Casino developer: “Oversaturation” can backfire

ASSOCIATED PRESS FILE The Cordish Company’s Maryland Live!, opening on June 6, will have 4,750 slot machines and cost $500 million. Owner David Cordish warns that the expansion of casino gambling can’t go unchecked forever. “I don’t know how we can control the politicians; they certainly don’t understand the word ‘oversaturation,’” Cordish said. 
May 18, 2012 12:25 AM

By Wayne Parry

THE ASSOCIATED PRESS

ATLANTIC CITY, N.J. — Casinos are not like Starbucks stores: You really can’t have one on every corner.

That’s the word from David Cordish, whose company is opening a huge new casino next month in Maryland.

Yet Cordish warns that the expansion of casino gambling can’t go on unchecked forever. A big problem is the attitude of politicians nationwide who view casinos as free money.

“I don’t know how we can control the politicians; they certainly don’t understand the word ‘oversaturation,'” Cordish said Thursday. “They think you can have casinos like Starbucks.”

If that attitude continues, Cordish said, “it’s going to implode on them.”

That sentiment was voiced repeatedly at The East Coast Gaming Congress, a major annual casino industry conference, held this year in the newly opened Revel casino resort in Atlantic City. The $2.4 billion Revel is being counted on to help turn around Atlantic City’s five-year slump. But several experts at the forum said the solution to Atlantic City’s woes is the closure of one or more of its 12 casinos.

“Here in Atlantic City, we have assets for sale that literally nobody wants to buy,” said Gary Loveman, president of Caesars Entertainment, which counts four Atlantic City gambling halls among its 56 casinos. “There is simply too much supply in Atlantic City. The supply doesn’t go away. That’s a very bad thing. The problem here? Nobody ever closes.”

During a panel of Wall Street experts, Andrew Zarnett, managing director of Deutsche Bank Securities, said Revel might hurt, rather than help, Atlantic City’s overall casino market.

“Everybody’s a loser; when you add supply to a market that’s not growing very much, everybody gets cannibalized,” he said. “We need some of this capacity to close and go away. I would have thought that would have happened two years ago, but the properties are still here.”

Zarnett said he doubts any Atlantic City casino will close until they see whether New Jersey will approve Internet gambling and throw the struggling properties a lifeline. He also predicted that New York will approve a casino in Manhattan within five years.

Not all the news from Atlantic City was bad, though: Figures released Thursday by state regulators showed the casinos saw a 17 percent increase in gross operating profit for the first quarter of this year, following a 26 percent increase in the fourth quarter of last year.

The expansion of casino gambling has continued rapidly over the last several years, nowhere more fiercely than in the Northeast. There is serious disagreement within the industry as to whether the market is oversaturated or whether there is room for further growth. But most agree it is tougher to do business in the Northeast casino market than it ever has been before.

The Cordish Co.’s Maryland Live!, opening on June 6, will have 4,750 slot machines and cost $500 million.

“Thanks, David, for bringing 4,700 new slots to this market,” joked Don Marrandino, eastern division president of Caesars Entertainment. “That’s great news

for us.”

Cordish said the casino market needs the stability of knowing how many operators there are going to be, particularly with the 67 percent tax Maryland imposes on its casinos.

He said the state will have four casinos with more slot machines “than anything in Las Vegas. It’s an experiment that nobody knows how it’s going to turn out. A contest I don’t want to win is Maryland will probably be the king of the oversaturated market with the highest tax rate. It’s a real problem.

“What happens when you put mega-casinos close together is they generally not only oversaturate the market, they don’t work,” Cordish said. In the Washington, D.C., region soon, he added, “you’ll have four of the largest casinos in the country operating within a short drive of one another.”

But new casinos keep coming. Timothy Wilmott, president of Penn National Gaming, which has 26 casinos nationwide, said the company is interested in new markets in Massachusetts and Texas and is opening new casinos in Ohio soon.

