allow sportsbooks. Some even put pre-emptive legislation in place anticipating that the federal law would be nixed. Meanwhile, Florida’s legislature was adjourned when the ruling came down and has not met since.

To that end, it may actually be Florida voters who determine what gambling will look like in the near future.

Adjusting the Odds
In November, Floridians will vote on a constitutional amendment, known as Amendment 3, that if approved will limit the Legislature’s ability to expand gambling. If it passes, then the only way to make new laws on gambling or change current ones will be through a constitutional amendment brought by a citizens’ initiative process.

This means the Legislature would not be able to pass a bill on its own or refer a constitutional amendment to the ballot. Instead, a group of citizens would have to draft an amendment, petition to get it added to the ballot and then Floridians would vote on it.

John Sowinski, chairman of Orlando-based group No Casinos, says the amendment was created because historically in the state, issues of gambling have been handed to the voters. But then, he says, the Legislature started overlooking what voters wanted for what the gaming industry lobbied for.

“What Amendment 3 does is [it] essentially clarifies and strengthens what we believe is already in the constitution that it should be up to voters to have the final say on whether or not we’re going to approve forms of casino gambling in the state,” he says.

Sowinski says that often bills passed by the Legislature have snowballed into legalizing forms of gambling that voters would have never approved. He cites penny-ante poker as an example of a minor bill that expanded beyond the scope of its original intention.

The origins of the penny-ante poker bill trace back to an incident in the 1980s in which Pinellas County’s vice squad arrested eight senior-aged men for playing poker with a pot at a pool hall in a mobile home community. At the time playing poker for money was illegal, even in private residences.

People were outraged, the case received national publicity and the men became known as the “Largo Eight.”

In response, the Legislature passed a bill that legalized penny-ante poker with a $10 limit. But then the Indian Gaming Regulatory Act was put into place by the federal government. Part of this act instructs state governments that if they are to make any form of gambling legal for any one group in the state, then the Native American tribes are entitled to be able to perform the same game in their casinos. So, because of the penny-ante poker bill and then the addition of the federal act, the Seminole Tribe was able to add poker rooms to its casinos.

From there Florida’s pari-mutuel facilities, a term that encompasses kennel clubs, horse tracks and jai alai frontons that are permitted limited casino-style games, lobbied for the chance to open their own card rooms. The Legislature passed that law and then another came along to raise the limits and so on and so forth.

Sowinski says this succession of legislation got away from what the original law intended. “That’s part of why there’s urgency about our amendment is kind of left to their own devices, the Legislature and even the regulatory agency, the Division of Pari-Mutuel Wagering, expand gambling in ways that the voters never anticipated nor would approve of,” he says. “And so we think it’s important to give those decisions back to the voters.”

In 2015, No Casinos formed a political action committee (PAC) called Voters in Charge of which Sowinski is also the chairperson. Voters in Charge brought Amendment 3 to the ballot through a citizens’ initiative process. According to campaign finance records, two of the largest donors to the PAC are Disney Worldwide Services Inc. and the Seminole Tribe of Florida. Disney has given the committee $10 million, while the tribe contributed $6.7 million.

When asked about the tribe’s support of the amendment, a spokesperson referred Orlando Family Magazine to No Casinos.

Sowinski says while he doesn’t necessarily speak for the tribe, he believes its interest in the amendment lies with the state’s disregard for a compact between the two entities that is currently in place. The compact gives the tribe, which operates six casinos in the state, exclusivity over most casino-style games in exchange for paying more than $300 million each year to the Florida Treasury.

“All they want to do is to not have the Legislature every year, every legislative session, consider legislation that would violate a 20-year agreement they signed with the state that’s still got 10 years left on it,” he says.

But Aubrey Jewett, a political science professor at the University of Central Florida, says the tribe’s interests may be broader than that. “[The tribe has] a virtual monopoly on casino-style gambling and so to keep their profits rolling in, they would prefer not to see other competition from other kinds of gambling,” he says. “Or if there is going to be an expansion of gambling, they would like it to be under their control and be a part of the compact that they have.”

As for Disney, outsiders have speculated that the company is concerned about Florida’s family-friendly brand. This was echoed in a statement from the Orlando-based Central Florida Hotel and Lodging Association on its support for Amendment 3 that said, “Internationally, the Orlando brand is recognized as being a family-friendly destination. This designation must be preserved and advanced to maintain Orlando’s unique identity.”

Another criticism of the amendment is that its real purpose is to make it harder for gambling to expand in the state because a citizens’ initiative process would become the only way to add a casino or legalize a new form of gambling. Today, that citizens’ initiative process requires 766,200 people to sign a petition with the signatures coming from at least 14 of Florida’s 27 congressional districts.

