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Economic Exploitation

From gambling to check cashing, there’s money to be made in Flagami

By David Quinones

His hands danced expertly across the worn Casio electronic keyboard, deftly avoiding the damaged and upturned F2 key with a grace that made you wonder — despite the cane at his side and blacked-out specs on his face — whether or not Martin Kendrick actually could see.

He sat with his back to the Government Discount storefront, nestled between a Winn-Dixie and a Kmart on the northwest corner of Flagler Street and Douglas Avenue, as people crowded around an outside counter, milling under the shade of the strip mall awning while sipping café con leche in the brisk early afternoon wind.

Kendrick played bluesy tunes in his usual spot in the predominantly Hispanic western edge of Little Havana, oblivious to the passersby dropping cash into his cup as they stepped around his cane.

“I just like it here — I like this part of the city. It’s safe here,” said Kendrick, a Miami native who began playing piano as a boy in Liberty City more than 40 years ago, long before his eyes began to fail him. He said he still works at a local studio, but his daytime excursions to the strip mall are borne more of necessity than of his love for music.

“I need to come out here more and more lately, you know, a little extra income here and there,” he said.

There is an important difference between this neighborhood and the upscale communities nearby — one reflected in Kendrick’s need to labor beyond his usual work week just to make ends meet.

The Flagami neighborhood — generally bordered by Northwest Seventh Street, Southwest Eighth Street, the Miami River and the Palmetto Expressway — is one of the poorest in the county, with an average per capita income of only $10,038 per year, according to U.S. Census data. In fact, data from the Flagami Neighborhood Enhancement Team shows that 17 percent of the neighborhood’s population lives below the poverty line, 22 percent have less than a ninth-grade education and 18 percent speak only Spanish fluently.

But that doesn’t mean there isn’t money to be made in Flagami. Like many low-income Miami-Dade County neighborhoods, the intersection of Flagler Street and Douglas Avenue is rife with businesses that thrive on the economic restrictions of their customers — check-cashing businesses, fast-food restaurants, liquor and gun stores, and even a dog racing track. These kinds of establishments use the limited options available to low-income citizens to their own advantages. Now the Miami-Dade County Commission wants to put slot machines there.

“Inferior goods and products like high-interest loans, payday advances, fast food, alternative financing options — they all take disproportionate amounts of money from low-income individuals who can afford it the least, all to provide the same services,” said Chi Chi Wu, an attorney with the Boston-based National Consumer Law Center, an organization dedicated to educating immigrant consumers. “These abuses can stem from immigrant fears about the fragility of their legal status.”

Placing their bets

Inside Flagler Dog Track early one afternoon, a few dozen patrons placed bets at the simulcasting counters, while others wagered on a race that a two-year-old, hard-driving bitch named Cashin’ Money won after a strong start out of the gates.

Cashing money, according to Flagler’s owner and Chairman Izzy Havenick, is something the track has been doing less and less of each year. Despite the recent addition of the Magic City Poker Room, Havenick, who owns the track with his brother Alex, said the track’s earnings are dropping about 12 percent each year. On this day, Flagler reported $75,688 in total wagers, a far cry from the track’s bygone days.

But all of that could change if Miami-Dade County voters pass a referendum Jan. 29 allowing pari-mutuel establishments to feature stand-alone slot machines. The measure could help Flagler Dog Track and its counterparts compete with local gambling cruises, the Seminole Hard Rock Hotel & Casino in Broward County and even online gaming businesses for coveted betting dollars, particularly since Gov. Charlie Crist signed a compact Nov. 14 allowing the Seminole Tribe of Florida to add more machines and table betting. If the agreement survives a lawsuit and a gauntlet of spurned state legislators, it could set a precedent for the Miami pari-mutuels to augment their gaming. If it doesn’t, it could spell doom for those businesses as the Seminole Hard Rock Hotel & Casino continues to encroach on their income.

“It’s a totally unfair competition,” Havenick said. “They can offer something that we legally cannot. It’s an uneven playing field. They’ve absolutely decimated our business.” While some of Flagler’s business comes from loyal locals, in its heyday, Havenick pointed out, the majority of its clients were those who could afford to take their bets elsewhere. And now many have.

If voters approve the slot measure, Havenick said he and his family would move forward with a $100 million dog track renovation plan, which would include an amphitheatre, retail shopping and a performing arts center on the massive plot of land located only blocks from Coral Gables and less than two miles from downtown Miami.

The way Havenick sees it, voters should ask themselves whether it is more harmful to introduce slot machines to the community or deprive its residents of 6,000 potential jobs.   

District 4 Miami Commissioner Tomas Regalado believes those employment opportunities will benefit the community. “As business partners, the city and the tracks can ask that Miami residents get first consideration for the 6,000 jobs this will create,” he said. “This legislation represents $770,000 in tax revenue for the city.”

Paul Seago, of the Orlando-based No Casinos committee, which has opposed similar legislation throughout the state to varying degrees of success, is concerned about the toll gambling will take on local paychecks.

“It’s just too bad that these people are so intent on pushing gambling and the element it creates in the community,” Seago said. “Slot machines are the crack cocaine of gambling. They’re the worst.”

