Calder Meeting: Considerable Progress

No contract yet, but horsemen and Calder may have a deal "in the very near future."

The Florida Horsemen’s Benevolent and Protective Association’s general counsel said June 10 that his organization could sign agreements “in the very near future” on 2008 purses and future slot machine revenues at Calder Race Course.

“We made considerable progress, but we have agreed not to discuss details,” Florida HBPA counsel Bruce Green said following a second day of meetings with officials from Churchill Downs Inc., which owns Calder. CDI officials were not readily available for comment.

Green said “both sides want to accomplish this promptly,” and settle disputes that have led to significant declines in revenue for Calder and the Florida HBPA since the Miami Gardens, Fla., track opened its season April 21. Green declined comment when asked if the Florida HPBA hopes to sign purse and gaming contracts this week. The parties do not have another meeting planned in South Florida but will negotiate by phone, he said.

If the horsemen's group and CDI sign a slots contract for a casino CDI is considering for Calder, it would clear the way for the Florida HBPA to permit Calder to send its signal to racetracks outside of Florida. That would help Calder start rebuilding its handle during a meet at which all-sources handle is down more than 70% year-to-date from 2007. But the Florida HBPA has said signing slots and purse contracts might not lead it to give Calder permission to send its signal to advance deposit wagering companies.

Last Jan. 29, Miami-Dade County voters approved a ballot issue that permits Calder to have a casino with Class III Las Vegas-style slot machines. There is a widespread view in South Florida that the Florida HBPA's agreement for Calder will give it a smaller percentage of revenue than the 8.25% it receives at Gulfstream Park in neighboring Hallandale Beach, Fla.

A Florida law requires Calder to have a slots revenue agreement with the Florida HBPA before it can obtain a casino license. CDI has not filed for that license for Calder.

Gulfstream, which opened a casino in November 2006, also is subject to that law. Gulfstream’s agreement requires it to pay the horsemen 8.25% of each year’s first $200 million in net slots revenue, and 13.9% beyond that. Gulfstream is paying the Florida HBPA 7.5% of slots revenue for purses, and 0.75% for breeders’ awards.Gulfstream agreed to that split with horsemen when it was nearing its state deadline for obtaining a casino license.

Calder is running races even though it is in the rare situation of not having a purse contract with the Florida HBPA. The horsemen’s group has said it will not sign a 2008 purse contract for Calder without also signing a contract on slots revenue. CDI maintains that a slots contract is not necessary this year. The company has pointed out that it has not announced plans for a possible casino at Calder, and that the track will not have slot machines until 2009 at the earliest.
Except for New York City Off-Track Betting Corp., Calder does not have any 2008 contracts with ADWs. The Thoroughbred Horsemen’s Group is negotiating ADW contracts for the Florida HBPA and horsemen in several other states.
Through Calder’s first 25 days, purses were down about $850,000 from 2007, according to The Jockey Club Information Systems. Some observers are wondering how quickly any Calder slots proceeds, starting perhaps in 2010, would start making up for this year’s purse shortfall. They note that competition with tribal casinos and a slowing economy have been factors in Gulfstream generating slots revenue parent Magna Entertainment Corp. has called disappointing.

For the first five months of 2008, Gulfstream had net slot-machine revenue of $19.6 million, according to the Florida Division of Pari-Mutuel Wagering. That puts Gulfstream on pace for 2008 net slots revenue of $47.0 million--less than 25% of the total where horsemen would start receiving a higher percentage. The horsemen’s share of that $47 million would be $3.9 million.

Gulfstream’s slots revenue and overall slots revenue at Broward County racetrack casinos are considerably less than what Florida pari-mutuel industry officials projected in 2006. That slots performance provides one indication why CDI and the Florida HBPA are striving to settle a dispute over future revenue that is proving costly to their 2008 business.