Concern Runs Deep Over Florida’s ‘David Vs Goliath’ Decoupling Battle

by | 01.12.2016 | 4:23pm
Gulfstream Park

The Florida Thoroughbred industry is on a roll. Breeding activity, severely impacted by the 2008 financial crisis and subsequent recession, has stabilized and there are new investors in bloodstock and farms. The Ocala Breeders' Sales Company hit a highwater mark in 2015, exceeding $150 million in gross receipts from six auctions of breeding stock, yearlings and 2-year-olds in training at its Marion County headquarters. Gulfstream Park, the state's premier racetrack, is coming off a year where a record $1.338 billion was wagered on its live races.

But many in the $1.6-billion dollar horse industry face an uncertain future if Florida lawmakers approve legislation in support of a compact between Gov. Rick Scott and the Seminole Indian tribe that has seven statewide casinos, including the hugely profitable Hard Rock properties in Hollywood and Tampa.

The compact, signed in December and pending approval of the Florida House and Senate, is a multi-faceted 20-year deal that, first and foremost, dangles a $3-billion carrot from the Seminoles to the state over the first seven years, provided certain conditions are met.

Among those conditions:

–The Seminoles will be allowed to expand their casinos to include craps and roulette tables (they currently offer slots, poker and blackjack but no other table games). They also can add more slot machines to their facilities.

–With the exception of slots and limited historical racing machines at the Palm Beach Kennel Club in West Palm Beach and one unnamed site in Miami-Dade County, no new casinos will be permitted outside of Dade and Broward counties, where horse and dog racing tracks, along with jai-alai frontons, currently have poker rooms and slot machines. Pari-mutuel operations in Dade and Broward would be able to add blackjack (with limits on maximum bets)

–An expansion of online wagering will not be permitted.

Among the conditions the compact says the Seminoles can live with is the decoupling of existing slot machine and poker room operations from the pari-mutuel licenses in Dade and Broward counties that qualified them for the gambling expansion after a statewide referendum was passed in 2004. (The constitutional amendment, which passed narrowly, required local referenda in each of the two counties.)

Decoupling surely will be the death of dog racing and jai-alai in Florida. It also would give Gulfstream Park and Calder, which currently leases its racing operations to Gulfstream, the option to keep their casino without having to offer any live racing. The same goes for Hialeah Park, which currently offers Quarter Horse racing as a condition of its slots and poker license, and the Isle of Capri Casino, which has Standardbred racing at the former Pompano Park.

The legislature, which began its 60-day session Tuesday, will consider whether to pass, amend, or reject a bill in support of the Florida governor's compact, including the controversial issue of decoupling.

Pari-mutuel operators in Dade and Broward counties, with the exception of Gulfstream Park, openly embrace decoupling, looking at the pari-mutuel license that granted them slots in the first place as a burden.

“There's not enough betting, not enough dollars to support the bricks and mortars currently in Florida,” said Maureen Adams, president and general manager of Calder Casino & Race Course, during a Jan. 7 panel discussion at the Florida Gaming Congress in Orlando. “There's a legislated requirement in Florida that bricks and mortar continue to exist. We are using resources for which there is no customer demand.”

Calder's parent company, Churchill Downs Inc., has torn down most of the track's stable area and is in the process of demolishing the grandstand. Despite the lack of a grandstand for a 40-day race meeting at Calder operated by The Stronach Group and rebranded as Gulfstream Park West, average daily wagering soared by 19 percent in 2015. In fact, wagering was up by 144 percent from 2012, the last year Churchill Downs management ran the Tropical-at-Calder meet without head-to-head opposition from Gulfstream Park.

Those business figures echo the sentiment of Bill White, president of the Florida Horsemen's Benevolent and Protective Association, stated Jan. 9 at the annual awards banquet of the Florida Thoroughbred Farm Managers, during which a panel discussion on decoupling was held.

“Churchill Downs purposely let Calder go down into the toilet,” White said. “They are one of the entities that want decoupling. Racing is an expense to the casinos.”