Havenick noted that the “element” Seago and others like him point to with distaste has yet to materialize in Broward County, where pari-mutuels have operated slot machines for nearly a full year without any major incidents. “Those are fictional charges rooted in the 1950s mentality,” Havenick said. “Casinos are heavily regulated and sanctioned — they don’t bring crime, they bring jobs and opportunities.”

But critics are quick to point out that the revenue has to come from somewhere, and it often comes from the poor residents living in surrounding areas, such as Flagami. Residents in that demographic are the most likely to become problem gamblers, according to 1-888-ADMIT-IT, a state-sponsored help group for people with gambling addictions. The group maintains on-site offices at Flagler Dog Track.

“By 2009, there will be 6,000 hotel rooms in the seven-block area between Flagler and the airport,” Havenick said. “That’s the demographic we’re going after. It does us no good to have locals wasting their paychecks at our casino. When you see a big spender dropping $50,000 a hand, they aren’t doing it because they’re addicted. They’re doing it because of the people watching. There’s a thrill to it and, more importantly, they can afford it.”

‘Pay your bills here’

The two-story Check Cashing USA at the northeast corner of Flagler and Douglas is by far the largest suite in the strip mall in which it resides, with both floors encased in professional office plate glass, two sets of double doors, ample parking and a drive-through. If not for the garish yellow and green lettering advertising “PAYDAY LOANS” and “PAY YOUR BILLS HERE,” the store could easily pass for a real bank.

Critics of the check-cashing and payday advance loan industry contend such sleek appearances can be deceiving.

With exorbitant interest rates that in some cases compound biweekly, short-term loan seekers who secure financing for $500 can find themselves in debt for thousands. For that reason, payday loan centers are often accused of exploiting low-income consumers. There are four such shops at the intersection of Flagler and Douglas alone — ACE Cash Express, Advance America, The Check Store and Check Cashing USA.

“Many of these lenders aren’t people you’d want to spend any time with,” said Robert James, Webmaster of www.pliwatch.org, a leading nonpartisan watchdog of the payday loan industry. “Some of them are crooks. Some of them break the law and/or take advantage of the gray areas.”

Sharon Reuss of the Center for Responsible Lending agreed that check-cashing stores are predatory. “They don’t help people get out of debt; they only perpetuate the cycle of debt in the end.”

In fact, many lendees find themselves in exponentially more debt than when they first sought the short-term cash flow solution.

“The law of supply and demand is a familiar one, but the law of unintended consequences is lesser known,” said Tom Lehman, associate professor of economics at Indiana Wesleyan University, who specializes in urban economics and authored the essay In Defense of Payday Lending.

While some believe tougher regulations could help curtail the problem, Lehman said it could just make matters worse for the consumers who need those services, because those businesses will pass the costs on to their customers.

“Often, well-intended regulations end up harming the very people they’re supposed to help because the reactions of market participants, both producers and consumers, end up attenuating or offsetting any intentions of the policy,” he said.

Still, even employees of local check-cashing businesses acknowledge shady industry practices.

“There is a sales atmosphere. You can tell if someone is going to get in over their head when you see their bank accounts and how much they make,” said an employee of one check-cashing shop at Flagler Street and Douglas Avenue. “We ask for a lot of information, and we turn a lot of people away, but a lot of times.… You know how it’s going to end for them. I wouldn’t take out one of those loans.”

Super-size ’em

For the money, it’s hard to beat the chicken and ribs at Pollo Tropical. One would be hard-pressed to find for less than $10 meat as tender as that in the chicken and ribs Combo Mambo. The total caloric intake for the meal, not counting sides or a soda: 723.

While it may not be the healthiest food available, it won’t kill you either. And on the corner of Flagler and Douglas, Pollo Tropical is about as healthy a choice as one can find. The intersection represents all the big fast-food chains — McDonald’s, Burger King, Wendy’s, Kentucky Fried Chicken and Taco Bell — all within 100 yards of each other.

Organizations such as McSpotlight, based in London, began criticizing fast-food chains for infiltrating low-income neighborhoods long before Morgan Spurlock’s Super Size Me documentary made a ripple of nutritional consciousness in the United States.

A spokesperson for McSpotlight pointed to the group’s mission: “People say fast-food restaurants are entitled to sell in the same way that junk-food companies are entitled to sell their products. But should they be allowed to advertise their food as healthy?” The group also pointed out links between fast food and cancer, heart disease, obesity and diabetes, as well as the fact that fast-food chains often pay the minimum wages allowed under federal law.

Inside Fiesta Liquors, a line makes its way to the back of the store as customers patiently wait to pay for their hooch. For years, community activists have decried the abundance of liquor stores and gun shops in places such as Flagami. While alcohol abuse is not exclusive to low-income areas, businesses like Fiesta flourish in them. Within three blocks of the intersection there are five liquor stores and three gun stores, each open seven days a week.

The disturbing thing is not that these businesses exist, critics say, but that most of them are located in the nation’s poorest communities.

Back in front of Government Discount, Kendrick wrapped up his day as the sun began to set. He did well for a Thursday. He, for one, doesn’t think the neighborhood, or the businesses in it, are any worse than they used to be. 

“Well, if this neighborhood has changed,” he said with a smile, reaching for his cane, “I sure haven’t seen it.”

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