Journal Information
Journal ID (publisher-id): jgi
ISSN: 1910-7595
Publisher: Centre for Addiction and Mental Health
Article Information
© 1999-2004 The Centre for Addiction and Mental Health
Received Day: 10 Month: 04 Year: 2003
Publication date: July 2004
Publisher Id: jgi.2004.11.17
DOI: 10.4309/jgi.2004.11.17

Rolling the dice on casinos in Florida: Will residents view legalized casino gaming as a cure for a financial crisis?
Peter Ricci
Dana V. Tesone
Po-Ju Chen
University of Central Florida, Florida, U.S.A. E-mail:
[This article prints out to about 13 pages.]
Submitted: April 10, 2003 All URLs were active at the time of submission.

For correspondence: Peter Ricci, CHA, University of Central Florida, Rosen College of Hospitality Management, University of Central Florida, P.O. Box 161450, Orlando, Florida 32816-1450 U.S.A., phone:(407) 823-0545, fax:(407) 823-1110, URL:∼pricci, e-mail:
Competing interests: No competing interests for any author.
Funding: Not applicable
Contributors: PR conceived the study. All authors contributed to the design of the study, carried out searches, and extracted data. PR wrote the first draft. DVT and PC revised and edited the initial draft. All authors researched the literature and as a team created more concise and timely analyses. All authors revised the final draft for submission. PR made suggested changes by anonymous reviewers and resubmitted the work.
Peter Ricci, CHA is an assistant professor of lodging management at the University of Central Florida's Rosen College of Hospitality Management.
Dana V. Tesone, PhD is an assistant professor of technology and human resources at the University of Central Florida's Rosen College of Hospitality Management.
Po-Ju Chen, PhD is an assistant professor of human resources and tourism management at the University of Central Florida's Rosen College of Hospitality Management.


This article considers the viability of casino gaming as one potential solution for Florida's current lackluster financial condition, due to declines in tourism revenues and increased education costs. The article suggests that similar conditions have motivated voters to set aside personal disdain for legalized forms of gambling in the interest of financial gains. It concludes with the next logical step of condoning casino gaming as a means to solve current budgetary woes and considers potential research to predict such an event.


While casino gambling has proliferated in the United States over the past three decades, Florida remains one of the few states without legalized full casino operations. Indeed, forty-eight of fifty states have legalized gambling in some form. By 1995, twenty-two states featured full-fledged casino operations, up from just one state in 1975 (Au & Hobson, 1997; Mason & Stranahan, 1996). Recent events such as the U.S.-led war on Iraq, the September 11th tragedy and the poor economy have all caused a significant reduction in visitor-related tax collections in Florida. At the same time, huge increases in state expenditures are on the horizon resulting from recent voter-approved amendments to the state constitution. Citizens and leaders must consider different options for luring visitors back to the state. One city in the state continues to be ranked as the number one visitor destination in America - Orlando - offering visitors a choice from over 109,000 hotel rooms (Orlando Convention and Visitors Bureau [CVB], 2003). Orlando's tourism industry provides jobs to over 25 percent of the local workforce (Orlando CVB, 2003). Even small cities in Florida boast large tax collections from the visitor industry. The state tourism industry will surely falter without the return of visitors. And, without visitors, tax collections will continue to dwindle.

This article considers the viability of casino gaming as one potential solution for the state's lackluster financial condition. Historically, voters have held firm in the conviction that gaming is not a welcome industry in their state. However, the residents have been known to approve the introduction of lottery games in response to the inability to adequately finance the state education system. Ironically, the passage of one recent amendment to the state constitution requiring limits on class sizes in state run schools has created significant budget deficits beyond the allocated funding provided by lottery revenues. Further, the decline of tourism revenues is placing a burden on all other aspects of the state budget. This article suggests that similar conditions have motivated voters to set aside personal distaste for legalized forms of gambling in the interest of financial gains. It concludes with the next logical step of condoning casino gaming as a means to solve current budgetary woes and recommends future research aimed at predicting the probability of such an occurrence.

The state of the state

Florida. The name alone conjures images of palm trees, oranges, theme parks, and sandy beaches. Florida - the Sunshine State - a state where tourism is the number one industry with over 72 million people arriving in the year 2000 alone (FLAUSA, 2003).

