The Biscayne Times

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Jun 03rd
Wagering on the Future PDF Print E-mail
Written by Erik Bojnansky, BT Senior Writer   
April 2020

Here’s the bet: Gambling will come to Miami’s Edgewater neighborhood

SGambling_1omeday the coronavirus crisis will subside. Closed businesses will open again, and people will be able to venture outside, at least every once and a while.

Sometime after that day is here, the Havenick family, owners of the Magic City Casino in Little Havana, will pull a permit to build a jai alai venue (a fronton) in Miami’s Edgewater neighborhood.

Customers will bet on live matches between former college athletes in a Basque sport that requires players to use a basket to ricochet a hard rubber ball against a wall at 100 mph and more. There may even be televised jai alai games and horse races from around the world that patrons can also bet on.

And sometime after that, Magic City Casino will ask the Miami City Commission for permission to build a poker room with high-stakes gambling.

Such a gambling venue would bring more jobs and entertainment to Miami, or more crime and economic ruin. It depends on who you ask. Either way, when and if the jai alai fronton is built, it’ll be thanks to a settlement agreement ratified by a federal judge on March 13, which ended months of litigation between Magic City Casino and the City of Miami.

Under the terms of that settlement agreement, the Havenicks will be able to construct a jai alai fronton in the 3000 block of Biscayne Boulevard without further approvals from the city commission or input from the public. But if they want a poker room, their plans would have to be approved in a public hearing by a majority vote of the city commission. The settlement agreement also permanently bans slot machines at the proposed entertainment complex.

The provisions of that settlement are dramatically different from an ordinance approved by the city commission in September 2018, which required public hearings and a four-fifths city commission vote prior to the establishment of any new gambling venues anywhere in Miami.

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Magic City’s lawyers sued the city in federal court, arguing that the restrictive ordinance should not apply to the Edgewater venue since the Havenicks had already obtained permission from state bureaucrats to build a jai-alai fronton.

On February 13, after months of litigation and upon the advice of city attorney Victoria Mendez, the Miami City Commission approved a settlement agreement in closed session by a vote of 3 to 2, with commissioners Ken Russell and Joe Carollo dissenting. Had the city lost the case in court, it would have had to cover Magic City’s hefty legal fees, pay at least $750,000 in damages, and risk allowing slot machines on site.

Should the Edgewater jai alai fronton be constructed, it would be the third pari-mutuel venue in the City of Miami. It will also be the first time in 81 years that a new pari-mutuel has been built in the city. Magic City Casino, originally known as Flagler Dog Track, was founded in 1939. Casino Miami, previously known as Miami Jai Alai, was built at its current location off NW 36th Street near the airport in 1926.

Izzy Havenick, vice president of Magic City Casino, says he isn’t sure when he’d start building the jai alai fronton. “Honestly, everything is so screwed up with the coronavirus,” he tells the BT.

When it is built, Havenick says, the pari-mutuel will be less than 25,000 square feet. The settlement agreement limits the size of any gambling venue at that location to 100,000 square feet and a maximum seating of 4000 people. It will be located adjacent to or within a 40-story residential and commercial complex developer Crescent Heights plans to build at that location.

However, a lawsuit filed by billionaire auto dealer Norman Braman, a fierce opponent of gambling, the Related Group, the Morningside Civic Association, the Brickell Homeowners Association, its president Ernesto Cuesta, and retired judge Ronald Freedman aims to nullify the settlement agreement.

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Their lawyer, Eugene Stearns, says a Biscayne Corridor casino will destroy the quality of life for the surrounding area. Stearns also claims that an improper memo issued by a city planner in response to a Magic City Casino lobbyist in 2012 enabled the Havenicks to obtain a gaming permit. According to that memo, issued by then zoning administrator Barnaby Min, casinos are allowed to open in commercial areas where entertainment uses are permitted. (Min is now a Miami deputy city attorney.) But Stearns insists the Miami 21 zoning code does not allow gambling, aside from the two grandfathered casinos now operating.

“It is our view that the memo has no legal force,” Stearns says.

Stearns adds that if the settlement agreement stands, casinos could be built in many parts of the city. On the other hand, if the settlement is invalidated, not only will Magic City Casino’s proposed operation in Edgewater be derailed, it could also make it more difficult for the Genting Group to convert Omni International Mall into a casino with as many as 8500 slot machines should the Malaysia-based company ever obtain a gaming license from the State of Florida.

“An ordinance doesn’t allow something that violates the zoning code,” Stearns explains. “This isn’t how it’s done. You have to have public hearings, there are all these steps you have to take to alter the zoning code.”

The Braman lawsuit names the City of Miami as a defendant, and while the city has not yet mounted a defense, Magic City Casino’s lawyer predicts that the city will move to dismiss the complaint. “Taxpayers don’t have standing,” says attorney Joseph DeMaria, who, along with Adam Lamb, has represented the casino in its litigation with the city. Under legal precedent, taxpayers only have the right to challenge city-approved settlements if it involves tax money, DeMaria argues. “There’s no money coming out of city coffers,” he says. “There will be money going into city coffers.”

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Mayor Francis Suarez, an ally of Braman on this issue, vetoed the settlement agreement on February 20. When city attorney Victoria Mendez then declared that Suarez could not veto such settlements, Suarez joined Braman and his associates in their lawsuit.

Soon, though, the mayor reversed course and pulled out of the court action, telling the Daily Business Review he intended to file a separate lawsuit against his own city. But then, just days later, Suarez tested positive for coronavirus and went into self-quarantine. He emerged from 18 days of isolation on March 31 after new tests were negative.

Stearns says his clients are proceeding without Suarez. And as for DeMaria’s contention that the case will be dismissed, Stearns replies: “We are reasonably optimistic about the outcome of this.”

