Tampa Bay Tops Again in FL Host-Track Battle

Tampa Bay Tops Again in FL Host-Track Battle
Photo: Tom Cooley Photography

Tampa Bay Downs finished first again this August in Florida for host-track revenue on simulcasts from out of state, and it appears that questions about the track's year-round eligibility for host status will remain unresolved for several more months.

Gulfstream Park was second in the closely watched competition for host-track business. Calder Casino & Race Course, which was the only host in previous summers, placed third and last for the second straight month, according to data released in late September by the Florida Division of Pari-Mutuel Wagering.

Tampa Bay Downs has not had live racing since July 1, but it has controversial status as a year-round simulcast host. In August it provided signals for approximately $8.1 million of the total betting at other Florida pari-mutuel outlets for a 40% share of a $20.1 million market.

Gulfstream had about $6.9 million or 34%, and its Miami-area neighbor, Calder, had about $5.1 million or 26%.

In previous Augusts, Calder was the only track the Florida DPMW deemed to be holding a live meet, and thus the only one eligible as an interstate host for re-transmitting those signals to other Florida pari-mutuel facilities. But since late May there has been a three-way competition for that lucrative and low-maintenance business, which some observers believe is as important as live pari-mutuel handle.

In its second-quarter report, Churchill Downs Inc., Calder's parent company, mentioned the Florida host-track situation as a potentially important ongoing issue.

Meanwhile, the second half of this November looms as the earliest that Florida regulators will rule on Calder's challenge of Tampa Bay Downs' eligibility as a year-round host. Tampa Bay Downs will then be preparing for Dec. 4, when it will begin its traditional five-month racing season–and the thrust of Calder's administrative complaint will be moot at least for this year.

In the host-track business, a Florida Thoroughbred track can buy signals from Thoroughbred tracks in other states and sell them to other Florida pari-mutuel facilities that are known as guest tracks. Florida has 32 pari-mutuel facilities, including the three Thoroughbred tracks.

The Blood-Horse estimates that host tracks' combined annual pre-tax revenue from import simulcasts has been between $30 million and $40 million in recent years. Half of the revenue must be put into race purses, which is making this year's new and intense host-track competition a major issue for horsemen as well as for the tracks.

Calder provided the signals for $169 million, or 65%, of the $262 million in guest-track betting in Florida's 2012-13 fiscal year, which ended June 30. That generated estimated revenue of about $23 million for Calder; that number is on path to drop to about $10 million during fiscal 2013-14, according to The Blood-Horse estimates.

Simulcasts from tracks such as Belmont Park, Santa Anita Park, and Churchill Downs are hugely popular at Greyhound tracks and other pari-mutuel outlets around Florida. That has made the host-track business a vital revenue component for all three Florida tracks, and more consistent than live handle.

The regulatory battle

Amid Calder's ongoing problems, its host business has been dropping while its all-sources handle is falling against new weekend live racing competition from Gulfstream. Calder officials declined to comment on the August host-track numbers and the dispute with Tampa Bay Downs, while Peter Berube, vice president and general manager at Tampa Bay Downs, was not available for comment.

Calder is challenging the Florida DPMW's decision to let Tampa Bay Downs be a year-round host even though it has not held racing since July 1. Calder maintains that state laws and precedent mandate that a track must be holding a live meet, with at least three racing days a week, to be a host for interstate simulcasts.

Until Dec. 4 Tampa Bay is serving as a host based on the Florida DPMW's acceptance of its new interpretation of Florida law. The interpretation is that running the first day and last day of a fiscal year, with a regular meet of at least 40 days in between, is sufficient to be a year-round simulcast host.

Tampa Bay had racing this June 30 and July 1, the last day of the 2012-13 fiscal year and the first day of its 2013-14 fiscal year.

Calder filed its complaint in June with the Florida Division of Administrative Hearings, which told the Florida DPMW to review its rules, based on state laws, for determining host-track eligibility. The Florida DPMW will hold a public hearing Nov. 7 in Tallahassee, with officials of Florida's tracks expected to participate.

A Florida DPMW spokeswoman said Sept.24 "there is no identifiable timeframe" for the agency to issue a new rule.

In late August, Calder vice president and general manager of racing John Marshall said the track hopes the Florida DPMW will revoke the year-round host-track status of Tampa Bay or not grant it for 2014-15.

A major shift of dollars

On Sept. 11 Tampa Bay Downs announced that as a result of revenue from being a year-round host it will raise its purses15%, or an average of about $22,000 per day, for its 2013-14 meet. In late August Berube said the list of pari-mutuel facilities that are receiving Tampa Bay's host-track signals is the same as during its regular race meets.

Through 12 weekends since early July, Gulfstream has averaged about $2.3 million a day in all-sources handle on its live product compared with about $1.1 million for Calder. Gulfstream is racing year-round at least two days a week, and it maintains that it meets racing requirements for host-track eligibility.

The Florida DPMW statistics show that wagering at guest tracks officially fell from $26.2 million in August 2012 to $21.1 million in August 2013. The decline can be attributed to the $9.3 million that was bet at Gulfstream and the $2.1 million bet at Tampa Bay Downs this August on out-of-state simulcasts. In previous Augusts the two tracks received those signals from Calder as guest tracks.

Without the new host-track competition Calder probably would have supplied more than $31 million in guest-track business and generated more than $4 million in revenue in August 2013. Instead, it did $5.1 million in business and generated an estimated $650,000 in revenue, according to Florida DPMW data.

Wagering at guest tracks was $270 million during Florida's 2011-12 fiscal year that ended June 30, 2012. It declined to $262 million in 2012-13. Calder's market shares were 71% in fiscal 2011-12 and 65% in 2012-13.

The tracks generally do not disclose their revenue and profitability for host-track business. But it is known to be very profitable and is sometimes referred to as a "cash cow," partly because of the relatively low cost of ongoing operations.

State law requires that the guest track receive at least one-third of pari-mutuel takeout, with the remainder divided evenly between the host track and the horsemen's association with which it has a purse contract. The host-track expenses are for paying a non-Florida track to take its signal and for ongoing operations.

Based on an assumed 20% blended takeout rate for $270 million in wagering, the guest and host tracks had combined revenue of about $54 million in each of the last two fiscal years. Of that money, the tracks probably divvied up $36 million each year.

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