“Calder lost $5.5 million on Thoroughbred racing,” Adams said at the Florida Gaming Congress. “We cut a deal (with Gulfstream) that consolidated the revenue with the expense.”

Donn Mitchell, chief administrative officer for Isle of Capri Casinos, told Florida Gaming Congress attendees that racing at Pompano Park “loses $6 million a year.”

Partial decoupling – allowing all but Thoroughbred operators to cease live pari-mutuel performances – would only strengthen the position of those businesses against Thoroughbred tracks if they invested the millions of dollars in losses into player rewards programs or facility upgrades that would compete against Gulfstream Park.

“The pari-mutuel industry? That train left the station,” said Dave Jonas, CEO of Casino Miami Jai-Alai. “There is no hope for them to become in 10 years what they once were.”

Isadore “Izzy” Havenick, vice president of political affairs for Magic City Casino, which runs the Flagler Greyhound Track and Dania Jai-Alai, predicts Floridians will force the decoupling of dog racing through a referendum, similar to the one that outlawed the sport in Massachusetts in 2008. “Dog racing will be illegal in the state constitution,” he predicted. “It will be on the ballot and will get 60 percent (of the vote) and be illegal. What's going to happen to our employees and our business? Do I think decoupling makes sense? Yes.

“Pari-mutuels can't survive,” Havenick added. “It's slow. It's boring. Most people under 40 never go outside (Flagler) and look at the racetrack. Most people don't even know we have a racetrack.”

That's probably by design.

Marc Dunbar, an attorney for Gulfstream Park, spoke about Frank Stronach's commitment to rebuild the South Florida racetrack into “something new” when he tore down the old grandstand, downsized it, and surrounded the property with restaurants and shops.

“He was lampooned for being an idiot,” Dunbar said at the winter meeting of the National Council of Legislators From Gaming States in Orlando Jan. 8. “The last five years he's been heralded as a genius.”

Dunbar said doubling purse levels over the last 25 years has not stopped the decline in racing's popularity, calling it a “flawed premise” that tracks need revenue from alternative products to subsidize purses and attract more horses.

“The purses alone have not saved the industry,” he said. Dunbar urged states with casinos or slots at racetracks to “mandate that the tracks invest in the racing facility – not the casino but in the racing facility. Make it be an integrated facility. If you just give them purse money, it's not going to be successful.”

Despite Gulfstream's success and commitment to racing, many people who have invested in Thoroughbred bloodstock or depend on the industry for their livelihoods are concerned. At the Jan. 9 Florida Farm Managers meeting, several speakers talked about the need to contact legislators to express their opposition to decoupling.

“I don't know why they would consider something that would be so devastating,” said George Russell, president of the Florida Thoroughbred Breeders' and Owners' Association.

Tom Ventura, president of Ocala Breeders' Sales Company, pointed out that it's not just the farms and its employees who would be affected, but all the companies they do business with. “We need the mom and pop farm owners, the people who sell supplies, the car dealers, to get the word out on this,” Ventura said.

“Apathy is our biggest problem,” said Dennis Baxley, who attended the meeting as a member of the Florida House and a supporter of the horse industry. Baxley, running for the state Senate in 2016, urged concerned individuals to call friends and business associates outside of the Ocala area to let them know decoupling would do. “This could have a huge negative impact for the state – and not just Marion County,” he said.

The Seminoles have already launched a $500,000 advertising campaign in support of the compact. “This is David vs. Goliath,” said the FHBPA's White.

  • Anton Chigurh

    The end of an industry.

  • David

    Don’t know the chances of the FL legislature ratificating this deal but Rick Scott knows something about horses . . . of the Trojan variety, just ask Louisville.

  • Economic Reality

    Ray if the industry can’t stand on its own because it’s not profitable because people don’t like the product enough to buy it, then it should be let go.

    What is so complicated about this?

