CDI Announces Deal With Calder Horsemen

CDI announced it has purse and slot machine agreements with the Florida HBPA.

Churchill Downs Inc. announced July 7 that it has signed contracts with the Florida Horsemen’s Benevolent and Protective Association on 2008 purses and on potential future slot machine revenue at CDI-owned Calder Race Course.

CDI said in a statement that as a result of the contracts, the Florida HBPA will let Calder resume sending its signal to non-Florida tracks and off-track betting sites June 10--the next live racing day. The agreements, following three months of sometimes-bitter negotiations, will enable the Miami Gardens, Fla., track to send its July 12 Summit of Speed card to those outlets.

Florida HBPA executive director Kent Stirling said he expects that horsemen’s groups in eight states will permit tracks in their states to send signals to Calder, which would then export them to other Florida pari-mutuel outlets. But the July 7 contracts will not resolve the advance deposit wagering part of a massive signal blackout that has contributed to a 73% decline in all-sources handle year-to-date at Calder.

The national Thoroughbred Horsemen’s Group is negotiating Calder’s 2008 ADW contract with CDI. Since Calder opened its meet April 21, six New York state OTB corporations are the only ADWs the Florida HBPA has permitted to take bets on Calder. That blackout includes CDI-owned and all other United States-based Internet sites.

The Florida HBPA said CDI is basically “refusing to talk with the THG,” Stirling said.

Signing of the purse and slots contracts took place two days after the Florida HBPA said its board of directors had approved them, and that a CDI official had given verbal approval.

In its July 7 announcement, CDI said the slots agreement guarantees the Florida HBPA and the Florida Thoroughbred Breeders’ and Owners’ Association $14.375 million
for purses in the combined first three full years of  any slots operation at Calder. The horsemen’s groups are guaranteed 6.75% of slots revenue for the remainder of a 10-year term. Additional provisions provide for the horsemen to share in the upside should a Calder slots facility generate specified slots revenue minimums in the second and third full years of operations.

CDI did not announce a timetable for possible start of a construction of a Calder casino, which would include Class III Las Vegas-style slot machines. But in a statement, CDI spokesman Kevin Flannery said the company will “ invest tens of millions of dollars in the construction and operation of a slots facility at Calder. According to the terms announced today, we estimate at this time that horsemen will benefit from CDI’s investments to the tune of approximately $50 million, potentially, over the term of the agreement. This underscores our company’s commitment to the horseracing industry.”

Calder would open a slots casino several years after Gulfstream Park and two other South Florida pari-mutuel facilities have opened casinos, which have not met original revenue expectations amid competition with Indian tribes’ casinos.

CDI also said it has agreed to dismiss without prejudice the lawsuit it filed April 24 against the Florida HBPA and its officers. The suit, filed in U.S. District Court for the Western District of Kentucky, alleged violations under the Sherman Antitrust Act in negotiating ADW contracts. CDI said the suit will continue against the remaining parties, including the THG.

CDI and Calder did not disclose terms of the purse contract. But on July 5, the Florida HPBA said Calder will restore average daily overnight purses from a current level of about $130,000 to about $180,000--the level at the start of the meet. Calder will not adjust overnights to make up for an overpayment that reached more than $1 million this spring, even amid the purse cuts, the Florida HPBA said.

Calder officials said the track plans to raise purses for its overnight stakes from its recent $36,000 to at least $50,000--the minimum for a stakes to have “black-type” status. Finishes of third or better in those races help horses gain higher breeding fees for their owners. Amid the meet’s decline in handle, Calder reduced average overnight purses 30% and cut purses for most of its stakes.

The approach of the Summit of Speed gave both sides added incentive to resolve the contracts dispute, Stirling said.

All-sources handle for the Summit of Speed program has been above $9 million four times in the last five years--including a Calder record $10.8 million in 2004. An assumed blended takeout of 21% left about $2.3 million for horsemen and tracks to divide that year.

According to The Jockey Club Information Systems, Calder’s average daily all-sources handle was $729,000 for its first 45 days this year. That average was $2.7 million for the same period in 2007.

Calder is not forecasting a Summit handle for this year, with almost no ADW wagering and with bettors at tracks outside Florida getting their first 2008 chance to bet on the track. But Calder officials said they are prepared to launch special advertisements in the trade media, employ a national e-mail campaign, and reach out to radio shows across the country to promote the Summit of Speed.

“Overall, we feel we did pretty well,” Stirling said of the purse and slots contracts.

“We are happy that our fans who wager through racetracks and OTBs will soon be able to enjoy the Calder product, and we are committed to working with the (Florida) HBPA to ensure that our customers will also have the opportunity to wager via and other online wagering platforms as soon as possible,” Flanery said.