Florida Slots see slump, while Gulfstream gains 8/27/09

You can say what you want about a parent company going bankrupt and poor publicity from a 2-year-old state investigation of out-of-control employees, but you also gotta say this: Of the three Broward County parimutuels with slot machines, only Gulfstream Casino and Racing can report gains from last year.

The state's July slot figures are out, and they support Gulfstream's argument that they're gaining ground:

Pari-mutuels have much riding on gambling negotiations 8/1/09

TALLAHASSEE - They're an invisible force in the high-stakes Seminole gambling talks, but they're the group with perhaps the most on the line: the pari-mutuel gambling industry, which has deep roots in South Florida.

The reason: Legislators tied key concessions to keep Florida's longtime gambling industry afloat to a final deal with the tribe.

After heavily lobbying the Legislature, well-connected gambling interests won lower taxes, high-stakes poker and other potentially lucrative concessions.

Industry experts say those provisions could be a lifeline to their struggling industry, but they don't take effect unless the Seminoles agree to a so-called gambling compact by Aug. 31.

At stake are not only horse tracks, greyhound racing joints and jai-alai frontons that dot the South Florida landscape, but jobs and businesses that rely on Florida's vast gambling economy. That includes a billion-dollar horse industry.

"Obviously, (the gambling proposal) is a huge windfall for us and the pari-mutuel industry," said Tim Ritvo, who trains thoroughbred horses at his stable in Davie. His business has declined sharply in recent years, and he's cut his operation from 50 employees down to 12.

The lower tax "may make the difference for some pari-mutuels surviving or not," he added. "It's pretty much up to the Indians."

With the clock ticking, the chances of getting a deal are iffy, if not downright bleak.

The tribe wants major changes to terms the Legislature outlined in May. Seminole lawyers are arguing to lower the $150 million annual payments and to keep all its blackjack tables open. Under the Legislature's proposal, the tribe would keep blackjack at Hard Rock casinos in Broward County and Tampa, but would have to close out table games at a resort near Naples.

Rep. Bill Galvano, the Legislature's leading figure on Seminole gambling, said Friday legislators are done negotiating. "The Legislature has done its job," said Galvano, R-Bradenton.

For pari-mutuel gambling interests, it means an awkward wait: Their fate will be decided by the same competitor – the Seminole gambling empire with seven casinos statewide – that's been siphoning away customers for years.

"We don't have any impact on the negotiations," said Dan Adkins, who runs Mardi Gras Racing in Hallandale Beach. "We don't have a seat at the table. We don't have anyone who's asked our opinion, to be honest.

"Would I love to be a fly on the wall? Yeah."

Pari-mutuel profits are in steep decline, thanks to tribal competition and the recession. Summer revenues are down more than 10 percent at Florida's 27 pari-mutuel facilities, according to weekly reports filed with the state. South Florida sites are faring even worse.

The gambling legislation approved in May promises some relief.

The tax rate on voter-approved slot machines in Broward and Miami-Dade counties would be lowered, from 50 percent to 35 percent. That cut would allow gambling spots to increase racing purses and pour more money into advertising and capital improvements, owners said.

The facilities also won authorization to expand their fastest-growing moneymaker: poker. Card rooms would get no-limit poker games, rather than the current $5 betting limits.

Legislators tucked in other concessions, too. Horse tracks could run thoroughbred races at night, an increasingly popular form of racing. The Palm Beach Kennel Club would open a second poker room in the county. And the historic Hialeah race track would be able to reopen, with poker and eventually slots.

But none of that happens unless the governor and the Seminole tribe beat the Aug. 31 deadline to sign a deal.

Top gambling lobbyists say if the tribe balks, they'll turn to the Republican-run, gambling-averse Legislature to revisit the tax and poker issues next year.

"Nothing that the Legislature gave me was a huge expansion of gambling or would have triggered a backlash by voters," noted lobbyist Brian Ballard, who represents the Palm Beach Kennel Club. "I have no fear of going back next year to the Legislature."

Not just casinos are awaiting the outcome. Florida's horse industry also depends on casinos profits, which subsidize higher purses. Thoroughbred owners say the only way the industry will survive is if South Florida gambling operators get lower taxes to compete on a more equal footing with tribal casinos.

"The entire future of horse racing in Florida relies on the (Seminole) compact, no question," said Marc Dunbar, lobbyist for Gulfstream Park, a top winter horse racing destination. by Josh Hafenbrack

Gulfstream Park Owes 144,000 in back taxes after Slot Scam 6/22/09

BY MARY ELLEN KLAS
Herald/Times Tallahassee Bureau

TALLAHASSEE -- A ring of employees and a supervisor at Gulfstream Park casino manipulated computer software in the summer of 2007 to steal nearly $290,000 in slot machine winnings by using cards that allowed them to play for free, according to a state investigation.

Gulfstream, in Hallandale Beach, immediately fired six of the eight employees, and the other two were cleared. One employee was convicted of cheating and organized fraud, and a casino patron was convicted of petty theft. State gambling regulators put the six on a watch list ``to potentially prohibit'' them from obtaining licenses to work at casinos in the future.

The Florida Department of Law Enforcement, which concluded its investigation in June, reported that Gulfstream owes the state $144,000 in back taxes because of the fraudulent play and could face other fines, according to documents obtained by The Miami Herald and St. Petersburg Times.