    • FloridaHorsemen

      The line of “let the industry stand on its own” is straight out of the Big Casino playbook. The reality is that, if NO state put casino money into purses, then that argument might hold water. But if states like Florida seeking the value of horse racing’s huge economic impact want to compete for business (and thereby job creation), they must provide bigger and better purses to do so. And all over the country, states spend taxpayer dollars in the name of “corporate relocation incentives” to create jobs. So the fact is, a state the purposely removes casino revenue from purses is not creating a “free market,” it’s killing its own economy.

      • johnnyknj

        I’m sympathetic to your position, but the flaws in your economic argument are too many to list. The sort of subsidies you reference have been shown, time and again, to be economically inefficient, particularly when applied to failing industries.

    • Troll, shill. Get a name pal. This is why anonymous posting sucks.

      • Barry, there are a pile of these “reality” trolls, obviously paid to do their thing. Identity to them is the same as profit from slots and lotto: never gonna happen.

        • johnnyknj

          They may indeed be a troll, a shill, or a paid operative of the casino industry. But if so, it speaks to how badly casinos wish to jettison racetracks. (See Penn Gaming, Greenwood, etc.) So why do we in racing persist in hanging on to a business model that relies on the very industry that has nearly destroyed us and wants to finish the job?

        • 7Cents

          I have heard of such “paid trolls” and have a question about that – How does one get that particular gig? I enjoy a debate and can even use a few $10 words. If racing does get the boot, it may be my next possible means of survival…
          Mostly kidding.
          Pretty much kidding.
          Kind of kidding.
          Maybe not kidding….

          • TampaBayRay

            Nobody wants to play Penn National because the horses do not race to form and the more informed horse player knows to stay away unless you want to pick random number and push Bet All… Its almost like some casino affiliated tracks are pushing us away by having unpredictable results..

  • sufferingsuccatash

    The coupling of casino gaming and horse racing was always destined to reach a point of decoupling. The business pattern was always very clear. Casinos make money at very limited expense while racing is clearly more costly to operate and the public prefers to gamble on other games of chance. Casinos were never a business partner and were always a business competitor. Horsemen never understood that concept until now. Anticipate consolidation and several states to end racing altogether.

    • FloridaHorsemen

      Last night, Ray was at Pompano Park (now known as Isle of Capri Casino) and saw the reality of what’s happening to horsemen and horse racing (in this case, harness racing). Now that tracks are owned by Big Casinos, the horse racing product isn’t being given a fair chance to even be viable when, for example, there’s only bare metal bleachers cordoned off into a penitentiary-type yard where fans can view the horses, as oppose to plush casino food and accommodations that are far more welcoming. By dedicating money to marketing and keeping up its facility, Gulfstream Park has shown that horse racing is indeed plenty viable. The other permitholders should be made to do the same.

      • 7Cents

        When I ran in a casino state you could see that they were deliberately trying to ease racing closer to it’s death bed. Condition books were not written to fill races, they were written to induce short fields. Horsemen would wander about bitterly lamenting “These stupid fools in charge,” when it was obvious those on charge were far from stupid and quite far sighted. The more short fields they presented, the stronger their argument each year for “5 less days….6 less days…10 less days” at the dates hearings. Kills us, but it makes perfect business sense.

        • johnnyknj

          I often think the same. If Greenwood (Parx) was told by the state they didn’t have to run races to keep the casino, they would cancel in the middle of the card if that’s when the news came in.

    • David

      Precisely. Could have been different but Racing simply can’t up with the casino side of the house. Always starts out well on the surface but the protectionish argument loses steam with every ensuing year. Even NYRA will hear the footsteps.

  • bocapunter

    Havenick of Magic City Casino says parimutuels can’t survive. “It’s slow. It’s boring”. Did you ever watch the robots that pull the handles on the slot machines? The Seminoles have gotten more than enough.

    • FloridaHorsemen

      We’re sure the Jockey’s Guild–among others–would strongly disagree with Mr. Havenick in regard to his “slow, boring” comment.

