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Front Page » Opinion » Bad bet: Slot machines don’t pay off for government, either

Bad bet: Slot machines don’t pay off for government, either

Written by on April 23, 2014
Bad bet: Slot machines don’t pay off for government, either

Slot machines were a bad bet. A county study issued this month for a key slots backer proves it.

Revenues the county expected from slot machines at tracks and frontons were touted to do a big job, but they’ve fallen a mile short.

So much focus is now on mega-casinos that the last big gambling incursion in Miami-Dade has been forgotten, though it was only a few years ago.

Miami-Dade voters in 2005 by 52% had denied slots to the horse and dog tracks and jai-alai fronton, which already profited from small-time gambling. Broward voters, meanwhile, had said yes for four pari-mutuels.

In 2008, however, the question came back and Miami-Dade voters passed it. Now the pari-mutuels have 30-year contracts tied to 30-year renewals to operate slots and to funnel some of the take to the county.

The impact of those contracts is what Commissioner Bruno Barreiro had asked about. The subsequent county study reveals the false hopes gambling raises. It’s a wonder Mr. Barreiro, a driving force behind the slots, called for evidence of the failure.

In campaigning to get slots passed, commissioners had argued that taxes on the machines’ winnings would do key jobs.

Sally Heyman said slots taxes would fuel education – a pitch that echoed brochures with which the pari-mutuels had bombarded voters. “We already have gaming,” she said. “Why not tax the hell out of it?”

In the tight budget year of the final vote, commissioners nearly unanimously said taxing slots would shore up county finances.

Commissioners Dennis Moss and Rebeca Sosa said slot taxes would offset cuts in state aid.

Mayor Carlos Alvarez, who opposed the slots but said he was happy to let voters make their own choice, said the tax take from slots would pay added costs the gambling would impose on the county.

Contracts between the county and the pari-mutuels said the tax revenue would help fund fallout from gambling “including the costs of regional law enforcement, human services, mass transit operation, and to mitigate lost revenues such as sales tax surcharges that the county will incur as a result…”

That’s a long list of benefits, if true.

So, how did Commissioner Heyman and the others “tax the hell” out of the slots?

Last year, after paying out all winnings to slots gamblers, the three pari-mutuels had slot machine take of more than $215 million. The county got a bit over $3 million of that, which is “taxing the hell” out of them only in your imagination.

Nobody is accusing anyone of cheating: that’s all the county was entitled to in contracts it negotiated.

Anyone who thinks $3 million is jackpot enough to fund law enforcement, human services, mass transit and lost county revenue, plus fill gaps left by state payment cuts and shore up the county’s financial gaps is likely to be dropping the family nest egg into slot machines right now with the certainty of striking it rich.

The county had counted on far more. Pari-mutuels had promised 8,400 slot machines and installed 3,033. They’d counted on $214 profit per machine daily and some make less – though others collect even more.

Promised operations would have brought the county $10 million a year. It planned for $9.8 million. But wisely, the county never budgets slots revenue – the budget director calls it too risky. Instead, revenues are counted only after the money is in the bank.

Too bad the elected officials weren’t that wise.

Pari-mutuels, with $215 million pre-tax profit just on slots last year not counting their other betting, meals and drinks, admissions and so on, aren’t going to the dogs, though they’d like the state to cut its slots tax. But outside their doors it’s another story.

One sales point for slots was that development would rise surrounding the pari-mutuels: hotels to house all the gamblers coming to town to drop quarters into machines and glittering retail stores to serve them after the quarters were spent.

Is anyone surprised that none of that happened? Those promises were valid right through election day and not an hour more.

To see why, look at who goes to the pari-mutuels. They aren’t folks who fly in to stay at top hotels and shop at luxury stores.

The slots losers are more like former county commissioner Natacha Seijas, who in arguing for slot machines at tracks and fronton recalled the good old days in Havana when she’d gone to casinos to play the slots at age 15.

They’re like her –  but a whole lot older than 15. It’s likely Social Security checks from the neighborhood pay the county its $3 million or so in slots taxes to fund our services.

Now we’ve saved the pari-mutuels, which were on the rocks, first by giving them poker rooms and later slot machines.

We keep adding on, and when we lose we double our bet on the next sure gambling gimmick.

Just like Marlins Park, we get none of the promised growth nearby. And a state study last summer showed that gambling adds no jobs outside the gambling hubs themselves.

How many bad bets are we going to make on gambling becoming an economic generator rather than what it always has been: an economic black hole?