But two years after the fraud was discovered, the Department of Business and Professional Regulation -- the state agency charged with regulating casinos -- has not concluded its inquiry and has not taken any administrative action against Gulfstream.

On Tuesday, agency officials were not aware that FDLE had concluded that Gulfstream may owe back taxes or that it had closed the case after making two arrests.

``The [FDLE] investigation is closed but the [DBPR] case is still open,'' said Scott Ross, deputy director of DBPR. ``At this point we're determining what the next course of action is . . . We're more focused on getting it right than getting it fast.''

With the state on the verge of expanding casino gambling once again -- by increasing casino hours, lowering the tax rate and loosening other restrictions -- DBPR's handling of what it says is the biggest slots violation case in its history has raised issues about its oversight of gambling in Florida.

A review of agency files shows that while FDLE conducted the criminal investigation, DBPR handled the probe into Gulfstream's operations. DBPR received a final report from its private investigator in August 2008 but has yet to act on the conclusions or recommendations.

Gulfstream attorney Marc Dunbar said the agency failed to give him a copy of the report until a casino competitor asked for the document last week. Dunbar acknowledged, however, that he knew of the contents of the report and said it contained ``major flaws.''

``I accept none of the documents as being accurate,'' he said.

Ross admitted that when a lawyer for Gulfstream competitor Mardi Gras Race Track made a public records request for the investigative report, the agency fumbled, failing to redact proprietary information, and had to ask for the documents back.

``This is the first investigation of its kind. To say there was a standard procedure in place wouldn't be accurate,'' Ross said.

A day after that incident, the head of DBPR's Division of Parimutuel Wagering, David J. Roberts, resigned abruptly with a letter on Ross' stationery. Roberts and Ross say the resignation was unrelated to the agency's handling of the Gulfstream case.

``Dave resigned on his free will and accord and it doesn't have anything to do with this investigation,'' Ross said.

The case began in September 2007, when Gulfstream employees caught Sarfranz Janjua of Miami playing slots for free using a card that was only for use by employees to test the machines.

Investigators soon linked him to Danny Feliciano, a lead slots technician at Gulfstream, who gave Janjua the test cards to play and who shared in the winnings. Feliciano pleaded guilty to organized fraud and cheating in February and is serving 30 months of probation. Janjua pleaded guilty to petty theft in June 2008 and served a year of probation.

The casino caught another employee, host Steve Dorman, with 17 promotional cards -- free play cards usually issued as customer appreciation rewards or marketing tools. FDLE investigators also initially suspected the casino's vice president of gaming, Eric Lemerand, of circumventing internal controls to authorize the fraudulent free play cards. Both were suspended from their jobs and Lemerand was banned from the property for a year, but neither were charged.

Neither Dorman nor Lemerand could be reached Tuesday.

During the investigation, six of the eight employees also admitted to cocaine use -- two while on the job -- but no related charges were filed.

Unsure of the scope of the employee theft, DBPR hired a Las Vegas-based consultant, John Goetz of BMM Compliance Field Services, to examine Gulfstream's software to analyze the use of test cards and promotion cards between July 1 and October 1, 2007. He was paid $95,000.

He found that many test cards, normally worth about $5 of free play, had been loaded with hundreds of dollars worth of play at a time, and over three months one of them showed transactions totaling $10,000. Promotional cards, which Gulfstream rules say can't be worth more than $500, were loaded with as much as $9,000 over the three month period.

Goetz also found that the casino's accounting functions were so lax they allowed the thefts to continue. ``If the property had been reviewing the system data, the issues driving this project could have been stopped (and prevented) in a matter of days instead of months,'' he wrote.

Among Goetz's other conclusions:

* Gulfstream had not ``turned on'' the computer function that tracks which employees authorize which free play cards so it could not be determined which supervisors were at fault.

* Gulfstream had ``no clear separation of duties'' and that employees who authorized promotional cards were also the same people who loaded the cards with the cash value.

* No records were kept indicating how much money was being loaded into the test cards.

* DBPR failed to require Gulfstream to use an accounting system tool called data warehousing to better track data.

* DBPR should require Gulfstream to put in place internal controls -- spelled out by Goetz in 30 pages of audit recommendations.

Dunbar, Gulfstream's legal counsel, said the casino cooperated fully in the investigation and, once the lapses were discovered, immediately revised its accounting functions to prohibit any future misuse of free play cards.

``It was an expensive bit of tuition for the state as a whole and our facility,'' he said. ``That probably is the evolution of casino regulations.''

But Dunbar strongly disputed FDLE's finding that Gulfstream will have to pay taxes on the fraudulent play or that it is at fault. The casino has been charged with no wrongdoing and ``until there is a charging document, Gulfstream continues to insist that it was the victim of this matter,'' Dunbar said.

He said that the casino ``didn't violate a single rule or a single statute,'' but followed procedures that were authorized and approved by state regulators.

``No casino wants a loose system, but you also can't anticipate the criminal mind,'' he said.

Ross, the DBPR secretary, said the agency considers the FDLE's investigation one piece of its lengthy review and has no time frame for completing its investigation. But, he said, slots players at Gulfstream ``are being offered a fair game.''

Hialeah Park still a high stakes bet 6/17/09