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Florida's "Cruises to Nowhere" Industry: Current Status and Future Prospects

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Florida's Nova Southeastern University NSUWorks Faculty Scholarship Shepard Broad College of Law 11-1-2017 Florida's "Cruises to Nowhere" Industry: Current Status and Future Prospects Robert Jarvis [email protected] Follow this and additional works at: https://nsuworks.nova.edu/law_facarticles Part of the Law Commons NSUWorks Citation Robert Jarvis, Florida's "Cruises to Nowhere" Industry: Current Status and Future Prospects, 21 Gaming L. Rev. & Econ. 18 (2017), Available at: https://nsuworks.nova.edu/law_facarticles/374 This Article is brought to you for free and open access by the Shepard Broad College of Law at NSUWorks. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of NSUWorks. For more information, please contact [email protected]. GAMING LAW REVIEW AND ECONOMICS Volume 21, Number 1, 2017 Ó Mary Ann Liebert, Inc. DOI: 10.1089/glre.2017.2115 Florida’s ‘‘Cruises to Nowhere’’ Industry: Current Status and Future Prospects Robert M. Jarvis I. INTRODUCTION and unregulated form of gambling,4 Florida’s CTN industry, which has existed since 1984,5 has btaining reliable information about the tended to attract operators who, for a variety of rea- O ‘‘cruises to nowhere’’ (CTN)1 industry in Flor- sons, have preferred to maintain a low profile.6 The ida2 always has been difficult.3 As an unlicensed most notable exception—SunCruz Casinos’ brash Keywords: casino boats; cruises to nowhere; floating casinos; it is odd that a profile of the industry is lacking from academic gambling ships; offshore gambling; unregulated gambling textbooks and manuscripts.’’). With few-to-no reporting requirements, how much Florida’s CTN operators annually earn has long been a closely guarded Robert M. Jarvis is a professor of law at Nova Southeastern secret. In 1997, Daniel Pollock of the Florida Greyhound University in Fort Lauderdale-Davie, Florida, and a member Tracks Association ‘‘ballparked’’ the amount at $172 million, of the Editorial Board of GamingLawReviewandEconomics. which at the time worked out to $7 million per ship. See Tyler 1The term ‘‘cruises to nowhere’’(CTN) originated during Prohib- Bridges, Casino Boats’ Revenue is Elusive Figure—One Esti- Miami Herald ition (1920–33), when ships would sail out to international waters mate Puts It at $172 Million, ,Nov.23,1997, so that passengers could imbibe alcohol. See, e.g., Law Sought to at 17A. In 2000, Gus Boulis sold the equivalent of 10 CTN Bar ‘‘Nowhere’’ Cruises: American Ship Companies Will Ask vessels for $14.5 million each. See infra note 7. By then, Congress to Act Against Foreign Lines; Drinking on Trips both government officials and the media routinely were Cited—Custom Officials Get Protest that 18th Amendment and using the figure $500 million, for an average of $25 million Coastal Acts Are Violated, N.Y. Times, Oct. 24, 1931, at 37. per boat. See, e.g., Jan Glidewell, Who’s Stacking the See also Daniel Okrent, Last Call: The Rise and Fall Deck?, St. Petersburg Times,Feb.7,2000,at1(Citrus of Prohibition 375 (2010) (‘‘‘[B]ooze cruises’ disappeared alto- Times) (‘‘Gambling ‘cruises to nowhere’ have been going on gether by 1938. On the other hand, the ‘cruise to nowhere’ begat for well over a decade. In all, it is generally agreed to be every passenger liner that [now] departs a U.S. port. .’’ ). a $500-million-per-year industry. .’’ ). 2Although this article is focused on Florida, CTN also currently 4CTN are subject to a federal statute known as the Gambling take place in Georgia (from Brunswick, 70 miles north of Jack- Ship Act of 1948 (GSA), 18 U.S.C. §§ 1081–1083. The GSA sonville, aboard the Emerald Princess II—see <http://www was enacted to combat a fleet of gambling ships stationed off .emeraldprincesscasino.com/>) and in South Carolina (from the coast of Los Angeles. See Ernest Marquez, Noir Little River, 25 miles north of Myrtle Beach, aboard the Big ‘‘M’’ Afloat: Tony Cornero and the Notorious Gambling I and Big ‘‘M’’ II—see <http://www.bigmcasino.com/>). Former Ships of Southern California (2011). The law ‘‘prohibit[s] CTN jurisdictions include Massachusetts, New York, and Texas. American citizens (or residents) from owning or running gam- See Day Ships and Casino Cruises, Gaming Floor, <http:// bling ships and . prohibit[s] American-flagged ships from www.gamingfloor.com/DayShips.html>. being [used as] gambling ships.’’ O. Shane Balloun, The True Patently illegal CTN are not included in the present discus- Obstacle to the Autonomy of Seasteads: American Law sion. See, e.g., United States v. Montford, 27 F.3d 137 (5th Cir. Enforcement Jurisdiction Over Homesteads on the High Seas, 1994) (defendants knew that Mississippi did not permit such 24 U.S.F. Mar. L.J. 409, 413 (2011–12) (footnotes omitted). cruises). Likewise, CTN that do not offer gambling are excluded. In 1994, Congress relaxed the GSA, thereby giving birth to See, e.g., Duluth Superior Excursions, Inc. v. Makela, 623 F.2d the modern CTN industry: 1251 (8th Cir. 1980). Because riverboats and multi-day cruises represent distinct forms of shipboard gambling, see Robert M. At one time, the Gambling Ship Act flatly prohibited gambling Jarvis et al., Gaming Law: Cases and Materials 397 aboard American-flag vessels engaging in interstate and for- (2003), they, too, are omitted. eign commerce, anywhere. See 18 U.S.C.A. §§ 1081–1082 3See Lori Pennington-Gray, Florida’s Day Cruise Industry: A (West 1984). The existence of the cruise-to-nowhere industry Significant Contributor to Florida’s Economy?, in Cruise depends upon a 1994 amendment to the Act, which created Ship Tourism 290–98 (Ross Kingston Dowling ed., 2006) (ob- exceptions for vessels on certain cruises, defined by reference serving, id. at 292, ‘‘It is fairly interesting that the value of the to a provision of the Internal Revenue Code as of 1994 DCI [day cruise industry] has not been documented. In addition, that levies a tax on the gambling revenues of such cruises. 18 FLORIDA’S ‘‘CRUISES TO NOWHERE’’ INDUSTRY 19 (footnote 4 continued) See Violent Crime Control and Law had the right to do, see Fla. Att’y Gen. Op. 95–70, available Enforcement Act of 1994, Pub.L. No. 103-322, § 320501, at 1995 WL 698073), but the legislation died in committee 108 Stat. 1796, 2114–15 (1994) (amending 18 U.S.C. over concerns that doing so would cost the state jobs and § 1081). In 1994, the Internal Revenue Code defined such revenue. See Florida Senate, Cruises to Nowhere, Interim cruisesas(inter alia) those that return within 24 hours to Project Rep. 2004-138, Nov. 2003, at 2–3, available at their port of embarkation and conduct gambling (subject to <http://archive.flsenate.gov/data/Publications/2004/Senate/ federal taxation) ‘‘beyond the territorial waters of the United reports/interim_reports/pdf/2004-138ft.pdf> [hereinafter Flor- States.’’ 26 U.S.C. § 4472 (1994). ida Senate 2003 Report] (discussing H.B. 2373 and S.B. 1906). 5See Florida Senate 2003 Report, supra note 4, at 4 (‘‘Cruises to United States v. One Big Six Wheel, 166 F.3d 498, 499 (2d Cir. nowhere have been operating out of Florida since 1984. The 1999). industry has grown from 1 ship in 1984 to seventeen today’’). The modern CTN industry also relies on a set of 1992 changes to Prior to 1984, Florida had hosted occasional ‘‘one-off’’ CTN. the Johnson Act, 15 U.S.C. §§ 1171–1178, which was enacted in In 1982, for example, the University of Miami baseball team 1951 to thwart the interstate transportation of gambling devices: organized such a cruise as a fundraiser. See Christine Brennan, Cruising to Nowhere, Miami Herald, Sept. 27, 1982, at 3D The 1992 amendments altered the Johnson Act’s general ban (‘‘[Coach] Ron Fraser’s ship came in, complete with gourmet on maritime gambling. Prior to the amendments, it was ‘‘un- dining, casino gambling, Las Vegas dancers, a comedy team and lawful to manufacture, recondition, repair, sell, transport, pos- entertainer Vic Damone. Saturday night’s Cruise to Nowhere, sess, or use any gambling device .within the special the latest of Fraser’s promotional ideas, was a rousing success maritime’’ jurisdiction of the United States. 15 U.S.C.A. § for his Hurricane baseball program. ‘It went great,’ Fraser said. 1175 (1990). The Justice Department, however, inter- ‘We had a standing-room-only crowd of over 900 and turned 60 preted this prohibition not ‘‘to apply to foreign-flag ves- away.’’). See also Larry Birger, Coach Fraser’s Formula: Play sels entering the United States.’’ H.R. Rep. No. 102-357 Hard, Sell Hard, Miami Herald, Aug. 30, 1982, at 10BM (1991). The effect was that American flag vessels were (explaining that guests paid ‘‘$125 [per] ticket for a special four- restricted from offering gambling to their passengers hour ‘Cruise to Nowhere’ Sept. 25 aboard the M/S Starward’’). while foreign flag vessels were free to do so. This put In 1984, Fantasy Cruises announced it was going to begin American flag vessels at a competitive disadvantage in regular CTN out of Fort Lauderdale using a Greek ship called the lucrative leisure cruise industry. See id. the Amerikanis. Built in 1952 by Harland and Wolff (the Belfast Congress reacted to the disparity by amending the firm responsible for the Titanic), the ship’s original owner had Johnson Act to make clear that it applied to vessels been London’s Union-Castle Line, which ran freighters to ‘‘documented under the laws of a foreign country.’’ 15 Africa. In 1967, after being sold to Chandris Lines (now U.S.C. § 1175(a). Additionally, Congress crafted excep- Celebrity Cruises), the vessel was given a new name, a new flag, tions to the Johnson Act’s blanket restrictions related to and a retrofit that made her suitable for Caribbean cruising.
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