A more current image of Florida might be: Florida, a state facing substantial budget deficits; Florida, a state with unemployment on the rise; Florida, a state with its number one industry, tourism, in jeopardy. Recently, the global economic downturn has led to a decrease in the number of Florida visitors along with their tax-producing dollars (Snyder, 2003). Compared to the year 2000, visitor arrivals in 2001 fell 4% (FLAUSA, 2003a). While 2002 visitor arrival numbers were more positive than 2001 by 8% (Pitegoff, 2003), the continued national economic downturn and start of the war on Iraq has dampened 2003 visitor arrival estimates. Further, the 2002 gains may have been triggered by a one-time investment of over $20 million by state government funds and $25 million by tourism industry organizations.

Barry Pitegoff, vice president of research for VISIT FLORIDA suggests: “We suspect this small spike in the number of visitors was due largely to the massive advertising and promotional campaign that got underway in the final month of 2001 and continued through the first half of 2002” (Pitegoff, 2003). With such a high price tag, neither state government nor tourism industry organizations have continued utilization of such a campaign in 2003. The extremely costly endeavor and limited return on investment (8% increase in year-over-year arrivals) can be interpreted as cost-prohibitive for any government or private industry organization to continue for any extended period of time. This is especially the case when one acknowledges the fact that increased visitation does not automatically mean increased tax collections. Substantial discounting by hotels, attractions, restaurants, added a comma and airlines diluted the gains expected from the greater number of visitors. Moreover, this massive advertising effort was only one possible cause for the slight increase in 2002-over-2001 visitor arrival numbers. Other variables may have included: weather, pent-up travel demand I eliminated 9/11 reference here, normal cyclical travel patterns, or a host of other options. Hence, implementation of excessively high-cost programs cannot be continued in a state which is suffering from decreased tax collections; to continue to do so would exhaust the already-shrinking tourism promotion budgets.

Not alone in the current downturn in tourism, Florida is one of many states facing a severe budget crisis with no foreseeable cure on the horizon. A voter-mandated amendment for smaller class size has exacerbated the situation. The amendment has led to a substantial increase in state funding. This amendment will be implemented while visitor-generated tax receipts continue their downward spiral, potentially leading to a dire financial scenario in government coffers. Tourism has been and continues to be the state's number one industry; yet, decreases in visitor arrivals may significantly affect the state's tax base for the foreseeable future. One of only seven states in the country without personal income tax as a funding source, Florida is chiefly reliant upon visitor-generated tax dollars (GovSpot, 2003). In a press release to the citizens of Florida, Governor Jeb Bush spoke of the current state of financial affairs in Florida: “I'm proud that Florida is one of the few places in the country that will see increases in education, child welfare and services for the elderly. At the same time, cost pressures related to the constitutional amendments as well as a still recovering economy, will force us to make some very difficult choices” (Bush, 2003). One should note that this quote was delivered to the citizens of Florida in late January, 2003 - prior to the United States' entrance of war with Iraq. This war has led to an even further reduction in state visitor arrivals as well as a continuation of state and national economic woes and rising unemployment. A recent news report sheds light on the accommodations tax collection in Greater Orlando: “A lengthy war with Iraq or continued economic woes could further suppress those numbers, making even those in charge of cheerleading tourism question when the visitors will come back to their historic levels” (Hunt, 2003). Although they are still somewhat optimistic, many of Florida's citizens, tourism executives, and government leaders have narrowed their hopes for continued visitor growth. With the nation at war, rising unemployment, fear among travelers and deep discounting omnipresent among hospitality companies, Florida's tourism leaders are thrust into an era of uncertainty about visitor tax collections.

A historical perspective

Florida's history has shown a lack of interest to gain any economic benefits via legalization of casino gaming operations. By 1993, ten states already had gaming revenues of at least $45 million per year with Nevada's revenues surpassing $6 billion annually (Kilby & Fox, 1998, p.11). Florida chose not to participate in potential earnings from taxation of casino operations in 1993, and its voter base still rejects full-fledged casinos. The state's voters have rejected an amendment to the state constitution that would provide the addition of casino gambling to Florida's repertoire of attractions three times over the past twenty-five years. The voters rejected an amendment to add full casino operations in 1978 and again in 1986; yet, in 1986 the voters approved an amendment that authorizes the Florida Education Lotteries, from which the State Legislature deposits the net proceeds into a trust fund for appropriation toward educational purposes. In 1994, gaming proponents tried once again with great fervor to secure an amendment to the constitution by state voters (MyFlorida, 2003). Instead, “Florida voters crushed a gaming proposition by a two-to-one margin, even though the proponents outspent opponents fifteen to one” (Glenn, 1995, p. 12).

