Despite Suits, Hialeah Moves on Slots Parlor

Hialeah Park is moving ahead with plans to build a casino even though three other southeast Florida pari-mutuel outlets are continuing with a lawsuit that challenges its legal right to have slot machines.

The Hialeah, Fla., track expects by early February to have approvals from the city of Hialeah to start renovations and construction, track owner and chairman John Brunetti said. He expects to begin the project in the north portion of the track’s grandstand.

Brunetti said total costs would be about $80 million. His current plan is to build and run a casino without a partner.

On Jan. 23 Hialeah ended its second Quarter Horse meet. By holding that meet and a 2009-10 Quarter Horse meet, Hialeah under a 2010 Florida law is eligible for a casino with Las Vegas-style slots.

Hialeah had an operational loss of about $5 million for its recent meet, Brunetti said.

“That was a necessity, to continue to fulfill our obligation,” Brunetti said. “We have shown our commitment to the business community and residents of Hialeah and to the state.”

On Dec. 21, 2010, the Florida Division of Pari-Mutuel Wagering approved a slots license for Hialeah Park. Brunetti hopes to have a casino with about 1,000 machines open in November or December 2011.  That would coincide with the opening of Hialeah’s next Quarter Horse meet.

Under its Quarter Horse permit, Hialeah can run a mixed meet with up to half its races Thoroughbred races.  Brunetti said he is considering that option. The track has not had Thoroughbred races since 2001.

Hialeah stopped racing after a 2002 deregulation of Florida racing dates would have forced it to run head-to-head against Gulfstream Park or Calder Casino & Race Course. Brunetti is wealthy from his real estate business, but his two bitter rivals are owned by public companies.

Now, Calder is part of a lawsuit that is attempting to stop Hialeah from adding a casino that would help it regain a prominent spot in southeast Florida’s gaming industry.

Meanwhile, Internet entrepreneur Halsey Minor is continuing with a lawsuit that challenges Brunetti’s ownership of Hialeah Park.  In 2008, Minor offered to buy the track from Brunetti. But after negotiations broke down, Minor filed his suit in 2009.

In a suit now in a Florida appellate court, Calder, Magic City Casino (formerly Flagler Greyhound), and Miami Jai-Alai maintain that the provision of a 2010 Florida law that authorizes a Hialeah casino is illegal under the Florida constitution. The plaintiffs’ central argument is that a voter-approved 2004 constitutional amendment did not include Hialeah among Florida pari-mutuels that can be eligible for casinos.

On Nov. 22, a judge in the Second Judicial Circuit Court in Leon County upheld the Florida legislature’s authority in the 2010 law, and ruled that the 2004 constitutional amendment did not have language that forever would allow casinos only at the seven facilities specified in the 2004 ballot issue.

In January, Calder filed an appeal while Magic City and Miami Jai-Alai filed a separate appeal. Michael Olin, an attorney who represents the Greyhound track and jai-alai fronton, said he expects the First District Court of Appeal in Tallahassee will consolidate the suits. Olin said he and his clients are confident the appeals court will accept their argument that the 2004 constitutional amendment shows the will of Florida voters and thus invalidates the Florida legislature’s 2010 decision to make Hialeah eligible for a casino.

Brunetti said Hialeah Park attorneys are confident the appeals court will uphold the lower court’s decision. Olin expects the appellate court will not issue a ruling until late this year.

Other parties anticipate that the losing party in appeals court will take the case to the Supreme Court of Florida.

That brings up the prospect that Hialeah Park might have a casino up and running, and a Florida court might later rule it illegal. Olin said he believes there might be legal precedents for a closure in that situation; Brunetti declined to speculate on that scenario.

A Calder official said the track and its parent, Churchill Downs Inc., have a policy of not commenting on ongoing litigation.

The Florida DPMW is a co-defendant in the case. Plaintiffs maintain that Hialeah Park is not eligible for a casino license from that agency. The Florida DPMW does not comment on litigation, a spokeswoman said.

Gulfstream and Calder are among the five southeast Florida pari-mutuels that added slots following the 2004 state vote and follow-up votes by electorates in Broward and Miami-Dade counties.

In a legal development separate from the casino suit, a state court in Miami on Jan. 25 set a pre-trial schedule for a lawsuit by a Minor-led group that challenges Brunetti’s ownership of Hialeah Park. Stephen Darmody, an attorney who represents Minor, said he expects the Miami-Dade County Circuit Court could begin a trial by December 2011.

Hialeah Park officials were not available for comment Jan. 26.

The suit filed by the Minor-led group Save Hialeah Racing maintains that the city of Hialeah owns Hialeah Park because in 2004 it transferred a then-owned city property, the track, to Brunetti without a required approval by voters. In 1978 Brunetti took out a 30-year mortgage from the city to purchase the track and agreed to make payments while operating it. The city transferred the deed to Brunetti in 2004.

Minor’s suit asks the circuit court in Miami to “impose a constructive trust on the subject property in favor of the city of Hialeah and for the use and benefit of its citizens.

Meanwhile, Hialeah Park reported that daily average ontrack handle for its recent 24-day meet was $46,034. Officials said that was 13.3% higher than $39,942 for its 40-day meet in 2009-10.

Hialeah Park did not release all-sources handle.

For 2009-10, a review of all Equibase charts for Hialeah Park showed daily average all-sources handle was about $138,000, or about $17,000 per race. A less-extensive review for 2010-11 indicated average handle of about $20,000 per race.

For its recent meet, Hialeah Park gained national attention and apparently more wagering by lowering all takeout rates to 12%. The track reported that average daily attendance rose from 1,973 to 2,361.

“The attendance and handle were about what we expected,” Brunetti said. “Most of the fans were residents of Hialeah.”

Hialeah held racing on Fridays through Sundays--thus competing with Calder, later with Gulfstream, and with televised football.

“Every day before every race, the fans would walk from the grandstand to the paddock to see the horses,” Brunetti said. “It was like the old days at Hialeah.”

Brunetti expects many of those fans could be patrons of a slots casino and shopping mall that is part of his long-range plan.

Brunetti said he will wait several weeks before deciding whether to have a mixed meet in 2011-12. He said he wants to see the outcome of a dates dispute between Calder and Gulfstream, which have both said they plan to have racing in December 2011.

“Yes,” Brunetti said when asked if he feels some vindication that his two long-time adversaries have their own dispute. “More so, I am concerned about how this could hurt the industry in Florida.”

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