The countdown to July 1 and long-awaited new Florida rules on slot machines and poker has ended for Calder Casino & Race Course and Gulfstream Park.
July 1 is the effective date of a new law that cuts the state tax rate on slot machine revenue from 50% to 35% at Calder, Gulfstream, and the three other southeast Florida pari-mutuels that have casinos.
The new law also expands daily operating hours at the poker rooms of all Florida pari-mutuels, and for the first time allows them to have no-limit games. Tampa Bay Downs, Calder, and Gulfstream are among 23 Florida pari-mutuels with poker rooms. Hialeah Park, which since last year has had a Quarter Horse permit, does not have a poker room.
Officials at Gulfstream in Hallandale Beach and Calder in Miami Gardens expect the slots tax change will have the bigger impact on their profits. They said the poker change also will generate increased revenue and profits.
As those changes arrive permanently for the pari-mutuels, the Seminole Tribe of Florida is waiting for the U.S. Department of the Interior and its National Indian Gaming Commission to approve its gaming compact with the Florida government. Separately, on June 3 the NIGC said it is investigating the Seminole Tribe, based in Hollywood, Fla., for allegedly permitting some of its members to illegally spend portions of tribal gaming profits on personal expenses.
In a report issued June 30, Fitch Ratings said it expects the Department of Interior will approve the compact “within approximately a week,” and that it believes the NIGC investigation has not impacted the federal government’s review of the gaming compact.
But Fitch downgraded several of its ratings on Seminole Tribe bonds, noting the investigation is an indication of an “inability to resolve the tribal government’s long track record of weak internal controls with respect to financial and accounting practices.” Fitch’s actions included downgrading the Seminole’s issuer rating from BBB- to BB--moving it from investment grade to a non-investment grade rating.
The Florida legislature and Gov. Charlie Crist approved the compact this year in tandem with a gaming law. It would permit the Seminoles to add blackjack and baccarat at two more Florida casinos, giving them those games at five sites.
The agreement gives the Seminoles exclusive Florida rights to the two table games for five years. In return, the Seminoles will pay the state a minimum of $1 billion from gaming revenue over five years.
Steve Calabro, Gulfstream’s general manager, said the July 1 changes should help Gulfstream and other pari-mutuels in their competition with Seminole casinos. But pari-mutuels “still don’t have a level playing field,” he said.
The Seminoles already have and will continue to offer poker for 24 hours and seven days a week at six of their seven Florida casinos. They have had poker games with higher limits than pari-mutuels, and for the first time will offer no-limit games.
The three Seminole casinos in Broward County compete with Gulfstream and Calder for gaming customers. Those three casinos have Class III Las Vegas-style slot machines--the same machines as Calder and Gulfstream.
Some gaming analysts estimate that under their compact, the Seminoles are paying the Florida government between 10% and 15% of their gaming revenue.
The Seminole Hard Rock Hotel & Casino in Hollywood has blackjack and baccarat, and the compact permits them to have the two games at its other two Broward casinos. It plans to install those games “probably in the next few months, and only after we receive (Department of the Interior) approval of the compact,” said Gary Bitner, a Seminole Tribe spokesman. He declined to comment on the NIGC investigation of Seminole financial activities.
Calabro and Austin Miller, Calder’s president and general manager, each said they already implemented expanded marketing strategies based on the expected increase in after-tax revenue from slot machines. In lobbying for the 2010 law, the tracks emphasized they would use part of those added profits for marketing that could lead to increased slots play. At each track, portions of slots revenue are contributed to race purses.
Calder, a subsidiary of Churchill Downs Inc., opened its casino with 1,245 slot machines Jan. 22. Calder needed early weeks for what securities analyst Ryan Worst calls a “ramp up” to attract customers in the South Florida casino market. From April 1 through June 20, Calder’s slots revenue was approximately $15.6 million, according to the Florida Division of Pari-Mutuel Wagering.
CDI chairman Robert Evans has said several times CDI expects Calder will have at least $80 million in slots revenue during the casino’s first 12 months. This spring’s results indicate Calder “is on a run rate on which they could reach that goal,” said Worst, of Brean Murray Carret & Co. in New York.
“Given all the competition in this market, we are moderately pleased (with early slots results),” Miller said. "Calder is building a base of customers who are making it their preferred casino, he said.
Miller and Calabro said the tracks' poker rooms will continue to offer games with betting limits, such as $5, as well as no-limit.
The new law permits pari-mutuels to have poker rooms open 24 hours on weekends and up to 18 hours on weekdays. The previous limit was 12 hours per day, per pari-mutuel permit.
Florida pari-mutuel facilities' net poker revenue is from the so-called “rakes” they take as a percentage of money from each hand and from players’ buy-in fees for games and tournaments. At Calder and Gulfstream 47% of net poker revenue is contributed to race purses, and 3% to breeders' awards. Florida pari-mutuels pay a state tax of 10% on poker revenue.
The three other South Florida pari-mutuels with slot machines are harness track Isle Casino and Racing at Pompano Park, Greyhound track Magic City Casino in Miami, and Greyhound track Mardi Gras Casino in Hallandale Beach.
