Decoupling Approved. What’s Next?
As you know likely know by now, the sport of jai-alai has been decoupled in the State of Florida. The stunning news was finalized as the House approved in Wednesday afternoon, a day after the Senate had passed the measure.
Decoupling in the jai-alai pari-mutuel industry gives the owners the right to drop conducting the game in order to keep their more lucrative card games (poker and the designated-player games) going. The savings, in some cases, can save the permit holder millions of dollars a year.
Lets look into the what happened. When I posted a previous story a month ago, I gave the odds at 9-2 that decoupling won’t happen. There were several reasons for these odds, because for the past ten years or show, that had been the outcome.
Those 9-2 odds drastically changed in an opposite direction as several stunning announcements were made.
Strike 1
First, Florida Governor Ron DeSantis reached a 30-year deal with the Seminole Indians in a massive gambling bill that could make Florida the next gambling mecca in the United States. This announcement by DeSantis and the Tribe surprised everybody. He’s a smooth negotiator that others had failed at. Right now, the Tribe pays nothing in taxes to the State of Florida, as they successfully were able to stop making $350 million dollar payments three years ago. The courts agreed that by allowing the parimutuels to conduct the designated player games at the facilities was an infringement of the Tribe’s rights to be the sole operator of such card games. Getting a deal that would satisfy the Tribe, the parimutuels and the Florida legislature seemed impossible. Nobody was willing to budge for years. But along came the prospect of Sports Betting – a whole new “ball game” in gambling terms and opportunities.
DeSantis and others were able to come up with an agreement that was signed off my the Tribe and the pari-mutuels about two weeks before the 60-day legislative session was too end. Those short sessions always seemed to be an issue as the gambling issues like decoupling had been kicked down the road as more important things keep the House and Senate busy. But now, a gambling pack was in place. Signed, sealed and Delivered. A big Strike 1. Now is was a matter of needing the time to go over it.
Strike 2
Time was about to run out again, but another stunning announcement was made. Congress was going to be called back to their seats just 2 ½ weeks later for a Special Session to discuss solely the gambling issues. An event like that is rare, but in this case is was important. Billions of dollars’ worth important to the State. This deal was complicated and involved a lot of moving parts. Legislators needed to be educated on many things – all from the eyes of the Tribe and pari-mutuel viewpoints. And what’s in store to the State of Florida.
So instead of the issue of time running out in the regular session, a common experience, an entire new session – only to involve gambling issues – was coming the week of May 17th. A huge Strike 2. Now time and agreement was in place and only the legislators needed approval. The gambling issues were three things – getting an agreement approved that was already agreed upon by the Tribe and the pari-mutuels, the formation of a gambling commission; and the decoupling of jai-alai & harness racing – which pari-mutuel owners had been lobbying years for.
Strike 3
By Wednesday May 20th, it was all over. The Senate had approved the vote 38-1. The House approved it 97-17.
The Tribe gets run sports betting with hubs set up at parimutuels, along with the more lucrative mobile sports betting on cell phones and computers. In three years, they can apply for slots and roulette gambling on the phones. The sports betting will start October 15th but there are several issues with that. We will get into that shortly. The Tribe gets three more casinos to be operated on their property either in Hollywood (Florida) or Tampa. Those hotels would operate under a different name like Wynn or Bally. They also get “real” Roulette and Craps games (not only the electronic ones). The State will get $500 million a year in return.
Jai-alai can legally stop their games as of July 1st and continue all the other operations. So what is going to happen next?
Dania Jai-alai
Dania’s current season closes May 30th. As the last full court, full roster jai-alai court operating in America, this venue gathers the most interest. The new owners have obviously lost a lot of money on jai-alai since taking over a few years ago and remodeling the entire building. But they love jai-alai and the ability to offer something most the other casino’s and racino’s don’t have- live betting on a sport right in front of them. They also have a great relationship with Benny, who now may be our sole “lobbyist” to keep Dania open if he even has a say in it. It’s going to be a hard task. Money usually talks. There is also reportedly an agreement with the players union for another year and a half. It is unknown if there is an escape clause in it for decoupling, or a buyout clause. The owners could shut down with their last performance that Sunday afternoon on May 30th or keep it going later in the summer when the next season is suppose to start. No one is talking right now, so the outcome will be known later. Chances are we won’t hear anything for a while, making Memorial Day weekend a must trip to Dania later this month.
Chance of jai-alai returning = 35%
Miami Jai-alai
The “Yankee Stadium” of jai-alai has been open since 1924 and can now open their Cirque du Soleil without jai-alai in the way. They almost made it to 100 years. When I went to “opening day” earlier this season, there were 3 people in the stands. Jesus, Jeden and Ron Ron. There were a lot of great memories there over the decades and the place has been in disarray for many years now.