And Virginia McDowell, CEO of St. Louis-based Isle of Capri Casinos, which owns 15 casinos in six states, said there are excellent new markets that don’t yet have casino gambling. The company plans two more, including one in Pittsburgh. She listed Massachusetts, Texas and Florida as prime spots for new casinos and said even traditionally hostile states such as Georgia, the Carolinas and Kentucky are considering legalizing them.

“Frankly, some of these opportunities are the best untapped gambling markets in the United States,” she said. But, McDowell said, “the industry lets its best growth opportunities die on the vine, choosing instead to fight each other.”

Mitchell Etess, CEO of Mohegan Sun in Connecticut, said the state’s two Native American-run casinos once had few competitors, but the Northeast casino market is becoming more crowded.

And part of that will be due to Mohegan Sun, which is also seeking a casino license in Massachusetts.

 

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Ray Paulick: Gretna Racing’s Bizarre Florida Barrel Racing Scheme Like Woody Allen’s Movie “Bananas”–“A travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham”

section ray

Ray’s Paddock

Bizarre Florida Barrel Racing Scheme Rolls Along

by Ray Paulick | 05.09.2012 | 7:53am

If Fielding Mellish, the hapless revolutionary from the 1971 Woody Allen movie “Bananas,” were representing Florida horsemen in trying to stop the barrel-racing-for-slots scheme from proceeding any further, he’d have the perfect description of what has taken place so far: “It’s a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.”

Exactly.

Beyond that, it’s a classic example of log-rolling politics in Tallahassee, Florida’s capital, where it’s not what you know but who you know. And in the case of the Gretna Racing LLC application to have pari-mutuel barrel racing in Gadsden County – a move that could spread to other parts of the state and permit these licensed “racetracks” to offer slot machines – one of its investors, lawyer-lobbyist Marc Dunbar, knows some very powerful people.

Dunbar’s law firm is listed by Florida Gov. Rick Scott’s chief of staff, Steve MacNamara, as a source of income as recently as 2010. Shortly after MacNamara joined Scott’s administration last July, he reportedly received an email from his old boss Dunbar complaining about the Division of Pari-Mutuel Wagering.

In September, Dunbar’s Gretna Racing application was filed with the DPMW, attempting to exploit a loophole in Florida’s gaming law that could permit a racetrack to be licensed without offering what most people traditionally think of as a horse race. Enter a handful of horses and riders, a couple of barrels, some pari-mutuel machines, and a local referendum to permit slot machines.

It’s Dunbar and partner David Romanik’s 21st century definition of pari-mutuel horse racing.

That same month, the powerful MacNamara wielded his clout at the Department of Business and Professional Regulation, which oversees the DPMW. Its director, Ken Lawson, called DPMW chief Milt Champion into a meeting and told him to step down from the job he’d held for the past five years.

“He told me Marc Dunbar is close with the governor’s chief of staff and they want me to resign, so I resigned,” the Miami Herald quoted Champion as saying.

Leon M. Biegalski was named director of the division, and the Gretna application was approved.

Champion told the Miami Herald as head of the Division of Pari-Mutuel Wagering he “would have strongly suggested we not approve it.”

Is this whole sequence of events an abuse of power? That’s not for me to say, but it certainly looks like a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.

It’s not over. Florida horsemen have gone to court to try and stop this bizarre scheme. Their case, in front of an administrative law judge, began in April and has been postponed until June. In the interim, the Miami Herald has uncovered the relationship between Gov. Scott’s chief of staff and one of Gretna Racing’s partners, and his possible influence in replacing the director of the Division of Pari-Mutuel.

Let’s hope the judge isn’t as friendly with Steve MacNamara as Marc Dunbar is.

