The Seminole Tribe of Florida has reportedly gone to the federal level to force approval of Class III gaming at its casino operations in Florida. Jeff Hwang says the Seminoles are already one of the most profitable gaming entities outside of Las Vegas and that Class III gaming will make the tribe even more powerful.
Fresh off putting in the winning $965 million bid for Rank Group's Hard Rock International (see Seminoles' Hard-Rocking Purchase), the Seminole Tribe of Florida is now focused on the next task at hand -- getting approval for the operation of Las Vegas-style Class III slots at the tribe's seven casinos in Florida, including the two exceptionally profitable Hard Rock-branded casino hotels in Hollywood and Tampa.
The South Florida Sun-Sentinel reported yesterday that the Seminoles have filed court papers with a federal judge in Tallahassee to force the U.S. Department of the Interior to establish guidelines that would allow the Seminoles to install traditional Class III slots in place of the Class II "Bingo" machines currently in operation (Class III machines generate more revenue than Class II). The Department of the Interior had previously set a November 2006 deadline for the Seminoles and the state of Florida to reach an agreement on a gaming compact, after which the Department of the Interior would step in and issue regulations itself.
That deadline has since passed without action.
By virtue of the Indian Gaming Regulatory Act, the Seminoles are entitled to any type of gaming legal elsewhere in the state of Florida. In this case, that means Class III slots, which have already been introduced at the first two of four pari-mutuel gaming facilities in Broward County granted approval for Class III slot machines -- Magna Entertainment's
As it is, the burden is on the state of Florida and its new governor, Charlie Crist, to reach an agreement with the Seminoles, as doing so would at least allow the state to receive tax revenue from the tribe's gaming operations. Failing to reach an agreement and allowing the federal government to make the rules could result in the state getting nothing.
One thing is for certain: The Seminoles are already one of the most profitable entities in gaming outside of Las Vegas, and they're only getting stronger. The tribe's seven casinos rake in an estimated $1.2 billion annually. That's more than the annual take of either Ameristar Casinos
The Seminoles also have several key locations near a large population of mature age with lots of free time and money to spend -- and in a state with a favorable tax rate (zero for now) and limited potential for new competition -- giving the tribe's gaming operations a Station Casinos-like
1. The Broward County casinos -- which will include Isle of Capri's
2. The Broward County casinos aren't even allowed to have ATMs on site. In fact, the casino at Gulfstream Park has a regular shuttle service to scoot patrons to the nearest ATM and back.
3. The Broward County casinos are limited to 1,500 slots each. The Seminoles currently have no cap on expansion.
4. The Broward County casinos pay half of gaming revenue to the state of Florida. The Seminoles don't pay gaming taxes.
And the biggest beneficiary of Class III gaming is...
All said, who do you think is the biggest beneficiary of the legalization of Class III slot machines in Florida? Is it Isle of Capri? Boyd Gaming? The state of Florida?
Well, I suppose a case could be made for slot manufacturers such as International Game Technology
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Ameristar is a Motley Fool Hidden Gems selection. Fool contributor Jeff Hwang owns shares of Ameristar Casinos, International Game Technology, and WMS Industries. The Fool has an ironclad disclosure policy.