One cannot ignore the fact that Florida did indeed experiment with casino operations in the period 1879–1895. Casinos, however, never caught the attention of mainstream Floridians at that time and Florida swung to the anti-gaming camp until the late 1920s. Tourism, an already significant industry in Florida, was severely impacted by the destructive forces of two strong hurricanes that slammed South Florida in the summer of 1928. Tourist arrivals all but halted as word spread that Ft. Lauderdale and Miami had been destroyed. As a push to return tourists to Florida after the negative publicity, a state-regulated system for pari-mutuel dog racing, jai alai, and horse racing was passed (UNLV, 1996). While a return to 19th century full casinos was not authorized, pari-mutuel gambling became a mainstay under the Florida sunshine.

Pari-mutuel gambling remained as Florida's stronghold gambling venture without competition from other forms of land-based gaming until the 1986 passage of the Florida Education Lotteries. Emerging on the scene during the 1980s, multiple gambling cruises began to sail from Florida's ports. Today, casino ships sail from over 25 cities in Florida (Awesome Florida, 2003). Many locations feature multiple vessels sailing several times daily from the same port, greatly increasing the gaming revenues of the cruise ship operators. All vessels are completely free from taxation by the state of Florida. One vessel advertises itself as the largest casino cruise ship in the world and its immense size has been a major factor in pushing its home port to become the number two multi-day cruise port in the world based upon passenger activity (Port Canaveral, 2003).

While casino cruises have contributed no tax dollars to the state's coffers, the Florida Education Lotteries have produced funding for state education. The Florida Education Lotteries amendment permits lawmakers to use the lottery collections to supplant education dollars which may be shifted elsewhere in the state's budget with a net effect of no “real” gain for educational activities. Although the ubiquitous lottery billboards, television advertising and Web site proudly proclaim “Florida lottery has contributed more than $13 billion for education in our state” (Florida Lottery, 2004), one must realize that original education dollar appropriations were shifted to other areas based upon budget needs - the lottery collections are not additional tax dollars used to enhance state education programs, they merely replace funding levels. With the 1986 amendment passed to legalize lottery in this manner, it is no wonder many of the state's citizens only see minimal return on investments in the education arena and often question where the money goes.

Beyond the pari-mutuel and cruise ship gaming activities, one finds Native American tribal gaming activities in the State of Florida. In reality, this is where one finds the “big bucks” in the state's gaming activities. Two main tribes, the Seminole Tribe and the Miccosukee Tribe have grown their operations considerably during the past two decades. Once again, the state receives nothing from these legal casino operations. The Miccosukee Resort and Gaming Center brings in an estimated $75 million a year in gaming revenues (Barlett & Steele, 2002). “Few tribes are more powerful than Florida's Seminoles, who pioneered high-stakes bingo and won Supreme Court approval for Indian Gaming everywhere” (Barlett & Steele, 2002, p. 56). In 2001, the Seminole Tribe's casinos made combined profits of $216 million on revenue of $254 million - this equals an astronomically high profit rate of 85%. General Electric, Microsoft, and many other Fortune 500 companies are lucky to break 10-25% return on revenue (Barlett & Steele, 2002). Once again, the state's tax dollars collected from the Indian tribal casinos located in Florida: zero.

Providing even more evidence of the anti-gaming sentiment in the state of Florida legislature and among its citizens, most states usually have no jurisdiction over sovereign Indian reservations, yet Florida is trying to prevent at least one of its tribal casino operators from growing to high-stakes games. If a tribe wants to offer Atlantic City or Las-Vegas-fashioned games such as blackjack, slot machines, roulette, craps, etc. the tribe must have an agreement with the state known as a regulatory compact. These high-stakes types of games are known as Class III gaming. Florida, which does not permit high-stakes operations, claims that the Seminole Tribe's current slot machines are illegal, resembling too closely the Las Vegas-style machines (Barlett & Steele, 2002). Class II games, which include bingo, pull-tab slips and low-stakes table poker are, as one would suspect, not as high in revenue generation as a casino. Class II games are justified by the state of Florida and the Seminole Tribe indeed claims to be using Class II slot machines - electronic versions of bingo and pull-tab games. The state of Florida claims otherwise stating that the machines in use are illegal and the casinos should be closed down. “The Seminoles claim the machines are not slots but ‘electronic terminals,’ so the tribe needs no compact. The Clinton Administration, in one of the decisions made as it was turning out the lights on Jan. 19, 2001, issued an order approving the Seminole operation. The incoming Bush Administration promptly rescinded the order pending further study” (Barlett & Steele, 2002, p. 56).

