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Horsemen Hoping for Another Calder Purse Hike

A July 1 cut in Calder’s state slots tax rate will earmark added money for purses.

Horsemen in southeast Florida are hoping that the 10% purse increase that Calder Casino & Race Course announced on June 12 will be followed by another increase this year--again largely from slot machine revenues.

“If business gets better, we would look forward to another increase maybe later this summer,” said Sam Gordon, president of the Florida Horsemen’s Benevolent and Protective Association.

“If things go our way, we could look at another possible increase later in this meet,” said John Marshall, Calder’s vice president and manager of racing operations.

Both are optimistic partly because a July 1 cut in Calder’s state slots tax rate will earmark added money for race purses--and give Calder more marketing dollars that it hopes will lead to more business at its casino.

“We were in negotiations for a purse increase for three weeks,” Gordon said on June 15. “They came around to giving it to us now, rather than later. We told them that some horsemen are hurting, and we need higher purses now. John worked very well with us.”

Marshall said Calder and its parent Churchill Downs Inc. agreed to the purse increase partly because the Calder purse account has been in underpayment status since its meet began on April 25.  Calder has been managing that account conservatively, in anticipation of raising purses as it increased its post-tax revenues on slot machines, he said.

Calder, in Miami Gardens, Fla., will end its eight-month live racing season on Jan. 3, 2011.

The track’s purse increase will take effect on June 17, the start of one of its regular Thursday through Sunday live racing weeks.

Calder announced that its 10% purse increase would include all non-stakes races.  The increase will be for purses for overnight races, including allowance, maiden special weight, claiming and maiden claiming.

Calder had average daily non-stakes purses of about $165,000 during the first two weeks in June, Marshall said. With the increase, that average will be about $182,000. Calder’s card sizes range from nine races on Thursdays to 12 on Saturdays, a day when it has one or more stakes.

In a June 12 statement, Calder said the increase is made possible by alternative gaming purse supplements and a new Florida law that takes effect on July 1, 2010.

On that day, the state tax on slot machine revenues will drop from 50% to 35% percent at Calder, Gulfstream Park, and the three other southeast Florida pari-mutuels that have casinos.  Calder’s agreement with the Florida HPBA requires additional payments of slots revenue to purses when that change takes place.

Based on Calder’s slots revenues through mid-June, the lower tax rate could raise its 2010 slots-generated contributions to purses from an original projection of $4.5 million to $5.5 million or higher.

Calder opened its casino building on Jan. 22, 2010.  It has 1,245 Las Vegas-style slot machines.

Thus, Calder is the Thoroughbred industry’s latest test of whether casinos can generate enough added purse money that will make races more attractive and generate significant additional handle.

Marshall and Gordon each said they hope Calder will soon see a start of that trend.

Marshall noted that Calder is raising purses during a period when some U.S. Thoroughbred tracks have cut them.  But he also noted that Calder is among tracks that have experienced declines in handle this year.

As of June 12, through 28 race dates, Calder’s all-sources handle was down about 10% compared with 2009, Marshall said.

Calder and other CDI tracks release handle numbers only in CDI’s annual and quarterly reports to the Securities and Exchange Commission.

But The Blood-Horse’s review of Equibase chart date shows that Calder’s average daily all-sources handle was approximately $2.1 million through June 12. A breakdown between live handle and other sources was not available. Calder handle numbers for the same period in 2009 were not available.

Meanwhile, Calder is generating slot machine revenue at a level Marshall said “we are able to live with.”

Data from the Florida Division of Pari-Mutuel Wagering show that Calder is one of only two southeast Florida casinos that had higher slots revenue in May than in April.  Magic City Casino (formerly known as Flagler Greyhound) in Miami is the other.

Trainers David Vivian and Bill White said they believe it is important that Calder is raising purses in June rather than waiting until July when the track’s slots tax rate will be lower.

“Everyone was waiting, and let’s hope it is just a start,” Vivian said.

He said he hopes that higher purses will help reverse recent years’ trends of some Florida owners sending horses to tracks in northern states that added slot machines prior to Calder.

About 100 of Calder’s 1,800 stalls were open as of June 12, Marshall said.  The track has been holding stalls open for 2-year-olds that it expects some owners will soon ship down from the Ocala area, he said.

In announcing the purse increase, Calder and the Florida HPBA noted that on June 15 the Ocala Breeders’ Sales Co. would hold a sale for 2-year-olds and horses of racing age.

“The announcement of the purse increase was well-timed,” White said from Ocala on June 14.  “What happens at Calder is critical for the state’s breeding industry.”

White has been leading trainer at 10 Calder meets, including 2009, and at five Tropical at Calder meets.  He has continued that success even though some of his regular owners have been sending some horses from Florida to tracks in Pennsylvania and other states that have raised purses after adding slot machines.

White has 26 horses at Calder, compared with his usual 40. He expects to soon add some 2-year-olds.

“It is good that we have this purse increase now,” he said. “It gives us an indication that things are getting better, and maybe will stop the continuation of bad news we have had at Calder for several years.”

But White feels that the 10% increase alone will “not make that big a difference in giving some owners the confidence to run horses at Calder.”

He added: “I hope we will have at least one more increase this year. Calder needs higher purses to be a viable track for many owners.  The trainers here have families, and need to stay. An owner can put a horse on a van and send it to another track, and hire a new trainer.”

White, like several other horsemen, said he is impressed by the layout and size of the Calder casino--a building adjacent to the clubhouse building.

Horsemen also are seeing the state’s reports that Calder is gradually improving its casino revenues--even amid the ongoing recession.

According to the Florida DPMW, slots play at Calder’s casino grew from $74.6 million in April to $78.1 million in May.  Average daily revenue per machine improved from $152 to $159.

During the first six days of June, daily average revenue per machine was $163.

Some patrons are betting horses during the live meet as well as playing slots, Marshall said.

“Our business also appears to be less seasonal and dependent on tourists than some other casinos,” he said.

Under its agreement 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 calls for that amount plus increased payments when the 50% tax rate is reduced. Under the agreement, purses will receive an additional 35% of the difference between Calder’s slots tax payments at the 50% rate and the lower rate, as of July 1.  Thus, of every $100 in Calder slots tax savings, $35 will go to purses.

The negotiations in late May and early June centered on questions of the timing of putting some of that money into purses.