 

To read the complete Miami Herald story by Mary Ellen Klas, click here or go directly to the Miami Herald story Web page here:  http://www.miamiherald.com/2012/05/05/2785490/scotts-powerful-chief-of-staff.html#storylink=misearch

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About Ray Paulick:   For 15 years, Ray Paulick was a leading industry voice as the editor in chief of the Kentucky-based magazine, The Blood-Horse, and his weekly “What’s Going on Here” commentary was a “must read” for people throughout the Thoroughbred racing and breeding world.  This highly respected journalist is now the Publisher of the Paulick Report www.paulickreport.com, which is known nationally and internationally as the Thoroughbred industry’s independent voice for news, analysis and commentary.

Florida’s Bizarre Approval of “Pari-Mutuel Barrel Racing”: The Miami Herald’s Mary Ellen Klas Explores How the Path Was Laid After Florida Pari-Mutuel Regulator Ousted At Gretna Racing Owner/Lobbyist’s Behest

“Pari-Mutuel Barrel Racing” Approved Shortly After Florida Regulator Ousted At Gretna Racing Owner/Lobbyist’s Behest

Published Sunday, May 6, 2012, the investigative news article below by The Miami Herald’s Mary Ellen Klas explains how the path was laid for the improbable 2011 approval of “pari-mutuel barrel racing,” which has cost both the State of Florida horse racing industry jobs and state tax revenue, and is now resulting in attempts to expand gambling throughout the state.

Excerpt from The Miami Herald, Sunday, May 6—The complete article is reprinted below:

(Then-Florida Division of Pari-Mutuel Wagering Director Milton) Champion said he, too, also was asked to resign.

In an email to MacNamara in August, Marc Dunbar, a lawyer and part-owner of a horse track in Gadsden County, complained about the division’s staff and hoped MacNamara could get them into shape. MacNamara had worked together at Dunbar’s law firm and listed the firm as a source of income on his financial disclosure forms as recently as 2010.

In September, Dunbar and his partners asked the division for permission to run rodeo-style barrel racing as a parimutuel sport, instead of the quarter horse racing they had intended when they obtained the permit. Shortly afterwards, Champion said he was called into Department of Business and Professional Secretary Ken Lawson’s office. “He told me Marc Dunbar is close with the governor’s chief of staff and they want me to resign, so I resigned,’’ Champion said.

Champion now says that while “the law may not be clearly defined,’’ had he remained at the agency he “would have strongly suggested we not approve it.”

MacNamara said Champion was asked to resign because his wife worked at the Seminole Hard Rock as head of surveillance. While the state does not regulate the tribe, it does regulate their competitors. But Champion said he had disclosed his wife’s job when he was hired to head the division five years ago and again when he was reappointed to the post when Scott came to office.

With Champion gone, the division then approved the barrel racing switch, a move which Dunbar and his partners hope will allow the track to get slot machines.

 
Posted on Sunday, May 6, 2012
As Gov. Scott’s gatekeeper exerts control, heads roll

By Mary Ellen Klas
Herald/Times Tallahassee Bureau

www.MiamiHerald.com

Steve MacNamara, Gov. Rick Scott’s chief of staff Steve MacNamara has officially become Tallahassee’s Wizard of Oz.

The lawyer-lobbyist turned university professor is the brass knuckles gatekeeper and omnipotent advisor to Gov. Rick Scott.

Since becoming the governor’s chief of staff last July, MacNamara has controlled access to the governor and his schedule, assumed authority over appointments and dictated press releases and policy memos. He has directed the governor’s message and reached into the bowels of agencies to remove people he doesn’t like and install favorites.

“No one gets in to see the Wizard. Not no one, no how,” reads the sign on the way into MacNamara’s office, an excerpt from the famous movie.

He played the same role as chief of staff for former House Speaker John Thrasher and for Senate President Mike Haridopolos, each time temporarily stepping aside from his teaching, law firm and lobbying work.

POSITIVE SIGNS

Now, nine months later, the governor’s relations with lawmakers have improved. Florida’s unemployment rate is down. Scott had a successful legislative session with a modest agenda and, while his approval ratings remain low, they are on the rise.

“I think he’s doing a great job,’’ Scott said.

“I don’t think there’s any question he’s made a difference for this governor,’’ said Thrasher, now a St. Augustine state senator.