The Seminoles seem unfazed and continue on with “business as usual” while waiting for a federal government go-ahead. To show the strength of their stance and their commitment to the land-based casino business, the Seminole Tribe has recently expanded and greatly upgraded both its Hollywood, FL and Tampa, FL casinos to be full Las Vegas style venues. While restricted to the current Class II games, these venues have added deluxe hotels, top-name entertainment, and upscale dining. They have partnered with Hard Rock Café International in both venues. The Hollywood, FL facility had an estimated expansion and development cost of over $279 million (Bell, 2004). “The casino-resort, which will also have convention facilities, a beach club and a spa, will add to the Seminoles' lucrative gaming business” (Barlett & Steele, 2002, p. 56). With an 85% return on revenues in 2001, it seems easy to justify such expansion costs.

This plethora of gaming activities operates in all corners of the state of Florida. Whether a vessel sailing from Ft. Lauderdale, a Native American tribal reservation in Tampa, or a lottery ticket sold in Pensacola, Florida's citizens seem apathetic to the impact of gaming in their state. In reality, the worst-performing sector of the gaming industry is indeed the state-approved pari-mutuel system. Although the dog racing tracks, horse racing tracks and Jai alai frontons pay a portion of their gaming revenues as tax collections to the state of Florida, none of these facilities has grown its user base over the past decade and many of these facilities are in disrepair and have fallen out of the limelight for potential gamblers. Jai alai has been experiencing an annually decreasing rate in betting amounts of 12% since the year 1977 (Florida Gaming, 1998). During the 1997-1998 state fiscal year in Florida, the state enacted a tax reform to offset losses from the particularly bleak environment in which jai alai frontons were operating. The downward spiral in betting and attendance was so severe that the state took action to protect the jai alai frontons by giving them a tax reform for future years preventing at least a handful of jai alai frontons from shutting their doors (Florida Gaming, 1998a). Then chairman of the Florida Gaming Corporation, Bennett Collette, stated: “This legislation will have a dramatic positive impact on our future revenues” (Florida Gaming, 1998a).

With the state of Florida offering tax rebates to pari-mutuel operators whose businesses are experiencing year-by-year downturns, receiving no tax collections whatsoever on the millions of dollars in gaming revenues generated by vessels and Native American tribal casinos, and experiencing a severe economic downturn and current war affecting visitor arrivals, it is no wonder why the Governor, the citizens and the state legislature may slowly concede to the option of land-based casinos that would be legalized, regulated and assessed for tax collection. Bernard Goldstein, CEO of Isle of Capri Casinos corporation, agreed: “Tough budget decisions have already softened some governors' stances on gaming revenue. In Florida, for example, a new law requires Governor Jeb Bush to reduce K-12 class sizes by 2010, which could mean that Florida will have to hire 25,000 new teachers this year” (Sherwood, 2003, p. 16). As an indication of the possible change in position, Governor Jeb Bush recently proclaimed, “I'm opposed to the expansion of gambling, but I'm also opposed to raising taxes” (Sherwood, 2003, p. 16).

The state of other states

The three leading casino gaming destinations in the country all faced similar economic challenges prior to instituting legalized and regulated casino operations. Las Vegas, Atlantic City and the Mississippi Gulf Coast (Gulfport/Biloxi) all have benefited economically from the arrival of casino gaming operations. Mississippi, the newest of the mega-gaming destinations has a history glaringly similar to current-state Florida. The 1980s was a rough decade in Mississippi with its public education rated as lowest in the nation, poor environmental quality, and a low rating on overall general welfare of its citizens accompanied by severe economic stress (Clynch, 1988). Rivenbark (1998) describes the economic conditions in Mississippi at the close of the 1980s:

Taxpayers demanded an increase in governmental services but simultaneously balked at the idea of higher taxes. In 1990, to avoid a mandatory tax increase and to abate fiscal stress, the Mississippi legislature passed the Gaming Control Act legalizing dockside casino gaming as a surrogate tax system for the state. During fiscal years (FYs) 1993, 1994, and 1995, the state collected a combined total of $256.9 million in gaming fees and taxes from the casino industry. The $128.6 million received in FY 1995 equated to a rather remarkable 5.04% of the state's general fund revenue (p.583).

Mikesell (1995) noted that state lotteries rarely generate more than 2% of general fund revenues for states featuring such games. Further, he noted that many analysts expected the same or less for casino gaming in Mississippi.

