|YOU CAN BET ON IT|
|Written by Erik Bojnansky - BT Senior Writer|
With billions of dollars at stake, Genting and other casino operators will never ever give up
More than a year ago, executives from the Genting Group, a Malaysian-based multinational company headed by K.T. Lim that operates casinos in five countries, announced their plans to build a gigantic, $3 billion resort casino complex where the Miami Herald building now stands.
Designed by Arquitectonica, Resorts World Miami was to include 5200 hotel rooms, more than 1000 condominium units, 50-plus restaurants and bars, a rooftop lagoon, a sandy beach, and 700,000 square feet of convention space, and gambling areas -- large enough to hold up to 8500 slot machines and other Las Vegas-style games.
Resorts World Miami is now in limbo, but it’s far from dead. In fact, Genting has already spent at least $503 million on the project, and may spend millions more even before major construction commences.
“The reason Genting is concentrating on Florida is two-fold,” says John Kindt, a business professor at the University of Illinois and a fierce critic of casino gambling. “One, they think they can do it, that Florida will succumb to the onslaught of money they’re bringing to the table. The other reason is that Florida is a plum to be picked, with billions of dollars in tourist money that Genting can take out of the state forever.”
The vast majority of money Genting has spent so far, about $500 million, according to media reports, was used to buy 30 acres of land on both sides of Biscayne Boulevard near the Adrienne Arsht Center. Those properties include 14 acres of land, the Herald building, and the historic Boulevard Shops that Genting bought from McClatchy Newspapers for $236 million in May of last year.
Genting also purchased the largely vacant Omni Mall, its parking garage, and the adjoining 527-room Hilton Hotel. Price tag: around $215 million.
In an effort to legalize gambling at its future resort, Genting has also spent more than $1 million lobbying the state legislature and governor, according to state records. Among the 32 lobbyists Genting hired in Tallahassee are former congressman Lincoln Diaz-Balart and school board member Carlos Curbelo. (Curbelo withdrew as a lobbyist this past June. Diaz-Balart did so in August.)
Another $2 million-plus was invested in campaign contributions to statewide committees, political parties, and legislative candidates.
In Miami-Dade County, Genting funneled $63,000 to countywide candidates and local political groups, including $10,000 to a committee set up by county Mayor Carlos Gimenez; $6000 to four incumbent county commissioners who faced challengers in the August primary election; and $2500 to five county judge candidates, four of whom challenged incumbents that same month.
Lobbying against the resort concept was an alliance of religious groups, restaurant and hotel business groups, Disney World, and existing gambling interests ranging from racinos such as Magic City Casino and Gulfstream Park to the Seminoles and Miccosukee. These interests have also spent millions on lobbying and campaign contributions.
A month after the bill died, Genting distributed a press release stating its intention to build a luxury resort on the five-acre waterfront site where the Herald building now stands, including an 800-foot-long promenade along the bay.
Those plans have now been challenged. On October 22, Miami’s Historic and Environmental Preservation Board (HEP Board) narrowly approved a resolution to study whether the 770,000-square-foot Miami Herald building, constructed in 1963, is worthy of being protected as an historic structure.
Dade Heritage Trust, a nonprofit preservation group, is seeking the historic designation, arguing that the building and those who worked inside it had a huge impact on the region. The group also argues that the building can be adapted to suit Genting’s needs.
Genting’s architects, including Arquitectonica principal Bernardo Fort-Brescia and former Dade Heritage Trust president Richard Heisenbottle, argue that the building is ugly and only worthy of the wrecking ball. One of Genting’s local attorneys, Vicky Garcia-Toledo, insists that Genting would never have purchased the property if they’d believed the city might designate it as historic and prevent its demolition.
Once the historic preservation staff prepares the report, the HEP Board will officially rule. (Board decisions can be appealed to the city commission.) When will that be? Difficult to say.
On November 6, the HEP Board will get a report on when the big report might be ready. William Thompson, Resorts World Miami’s senior vice president of development, nervously whispered into the ear of Garcia-Toledo as she tried to get a date certain so her client could prepare. The HEP Board refused to give her one. The report, its members argued, must be a detailed one, and so staff shouldn’t be forced to rush it.
Garcia-Toledo called the ruling a “tremendous burden” for Genting and a waste of taxpayer money. “What they’ve decided is that even though it doesn’t meet the criteria, they need more information, and they’re going on to the next step,” she told the BT after the meeting.
Genting’s Thompson would not discuss the board’s decision, which is in keeping with the company’s new philosophy. Once chatty with its promises to bring rich “whales” from Asia to Miami and create thousands of jobs, Genting now speaks sparingly to the press. The only comment to the BT was this e-mailed statement: “Over the past months, we have continued to meet with many stakeholders to evaluate the needs of the state and local community. Resorts World Miami’s efforts are future-focused and we continue to keep an open mind as plans are mapped out moving forward. Our commitment to Florida remains as we work to be a productive and valued corporate citizen in the state for many years to come.”