Scott’s closest supporters and some Tea Party followers, however, say that the union between the newcomer governor and the wily insider is for them a Faustian bargain. Though they refuse to be quoted by name, several advisors to the governor — both inside and out of government — fear Scott is squandering his conservative credentials and his outsider brand by engaging in deal-making with special interests who have connections to MacNamara.

His critics call him Florida’s “shadow governor,” noting that agency contracts have been redirected, gambling allowed to expand, and a policy to privatize state prisons, which Scott didn’t focus on during his campaign, has become an administration priority.

“I voted for the outsider and he has hired the consummate insider and he is acting like an insider now,’’ said Henry Kelley of the Fort Walton Beach Tea Party. “It’s very disappointing.”

He complained that issues Scott campaigned on, like illegal immigration, have been shelved while prison privatization has emerged. “Was that the governor’s decision or was that MacNamara’s decision?”

What’s more, they worry MacNamara is running the government with an eye toward retaining influence and returning to lobbying when he leaves, as scheduled, later this year.

MacNamara, 59, has heard the rumors and denies planting the seeds for a return to lobbying. He had originally planned this fall to move to Montana, where he has a home in the mountains along a glacier fed river. But his wife, an anesthesiologist, has a job in Vermont and he plans to move there.

“I haven’t done that in the past and it’s not my M.O.,’’ he said, dismissing the thought that he would need to cash in on his Scott administration connections. But as a tenured professor, he said, he’s exempt from the two-year lobbying ban. “I could lobby anybody in state government.”

THE EXODUS

Since MacNamara joined the office, five agency heads Scott brought to Tallahassee have left. Scott’s general counsel and director of external affairs resigned. One of Scott’s longest-serving staffers, deputy communications director Amy Graham, is leaving to join the Mitt Romney campaign, and at least two others have told the Herald/Times they are on their way out.

“If I only had to work for the governor, it would be great,’’ said Jack Miles, former secretary of the Department of Management Services who resigned in March and blames clashes with MacNamara for his decision.

After a career in the private sector, most recently as a former senior director at CIGNA, the healthcare company, Miles agreed to accept Scott’s offer to manage the agency that handles the nuts and bolts of government — from multimillion dollar contracts, leases on state buildings to health insurance for state workers.

“The governor, on many occasions made it very clear: I hired you to run your agency. I won’t interfere,’’ Miles said. “That worked for a period of time, then changes started to happen in the governor’s office and that was no longer the case.”

In interviews with several current and former top advisors and agency heads, one pattern emerges: while each offered a plausible reason for leaving, most say working conditions under MacNamara contributed to their departure.

Others agency heads who have left their $140,000-a-year posts include Secretary of State Kurt Browning, who stepped down in January to run for Pasco County superintendent of schools, and Doug Darling, executive director of the newly created Department of Economic Opportunity.

PROMOTING FAVORITES

Darling resigned in January, four days after sending MacNamara a critical note complaining of excessive travel expenses from film commissioner Shari Kerrigan, whom MacNamara had recruited. He cited personal reasons for his resignation.

Frank Farmer resigned in March as surgeon general after leading an overhaul of the health department but clashing with lawmakers over a push to turn over public health duties to counties. He cited his wife’s treatment for breast cancer but later told The Daytona Beach News-Journal that a mammogram performed in December was negative. Scott called his resignation “an unfortunate surprise.”

Two others, Miles’ chief of staff, Brett Rayman, and Milt Champion, former director of the Division of Parimutuel Wagering, told the Herald/Times that they were asked to leave so that MacNamara could replace them.

Rayman, who served as a budget and policy official for three previous governors after a 23-year career in the U.S. Marine Corps, said he considers Scott “probably the best governor I’ve ever worked with.”

During Scott’s first few months in office, the staff had “complete interaction” with the governor, Rayman said, and “understood what their mission was.” Under MacNamara, however, “things have been completely disorganized.’’

