Stalled Florida Law Puts Tracks on Standby
Florida’s Thoroughbred industry will enter 2010 without the expanded racing, other gaming, and tax breaks it thought it had gained during this year’s session of the state legislature.
A pending law that contains those changes has not been enacted due to a dispute between Gov. Charlie Crist and leaders of the legislature over terms of a gaming compact with the Seminole Tribe of Florida.
The pending law has a section on Thoroughbred tracks and other pari-mutuel facilities and a section on operations of the Seminoles’ seven Florida casinos. Crist and the Seminoles are seeking changes in the Seminole section, including one that could prevent additional future casino gaming for Florida pari-mutuel facilities.
Several leaders in the legislature have said have said the changes are unacceptable.
The dispute has effectively killed the pending law, thus forcing Thoroughbred tracks and other pari-mutuel facilities to begin lobbying for a 2010 bill. One Senate leader expects it could be difficult to gain a bill with pari-mutuel provisions similar to the 2009 package.
“Maybe we will have to start from scratch again, to come up with the broader picture,” said Sen. Dennis Jones, a Republican from the St. Petersburg suburb of Seminole. Jones is chairman of the Senate Regulated Industries Committee, which has initial jurisdiction over gaming issues.
The legislature will hold its 2010 session from March 2-April 30.
“I don’t see any interest in holding a special session (prior to March),” Jones said.
That indicates the Thoroughbred industry, other racetracks, and jai-alai frontons will need to wait at least until mid-2010 for any changes in Florida laws.
Jones, citing the employment and overall economic impact of pari-mutuel operations, was a sponsor of the 2009 law’s provisions that would have benefited horse and Greyhound tracks and jai-alai frontons. Those changes, including permission for Hialeah Park to build a casino, were part of the gaming law the legislature passed in May and Crist signed in June.
The law would reduce the state tax rate from 50% to 35% on slot machines for pari-mutuel casinos in Broward and Miami-Dade counties. Gulfstream Park has a casino with Class III Las Vegas-style slot machines, and Calder Race Course plans to open one in January, 2010.
The law also would authorize a not-for-profit Thoroughbred meet for the Ocala Breeders’ Sales Co. and expand daily poker room hours from 12 to 24 on weekends and to 18 on weekdays under each pari-mutuel permit.
The now-stalled 2009 measure would have allowed Hialeah to hold up to half of its races as Thoroughbred races during future Quarter Horse meets, without the permission from Calder and Gulfstream that it now needs for any Thoroughbred racing. It also would allow Hialeah, as an active Quarter Horse track, to build a casino with Las Vegas-style slot machines.
Hialeah is running its initial Quarter Horse meet of 40 race days through Feb. 2, 2010.
“It is very frustrating,” Hialeah owner John Brunetti said of the wait for any changes in state gaming laws.
Last March, the Florida Division of Pari-Mutuel Wagering issued Hialeah a Quarter Horse permit. Under current law, it must race at least 40 days with a minimum eight races per card.
“We are honoring that requirement and the commitment we have made for this meet,” Brunetti said. “But we are suffering the pain.”
Handle for the first 12 days of Hialeah’s meet has been lower than it expected. Average total handle has been $133,598 per day, or about $16,700 per race, according to Equibase. That includes wagering at Hialeah and at approximately 100 other locations—a mix of racetracks, off-track betting parlors, and advance deposit wagering platforms.
Blood-Horse research indicates those handle numbers are comparable with many Quarter Horse meets. But Hialeah’s contract with horsemen to pay total purses of $4 million, an average of $100,000 per day, is by far one of the highest in Quarter Horse racing.
In addition, Hialeah spent about $12 million to renovate the clubhouse portion of its building, its paddock area, and other portions of its grounds for the meet that began Nov. 28. Hialeah built 800 temporary stalls. Quarter Horse owners, mostly from outside Florida, have filled only about 550.
“They are straggling in,” Brunetti said. “The costs of running this meet will probably be more than I expected. This is a serious wound, but not fatal.”
Brunetti had been projecting an operating loss of about $6 million for the meet he calls a “means to an end” for a casino and at least a partial return of Thoroughbred racing.
On Dec. 19, Hialeah will hold the $100,000 Hialeah Derby at 440 yards for 3-year-olds as part of an eight-race card with $193,000 in purses.
As a first-year Florida permit-holder, Hialeah cannot carry simulcasts from any Thoroughbred tracks.
Marc Dunbar, who teaches gambling and pari-mutuel law at The Florida State University College of Law, said he is unaware of any United States track other than Hialeah that has held a lengthy first-year Quarter Horse meet without also having revenue from other gaming, such as slot machines.
“John is doing everything that anyone could want him to do under a situation where he cannot have other supporting revenues,” said Dunbar, a partner in the Pennington Law Firm, which represents Gulfstream.
Dunbar noted Gulfstream supported the 2009 bill’s provisions that helped Hialeah, as part of a compromise among several pari-mutuel operations, and would support similar provisions in 2010.
Hialeah hopes any legislation will allow it to obtain a new Thoroughbred permit, Brunetti said. Jones said he supports a 2010 passage of basically all of this year’s pari-mutuel provisions, including those that would benefit Hialeah.
Regarding a new Thoroughbred permit for Hialeah, Jones said: “I’m not sure if that would have any staying power if introduced. It needs to be brokered among all the pari-mutuels, and there has been some bad blood.”
Disputes that have pitted Thoroughbred tracks against each other and against the Greyhound and jai-alai industries are long-running in the Florida legislature.
Said Brunetti: “This year, when I was in Tallahassee, one legislator told me, ‘John, I’ve never seen an industry like yours where someone will spend millions to keep someone else from making a few more thousands.’ ”
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