Fishkind Economic Conversations: New Deal On Gambling Could Rake In Billions For Florida
Florida lawmakers kicked off a special session yesterday to consider an overhaul of the state’s gambling industry, and a 30 year compact with the Seminole Tribe of Florida.
Economist Dr. Hank Fishkind with Fishkind Litigation Services tells WMFE’s Matthew Peddie there’s billions of dollars in tax revenue at stake.
Matthew Peddie: Well, let's start with the scope of this gambling compact. Tell me about the overhaul and the scope of it. What's up for discussion?
Hank Fishkind: Well, Florida's gambling regulations have just become, you know, obsolete, Matthew. So they're in real need of an update. And the compact that was between the Seminole tribes in the state of Florida has been abrogated, and the state's not collecting any money. So for all those reasons, we need this special session.
MP: Now, I understand that the new gambling regulations would legalize sports betting in Florida. Florida, therefore, will join 29 other states that have already approved it. Is this good for the state of Florida?
HF: Yeah, it absolutely is good for the state of Florida. You know, first of all, if approved, Florida would be the most populous state in the nation to offer mobile sports betting. And the reality is that anybody with an internet enabled device can bet on sports now. So this is really just acknowledging the economic reality. And from an economic perspective, it's good to legalize, regulate and tax economic activities that many people are engaging in legally anyway. The proposed tax is between 10% and 15%. And that's well within the range that most states use. The highest in the nation is Connecticut at 13 and a half. So the bottom line is Yeah, legalized sports betting is a good idea for Florida, Matthew.
MP: So under this new compact, the Seminole tribe would pay Florida at some $2.5 billion over the initial five years, but it also puts the tribe in charge of sports betting. So just explain how this works.
HF: Well, it is a little complicated, you know, all sports betting under this agreement would be routed through servers on the tribes property. And the deal would inject needed cash into Florida's parimutuel industry. And it does that by allowing them to operate mobile sports apps under their own brands in exchange for 60% of the proceeds. Now, the reason for this somewhat convoluted structure was twofold. First, the federal Indian gaming regulatory act, that's the law that rules gambling agreements between states and tribes, requires that states offer something called meaningful concessions, whatever that's supposed to mean, in exchange for the tribes' revenue. Second, it insulates the state from some legal challenges, since opponents argue that the compact violates that new 2018 constitutional amendment that requires voters to approve all expansions of new casino games.
MP: So what about the controversy over portability of gaming licenses, then? I mean, today, those licenses were granted only to parimutuel sites, whether it was greyhound racing, which as we know is no longer allowed, or horse racing tracks like Gulfstream Park. Now, under consideration is the ability for the holders to sell the licenses or to move them to other locations. So tell me about this. And what about the economics behind it?
HF: Well, it's certainly good economics. You know, license holders should be free to sell or move their licenses to better locations if the receiving jurisdiction would permit new gambling facilities. The controversy really arises from the politics involved, not from its economics.
MP: Alright, so what about the economic challenges with the overhaul and the compact? What are the biggest challenges here?
HF: Well, the biggest challenge the legislature is going to face is going to be portability. And the second biggest thing, perhaps the most important thing is, you know, can Florida's political leadership use these funds to really contribute to Florida's economy and to its citizens. Matthew.
MP: Yes, that is always the question. Well, Hank Fishkind, WMFE economic commentator, thank you so much for your time. Appreciate it.
HF: Thank you, Matt.