“It does make it tougher because you’ve got to get a lot of signatures and then even if you get the signatures to get it on the ballot, you’ve got to get 60 percent of Floridians to approve of it,” Jewett says.

To which Sowinski says, “If it were such an impossible dream how could we have done it? That’s exactly how we got our amendment on the ballot and we believe that it will pass.”

He adds that the gaming industry lobbyists just want to be able to buy their way in.

There is one other issue with the Amendment 3 that, if it passes, might have it end up in court: whether or not sports betting will be included. The amendment uses the term “casino gambling” and defines it as “any of the types of games typically found in casinos and that are within the definition of Class III gaming in the Federal Indian Gaming Regulatory Act.”

Although sports wagering is covered under the Indian Gaming Regulatory Act, the ability to legalize it was not on the table when this amendment was drafted or when it made it onto the ballot. While Sowinski says the amendment does include sports betting, others have questioned if that will hold up in court.

“Any time you have these constitutional amendments, lately it seems, they end up in court,” Jewett says. “Even when they seem to be pretty straight-forward and pass by large margins, they still seem to end up in court with huge disagreements on what they actually require [and] what they actually mean. And I’m sure this casino gambling one, whether it’s sportsbook or anything else—I’ll be shocked if it doesn’t end up in court, assuming that it passes.”

Raising the Stakes
Casey Clark, vice president of strategic communications for the American Gaming Association, says the prohibition of sports betting has never stopped people from wagering, instead it just created an underground market.

“I think you’ve got to start with the premise that sports betting is happening in Florida right now,” he says. “Sports betting has been happening around the country despite the federal prohibition that was in place for 26 years.”

Florida Sen. Bill Galvano (R-Bradenton), who has been at the forefront of bills to expand gambling in the state, has expressed the same sentiment.

In a written statement, he said “Sports betting has been going on in our state since the origin of professional athletic competition. What we have now, through the recent Supreme Court decision, is an opportunity to capture a portion of the revenues from this industry, which could be a complete game changer for our budget.”

By bringing this practice out of the shadows, Clark says Florida could generate over $110 million in gaming tax revenue.

According to the New Jersey Division of Gaming Enforcement, the Garden State’s three sports-betting venues captured nearly $3.5 million in gross revenue in just the first month of operations and $294,000 of that amount went to state taxes.

But anti-gambling advocates say revenue like this is just shifted from other discretionary spending. Furthermore, because gambling has expanded all over the country, people are less likely to travel to place their bets, meaning Florida will not necessarily get new tourists by legalizing more gambling.

Still, the gaming industry says it could bring more jobs to the area.

“Right now, the gaming industry across the United States supports 1.8 million jobs,” Clark says. “And these are not just shift jobs, they are real career opportunities and people are capitalizing on that in 40 states right now.”

Even so, some worry that more gaming in the area will exacerbate problems like gambling addiction and crime. But Clark contends the idea that casinos bring about more addiction and illegal activity is based on antiquated stereotypes.

“When a new casino property opens up in a community, they tend to invest hundreds of millions, if not billions of dollars, to bring infrastructure into a community that includes expanded privatized security forces that in a lot of instances make communities safer than they were before,” he says.

According to the National Council on Problem Gambling, about 1 percent of U.S. adults are estimated to meet the criteria for pathological gambling in a given year. Another 2 to 3 percent would be considered problem gamblers, which is a collective total of about 4 to 6 million people.

Clark says the gaming industry is at the front-lines when it comes to investing in programs that help people with gambling addictions.

“We want to make sure that the people in our casino properties [who are] engaging in gaming are doing so responsibly and using this, as millions of other people are, as a form of entertainment that they’re engaging in responsibly,” he says.

Nothing is a Sure Thing
Even if Amendment 3 is not approved by voters in November, the Florida Legislature may still have a hard time passing a bill on sports betting.

“Gambling has sort of really been political football because it’s crossed party lines to some degree,” Jewett says. As an author of a textbook called Politics in Florida, he has been following the moves of the Legislature for many years.

If lawmakers do not take up the issue and pass a bill, then it is possible the Seminole Tribe could negotiate a new gaming compact that includes allowing sports betting at its facilities. The current compact does not expire until 2030 but that doesn’t mean the tribe would have to wait until then to attempt a renegotiation.

Taking into account the state’s record on gambling, Jewett says the legalization of sports betting is by no means a sure thing.

“Bottom line is the Legislature may look into that, particularly if they think it’s a good way to generate revenue, but traditionally, a majority of legislators have been reluctant to expand gambling.” Complicating matters is the fact that the Legislature isn’t scheduled to meet again until March 2019 after the election of new representatives and a new governor.

With those odds, Floridians hoping for a quick play to the legalization of sports wagering may want to start hedging their bets.

This article originally appeared in Orlando Family Magazine’s August 2018 issue.

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