Calder Casino Gets Off to Modest Start
During the first full month of operation, slot machines at Calder Casino & Race Course placed third in pre-tax revenue among the five pari-mutuel casinos in southeast Florida.
Data from the Florida Division of Pari-Mutuel Wagering show that in February, Calder’s 1,245 slot machines had pre-tax revenue of $5,129,746. Amid that apparently modest start in a fiercely competitive market, Calder’s casino was fourth that month in total slots play and fourth in average daily revenue per slot machine.
However, Calder’s February numbers indicate that its casino operations could be profitable in 2010 even if the state tax on pari-mutuel slots revenue remains at 50%, said Ryan Worst, a securities analyst at Brean Murray Carret & Co. in New York. The Florida legislature is considering a bill that would reduce that tax rate to 35%.
“We are pleased with our start,” Calder president and general manager Tom O’Donnell said.
Building brand recognition and revenue has been a goal for Calder. O’Donnell said the racetrack/casino believes it has “capitalized on the exposure” of its early television, radio, and newspaper advertising, and is starting to build a loyal slots customer base.
Calder, in Miami Gardens, opened its casino Jan. 22. Calder and parent Churchill Downs Inc. spent $85 million on the casino and met their goal of opening it prior to the Jan. 31 Pro Bowl and Feb. 7 Super Bowl. Both games were at Sun Life Stadium (formerly known as Dolphin Stadium), about a mile south of Calder.
“We expected we would attract guests looking to see our casino on days around the games,” O’Donnell said. “We expected they would not want to deal with the traffic that Sunday (Super Bowl). That’s what happened.”
Slots play at Calder on Super Bowl Sunday was $1,609,702, according to the Florida DPMW. Calder’s daily average for February was $2,280,493.
For February, Calder had total slots play of $63,853,814. Calder had average daily revenue per machine of $147. Many analysts use that second number, also known as win-per-unit, as a key gauge of casino operations.
In a 2006 study, the Florida legislature projected that the overall daily “win-per-unit average” would be about $190 per day at South Florida pari-mutuel casinos. That average has been as high as $185 in the 2007-08 fiscal year that ended June 30, 2008.
Since then, the recession and overall problems in the real-estate market have had a major impact on southeast Florida. In addition, Calder and other pari-mutuel facilities compete with the Seminole Hard Rock Hotel & Casino in Hollywood. That casino has blackjack and baccarat—popular games that are not permitted at Florida racetracks.
The five pari-mutuel casinos and three Seminole casinos in southeast Florida all have Class III Las Vegas-style slot machines and poker. The Seminole casinos do not have pari-mutuel full-card simulcasts.
“The recession has had a big impact on discretionary income,” O’Donnell said “Everyone (in gaming) is street-fighting for every dollar.”
But even with Calder opening, slots performance in all three categories was higher in February 2010 than in February 2009 at Gulfstream Park and at harness track Isle Casino and Racing at Pompano Park. The numbers were down in all three categories at Greyhound track Mardi Gras Racetrack and Gaming. Greyhound track Magic City Casino, formerly known as Flagler Greyhound, opened its casino last October.
“Our primary competitors are Mardi Gras, Gulfstream, and Flagler,” O’Donnell said. “We do not consider the Hard Rock a competitor. They pay revenues (to Florida) at a much lower rate than our tax rate. They have more marketing and advertising dollars, and are a full-destination resort.”
Gulfstream and Mardi Gras at Hollywood are located about eight miles east of Calder. Magic City is in Miami. The Seminole Hard Rock is six miles north of Calder, and is visible from upper floors of Calder’s grandstand.
Officials at Gulfstream and several other pari-mutuel facilities often mention the Hard Rock as a main rival for slots and card games.
O’Donnell said Calder hopes to gain some customers for which it is the closest casino, and noted its attractive building and variety of slot machines could bring in business from some rivals. Calder’s 104,000-square-foot casino is on one floor, and many visitors have said they like its rectangular design and space that is more open.
“People also are saying they like our variety of games,” said O’Donnell, whose career includes executive positions at Harrah’s Entertainment.
An indication of the casino’s importance in CDI’s view is the large signs on the casino and adjacent racing grandstand building that say just Calder Casino.
Worst, of Breen Murray Caret, follows CDI’s stock. He is forecasting that Calder’s casino will have about $7 million in annual earnings before interest, taxes, depreciation, and amortization this year if the state tax rate stays at 50%. In a full year with a 35% tax rate, he expects that number could grow to $15 million.
Calder’s revenue per slot machine might be lower than some local rivals because of its larger number of machines, Worst said.
“Once they are installed, there is very little added incremental cost with more machines,” he said. “If you have 1,200, your ongoing costs are about the same as with 1,000.”
Calder will begin its eight-month race meet April 25. During the first three full years of its slots operation, Calder will pay a minimum of $14.375 million to the Florida Horsemen’s Benevolent and Protective Association and the Florida Thoroughbred Breeders’ and Owners’ Association for purses and breeders’ awards. That will generate about $4.8 million per year for the horsemen’s groups.
Under a slots agreement signed with Calder in July 2008, the two horsemen’s groups are guaranteed a combined 6.75% of annual pre-tax slots revenue for the remainder of a 10-year term. For the horsemen’s groups, all Calder slots revenue is allocated for overnight races. That will add about $30,000 a day for each race day in 2010, said Kent Stirling, executive director of the Florida HPBA.
Under its contracts with the two groups, Gulfstream pays 7.5% of pre-tax slots revenue for purses and 0.75% to the state’s Thoroughbred breeding program.
For this February, compared with February 2009, Gulfstream’s casino had significant increases in all three slots categories, according to the Florida DPMW. Gulfstream’s total slots play at its 846 machines was up 34% from $53,933,391 to $72,269,072, and its pre-tax slots revenue increased 10% from $4,450,117 to $4,911,995. Gulfstream’s payout to slots players grew from 91%to 92%, and it also increased its promotional payouts.
Months early in the year are always best for Gulfstream’s casino, as it attracts tourists and bettors that attend mostly for live racing. This year, Gulfstream is benefiting from a combination of enhancements in marketing to repeat slots players, car giveaways and other promotions, said Steve Calabro, the track’s vice president of gaming.
“We also regularly survey our customers about the games they want, and we react to please them,” Calabro said.
Gulfstream’s two casino rooms, on its first and second floors, are gaining an undetermined number of players who are shopping and eating at the adjacent The Village at Gulfstream Park, which opened Feb. 11.
Gulfstream will end its race meet April 24. Before then, it hopes to have arrangements with some Village merchants to provide their customers racing and casino vouchers, which Calabro hopes will lead to more betting at Gulfstream.
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