Magic City Casino gets a big tax cut
Isaac Delvalle paces in the desolate atrium outside the poker room of Magic City Casino. The tan 49-year-old takes a few steps, checks his watch, and sneaks a drag from his bummed cigarette. He's practically twitching. It's midnight, an hour till close, and the air reeks of smoke, bad cologne, and desperation.
Delvalle is a Cuban Fredo Corleone, a deadbeat optimist who's been chasing luck ever since he hopped on one of the last Freedom Flights from Havana in 1971. Sometimes he gets a break — last year, he won a freak $30,000 bad-beat jackpot at Seminole Hard Rock Hotel & Casino — but he's a professional squanderer. He's blown triple that prize since then, he says. All of it was spent on his two vices: cards and girls.
Earlier tonight, he came to the old dog track on Douglas Road at Seventh Street to collect a marker from a pal, but the guy didn't show. Delvalle hadn't intended to play. He's been trying to avoid card rooms since losing his job as an electrician, but he has the backbone of a dishrag. So he sat down at a $2/$4 Texas hold 'em table in the heart of the casino's poker room, the kind preferred by serious regulars because the blinds keep out both cheap riffraff and nutty high-stakes gamblers.
"I'm unemployed — what else am I going to do?" he asks.
The poker room beats to a steady bass line of shuffling plastic chips, bad cable television, and loudmouths. Lately, the 18-table hangar has been filling up early with players in search of the $175,000 Royal Flush jackpot. In April, a man won a Florida record $195,423 at one of these tables.
Things started off well after he cashed in his last $20 around 8 p.m., Delvalle recalls. He got an ace and a queen on his opening hand. He casually bet two white chips and sipped from his free mini-bottle of water. "First rule of poker: Don't drink when you play," Delvalle says, smirking.
All but two players folded, leaving about $16 in plastic gold on the black felt tabletop. An intimidating buddha bet $4, and Delvalle called. The dealer copped a glance at both players, waited a beat, and unholstered an ace of clubs on the river. And just like that, with his queen kicker, Delvalle won a tidy $24. "That asshole tried to raise me with a pair of nines," he hisses.
But at these midstakes tables, money can disappear faster than a shot of cafecito. "Hold 'em is cards, cards, cards, just throw away cards again and again," he says. "The money is gone faster here because when you start winning, you get cockier and you bet on more hands." Slowly, the neat pile of white chips before him, stacked high like a Jenga tower, had vanished.
Four hours after the game began, outside the poker room, beneath the klieg lights that illuminate the nearby empty dog track, he's restless. He asks everyone on a smoke break for change. He has lost all of his money. Well, not all. In his hands he holds four quarters, which he shuffles like chips. "I just need gas money to get home to Miccosukee, where I live."
Delvalle is in some ways the ideal casino customer. He's single, excitable, and willing to spend money even when he's dirt broke. He stalks poker rooms as furiously as a junkie trawls for his next fix. Lancey Howard from The Cincinnati Kid would describe Delvalle as "loose money." The chieftains of Florida's pari-mutuel industry view him that way too. To them, he's the future. For many decades, gambling in the Sunshine State meant old-timey pastimes such as dog races and jai alai. But the past decade has seen a break-neck race toward Las Vegas-style gambling, with all the major players donating escalating millions to politicians and lobbyists to see who can penetrate one of the nation's largest untapped gambling markets.
Last month, those campaign contributions resulted in a $1.5 billion compact with the Seminole tribe that opens the door to expanded gambling for the first time since 1978. The tribe gets a five-year monopoly on blackjack, baccarat, and chemin de fer, while pari-mutuels in South Florida, among the biggest campaign donors to state legislators, get expanded operating hours, no-limit poker, and a 30 percent tax cut on their slots revenue that will likely generate $140 million.
Legislators defend the pact — and the casino tax cut — as a way to plug the state's billion-dollar budget hole and help the struggling pari-mutuel industry. But multibillion-dollar corporations own most of these pari-mutuels, and some people see the agreement as the result of an industry with too much influence. Nathan Dunn, a lobbyist for the conservative group Florida Family Action, says the industry preys on the poorest Floridians. "This amounts to a bailout for gambling executives," he says. "The suggestion that we're going to give tax breaks to certain industries in this toughest of economic times while families are struggling is highly irresponsible."
