Calder Hitting Purse Increase Target
Updated: Friday, August 20, 2010 8:38 AM
Posted: Thursday, August 19, 2010 3:56 PM
Calder Casino & Race Course is meeting its targets of an overnight purse increase that it announced on June 12, utilizing portions of the revenue from slot machines at the casino it opened on Jan. 22, 2010.
Calder’s average daily overnight purse target is $182,000—up 10% from a previous target of $165,000 at the race meet it began on April 25. That money is for all races except overnight stakes, which at Calder are usually for $55,000, and for other stakes.
Blood-Horse research, based on a review of Equibase charts shows Calder averaged $182,050 in overnight purses for the four days from Aug. 5-8 and $188,350 for the four days from Aug. 12-15.
The Miami Gardens, Fla., track has live racing Thursdays through Sundays.
Calder has consistently hit the $182,000 target and in several weeks has exceeded it since mid-June, according to John Marshall, the track’s vice president and general manager of racing operations, and Kent Stirling, executive director of the Florida Horsemen’s Benevolent and Protective Association.
As of Aug. 13, Calder had a “slight underpayment” in its purse account, Marshall said. Meanwhile, Calder’s slots revenues are continuing a pattern of steady and modest growth.
Those factors have made Marshall and Stirling optimistic that Calder will be able to keep overnight purses in the $182,000 range through its eight-month season that will end on Jan. 3, 2011.
Money from its Las Vegas-style slot machines is aiding the Calder purse structure during a year in which it is among numerous Thoroughbred tracks that are experiencing declines in handle.
“The casino is helping make this a decent meet,” Stirling said.
As Calder prepares for the fall portion of its season—generally its strongest months for handle—he and Marshall are hoping for a continuation in this summer’s modest improvement of handle, compared with this spring.
Churchill Downs Inc. is Calder’s parent. In its latest quarterly report to the Securities and Exchange Commission, CDI said Calder’s total handle fell from $195 million in last year’s second quarter to $165.9 million in this year’s second quarter. That is a 15% decline.
Calder had 39 live racing days in 2009’s second quarter and 37 live racing days in this year’s second quarter.
CDI told Blood-Horse that in its reports to the SEC, Calder total handle is a combination of live on-track wagering; export; import; proxy when Calder is host (wagering at other Florida sites on out-of-state races); and Gulfstream wagering on Tampa Bay Downs when Calder is host. CDI’s reports to the SEC do not provide a breakdown of those components.
Marshall said that through Aug. 13, Calder handle by that measurement “is down single digits” to date in this year’s third quarter compared with 2009’s third quarter. He did not disclose handle numbers.
“The second quarter numbers were impacted because we had 10 fewer live races and 150 fewer imported races,” Marshall said. “We are feeling the impact of some other tracks cutting back.”
Calder’s handle performance is similar to this year’s national trend. According to Equibase, wagering on U.S. thoroughbred races was down 7.1% for this year’s first seven months compared with the first seven months of 2009.
While Calder has raised purses, due to slots revenue, several other U.S. tracks have cut purses.
“We are improving (handle) so far in the third quarter partly because there is no construction,” Marshall said.
During 2009, construction of the casino led to congestion in Calder’s main parking lot. That cut into attendance by an amount Calder can’t determine, Marshall said.
“This year, we have the casino and easy entry and we have our poker room (opened last October),” he said.
The casino building, with 1,245 Las Vegas-style slot machines, is adjacent to the clubhouse/grandstand building.
“Our biggest improvement this quarter is in live handle,” Marshall said. “We are finding that more of our casino patrons are walking over and betting on races. But we can’t put a number on it.”
In reporting second quarter results, CDI president and CEO Robert Evans said on Aug. 4 that Calder had gross gaming revenue of $21.1 million for the quarter. Thus, he said Calder has “continued on pace” to meet CDI’s goal of between $80 million and $100 million in that revenue for the casino’s first year.
July and August are usually slow business months in southeast Florida. But apparently because it is in its live racing season, Calder’s slots play has held relatively steady while several rival pari-mutuel casinos have reported declines to the Florida Division of Pari-Mutuel Wagering.
Gulfstream Park and Calder are among the five pari-mutuels that have casinos. They compete for slots and poker business with four Tribal casinos in the Miami-Fort Lauderdale market.
During the first eight days in August, Calder’s average daily slots revenue of $154 per machine was third among the five pari-mutuel casinos in southeast Florida.
Slots play at Calder totaled $78.1 million in May, $76.4 million in June, and $74.7 million in July. Through the first eight days of August, Calder slots play was $18.9 million.
Until July 1, 2010, the state tax rate was 50% on net slots revenues at Florida pari-mutuel casinos—which are permitted only in Miami-Dade and Broward counties. A law the Florida legislature passed this year cut that tax rate to 35%, as of July 1. Net slots revenue is basically slots play minus payouts to players.
Of its $74.7 million in slots play in July, Calder had net slots revenue of $5.8 million and at a 35% rate paid $2 million in state tax on that revenue. Under the agreement it signed in 2008 with the Florida HPBA, Calder will pay a minimum of $4.5 million from slots revenue to race purses this year, all for non-stakes races.
The agreement also called for an increase in payments if Florida cut the slots tax rate from 50%. As of July 1, Calder non-stakes purses receive an additional 35% of the difference between Calder’s slots tax payments at the 50% rate, and the new 35% rate. Thus, of every $100 in Calder slots tax savings, $35 goes to purses.
The pending lower tax rate led Calder, following talks with the Florida HPBA, to raise its overnight purse target to $182,000.
Between July 1 and Aug. 8, Calder at the 35% rate paid state slots taxes of $2,555,491. At a 50% rate, that payment would have been $3,701,708. Blood-Horse calculations show a savings of $1,146,217, with 35% or $401,175 going to purses. That accounts for the approximately $17,000 a day in added purses.
Payments to the purses that result from the lower tax rate are in addition to money that Calder has been paying to reach its $4.5 million requirement. Data from July and early August, with the lower tax rate, indicate Calder might pay $6 million or more of slots revenues into purses this year.
Calder will end its Calder meet on Oct. 17 and begin its Tropical Meet on Oct. 21.
The final three months will include several multiple stakes Saturdays, and Marshall and Stirling are hopeful that handle and casino play will enable Calder to maintain current purse levels.
“But what we have is what we will get, and I don’t see the prospect of another increase,” Stirling said.
Still, this year’s developments at Calder are an indication of how a casino that meets management’s expectations can help a track that is facing challenges to maintain its handle levels.
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