Pay no attention to the over-budget, behind-schedule megaresort in the background.
Six casinos at $2 billion apiece. No joking, that’s what a Sheldon Adelson flunky is proposing in Florida. (I guess the white-out of Atlantic City isn’t the only snow job on the East Coast.) Oh, and a 10% tax rate … far less than what existing operators are paying.
Legislators, dazzled by state-generated projections of as much as $2.3 billion in licensing fees, are apparently eating this all up. Imagine the black laughter Adelson spokesman Andy Abboud would get from the Nevada Legislature if he used the phrase “long-term, stable revenue for the state” with a straight face up in Carson City. One can’t blame Las Vegas Sands, though, for trying to sell this preposterous overreach, considering that Florida solons sound like they just fell off the turnip truck.
Had they done their homework, they might have asked a few sharp questions, starting with my Mom’s favorite: “Using what for money?” Sands’ liquidity issues — partially alleviated by an IPO in Macao — appear to have escaped their notice. They might also wonder at how Sands will build a half-dozen casinos in Florida alone when it currently has a pair of unfinished hotels in Macao, the incomplete Sands Bethlehem, $5.5 billion Marina Bay Sands is running a year behind schedule — and grotesquely over budget — in Singapore and there’s no timeline for resumption of the abortive St(ump) Regis condo tower on the Las Vegas Strip.
Is there any economic indicator to date that Florida will support one Strip-sized megaresort, let alone six? Quite the contrary (although one economist vehemently disagrees). And, given Sands’ cheerful indifference to budgets, schedules and market conditions, the notion that it could bring in even one casino on time and budget inspires incredulity. Also, if the state is going to be protecting Adelson from competition, why should he enjoy a preferential tax rate? If he wants the state to gift-wrap the Florida market for him, he should be willing to pay — at a premium rate.
While the time may have arrived for Florida to experiment with a Class III megaresort or two, lawmakers should turn their ears from Adelson’s seductive croon. Entrusting casino development in Florida to Sands isn’t a role of the dice; it’s more like playing Russian roulette with multiple bullets.
Slowly, Vegas style gambling seems to be spreading everywhere that can support it and I don’t think Adelson or Florida is crazy — although 6 mega casinos is a stretch. Florida has a lot of appeal to international travelers and the weather is good, more of a year round destination than Southern Nevada. The built in market of local elderly folks is another advantage for the Florida. I don’t think it will happen in the next five years but in the medium term — if Nevada can absorb a eight billion dollar project like City Center, I’d bet more than even money that Miami and Tampa could absorb a two billion Venetian-like project. It would be a huge blow to Atlantic City and a meaningful blow to Las Vegas. I think there are a lot of international (and domestic) travelers who would skip Las Vegas if they thought they could combine the Vegas experience with the natural advantages of Florida.
Nothing will happen this year, but LVS and perhaps Wynn will lay the groundwork for the future. Miami is the financial capital of Latin America, and both Wynn and LVS could do huge international business if they build closer to Miami than Fort Lauderdale.
However, it’s interesting that LVS is already dictating what the tax rate would be and how many competitors.
As for this year, I expect a Compact with the Seminoles to be approved in some form which will then let them start an expansion at Coconut Creek (but I doubt it will be a 1,500 room hotel) anb build additional rooms and casinos space in Hollywood and Tampa.
I agree with both of the comments above by Howard Park and detroit1051. Another big advantage Miami has over Las Vegas is that approximately 77% of the people who live in the United States live in the eastern and central time zones. Both of these time zones are closer to Miami than Las Vegas and the way all the airlines now are charging more for pillows, blankets, etc. people are going to start driving more instead of flying and this will hurt Las Vegas in the long run.
Paul – Interesting comment about people driving instead of flying to Florida…
Maybe the East coast would be a good route for a “Gamblers Special” TRAIN to Miami if/when enough casino-hotels are built. Maybe it could be tied in to the existing Auto Train?
One traveler’s review:
http://www.johnnyjet.com/folder/archive/BobRavitzCarTrain2007.html