Fitch Ratings had plenty of nice things to say about the Seminole Tribe of Florida’s gambling business in a release it issued Thursday.
Notably, in the state marketplace, the credit company likes the tribe’s position, which has been bolstered by recent court rulings.
Fitch assigned a ‘BBB’ rating to Seminole gaming division’s announced loans to expand the Seminole Hard Rock Hotel & Casino properties in Hollywood and Tampa.
“Fitch views STOF’s planned expansion favorably given the strength in the underlying operating environment and benefits it will provide to STOF’s competitive positioning,” the release read. The tribe continues to experience steady, positive operating trends, compared to more flat growth seen in other U.S. gaming markets. Overall, the tribe’s seven casinos took in about $2.3 billion in 2016.
“STOF has sizable gaming operations in two distinct, populous Florida markets and benefits from having no competition in Tampa and limited competition in southeast Florida,” the release read.
State legislators again failed to come up with a gambling expansion agreement, which could have brought slot machines to eight counties, as well as added blackjack and lowered the tax rate at the racetrack casinos in Broward and Miami-Dade counties.
The BBB rating is an upgrade from the BBB- issued in December 2016 and reflects “the diminishing uncertainty over the tribe’s ability to continue offering table games and established track record of adherence to prudent financial policies.”
Fitch also noted that the tribe been party to a number of favorable court rulings in the past year. Their authority to offer table games under its existing compact expired in July 2015, but table operations continued as the tribe and the state negotiated a new compact and filed suits against each other.
Then in November 2016, a U.S. district court found that the exception to the tribe’s five-year limitation to offer table games was triggered due to the state allowing another entity to offer banked table games.
Those games, called “designated player” games, sprouted in various card rooms across the state after the state’s division of pari-mutuel wagering flip-flopped on the question of their legality.
Fitch notes that now the tribe has the right to offer banked table games for the compact’s entire 20-year term, ending 2030, at its seven locations. The state is appealing the decision. But if nothing else, the tribe has negotiating leverage.
In what might be a word that stings the racetrack casinos in South Florida, Fitch called the risk of additional significant competition “benign.” The company notes that in May the Florida Supreme Court ruled against the ability of individual counties’ conducting voter referendums to determine slot expansions.
Fitch also said good things about the recent election of Marcellus Osceola Jr. as tribal chairman, noting that the tribe’s reserves are now at about six months of governmental operations, including per capita payments, an improvement from less than a month of operations prior the election.
Colin Mansfield is Fitch’s primary analyst. Alex Bumazhny is the secondary analyst.
NickSortal@BellSouth.net
