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Calder Drops to Last in Host Track Business

July figures show it has been passed by both Florida competitors in simulcast market.

Calder Casino & Race Course came in last among Florida's three Thoroughbred tracks in July in the lucrative business of host-track simulcasting of races from Thoroughbred tracks outside the state.

Previously in July, Calder was the only Florida racetrack holding a race meet and thus the only one eligible to be a host and retransmit Thoroughbred simulcast signals to other Florida pari-mutuel outlets that are known as guest tracks.

But  amid new host-track competition from Gulfstream Park and Tampa Bay Downs, The Blood-Horse estimates that Calder's pre-tax revenue from simulcast wagering on tracks such as Belmont Park and Santa Anita Park fell from about $3 million in July 2012 to about $550,000 in July 2013.

A host track must put half of that revenue into race purses, while using the remainder for other purposes. Florida has 32 pari-mutuel facilities including the three Thoroughbred tracks.

During July 2013, Tampa Bay was first and Gulfstream was second in providing signals for wagering at guest tracks that totaled $17,010,964, according to data released Aug. 28 by the Florida Division of Pari-Mutuel Wagering.

Here is the breakdown for July 2013: Tampa Bay Downs, $7,162,855, for 42% of the total; Gulfstream, $5,532,761, for 32% of the total; Calder, $4,315,347, for 26% of the total. Guest track wagering was listed as $23,050,325 in July 2012, with Calder providing all of it.

The July-to-July decline in the total number can be attributed to the $7,285,601 that was bet at Gulfstream and the $1,886,5218 bet at Tampa Bay Downs in July 2013 on out-of-state simulcasts. In previous Julys the two tracks received those signals from Calder as guest tracks.

Without the new competition Calder probably would have supplied more than $25 million in guest track business and generated more than $3 million in revenue in July 2013, similar to  the previous July, The new Florida DPMW data help explain why Calder announced Aug. 25 it would cut daily average overnight purses by 12% beginning Aug. 30.

Calder said it is making the change due to the impact of the host-track competition and of its new weekend head-to-head racing with Miami-area neighbor Gulfstream.

Since the middle of May 2013, the three tracks have been operating as year-round host tracks, using their different interpretations of Florida laws. They are competing for market share where combined revenue for the three tracks is $30 million to $40 million a yearwith half of that going to purses.

It is widely viewed that the outcome could be significant in determining the long-term health and growth prospects of the three tracks. The host-track numbers for July are a continuation of a troublesome trend for Calder.

Since July 6 Calder and Gulfstream, which are just eight miles apart, have been racing head-to-head on Saturdays and Sundays. Through eight weekends, Gulfstream has averaged about $2.5 million a day in all-sources pari-mutuel handle compared with about $1.25 million for Calder.

Despite the host-track and on-track numbers, Calder officials reiterated Aug. 29 that the track does not plan to change its schedule, which calls for  it to have racing Fridays through Sundays until June 30, 2014.

Host Track Rules

Under Florida laws, a Thoroughbred track can be eligible to be a host only if it is holding what the Florida DPMW regards as a live race meet. A host purchases the signals of Thoroughbred tracks outside Florida and then sells and transmits them to other Florida pari-mutuel facilities.

In the Aug. 25 announcement, Calder vice  president and general manager for racing John Marshall said: "Historic qualification for a live race meet only allowed simulcasting during a live meet which consisted of three live race days a week."

Gulfstream is now racing year-round at least two days a week, and it maintains that it meets contiguous weeks' racing requirements for host-track eligibility. Tampa Bay's interpretation has created some controversy, and the track's general manager, Peter Berube, saidt "some people are depicting us as the bad guy."

He provided details to refute that view, and explain why Tampa Bay believes it is host track-eligible. Berube pointed to a provision of state law that allows a track to conduct any type of simulcasting if, during the preceding  fiscal year, it raced for a period of at least 40 days with at least three racing days a week.

Tampa Bay did that during its 2012-13 meet from early December through early May. It stirred controversy by holding a two-day meet June 30 and July 1 to help assure it could have year-round host-track status for 2012-13 and for 2013-14.

Tampa  Bay's next race day will be Dec  4.

Berube  would not identify the pari-mutuel outlets that are receiving Tampa Bay's host-track signals from non-Florida tracks. But he said the list is the same as during its regular  race meets.

Berube estimates that year-round host simulcasting will lead to a $1.8 million to $2 million increase in purses for Tampa Bay's 2013-14 meet. That would be a 15% hike with an average of about $22,000 per day over 91 days.

"This is money for our horsemen (Tampa Bay Horsemen's Benevolent and Protective Association)," Berube said. "It helps level the playing field with Calder and Gulfstream, which have some purse money coming from slot machines–something we don't have,"

Kent  Stirling, executive director of the Florida  Horsemen's Benevolent and Protective Association, said: "What Tampa Bay is doing is totally bogus. It  was never the intention of the legislature to let a track go 150 days between races and still consider it a race meet."

The Florida HBPA has purse contracts with Calder and Gulfstream.

"The majority of the horsemen at Tampa Bay spend the rest of  the year at tracks in other states," Stirling  said. "What Tampa Bay is doing is taking purse money away from our horsemen who live and race in Florida year-round."

Calder in late May filed a petition with the Florida Division of Administrative Hearings asking it to determine whether the Florida DPMW violated Florida laws and rules by allowing Gulfstream and Tampa Bay to be host tracks during periods other than their traditional race meets. The Division of Administrative Hearings has told the Florida DPMW to conduct the review, with a decision due by the end of September.

Marshall said Calder hopes the Florida DPMW will revoke the year-round host-track status of Tampa Bay and Gulfstream or not grant it for 2014-15.

Host Track Numbers

Guest-track wagering was $270 million during Florida's 2011-12 fiscal year that ended June 30, 2012. It declined to $262 million in 2012-13. Calder's market share fell from 71% in fiscal 2011-12 to 65% in 2012-13.

The host tracks generally do not disclose their revenue and profitability for that business. But it is known to be profitable and is sometimes referred to as a cash cow, partly because of the relatively low cost of ongoing operations.

State law requires that the guest track receive at least one-third of pari-mutuel takeout, with the remainder divided evenly between the host track and the horsemen's association with which it has a purse contract. The host track expenses are for paying a non-Florida track to take its signal and for ongoing operations.

Based on an assumed 20% blended takeout rate for $270 million in wagering, the guest and host tracks had combined revenue of about $54 million in each of the last two fiscal years. Of that  money, the tracks would divvy up asmuch as $36 million.

That breakdown indicates why Calder apparently had about $3 million in revenue on $23 million in guest track wagering in July 2012, and about  $550,000 in revenue on $4.3 million this July,

Calder and Gulfstream cannot be the host track for any of the three pari-mutuel facilities located within 50 miles of Tampa Bay Downs, and Tampa Bay cannot be the host for the other six pari-mutuel outlets within 50 miles of Gulfstream or Calder.

Berube said  Tampa Bay in recent  years has allowed some guest tracks to keep slightly more than one-third of takeout, but that it has not become more aggressive on pricing this year. Gulfstream has offered a bigger cut and has gained year-round business from several wagering outlets that have been guest- track clients during its regular winter meets, track president Tim Ritvo said.

Without  providing pricing details, Ritvo said Palm Beach Kennel Club, one of Florida's most active sites for simulcast betting, is among the guest tracks Gulfstream has taken away from Calder this summer.