Company silence will be difficult to maintain if Genting pursues a statewide referendum on a Florida constitutional amendment in 2014 or 2016 that would ask voters if county residents, or just those living in Miami-Dade County, should be allowed to decide if they want casinos.
So far Genting has poured $936,500 into its own political action committee called New Jobs and Revenues for Florida (NJRF), which is currently studying ballot language for a statewide referendum. Such a task won’t be easy. Without the help of the legislature, NJRF will need to gather 700,000 signatures to put a referendum on the ballot. To get that referendum passed, state law now requires approval by 60 percent of Florida voters.
To assist in their quest, NJRF has also hired two former associates of Gov. Rick Scott: former spokesman Brian Hughes and pollster Tony Fabrizio.
Another option for Genting: Persuade state legislators to legalize a limited number of new casinos in Florida, or in Miami-Dade County alone. Or persuade the legislature to let Miami-Dade residents decide if they want casino gambling. Perhaps in an effort to gain Tallahassee’s cooperation (or elect people who will see things their way), Genting has spent $133,000 on contributions to state political campaigns since July. “They have enough money to do one track, two tracks or even a three track approach,” Kindt says.
If money is any clue, however, the campaign contributions might be a hedge. “They’re giving the legislators another chance to pass something,” reasons Steve Geller, a former state senator and current lobbyist who is also representing a company interested in building a casino in South Florida -- whom he declines to name. “If not, they’ll fund a petition for a constitutional amendment.”
But Peter Zalewski, a real estate analyst and founder of Condo Vultures, doesn’t think Genting has a lot of time. “There are so many developers who are coming forward at a rapid pace that it could be a situation that, the longer you wait, the more likely you’ll miss this new development wave,” he says. When that happens, developing anything at that site will be less profitable.
Genting may also risk having to deal with more competitors. Three Las Vegas-based casino companies already have lobbyists in Tallahassee: Las Vegas Sands, MGM Grand, and Caesars Entertainment.
Of the three, Las Vegas Sands may be Genting’s most potent adversary. The company already has three lobbying firms representing its interests in Tallahassee and one in Miami, the Coral Gables-based Barreto Group, headed by longtime county insider Rodney Barreto.
According to media reports, Las Vegas Sands is looking at two possible sites for its casino: Watson Island, where a stalled mega-yacht marina and the financially troubled Jungle Island are located; and Miami Worldcenter, a 25-acre area bounded by NE 2nd Avenue and N. Miami Avenue (east-west), and NE 6th Street and NE 11th Street (south-north).
Last year representatives from both Las Vegas Sands and Miami Worldcenter confirmed they were talking, but no agreement was reached. Then last month one of the main investors in Miami Worldcenter, Art Falcone, bought the adjacent four-acre site of the former Miami Arena for $35 million.
Falcone did not return phone calls from the BT, but Geller, whose client list includes Falcone, describes Miami Worldcenter as a “superb location” for a casino resort. Not that he knows what Falcone intends to do with the land. “All I know is what I read in the papers,” Geller professes.
In fact, Las Vegas Sands expressed an interest in building a casino somewhere in Florida long before Genting arrived on the scene. Andy Abboud, Las Vegas Sands’
Sheldon Adelson, CEO of Las Vas Sands, has also criticized Genting’s decision to back a proposal allowing three mega-casinos in the state. Florida’s market, Adelson asserts, can only handle one.
Adelson has gained notoriety for pumping millions of dollars into this year’s presidential campaigns, first to Newt Gingrich, then to Mitt Romney. His main lobbyist in Tallahassee, Nick Iarossi, told Miami Today last month they favor stopping all gambling efforts until statewide hearings on the issue take place.
Such hearings are being proposed by state Sen. Don Gaetz of Niceville and state Rep. Will Weatherford. If re-elected, as expected, they may get their way. Gaetz is slated to become the next Senate president and Weatherford the next speaker of the House.
“The legislature would prefer to measure twice and cut once,” says Rep. Matt Gaetz, Senator Gaetz’s son. “If it’s possible, we’d like to have time to collect data and really study the lasting impacts of gambling.”
The Bogdanoff-Fresen bill died last year in large part because of opposition from most Miami-Dade legislators, who were uneasy about expanding gambling here. “Genting had high hopes that they would have casino licenses issued in Miami-Dade County, but the driving force behind blocking the issuance of these licenses has been the Miami-Dade legislative delegation,” Matt Gaetz notes.
Genting’s arrogant attitude didn’t help matters, says Bob Jarvis, a professor of casino law at Nova Southeastern University. “Genting pissed off a lot of people and made a very bad impression in Tallahassee,” Jarvis tells the BT. “They came in and acted like they owned the place.”
