South Florida Destination Resort Proposal, Economic Forecast

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Tim Suereth
timsuereth.com

With the prospect of resort casinos now becoming a real possibility in Florida, it’s time to break down the numbers to see the overall impact three destination resort casinos would have. Genting CEO Colin Au gave a controversial and passionate presentation on November 16th to the Senate Regulated Industries Committee to detail the results of an economic impact study created by Spectrum Gaming Group. The report concludes that the state would save approximately $1.2 billion dollars each year in unemployment compensation and benefit cost savings if 100,000 people were hired through the resort casino initiative.

Mr. Au stood his ground when attacked by legislators about the possibility that casinos in Florida could cost the state jobs. He responded – that’s B.S., and then went on to explain why it made no sense. His strong statements were jeered by some and cheered by others. TEA Party Miami applauds his strong position that resort casinos will add many thousands of jobs and BILLIONS in new revenues.

The Destination Resort bills (House Bill 487 and Senate Bill 710) propose to allow 3-resort casinos in counties where a gaming referendum has been put to a vote, and passed. So far, that has only happened in Miami-Dade and Broward counties, although other counties are now scrambling to pass gaming referendums so they can also compete for a resort casino in their county.

Tim Suereth
timsuerth.com

Resorts World Miami has committed to a $3.8 billion investment into the Miami Herald site and each of the other two resorts will be required to invest a minimum of $2 billion each. These combined $7.8 billion dollar construction projects would be a major windfall for city, state and local governments but there are other ancillary tax considerations and community benefits that should now be calculated into the equation to get a fuller understanding of what three resort casinos will mean to the state of Florida and its economy.

Spectrum Gaming concluded that three South Florida resort casinos would attract 4 million to 6 million new national and international visitors to Florida every year. Below are the projections for South Florida gaming.

Tim Suereth
timsuereth.com

Spectrum Gaming Group Forecasts

Jobs:
Approximately 1 million Floridians were out of work in 2010. One hundred and fifty thousand of the unemployed are from Miami-Dade County and 93,000 are from Broward County. That equals 243,000 people in South Florida who are in need of a job.

The study determined that three destination casinos would create 100,000 new permanent jobs. Those new jobs would employ 41% of the South Florida unemployed labor market, and pay them a rate that allows for a comfortable living.

The median income in Miami-Dade County in 2009 was $29,812. The study estimated that the 100,000 new jobs would pay an average wage of between $30,000 and $50,000 per year, plus medical and other benefits.

NOTE: The South Florida unemployment rate is at 31% for workers aged 16 to 19 and 18% for those who are between the ages of 20 to 24.

Reduced Benefit Payments To The Unemployed – Each unemployed person has been estimated to cost Florida taxpayers $230 per week ($12,000 annually) for unemployment payments, medical and disability benefits, food stamps, and other costs related to unemployment. Those costs would be eliminated for anyone who found work. One hundred thousand new jobs would save Florida over $1.2 billion in unemployment related costs and produce approximated $1.7 billion in overall revenues and cost savings to the state of Florida each year.

Taxes – Between $250 and $450 million in “net” new state taxes will be generated from three resorts, per year. County and city tax revenues are estimated to be $235 million annually and include $98 million in county taxes, $66 million in city taxes, and $62 million for the school board. Others would be property taxes, food and beverage taxes, bed taxes, sales taxes, etc. The state of Florida will also make an additional $27 million through sales, utility and unemployment taxes.

Hotels – High roller guests will pay an average nightly room rate of $500 per person for four or five nights, which would add $2 to $3 billion to the hotel industry. Hotel occupancy of 80,319 existing rooms will go up by 10% to 13% to cater to the additional 3 to 5 million new visitors who will stay at hotels that are not affiliated with the resorts.

Airlines – Four to six million new annual visitors to South Florida at $350 per person would generate $1.4 to $2.1 billion for the airlines. Hundreds of millions more will be spent at airport retailers and restaurants. It is estimated that three resort casinos will increase the number of South Florida visitors by 17% to 27%.

New Construction – A minimum of $7.8 billion in new construction spending will employ 50,000 workers and generate billions in revenues for companies throughout the state

Other Revenue Generators – The report estimated that $500 would be spent per person for non-resort limousines, taxis, buses, restaurants, florists, and attractions to total another $2 to $3 billion in annual revenues. Four to six billion in new destination resort spending will increase tourist spending at other businesses in Miami-Dade and Broward Counties by $27.5 billion, each year.

Point Program – Genting has established an open point system that will allow visitors to redeem points acquired from the resort for purchases at local restaurants, retail stores, theme parks, museums, music venues, among other participating businesses. The program was created to help drive more customers to other companies outside of the resort, as a way to counter any belief that the resorts would hurt local businesses.

It’s hard to imagine any other industry coming to Florida that could possibly produce the number of jobs or amount of revenues that the resort casinos could supply. The potential revenues are mind-boggling.