These days, South Florida pari-mutuels — including several in Broward — are staking it out for the long term through lobbying, union-busting, and shady political alliances. No pari-mutuel tells the story of gambling in Florida quite like Magic City Casino, a glitzy parenthesis in the heart of working-class Miami. Despite irate governors, corporate takeovers, and cultural relevance, one family has run the casino since the 1950s. They've accumulated a multimillion-dollar fortune and stand to earn much, much more.
Says Steve Wolf, a former racing director at Pompano Park: "This is what they know. They haven't done anything else for 60 years. They're going to fight tooth and nail and down to the last dime to keep this business going."
Noelia Rodriguez comes to the dog track now just out of habit. She's been betting on the greyhounds here nearly as long as she's been married to Armando, her husband of 55 years. The stooped Cuban couple sits in the air-conditioned clubhouse tracking dozens of races simulcast from places they've never been: Birmingham, Phoenix, Corpus Christi, and, even at midnight, Australia.
These days, they can't muster up much excitement. "It's something to do during the day," Noelia says. Despite the elegant paint job and manicured buffet, the joint has lost its luster. It's now just a half-empty amphitheater of hundreds of doll-size TV monitors and dozens of weathered faces and guayaberas.
"I remember the first time I came: September 1966. I remember it because it was the month we came from Cuba, and it was my birthday," Armando says. "Three floors, all for dog betting. Races every day, into the night. You couldn't find a parking space. They had car giveaways. They did something called a supermarathon sometimes, where the dogs went around for two laps."
"Those were some dogs," Noelia recalls.
Magic City has been around in one form or another since 1931, when Jacob Sher, a thoroughbred breeder, opened it as the second dog track in the county, after Miami Beach's. Sher's place was called the West Flagler Kennel Club and drew a less well-heeled crowd than its peer to the east.
Back then, the city was a cesspool of unregulated gambling. Aside from the greyhounds, there were cockfights in Hialeah and roulette wheels in beach clubs. Between 1935 and 1937, slots were legalized and appeared everywhere, from hotel lobbies to barbershops. Gangsters such as Meyer Lansky pocketed the profits; they also operated casinos in the free-for-all that was Fulgencio Batista's Cuba. "Gambling was totally wide open," historian Paul George says. "In the words of a sheriff back then: 'Give the tourists what they want.'"
Isadore Hecht moved to Miami Beach in 1929 and saw the racket's financial potential. The 25-year-old Jewish tomato and banana importer was friendly with Lansky. When Congress clamped down on illegal gambling in 1953, Sher decided to sell, and Hecht bought the track for $2 million. At the time, a day at the kennel club cost a quarter. But the place was so popular the annual handle hovered at $14 million.
The gamble paid off. In the next few years, Miami solidified its place as a destination spot with the construction of a Hydra of hotel beauties: the Fontainebleau, the Eden Roc, the Carillon, the Deauville, and the Doral Beach. By 1960, Hecht transformed the faded track into an art deco jewel box of a dog track with a 5,000-seat auditorium, steam-heated grandstand, and refurbished clubhouse. Time magazine called it the "White House of dog racing."
Flagler soon outdrew the famed Hialeah Racetrack. Frank Capra's A Hole in the Head, a movie about a down-on-his-luck gambler and his big-shot brother, was filmed here. The gambler: Frank Sinatra. Edward G. Robinson played his brother.
By the 1970s, Miami began to lose its destination status. Walt Disney World opened in 1971, and cheap airfare to the Caribbean cut into South Florida's tourist dollars. The state asked voters to allow gambling in 1978 as a way to shore up dwindling coffers. South Florida developers spent $2 million, pointing to the success of Atlantic City, but popular Gov. Reubin Askew took issue, claiming the mob would return. Dog and horse track owners — including the Hechts — campaigned against the casinos, believing they would eat into their core audience. Armed with just $1 million, gambling opponents won by a whopping 70 percent to 30.
