Adelson dealt a setback

Florida casinos, the latest pet project of Sheldon Adelson and new ally Gov. Rick Scott (R), got the back of the hand from Miami Beach‘s city commission. Since Miami Beach is the most desirable casino zipcode in the state, this takes some of the shine off a multi-casino proposal currently being crafted in the Legislature. There are many other hurdles and foibles to be overcome. Proposed “exclusivity zones” would require that each casino be 140 miles from its nearest competitor, making that a idea a probable non-starter.

Also, at a tax rate of 9%, Sunshine State casinos would have to be a multi-billion-dollar industry right out of the gate in order to replace the current revenue-sharing arrangement with the Seminole Tribe — something that probably goes bye-bye if the Seminoles’ exclusive Class III perks have to be shared with Las Vegas Sands or whomever. A penny for the thoughts of Isle of Capri Casinos (which has both a new CEO and more love on Wall Street this week) and Boyd Gaming, both already invested in the Florida market — albeit minimally in Boyd’s case — and neither of whom has enjoyed the gubernatorial prostration currently being accorded Big Shel.

Another state that’s playing Russian roulette with its tribal-gambling revenues is Arizona. Lawmakers have proposed adding racinos to the state’s betting mix. The motive for this high-stakes gambit seems to be pique. Since the Tohono O’odham Nation will not be deterred from pursuing a very litigious — and too convoluted to summarize — casino project (above) adjacent to Glendale, freshman state Rep. John Fillmore (R) is playing the racino card. To his somewhat Neanderthal way of thinking, if Arizona’s other tribes can’t club the (sovereign) Tohono O’odham Nation into submission, they all should be punished by having their casino exclusivity taken away. At least one other tribe has fought hard against the Glendale casino, an inter-tribal nuance that evidently hasn’t resonated within Fillmore’s noggin.

Although Fillmore (left) has an uphill fight on its hands, his success could hurt the state more than the tribes. Native Americans would be exempted from any limits on gambling offerings to which they agreed in 2002, nor would they have to share their wealth with the State of Arizona anymore. A 2009 study proposed a usurious tax rate (45%) and extrapolated $375 million in racino-derived revenue per year. However, a glance at the right-hand column shows that racino states generate an average of $219 million in taxes per state (or $59.7 million/racino). No state west of the Appalachias raises nearly that amount.

Instead of tossing around hallucinogenic numbers like $375 million, the basic question Arizona legislators have to consider is this: Could racinos be reasonably expected to create a revenue base equal or greater to that of the tribal casinos? The latter’s contribution to the state peaked in fiscal year 2007 at $111 million, declining to $89 million in FY10. Matching those figures looks achievable and would be a more intellectually honest selling point rather than than painting racinos as the biggest golden calf since Moses‘ time.

Then there’s Kansas, which has a casino license it literally can’t give away. If having two casinos in immediate proximity were an economic suicide pact, there’d never have been a Las Vegas. But try telling that to developers who want no part of Sumner County now that there’s a tribal casino sitting just across the road from the intended site. Instead of pressing the Lege to reduce the $225 million investment threshold (or move the license somewhere else in the state), the Kansas Lottery Commission is going to extend its deadline and hope against hope that the Easter Bunny drops a prospective casino operator in its lap.

Here at S&G, we don’t hold with this idea of artificially “seeding” casinos in geographically discrete zones. Market demand and developer enthusiasm are far better barometers of where gambling will or won’t flourish. And if there’s an over-concentration, well, the marketplace takes care of that pretty efficiently, too.