Good government demands that you have clear laws, which are either uniformly enforced or taken off the books. Though the law should provide enough flexibility to allow for common sense, it cannot be arbitrary. It was clear that Internet cafés were only legal because people had found a way to use an unintended loophole to get away with something clearly meant to be against the law. But now that the loophole has been closed, we should get back to the original debate about gambling and where and when it should be legal.
In actuality, the entire issue is a good example of how not to govern. It was clear from the beginning that these businesses didn't pass the smell test. They got to engage in a highly-regulated industry (casino-style gambling), without being subject to the same regulations. As such, they were rife for corruption. But by deliberately turning a blind eye to the operations, lawmakers sent the wrong signal, allowing the industry to grow, while more and more people invested their money in such operations.
By mid-2011, Pasco Sheriff Chris Nocco began busting such facilities, shining a spotlight on the practice, which had managed to fly largely under the radar in a state with everything from bingo parlors to blackjack within a convoluted system of legality. The state should have either squashed the loophole then, or legalized the concept and put them under the same sort of rules as the others. But politics being politics, that's not as simple as it sounds.
At the time, Florida was about to engage in an epic battle over expanding its very limited “Vegas-style” operations, which began with a 2009 deal in which the Seminole Indian Tribe received a license for blackjack in its casinos, in exchange for loaning the state $1.1 billion over two years. By 2011, other companies were pushing hard to expand such operations. Last year, the legislature looked poised to pass a limited expansion that would create a Department of Gaming Control and allow for three major, Vegas-style destination casino resorts.
The Las Vegas Sands Corporation was the main player behind the push for expansion, though they were soon joined by the Malaysian group, Genting Americas. Genting, who is involved with Foxwoods and the Seneca Niagra Casino, bought the Miami Herald's historic waterfront complex for a reported $236 million in 2011, with intentions to build a 500-room luxury hotel, condo towers and a $2 billion upscale "Monte Carlo-style" casino.
The whole process turned into a fiasco as Disney mounted a major push to kill the expansion, joined by the Seminole Indian Tribe, who threatened to withhold gaming revenues, since the move would seemingly violate their compact with the state. The fact that lawmakers were being asked to regulate the internet cafés just added to the mess. Originally, it was thought that they could simply be tucked into the deal and regulated through the new bureaucracy. But when the expansion bill floundered, it was back to square one.
Without a big score, the legislature did what it does best – nothing. The cafés did the smart thing and ponied up some scratch, sprinkling more than a million dollars around Tallahassee. What all that money appeared to buy them was another year of hemming and hawing – not to mention another election cycle in which they could curry favor.
Enter Allied Veterans, the Jacksonville-based company that took in over $300 million in its 49 parlors across the state. Masquerading as a non-profit that helped homeless veterans, Allied got swept up in a massive investigation that resulted in 60 arrests on charges ranging from illegal gambling to fraud and conspiracy. Lt. Governor Jennifer Carroll, who worked for the group while serving in the state legislator, resigned almost immediately and suddenly lawmakers were singing a very different tune, especially when word started to get out how many of them had cashed campaign checks from Allied and its people.
The investigation has exposed a number of flaws in the sitting-on-their hands approach employed by the legislature. First, the fact that these businesses were unregulated gave them a very unfair advantage over the rubes who dumped their money on them. Gambling devices in regular casino operations have to be set in a way that regulators decide is fair to the participants in terms of their chances of winning. Investigations into Allied and other groups are revealing that because the games take place on a computer with off-site servers, the values, outcomes and frequencies can very easily be manipulated. It seems that payouts as a percentage of revenues were much lower than typically is the case. Hence the piles of cash some of these places were racking up.
That being said, it's estimated that 14,000 people were employed by such operations, all of whom will be joining the ranks of the unemployed. I can't help but think that regulating them would have been the better way to go. Personally, I've never understood the appeal of gambling and have no interest whatsoever in casinos. I grew up in a part of Pennsylvania where bookies and shylocks were as routine as insurance men and garage mechanics, so I have seen first hand the debilitating effects of degenerate gamblers on a family and community, but I've also seen that gambling is a vice that exists with or without the endorsement of the law. I also watched as PA sat by idly, as droves of senior citizens hopped buses to Atlantic City every weekend, dropping their hard-earned dollars into the Garden State's coffers.
At the end of the fay, Florida has gambling, and it has just about every kind there is. To allow it in some places and not in others, does nothing but pick winners and losers based on who has the most sway in Tallahassee. People spending their money on goods and services that employ other people is what makes a market economy. Many of the Floridians with disposable income to throw around happen to be retirees, and many of them like to gamble. If they want to throw some coin down the toilet at a local slot machine house, I say let them do it – especially if the money spent puts thousands of Floridians to work. At a minimum, lawmakers should find a way to integrate such small, local casinos into the regulated industry of gambling and welcome the economic impact in entails.
Dennis Maley's column appears every Thursday and Sunday in The Bradenton Times. He can be reached at firstname.lastname@example.org. Click here to visit his column archive. Click here to go to his bio page. You can also follow Dennis on Facebook.
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