But the Seminole Hard Rock opened the nation's first high-stakes bingo hall in Hollywood the next year, and nontaxable cruises-to-nowhere appeared around the same time. Tropical Park Race Track was closed in 1972, the Miami Beach Kennel Club was demolished in 1980, and the Biscayne Dog Track was shuttered in 1996.
As for Flagler: Isadore Hecht died in 1977. Nightly handles declined to $450,000, and the place fell into grimy disrepair. But then Hecht's son-in-law, Fred Havenick, took over. The imposing New York lawyer quickly noticed casino gaming and Cuban émigrés were the future. In the mid-1980s, he allowed a flea market, casually referred to as el pulguero de los perros (the dogs' flea market), to set up shop on the weekends in the parking lot.
"I started in Los Perros when it was really something," says Orlando Gay, who opened his seafood stand-cum-restaurant at the track in 1985. "You couldn't find parking in those days. Business was so good a bum could make $100 just asking for change at the entrance."
In 1994, Havenick teamed with big corporations such as Bally's and Harrah's to bring limited gambling to the ballot. They raised $10 million, but the measure failed. Nevertheless, the big companies swooped in to buy out the mostly family-owned pari-mutuels. Isle of Capri bought Pompano Park, Churchill Downs purchased Calder, and Magna acquired Gulfstream. In 2000, the three and Mardi Gras — then the Hollywood Greyhound Track — created a political action committee.
The PAC, Floridians for a Level Playing Field, has spent $14 million on pari-mutuel-friendly ballot initiatives since 2000. In 2004, they pushed state voters to approve a complicated ballot initiative that would allow Miami-Dade and Broward to cast ballots. If local voters agreed, pari-mutuels, including horse and dog tracks and jai alai frontons, would be allowed to install lucrative slot machines.
That vote was extraordinarily contentious. Religious groups, Bush, Disney, and the Indian tribes spent $6 million to campaign against the measure. The pari-mutuels countered with a $16 million advertising campaign. In the end, a slim majority, 50.8 percent, approved it.
But later, 53 percent of Miami-Dade voters rejected the idea, while Broward, where the corporations spent more on advertising, embraced it.
Izzy Havenick says the vote was devastating to Fred, who was then already battling emphysema: "My father was a boisterous man, and it crushed him to lose something he'd worked so hard for 25 years to get." A year later, Fred died. He remains such a popular figure around the track that his 2006 obituary still hangs in a clubhouse betting window.
For the next election, Izzy says, they were determined to hold nothing back.
At Century Marketplace's outdoor flea market on Le Jeune Road, Orlando Gay stabs his gutting knife into a fresh Ecuadorian blue marlin. He fillets the bloody block of fish as one would swipe a credit card.
Gay, a stout Cuban with a Charles Bronson mustache and booming voice, has been a fishmonger since 1985, five years after he arrived during Mariel. For most of the past quarter-century, he worked at the Flagler flea market. He was one of the original pulgueros.
The flea market was his only job, and it was lucrative enough that he was able to buy several storefronts and a seafood restaurant in nearby Flagami. "My daughter grew up there," he says, referring to the dog-track flea market. "Fish paid for her college education."
But last June, the Havenicks evicted the market. Though Gay and the 400 pulgueros had supported with sweat and blood the referendum to allow slots in Dade, the flea market no longer fit the family's vision for the place.
Gay says he "lost a chunk" of his life: "I had a cow that gave four buckets of milk a day, and now I got a goat with a couple of broken legs."
After the 2004 vote, the Broward casinos didn't immediately turn a profit. The jai alai fronton, dog track, and horse tracks invested hundreds of millions in the slots and improving their facilities. Pompano Park dropped a sick $230 million to turn itself into a Valhalla of gambling, and Calder rushed through an $85 million renovation to be ready for this year's Super Bowl. A conservative legislature set taxes on the new slots at 50 percent, which was high but not unprecedented. Pennsylvania's casinos pay 55 percent on slots, and New York's fork out 78 percent.