Chance of jai-alai returning = 0.0001%
Ft. Piece, Ocala, Orlando Jai-alai
Ocala and Orlando had been running the two-man show for years now, so there is no question what is going to happen there. Orlando was supposed to be redeveloped into a housing complex, but COVID apparently put a hold on that. Ft. Pierce is holding the two-man games right now, and that will be the end of Ft. Piece jai-alai when their season ends later this month
Chance of any of the 3 returning = 0.00000001 %
Calder Jai-alai
Three years ago, they got out of the horse racing business in exchange for jai-alai. Thoroughbred racing was NOT decoupled. The owners are Churchill Downs and now can shut down the jai-alai operations legally July 1st.. Their current season is scheduled to end August 29th. The building will likely be converted into some kind of entertainment center for live music or perhaps a sportsbook bar. That was always in the plans when decoupling happened.
Chance of jai-alai returning = 0.00000001%
Magic City Jai-alai
They converted from dog racing to jai-alai four years ago to likely to save money and open up some prime real estate. Their music venue inside was converted into a short court, clear glass fronton which is operating to this day. Dog racing in Florida was decoupled by an amendment in 2018, but they are still operating under the dog racing permit and can shut down at any time. But Scott Savin and company like jai-alai and it’s not likely going anywhere anytime soon. They did say this was a 3-5 project and we are in year 4. Plus they have added the one-on-one partidos with $100K in prize money to the players. This decoupling measure has absolutely no effect on them as far as staying open or not. I’m sure plenty of players from the other fronton’s have been contacting Stu and Arra. If they are the only game left in town, the handles would likely improve.
Edgewater Jai-alai
Magic City worked out an agreement with the City of Miami to open another fronton in downtown Miami recently (see my blog from a couple months ago). It’s been quiet ever since. Another fronton just a few miles away was in the plans, but no info has been released yet. Now they would have many more players to put on their roster.
Pompano Jai-alai
There were big plans to convert their harness racing to jai-alai – again to save money and open up real estate in what is to be a multibillion project on the site. But their version of horse racing was decoupled also, so those plans are out the door. It’s too bad, the fronton was going to be a good one. One last year of horse racing there and that is it. They are the busiest parimutuel facility in the state in casino revenue from slots, etc. So the Jai-alai plans are likely gone. Thousands of jobs will be lost in the horse breeding industry that used Pompano as their sole source. The House regulatory group had voted to keep it alive but the Senate convinced them to decouple it on Wednesday. Only thoroughbred racing in Gulfstream and Tampa Bay Downs are required to stay open in the parimutuel industry in order to keep the other casino games going.
The Legal Issues may be the only savior
So, is jai-alai over? Its up to the owners to decide. And now the court system. There are lawsuits coming. And the Federal Government has a say in the deal signed with the Tribe that could very well throw out the Sports Betting aspect of the agreement.
The Compact or deal with the Tribe is subject to approval from U.S. Department of the Interior. They have 45 days to sign off on it after the governor signs the bill. This falls under the Federal Indian Gaming Regulatory Act. Offering mobile sports betting or operating the “hub and spoke model” where the bets are placed at parimutuels (and other sites) via the Internet with the servers on tribal property. California had this problem and it could be Florida’s too. Supporters say if the server is on tribal grounds that is processing the bet, then the bet is only subject to the laws on the reservation. Either way, the Compact will remain in place with or without sports betting. The Tribe would only have to pay $400 million a year to the State of Florida vs. $500 million.
That is not the only obstacle they will face. The other one is a lawsuit in the works by John Sowinski of “No Casinos”. They got the Amendment 3 on the ballot and passed with 71% of the vote in 2018 that prevents any expansion of gambling unless through a voter referendum and get 60% of the vote. However, that amendment excludes the Tribe but the deal now calls on the Tribe to work with parimutuels and others to offer sports betting via the computer “airwaves” and allows for more huge casinos to open. There is also a question if “Sports betting” is a common casino game as the amendment was worded. Sports betting is not a common game and is never mentioned in the poorly worded amendment.
How can jai-alai be saved? Sowinski has said that the decompiling of game rooms from parimutuels constitutes an increase in Class III gambling in Florida and that it is part of the Compact. I’m not sure what that means, since they are shutting it down and not increasing gambling in this case.
This is going to drag on for a long time, and with the courts backed up since March of last year due to COVID-19, it may be awhile to everything is ironed out.
Could a pending lawsuit put everything on hold? Could jai-alai be saved? We shall see.
