Gaming boats have come and gone in Florida almost as often as the tide.
In the last three years, however, the number has dropped from 28 to 17. The decline is attributed to everything from the economy to the ascendance of Indian gaming and the increase in big new multiday cruise ships with their lavish casinos.
Whatever the reason, Broward County is now playing a bigger hand in the business. On Thursday, a county committee will consider bids for a new gaming boat slot at Port Everglades.
The only sure winner may be the port. An additional cruise to nowhere would hurt current operators but bring the port $2.6 million in additional revenue, Economics Research Associates of Los Angeles concluded in a study for the county.
Just two companies responded to the county’s request for bids for a third day-cruise slot: SunCruz Casinos, which has been here for years, and St. Tropez Casino Cruises, a new operator tied to New York City’s Circle Line empire.
Seeing empty berths and a chance to make money, the port decided to offer a third gambling cruise contract after earlier this year giving St. Tropez a temporary, no-bid hold on a dock until mid-October.
St. Tropez has cut into competitors’ business. The question is whether the market can be expanded enough to profitably support an additional casino cruise.
”It’s a pretty stagnant industry,” said Sebastian Sinclair, president of Christiansen Capital Advisors, a New York company that tracks the gambling industry.
Cruises to nowhere grossed $385.1 million in 2002 — up slightly from the year before — out of a total U.S. casino take of $28.1 billion, Christiansen found.
St. Tropez says its research and operating numbers show a “growing and unsaturated market.”
SunCruz Chief Executive Michael Hlavsa says, “I think the market can be large enough for three vessels.”
SeaEscape Entertainment, which has a long-term contract at the port, is not so sure. Chairman Dean Hofmeister called St. Tropez “a very strong disturbance in the marketplace. SunCruz had been here for some time, and the market seemed to be sufficient to satisfy our needs as well as SunCruz.”
If SunCruz wins the current bidding, it will bring one of its larger vessels to the Broward port and leave the city of Hollywood — much to the relief of neighbors, who complain about noise and traffic.
The boats, which had their heyday in the 1990s, carry passengers the requisite three miles offshore before revving up the unregulated casinos. The state has been trying for years to run them out of business, but they survived as Florida voters repeatedly turned down casino gambling.
Shelly Sattler, of Pompano Beach, has been on SunCruz ”many, many times.” He doesn’t like the wait to get beyond the three-mile limit but takes the cruises because “there’s no other choice. I’d rather have a casino in town.”
Jean Walder, director of the Day Cruise Association, said the number of boats has always fluctuated, and now there are more large vessels. Still, business is off. In 2002 the boats carried three million passengers, compared with 4.3 million in 2000.
Sometimes, the marketplace forces gaming boats out, but sometimes it’s the authorities.
In January, federal agents seized six vessels operating on Florida’s west coast and off South Carolina. The move was part of an investigation into an Ohio banker who earlier this month was sentenced to 14 years in prison after admitting he embezzled $48.7 million and invested nearly all of it in the gambling boats, according to the Associated Press.
”I think the bloom is off the rose, particularly since Indian gaming has picked up,” said Bill Roversi, vice president of Royal Marine Insurance Group of Miami, who’s familiar with the industry.
In its proposal to the county, St. Tropez noted the competition includes Native American casinos that offer limited gaming and “little else to attract customers. . . . The reservations themselves are often located in congested or remote areas.”
The Seminole Tribe of Florida likely would consider its new $410 million Hard Rock Casino project due to open next spring in Hollywood neither remote nor unalluring.
While not full-scale Las Vegas gambling with high-stakes card games and roulette, the Seminoles’ Hard Rock Hotel & Casinos are full-scale resorts with hotels, restaurants, shopping and, of course, gaming.
The first phase of a similar facility in Tampa opened in June. Both projects are expected to significantly boost the tribe’s current take of $300 million a year from gambling.
The Miccosukees also have a large resort, golf club and gaming operation in Miami-Dade County.
Indian gaming revenue nationwide has gone from $8.5 billion in 1998 to $14.5 billion in 2002, according to the National Indian Gaming Commission. Numbers are not broken down by tribe.
SeaEscape grosses $35 million a year. While public, it is traded over the counter and does not report results to the SEC. (It last traded at .009 cents.) SunCruz has an annual revenue of $80 million. St. Tropez projects $28.2 million gross revenue for its first year. Profit margins were not disclosed.
Unlike Nevada, where slot machines must pay back to gamblers at least 75 percent of what they take in, the gaming boats’ payouts are unregulated.
Joanie Jacka, administrative coordinator for the Nevada Gaming Board, said most of their slots “are approved at a much higher payback.”
Some go as high as 98 percent. Others are 91 percent. Pay depends on player volume, she said. The board must approve any changes to the percentage. Table games also are closely monitored.
SeaEscape’s Hofmeister said that the gaming boats are controlled by competition. “Regulation is provided by your customers.”
AWAITING THE OUTCOME
SeaEscape is keenly interested in who gets the third spot.
After St. Tropez was approved, the company sued the county, saying the deal violates fair competition laws.
SunCruz, meanwhile, is working out details of a bankruptcy plan.
Earlier this month, a bankruptcy trustee was appointed to oversee the operations of the Dania Beach-based company, which bills itself as the largest day cruise operator in the world. Founder Gus Boulis was slain, gangland style, in February 2001.
The court is trying to work out differences between SunCruz and its creditors. SunCruz could be auctioned to the highest bidder. New management ”will be able to take SunCruz to the next level of growth,” Hlavsa said.
”The question is: Can all these outlets enlarge the marketplace so that all can participate profitably?” Hofmeister said. “I don’t have the answer to that.”
By Dale K. DuPont, The Miami Herald