The Havenicks and other Miami-Dade pari-mutuels such as Calder Race Course and Miami Jai-Alai didn't give up. They continued to invest heavily in lobbying county officials for a new vote and came up with a canny strategy. In July, Izzy approached Miami-Dade commissioners about setting a new vote on the casinos the day of the upcoming presidential primary. When the first ballot was rejected in Dade, turnout was a measly 14 percent, mostly die-hards who were elderly and conservative. With the primary, there would be more voter participation. Commissioners approved that date by nine to one, with Katy Sorenson as the sole dissenter.
Then the slots backers mobilized forces. A few months before the 2008 vote, hundreds of the pulgueros powwowed with Izzy Havenick at a rare meeting below the grandstand. The 32-year-old Flagler vice president talked about the future.
Most old hands had seen Izzy grow up. He was the chubby kid who mulched the track when he was grounded. To the pulgueros, he was a cipher. Izzy had spent the track's boom years studying photography at the University of Miami, living in one of the residence halls that bore his grandmother's name.
The flea marketers had heard rumors the family was preparing to sell the ten-acre property to a condo developer. "Most people didn't have part-times — this was it," says Jorge Garcia, a stringy Cuban with lank hair, who had been at the flea market since 1985. "You spent all week gathering merchandise, and you worked on the weekends." On any given weekend, he says, he made $5,000.
At the meeting, Izzy delivered a grim prognosis. "We were honest with them," the track owner says now. "I said, 'Unless you help us, come next year, you may not be here anymore.'" He told them the vote was a make-or-break deal. "If we lost, we'd sell the land," he says.
Flagler was losing nearly $8 million a year, he told the group. The family just couldn't keep the crown jewel of its business (the Havenicks also owned tracks in Fort Myers and Wisconsin) afloat without help. They needed casino-style gaming.
The meeting was calm. "They asked us to campaign for them," Garcia says. "They bought us T-shirts. They asked us to tell our clients to vote yes on slots."
Someone shouted, "Contract!" but Izzy politely rejected the suggestion. After several meetings, they agreed. "It was like seducing a woman," Gay explains. "First you promise her the world, and then you ravage her."
The Havenicks didn't stop with the pulgueros. The 2004 loss taught the family to take nothing for granted. They joined Calder and Miami Jai-Alai on a $6 million advertising campaign and enlisted the help of state Rep. David Rivera, then a top lieutenant for anti-gambling Florida House Speaker Marco Rubio.
They also enlisted track employees. In 2004, Unite Here, the largest gaming employees union, offered to help. The Havenicks and other track owners accepted, but there was a catch: The tracks would have to allow Unite to speak with employees about unionizing if slots were approved.
Employees had long wanted a union, says Jay Mehta, a Unite Here spokesman. And the pari-mutuels saw it as an opportunity to telegraph to voters that slots would be good for workers. "They thought by signing this agreement, they could persuade voters and politicians this had the potential to secure good jobs," Mehta says. "Many companies use that as a tactic when they're negotiating with voters."
Bernie, a track cashier at Flagler since 1995 who asked New Times not to use his last name, saw the election in personal terms. The gray-haired 61-year-old, a regular Willy Loman, has medical problems, so he took the job for health insurance. He and his wife campaigned for the slots and took voters to the polls. "I thought, This will help them make money so they can start offering insurance again," he says.
Last-minute opponents materialized: Animal rights activists juxtaposed the hot Michael Vick scandal with racing greyhounds, and Hialeah Mayor Julio Robaina, upset that his city's horse track wasn't part of the slots deal, campaigned against it.
But on January 20, the day of the presidential primary — Hillary Clinton and John McCain swept — Miami-Dade voters also approved slots 63 to 37 percent.
Two months later, the pulgueros got a jolt: They had a week to vacate the premises. "It was really disgusting what they did to us," Gay says. "They even called the cops."
Izzy Havenick says his family owes the flea marketers nothing. "They've been here for 20 years? Well, we've been here for 58," he says.
But Julio Robaina (no relation to the Hialeah mayor), a Republican state representative from the track's district, says Havenick betrayed their trust. "Every local elected official got assurances about not displacing those people," Robaina says. "They didn't keep their promise."