Currently, Mississippi continues its gaming industry growth with the Gulf Coast creating jobs and increasing its tourism tax base. Conventions and conferences that previously visited states with larger facilities now have meeting space on the Mississippi Gulf Coast. A $10 million expansion of the area's Mississippi Coast Coliseum & Convention Center took place in 1999 as demand has increased (Hardin, 1998). Other improvements in the community gained through the accumulation of gaming tax contributions include a new runway at the Gulfport-Biloxi Regional Airport, a beachside boardwalk, a widening of the area's main highway, Beach Boulevard, and the addition of at least 15,000 jobs directly related to the gaming industry (Hardin, 1998).

On the Atlantic coast of New Jersey, Atlantic City demonstrates the economic benefits and job creation features of the gaming industry. The first casino in Atlantic City opened in 1978. Between the years of 1975 and 1980 construction, transportation, communications, public services and general services all added jobs to the workplace - in total 33,000 jobs, far more than the casino had promised (Browne & Kubasek, 1997).

During fiscal year FY 1997 alone over $940 million was generated in gaming revenues in New Jersey of which 31% came from casinos in Atlantic City (the only in-state location for full casino operations). During the first 18 years of operation (1978-1996), the casino industry paid almost $5 billion dollars in fees and taxes to the state of New Jersey. Casino tax revenues grew from $1.5 million in fiscal year FY 1978 to $288.8 million in FY 1995 even though gaming expanded across the United States at a frenetic pace (Madhusudhan, 1996).

Las Vegas remains the big player in the casino gaming business. Nevada became the first state to legalize casinos statewide in 1931 (Madhusudhan, 1996). In the 1900 census the city of Las Vegas was comprised of 17 people compared to its current population which is well over two million; many attribute this explosive growth to an economy sparked by the gaming industry (Doppelt & Schwer, 2002). Today, one of every three jobs in Las Vegas is in hotel, recreation, and gaming. These jobs also support other jobs in the community directly and indirectly. Seventy-five percent of the state's tax income comes from gaming. Las Vegas alone contributed over $7.6 billion in 2002. Unlike other states, Nevada does not limit the number of gaming properties, yet Las Vegas remains far ahead of any other city in the state (Doppelt & Schwer, 2002). The Las Vegas experience is often used as a glowing example of the economic growth and revitalization generated by casinos and gambling (Gross, 1998).

There are many examples of successful economic impacts from gaming in areas such as Black Hawk, Colorado, New Orleans, Illinois, and Iowa (Jang, Lee, Park & Stokowski, 2000; UNLV, 1996). However it is also important to mention the numerous reports in the literature regarding negative aspects of gaming. Gross (1998) offers a comprehensive summary of several studies analyzing gambling as a stimulus for economic development. Several problem areas are illuminated: public officials have little objective research on which to make decisions about legal gambling, gambling is sold as a painless way to raise revenues, legal gambling may result in cannibalization of the local economy siphoning consumer spending from other businesses, and increased crime and/or larger police budgets may result. Gross analyzed and expanded Goodman's (1994) United States Gambling Study. In his United States Gambling Study, Goodman analyzed existing gaming literature, examined and compared press clippings from across the United States, met with elected and appointed officials, and interviewed both those inside and outside the casino industry who resided in areas where casinos were in operation. These analyses provide indications of potential financial rewards that Florida may achieve from tax collections on legalized casino operations.


The examination of the gaming literature, in particular, those studies focused on Mississippi, which closely mirrors the demographic and economic composition of Florida, provide impetus for empirical studies on the potential probability of casino gaming in the “Sunshine State.” In light of current events taking place in Florida, the timing is right for new sources of tax revenues. The downward spiral in tax collections driven mainly from decreasing visitor arrivals, the national and statewide economic downturn, the current U.S.-led war with Iraq, and the recent amendment to shrink K-12 classroom size at a huge cost to taxpayers, make the environment ripe for a panacea to the state's financial woes. Indeed, “In an era of property tax revolt and government cutbacks, gambling has become an easy ‘sell’ to cash-strapped communities” (Gross, 1998, p. 205).

The next step is for researchers to engage in focus groups, data collection, and data analysis for the purpose of predicting the probability that Florida residents will be willing to ‘roll the dice’ on casino gaming in their state. Future findings on citizen readiness may range from the category of ‘long-shot’ to one of ‘sure bet’ in gaming parlance. No matter what future research will uncover regarding Florida's readiness to acquire casinos, the success of casino gaming in the State of Florida will be more of a ‘gamble’ today than it would have been twenty years ago. The sheer number of casino operations already flourishing across the United States make for a challenging environment.

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Keywords: casino, gaming, Florida, budget, gambling, legalized.