Industry Groups Join Lawsuit Opposing Calder Plan

A pair of industry groups will be allowed to join the legal fight aiming to prevent Churchill Downs Inc. from converting its Calder Casino license from one associated with Thoroughbred racing to a jai alai license.

The Thoroughbred racing industry has lined up to oppose the move that would end the approximate commitment of $10 million to the Thoroughbred purse fund and breeders. A May 7 decision of an administrative law judge will pave the way for two of those groups to join the Florida Horsemen's Benevolent and Protective Association's lawsuit questioning the validity of a permit issued by a state regulator that would permit CDI to offer jai alai. 

Florida administrative law judge Darren Schwartz May 7 approved the Florida Thoroughbred Breeders' and Owners' Association as well as Ocala Breeders' Sales to join in the lawsuit filed June 25, 2018, against the Florida Department of Business and Professional Regulation Division of Pari-Mutuel Wagering and Calder Race Course.

Both the DPMW and Calder had opposed a motion to allow the FTBOA and OBS to join the lawsuit, but Schwartz ruled that Florida law allows both entities to do so. He said they both meet the standards of being substantially affected by the challenged agency action, the subject matter is of their general scope of interest and activity, and the relief requested is appropriate for the association to request on behalf of its members.

"A substantial number of FTBOA's members depend on the ability to compete for and receive substantial monetary awards resulting from Thoroughbred races," Schwartz wrote in his opinion. "Millions of dollars that would otherwise be available through the payments of awards from Thoroughbred races would be lost if Calder is permitted to switch its underlying pari-mutuel activity from racing Thoroughbreds to conducting jai alai games. FTBOA's substantial injury is of a type or nature which this proceeding is designed to protect."

In the case of OBS, the opinion noted the quality and quantity of the horses marketed at OBS are directly related to a vibrant Florida racing industry.

"The demand to breed and race horses in Florida will decrease significantly if the purses and awards are reduced as a consequence of Calder discontinuing Thoroughbred horse races and replacing the races with summer jai alai games," Schwartz wrote. "In addition, the loss of Thoroughbred racing at Calder will also directly impact the intertrack wagering that OBS conducts."

CDI currently holds pari-mutuel licenses for both jai alai and Thoroughbred racing at Calder, but the latter will expire in 2020. On July 31, Calder submitted an email to the DPMW requesting a declaratory statement from the regulator about whether a switch to jai alai would jeopardize its casino license.

In a conference call with investors last month, CDI CEO Bill Carstanjen said Calder plans to begin to offer jai alai events this month. The Calder Casino website said Jai Alai will begin May 22. Carstanjen noted expenses in opening the jai alai front on and in related legal expenses.

In the suit filed June 25 in Leon County Circuit Court—the county where state capital Tallahassee is located—the horsemen requested declaratory and other relief following the February decision by the DPMW.

In its court filing, the Florida HBPA argues the summer jai alai permit granted to Calder should not have existed to begin with, based on state law. It also suggests the DPMW acted improperly in its procedures in granting the license. Its court filing says the regulator was required to provide interested parties notice that such changes were being considered. The Florida HBPA said it was unaware of Calder's jai alai permit request until after it was approved, and it was not afforded a public hearing, for which it says it is entitled.

Under state law, the casinos at Gulfstream Park and Calder both pay into a single Thoroughbred purse fund, a commitment of 10% of their slot machine revenues. In the lawsuit, the Florida HBPA said in fiscal year 2017-18, Calder paid $8.82 million to purses. Florida HBPA attorney Brad Beilly noted Calder would commit about another $1 million to state breeders. 

"We're soundly heartened and encouraged by the court's recognition of our horsemen's collective economic engine and job creation contributions to Florida," said FHBPA executive director Glen Berman. "Indeed, each aspect of our business and each investor who has brought money into Florida expecting to enjoy a return on their racehorse investment is critically supported by having a viable horse racing venue at Calder."