The unionizers also feel deceived. The group sued the Havenicks this past January for failing to honor the 2004 agreement to allow talks with employees.
Izzy wouldn't discuss that lawsuit, but in court records, the family argues the agreement is invalid for various technical reasons. "Our employees have always supported everything we've done here," Izzy says. "They've volunteered; they've worked poll stations. They wanted to protect their jobs." So far, there's been no decision on the suit.
At the track, most employees know nothing about the union. Orquidea Herrera, age 50, has been working as a cashier and waitress at the track since 1995 and earns $8 an hour at the clubhouse's buffet. She can't afford health insurance. "I'm too old to be fishing around for anything else," she says.
Bernie is also disappointed. "It's a real sore point for me," he says.
Marlen Cabrera zigzags through the slot machines at Magic City Casino like a guided missile. She's a dark-skinned, heavyset woman in her mid-40s who plays machine after machine while her husband competes downstairs at the $5/$10 poker tables. Around her, the joint swings like a kaleidoscopic arcade. Bedazzled slots flash neon lights and trill like overzealous Ataris. Little old ladies excitedly pull on levers as if they were playing Dance Dance Revolution.
Cabrera arrived at 6 p.m. with $100. She dropped 30 cents on the Treasures of Machu Picchu and then more on Triple Lucky 7s. "There's a jump at the beginning, and I make a few coins, but it's all downhill from there, and it leaves me pelada [wiped out]" she says. "These machines are thieves. You keep putting money in — out of avarice really — but all you do is lose more."
In two hours, all she had left in her purse were cigarettes and cosmetics. She's not alone. Slots are the most popular attraction at Florida's racinos (a portmanteau of racetrack and casino). In the 2008-09 fiscal year, visitors spent $2.7 billion playing slots, according to the Florida Department of Business and Professional Regulation. Cabrera and her husband come to Magic City three or four days a week. "When the money's good, we stay until dawn," she says. "And when the money's bad, we stay anyway."
After prevailing in the 2008 vote, the Havenicks began looking for capital. Their goal was to raise $160 million for slot machines, a dog track upgrade, and a casino build-out. As the recession took hold and banks began tightening up, the Havenicks had to settle for a $54 million loan from two local banks, which the family declines to name.
"We had to sell a dream to a bank in the worst economy since the Depression," Izzy says. "We gambled everything on the 2008 election." The loan enabled them to repaint the clubhouse and refurbish the grandstand, which had been closed for a decade. It also allowed for a new 2,000-seat amphitheater, smack in the middle of the track, which has hosted José Feliciano and the Guess Who.
The renovated Magic City Casino opened this past November. The slots wing is by far the most expensive part of the renovation, Izzy says. At an approximate cost of $10,000 to $15,000 per machine, the games totalled $18 million.
There's a stark contrast here. The old clubhouse is a sterile, Muzak-friendly incubator for old-timers, while the casino is like a jukebox that syncopates to shrill computerized noise and a blitzkrieg of lights. This past March, a new wing of electronic blackjack machines opened at a cost of $3.5 million. New ads have appeared all over town: "Blackjack + Miami = Magic City."
All of that work didn't immediately translate to profit. Izzy Havenick claims the track has been barely breaking even. A ray of hope arose, though, when the state reached agreement on a pact with the Seminole tribe to gain money that would pay for deficits accrued because of the real estate meltdown.
Years in the making, the pact allows the tribe to run more card games, such as baccarat and Vegas-style slots. In return, the Seminole guarantee the state at least $1.5 billion over the next five years.
A less noticed part of the pact will mean millions of dollars for the Havenicks and other pari-mutuels. It reduces the tax on slot revenue from 50 percent to 35 percent, rolls back the annual slots license to $2 million, and allows no-limit poker. It also extends card rooms' operating hours to 18 on weekdays and 24 on weekends. Just the tax break on the slots will generate at least $138 million, a whopping $32 million more than last year.
How did the deal get done? Lobbying helped. The Havenicks employ three lobbyists — Quinton Greene, Manny Prieguez, and Ron Book, or Ronnie, as Izzy calls him, who has been with the family since Izzy was 10 — for about $200,000 a year. In addition, pari-mutuels gave $1.6 million to political campaigns in 2008, according to the National Institute on Money in State Politics. Magic City donated the most of the Dade tracks: $96,500.