In Florida, gambling regulations have long been in flux. For example, in 1935 the state legislature made slot machines legal in pari-mutuels. By 1973 the state banned slots. Then in 2005, following a referendum, slots became legal in pari-mutuels located in Broward County. Two years later, no-limit poker was approved by the state legislature. Then in 2008, after another referendum, Miami-Dade pari-mutuels were allowed to have slot machines.

Thereafter, pari-mutuel owners and casino operators pushed the envelope to expand gambling throughout Florida. Among those who have so far failed to persuade the state to allow gambling on their properties is the Genting Group, which invested $500 million assembling a 30-acre territory, including the shuttered Omni mall and the (now demolished) waterfront Miami Herald building, where they hoped to build a mega-casino and hotel complex called Resorts World Miami. (See “You Can Bet On It,” November 2012.)

Somewhat more successful was Hialeah Park Racing and Casino owner John Brunetti. Using an obscure 1980 “summer jai-alai” law, Brunetti, who died last year at the age of 87, was able to obtain a gaming license for a jai alai fronton and poker room three years ago in Florida City -- without a referendum. Nevertheless, he was never able to obtain slot machines.

After suing the State of Florida for 12 years, the Havenicks were granted a gaming license by state officials, thanks in large part to two memos from City of Miami zoning staffers, one in August 2012 by Min and the other from zoning administrator Devin Cejas in January 2018, which decreed that casinos can be located in commercial areas where entertainment is permitted “as of right.”

Yet before the Havenicks could obtain the needed building permits to construct the jai alai fronton, the Miami City Commission passed the restrictive ordinance, in the fall of 2018, requiring any proposed new gaming venue be approved by four out of five commission votes.

The Miami Herald reported that a draft of the ordinance was written on city letterhead by Braman attorney Stephen Helfman, and then forwarded to Mayor Suarez, who in turn forwarded it to then city manager Emilio Gonzalez. The Herald also revealed that Braman made two $25,000 contributions to Suarez’s strong-mayor political committee, each time the city commission discussed the legislation.

Helfman insists these actions were above board and that his proposed ordinance was even forwarded to the Havenicks’ lobbyist -- on the city letterhead. Helfman adds that the restrictive ordinance wasn’t really his version, but rather that of city planning director Francisco Garcia. The planning director, Helfman says, also took it upon himself to amend the Miami 21 zoning code to include “gambling” as a use separate from entertainment.

“He decided, for the first time, to amend Miami 21 to include ‘gambling’ as its own use,” Helfman tells the BT, “while at the same time adopting the 4/5th city commission public hearing approval we had suggested. It was actually the planning director’s legislation that the city commission adopted.”

But when commissioners later ignored that legislation with their Magic City Casino settlement, Helfman contends, they effectively changed the zoning of the 11-acre parcel Crescent Heights wants to develop as an entertainment complex “without following the basic due-process notice and hearing requirements under state statutes.”

Rachel Furst, president of the Morningside Civic Association, says that besides an aversion to gambling, Morningside homeowners never received notice from the city that the case was going to be discussed. “Had we known,” Furst explains, “we would have made our voices heard with the city commission. That opportunity was taken from us.”

Attorney DeMaria counters that pari-mutuel wagering has been allowed in the City of Miami for nearly 80 years, and that two zoning-verification letters determined that a licensed jai alai fronton and poker room is permitted in that part of Edgewater.

“Since the Great Depression, pari-mutuel wagering has been part of state law, since 1932, as a way to encourage tourism,” DeMaria says.

Local documentary filmmaker Billy Corben believes that jai alai in Edgewater will be beneficial for the area. “Like any other entertainment option, it’s an asset,” Corben argues. “I don’t like EDM music, I have never been to Ultra, but the great thing about Miami is there’s something for everybody.”

Corben, whose films include The U and Cocaine Cowboys, particularly appreciates that Magic City Casino is recruiting college athletes, particularly from the University of Miami, as jai alai players at its main facility in Little Havana. “I don’t know where else we have a casino go to a university and say, ‘Hey, blast out an e-mail to your former male student athletes and tell them we’re looking to audition to try out for jai alai,’” says Corben, who made a documentary about it called Magic City Hustle.

Corben also pushed back on the notion that casinos attract crime, insisting that Magic City Casino is “not sleazy or dangerous” and is “the number-one employer of off-duty cops” in the City of Miami.

But John Kindt, professor emeritus of business and legal policy at the University of Illinois, says the worst thing the City of Miami could do is allow another gambling venue when the region will likely be recovering from a coronavirus-induced recession or depression. In fact, Kindt, who has studied casinos for 27 years, thinks the best economic stimulus would be to close casinos permanently.

“Two-thirds of their money comes from problem and addicted gamblers,” Kindt says. “You are not creating a product [by allowing gambling]. You are not helping the consumer economy. You are taking money out of people’s pockets,” he declares, adding that bankruptcies in areas surrounding casinos tend to increase 18 to 42 percent, while property crimes committed by addicted gamblers increase up to nine percent a year.

Kindt also insists that slot machines are the ultimate moneymakers, a goal for any gambling venue, including pari-mutuel operators who claim not to want them. “That’s the classic modern business model for getting slot machines into an economy or jurisdiction that doesn’t want slot machines,” he explains. “You say up front that you don’t need slot machines.” Then, later on, the pari-mutuel claims it will go bankrupt unless they have slots. “We’ve seen that strategy work, primarily with horse racing,” Kindt says.

DeMaria counters by noting that the Havenicks have agreed to explicit language in the settlement that forever prohibits slot machines or any other electronic gambling devices. “We will never have slot machines,” he insists.

 

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