“He has political favorites he’s trying to move around and I’m not sure the governor knows what MacNamara’s doing,’’ said Rayman, who now works for the Department of Financial Services, which is not under the governor.

Among Rayman’s frustrations: orders from MacNamara’s deputy, Marc Slager, to “hold off” on signing a contract with a company to use federal money to map broadband access in Florida.

Another company that had lost the contract, Connected Nation, began pushing for legislation to move management of the contract from the DMS to the Department of Economic Opportunity.

The move would have allowed for the bids to be reopened and for the company, and others, to get a second shot at the contract. DMS objected, warning the switch could cost the state federal grant funds. The company’s lobbyists included Lanny Wiles, the husband of Scott’s former campaign manager, and Al Cardenas, the former chairman of the Republican Party of Florida.

Slager said “they had already expressed their opinions and the facts” and didn’t want them advocating a position.

Champion said he, too, also was asked to resign.

In an email to MacNamara in August, Marc Dunbar, a lawyer and part-owner of a horse track in Gadsden County, complained about the division’s staff and hoped MacNamara could get them into shape. MacNamara had worked together at Dunbar’s law firm and listed the firm as a source of income on his financial disclosure forms as recently as 2010.

In September, Dunbar and his partners asked the division for permission to run rodeo-style barrel racing as a parimutuel sport, instead of the quarter horse racing they had intended when they obtained the permit. Shortly afterwards, Champion said he was called into Department of Business and Professional Secretary Ken Lawson’s office. “He told me Marc Dunbar is close with the governor’s chief of staff and they want me to resign, so I resigned,’’ Champion said.

Champion now says that while “the law may not be clearly defined,’’ had he remained at the agency he “would have strongly suggested we not approve it.”

MacNamara said Champion was asked to resign because his wife worked at the Seminole Hard Rock as head of surveillance. While the state does not regulate the tribe, it does regulate their competitors. But Champion said he had disclosed his wife’s job when he was hired to head the division five years ago and again when he was reappointed to the post when Scott came to office.

With Champion gone, the division then approved the barrel racing switch, a move which Dunbar and his partners hope will allow the track to get slot machines.

TOP SALARY

MacNamara, whose $189,000 is the highest in Scott’s administration, believes it’s important for the governor to have people in positions of power who can be trusted. “They’re not free agents,’’ he said. The policy positions “have to be in conformance with what the governor wants to do.”

When MacNamara moved to the governor’s office, he brought with him Chris Finkbeiner, Slager, and administrative assistant, Amy Bescaglia, from the Senate. MacNamara made Finkbeiner and Slager his deputy chiefs of staff, giving them the same role as two women deputy chiefs of staff already in the governor’s office, Jenn Ungru and Carrie O’Rourke but paying them considerably more.

Finkbeiner and Slager make $135,000. Ungru and O’Rourke make $100,000.

MacNamara’s first orchestrated ouster came with the removal of Department of Corrections Chief Ed Buss. The prisons chief had been lured to Florida from Indiana but, once here, became a vocal critics of a Senate-led effort to privatize 30 South Florida prisons.

The idea was an important one to MacNamara whose close friend, Jim Eaton, is the lead lobbyist for the Geo Group, one of the nation’s largest private prison companies which stands to make billions in state business if they win the privatization contracts.

When a circuit court judge ruled in September that the budget maneuver used to pass the prison plan in 2011 was unconstitutional, it invalidated the prison plan, MacNamara demanded Ungru “give me some options” so that if they win on appeal they could “move forward with all due speed and diligence” in pushing for the prison plan. The hearing on the appeal is set for June.
MacNamara dismisses the forced departures as routine and not out of the ordinary for a governor running the nation’s fourth-largest state.

“People lose jobs; people lose contracts,’’ he said. “It’s calibrating people more than anything else. It’s not controlling people.”
Tampa Bay Times senior writer Lucy Morgan contributed to this report.

© 2012 Miami Herald Media Company. All Rights Reserved.
http://www.miamiherald.com

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