Indeed, given that Genting didn’t even have its gaming license yet, its initial publicity campaign and over-the-top promises were very unusual. “Normally the way the gambling guys operate is that they hold their cards close to their vest,” observes John Sowinski, president of No Casinos, Inc. and an Orlando political consultant. “When Genting came on the scene, they made a big splash and released those grandiose drawings.” While the splash created some positive energy at first, Genting soon had to deal with plenty of criticism when people began looking at the details, Sowinski says.
Professor Kindt of the University of Illinois believes the stumble was the result of cultural differences between the United States and Asia. The big publicity approach for future casinos “works extremely well in the Asian-Pacific area,” he says. “That is Genting’s home base, so that might have influenced their strategy.”
Aside from being less specific regarding details -- a strategy Genting now appears to be following -- the company will need to “put together the broadest coalition” in order to get a 60-percent victory in a statewide vote, suggests Steve Geller. A referendum that paves the way for a resort casino in South Florida, but forever bans gaming elsewhere in the state might appeal to voters living in north Florida’s Bible Belt, Geller says.
Thus far, however, the only broad coalition that seems to be forming is the one opposing Genting. Sowinski, for example, sees casinos as a cancerous growth that metastasizes every time a new gambling venue is allowed to open.
Even gambling proponents like Izzy Havenick, vice president of Magic City Casino (formerly Flagler Greyhound Track), have fought Genting. Havenick won’t accept any legislation that gives destination resorts an unfair advantage over pari-mutuels like Magic City. “Everyone should be treated the same,” Havenick insists.
Another arch critic of Genting also doesn’t appear to be budging: Disney World, a company that has contributed more than $2 million to campaigns since 2011. “We oppose the expansion of casino gambling in our state for many reasons, including the fact that it is inconsistent with Florida’s brand as a family-friendly destination and with efforts to diversify Florida’s economy,” a Disney spokesman says in an e-mail to the BT.
“The last time we chased somebody away from here it was Walt Disney; we ran him out of town in the late 60s and early 70s,” says Fred Joseph, a board member of the Grand homeowners association and a real estate broker. As far as Joseph is concerned, even Genting’s controversial designs by Arquitectonica would be preferable to an “ugly box” blocking access to the bay. “It has never been neighborhood friendly,” Joseph says.
Joseph’s attitude is not shared by the Venetian Causeway Neighborhood Alliance, which approved a resolution unanimously opposing Resorts World Miami last year. For one thing, the group’s members are against the further expansion of gambling in Florida, explains Jack Hartog, president of the Alliance. For another, they felt that the project was just too big. “The size and scope of the Genting project was so huge the concern was that no matter how they try to mitigate the effects on traffic, it will have an adverse effect,” Hartog says.
The Alliance has yet to take any position on the Miami Herald building, Hartog adds, nor has it been presented with any revised plans to judge.
Though it might seem counterintuitive, Genting might be able to count other casino operators, including Las Vegas Sands, as their allies -- if only temporarily, says Jarvis of Nova Southeastern University. He’s confident they are probably helping each other even now, despite the rhetoric of Las Vegas Sands executives. “I have no doubt they’re helping; it’s in their interest,” Jarvis says. “They’ll try to open up the market first, and once the market is open, then they’ll become competitors.”
Still, Jarvis doesn’t expect resort casinos to be legalized for at least the next two years. There are too many pitfalls for any legislators to support it, especially outside of South Florida. “If you’re a north Florida legislator and you make any kind of deal expanding gambling, you’ve made a deal with the devil,” he says. “In central Florida, if you allow gambling, Disney will make sure you won’t win re-election.”
But Jarvis does see some possibility of legalized casinos -- in the comfort of your own home.
The U.S. Department of Justice issued an opinion late last year that allows states to license online gambling, such as poker, so long as the sites have nothing to do with sports betting. Jarvis asserts that state officials, desperate to raise revenue, are already trying to figure out a way to issue licenses for online gaming operations in Florida. He suspects north Florida politicians might be able to back it: “At least you won’t have casinos with their flashing neon lights coming into your neighborhood.”
Jarvis also believes that with the low overhead of online gaming, and the convenience for the consumer, old-fashioned brick-and-motor casinos might “go the way of the Dodo bird.”
With the Dodo factor in mind, might Genting consider yet another possibility: Giving up?
Grant Stern, president of Morningside Mortgage, says if Genting were to build something similar to the Epic Hotel and Residences in downtown Miami, it could make a fortune even without a casino. “It’s on the water, it’s convenient to mass transit, it’s in an area where people want to live, work, and play,” Stern notes.
Professor Kindt, however, doubts that Genting will ever give up on building a casino along the Biscayne Corridor. If Genting ever announces such a surrender, Kindt warns that it’ll likely be a “red herring,” that whatever project Genting builds, it will be designed with the expectation that Genting’s casino goal eventually will be realized.
Says Kindt: “They’ll put in all kinds of electrical sockets in anticipation of hooking up slot machines.”
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