Legislators such as state Sen. Dennis Jones and House majority whip from Miami, Carlos Lopez-Cantera, were some of the main proponents of the tax break. Unsurprisingly, they were among the top ten recipients of political industry contributions in 2008, receiving nearly $100,000. "It's not a bone we're throwing them," says Lopez-Cantera, who received $15,500. "If they make money, we make money. It may not be the windfall they're expecting, but if the state doesn't suffer, I don't see the harm in it. If the state makes money and they make money, that's great. That's capitalism."
Because of the money guaranteed for schools, the measure was backed by the United Teachers of Dade and the Florida School Boards Association. In fact, the state legislature's office of economic research forecasts that more people will play slots — so the total amount received by the state will grow back to its current level of about $113 million annually by 2013.
Gov. Charlie Crist signed the measure into law last week — the day before he announced he would run as an independent for U.S. Senate. It takes effect in July. He called it "an example of elevating problem-solving over ideology."
But it's not that simple. Nathan Dunn, the lobbyist for the conservative group Florida Family Action, doesn't see it that way. "This is the largest expansion of gambling in Florida without the vote of the people," he says. "It's unfortunate the state didn't take further efforts to resolve their financial problems."
Miami-Dade Commissioner Katy Sorenson cast the sole vote against the slots referendum in 2007. "Casinos target the poor," she says. "They prey on people's problems rather than solving them, and I don't think they create great jobs." She adds the compact is one more "desperate" Band-Aid to remedy the state's flat-lining finances. "We're going to continue to cobble these solutions together that really aren't solutions."
The management office at Magic City Casino is a shabbier home away from home for Izzy Havenick. The 32-year-old leaves his $1.5 million home in Miami Beach every morning with his bullmastiff, Kitty, and drives to an office that overlooks the now-impressive dog track. Havenick is the opposite of the slender greyhounds that run here weekdays — a chubby poodle of a man with pudding cheeks and a golfer's tan. He walks around in khakis and a Magic City guayabera. Only his hair, which is sooted with gray specks, suggests he's the guy in charge.
On his desk sit blueprints to develop the track's old racing theater, a soundstage-like facility that's been empty since Hurricane Andrew tore off the roof.
He'd like to bring back the flea market and then build stores and cafés around the building in much the same way Gulfstream recently opened the Village at Gulfstream Park. "Our family is invested in this project," he says. "We definitely see a future of retail, restaurants, and bars, not just the casino and the dogs."
Those plans will likely work out. Combined with earnings from slots, jai alai, dog tracks, and racetracks, the Florida gambling industry earned a total of $1.1 billion in 2009, according to the Florida Department of Business and Professional Regulation.
That will go higher, says Bob Jarvis, a gambling-law professor at Nova Southeastern University in Davie. The Seminole compact opens the door to hotels and amusements that have made gaming a $4.3 trillion industry in Nevada. "Eventually, the legislature will decide the horse is so out of the barn we might as well have full-scale gambling in Florida," he says. "And if you have that, prepare to see the Steve Wynns, the Donald Trumps developing all along the beaches."
And eventually, the racing and jai-alai will disappear. "Even the owners don't want dogs," Jarvis says. "Horses you gotta feed, and jai alai players can go on strike. If [owners] could just have 24/7 gambling and get rid of horses and dogs, they'd do it in a heartbeat."
A few hours with Isaac Delvalle will convince you Jarvis might just be right. Two days after his first beating, Delvalle is back at Magic City after leaving the Miccosukee casino at dawn. He didn't do well; in fact, he was thrown out when he called a dealer an hija de puta. He'd borrowed $60 to play there, and he's at Magic City to recoup the loss.
He spends the next several hours getting gob-smacked and winning small pots. A 29-year-old, curly-haired, pregnant beauty with a nose ring takes him for a $32 pot, but at the end of the night, he leaves with $40 on a $20 investment. "What do you think I'm going to do next? Of course I'm going to Miccosukee. They have high hands all night long."
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