Slots Revenue Issue in Gulfstream-Calder Plan

The major remaining issue is the tracks' proposal for an annual reduction of about $1.5 million in the amount of Calder's slot machine revenues that go into its race purses. 

 

Officials of the neighboring South Florida tracks and their parent companies and officials of the Florida HBPA have declined to comment on details of the plan, which probably would halt head-to-head racing as soon as this July. But there are expectations among trainers and owners that an agreement could be announced during the week of May 12.

 

Churchill Downs  Inc., Calder's parent, reportedly has insisted that any agreement must reduce the share of  its slots revenues that go into race purses—and thus to South Florida horsemen with whom it has had a series of bitter contract disputes.

 

The current contract calls for Calder over the course of each year to place 12% of its revenues from slot machines into purses for its races. In each of the past two  years that annual provision has been in the $9 million range--coming from just under $75 million in net slots revenues. 

 

But that contribution would drop to 10% of slots revenues, or about $7.5 million a year, as part of a tentative agreement that Gulfstream and Calder reached in late April. The slots revenues-to-race purses ratio would remain 10% at Gulfstream. 

 

Over the course of 150 race days, approximately Calder's current annual schedule, the $1.5 million decrease would amount to about $10,000 in money for purses each day. In recent weeks, Calder has been racing Fridays through Sundays, with eight races per day and average daily purses of about $110,000. 

 

The Florida HBPA, which has the annual purse contracts with each track, has indicated it will accept the plan. But in return for less slots money from Calder, it is seeking some unspecified changes in its agreements with Gulfstream.

 

The horsemen's requests are directed toward Gulfstream, which under the agreement would take over Calder's racing operations through a lease arrangement. Calder, eight miles west of Gulfstream, would have racing approximately two months each year and Gulfstream would have the remainder--with no overlap.

 

That would achieve the goal of the Florida HBPA, and almost everyone else in racing, of halting the head-to-head racing that began last July and is scheduled to continue through June 2015.

 

Gulfstream has confirmed that the deal, which it presented to the horsemen April 28, has this basic framework:

 

—Gulfstream and its parent Stronach Group would lease part of Calder's operations from Churchill Downs Inc. (CDI);    

 

—CDI would retain ownership of Calder, including its casino; and

 

—Calder would have racing 40 days, probably in the fall, and Gulfstream would race during the other weeks. There would be no overlap.

 

The agreement would be for six years. After approval by the tracks and horsemen, it would require approval by the Florida Division of Pari-Mutuel Wagering.

 

In a statement issued May 9, Florida HBPA president Phil Combest said: "I have to believe we're closer to an agreement than we've ever been. No question it's not a perfect document, but it's a document which allows racing to continue and grow in South Florida and is acceptable to the horsemen." (See Blood-Horse article ) 

 

On May 8, the Florida HBPA board of directors sent Gulfstream a resolution with its recommendations on the Gulfstream-Calder plan. It included what Combest called "the controversial 2% reduction in slots revenue to purses at Calder." 

 

At Florida pari-mutuels, net slot machine revenues are the money that players put into machines minus payouts to players and promotional credits.

 

Calder has 1,170 Las Vegas-style slot machines in its casino that is adjacent to its racing building; Gulfstream has 875 of those machines in the two casino rooms in its racing building.

 

Calder is on a pace to generate about $74 million in net slots revenue during Florida's 2013-14 fiscal year that ends this June 30, according to the Florida DPMW.

 

In fiscal 2012-13, Calder had $72.5 million in slots revenue. At a 12% rate, that provided $8.7 million for race purses.

 

Gulfstream is on pace to generate about $49 million in net slots  revenues during the current fiscal year--similar to fiscal 2012-13 when that total was $48.7 million.

 

Broward and Miami-Dade are the only counties in which Florida allows pari-mutuels to have casinos with slot machines. All eight eligible facilities have casinos.

 

Through April 20, for the current fiscal year Calder had average revenue per machine of $173 per day—fourth highest among the eight. Gulfstream's average was $155 per day, tied for fifth with Miami Jai-Alai.

 

Magic City Casino, formerly known as Flagler Greyhound, was first at $262, followed by Standardbred track Isle Racing and Casino at Pompano Park at $258. 

 

Hialeah Park, which has Quarter Horse racing, has averaged $183 in daily revenue per machine since it opened its casino last August.

 

Calder opened its casino in 2010, as one of CDI's first steps into the non-racing gaming that is important in its growth strategy. For several years in local advertising, Calder has emphasized its casino while Gulfstream has continued to emphasize its casino.

 

That plus Gulfstream's brand name with simulcast bettors has led to results like the recent May 9-11 weekend, when Gulfstream had 25 races and Calder had 24 over the three days. Gulfstream's average daily all-sources handle of $4.0 million was 5.3 times greater than Calder's $753,000 average, according to Equibase Co.