    • David

      A point but reporting of this little jackpot thing for later tonight says the lottery biz is over 50b, a number that drawfs a bumch of other (entertainment) options combined. Racing, as bad as it is in terms of the attempt to leave with more than what you had coing in, gives a far better chance than any office pool will have later on today. But the Seminoles may have realized what the casinos did – people like like “their” kind of poison more than watching horses take left-hand turns every 30 minutes. In competing against a bigger foe it’s best to pick an aspect and do it better than Goliath; Instead of increasing the return to a wider portion of their audience Racing has actually widened the gap of winners to total players.

  • Following racing for decades, ever since ‘casino money’ was added to the sport, much more animals had to suffer the consequences in regards to being overworked, exploited and abused; too many of them had to die.
    I still love racing, but believe that the industry should stand on it’s own and create other incentives to keep it alive! Yes, people (business – horsemen) will lose income or their jobs, but so did millions of people when the computers took over businesses…
    I’d rather see people looking for another job / income, than to continue the current status of using our wonderful athletes and animals as commodities and watch them die by the dozens each week!

    • Hamish

      Now that’s a sobering discourse.

    • David

      OK, casinos inject more resources into purses, a situation causing more animal injustment. Now “the industry should stand on it’s own and create other incentives to keep it alive” presumably meaning to fuel purses themselves. If the industry is ever successful in doing so, is not “. . . and watch them die by the dozens each week” going to continue regardless? Don’t get it.

      • I agree with your thought, depending on “how” the industry invests into purse money and betting promotions, the abuse of animals (and very high injury rate to riders) might continue… :-(
        However, if you withdraw the casino money, the whole industry will take a big hit, as in fewer but most likely more quality races. Starting at the breeding farms, over the sales, up until the races, people will lose money. If breeders and owners had to invest in creating purse money, fewer animals would receive the treatment they are getting today.
        I’m sorry, I don’t have a perfect solution on how to create this, or I would be sitting on several of the racing boards. I wish I had though…
        I just believe that animals should not be drugged or exploited (and literally raced into the ground) in the amounts they are, just to keep racing and betting as it is today.
        I left the sport over 20 years ago for this reason, but since the casino money was added (which required a certain amount of live racing) the situation has gotten much worse. :-(
        I am not talking about the whole sport and the relative few horses who perform at a higher level. This is still what it used to be and only few (deadly) accidents happen; and most horses are wonderfully taken care of!

        But look at the amount of low level claiming races, especially the ones where every horse gets paid when they cross the finish line… How many of those horses should not race anymore? And how many riders get injured riding those horses every morning and in the afternoons? With the current conditions, each track with a racino has to fill the race cards somehow in order to keep the revenue from their casinos. Which in my eyes is an incentive to create more animal abuse.

        • I guess I also have to admit that my post may not be very relevant as the issue at hand just concerns Florida and not every other state where the casino money is used to ‘prep’ the races…

        • David

          So we reduce things to a boutique biz played by rich hobbyists and therefore fewer animals get compromised? Although I personally don’t subscribe to a hard, right-wing Animal Rights’ group approach, I could respect your thoughts more if you would simply say “one” is too many.

          • I also stay away from any animal rights groups, and over 20 years of active work within the racing industry have taught me from very early on that there are always some who get injured or die. I took this risk myself for over 20 years.
            So yes, I’d rather see less races with higher quality all together than what I have seen since I moved here over 25 years ago. There are nations and countries in this world where racing is still a sport – with fewer horses / races and in some instances lower purses, but it works for everyone; including the betting public, which is essential for the sport… ;-)

        • Northern Dancer

          I’m so with you on this one. Great comments. Like you, I left years ago directly to the issues you mention.

  • David Worley

    The question that pops up over and over in TB horse racing is whether it is sustainable on its own merits. While I will always be in favor of subsidies if a state wants to extend them (why turn down free money), at the end of the day the TB industry has to save itself by:

    1) improving the RACING product through multiple elements of innovation,
    2) lowering takeout to competitive gambling rates,
    3) 1&2 entail a consolidation in the sport which likely mean fewer race days at fewer venues, -and-
    4) finding ways to keep the best horses sound and on the track for longer careers (which is critical for building fans).

    I truly do believe that at some point consolidation will occur (maybe just through attrition), but #4 concerns me and is difficult and I’m skeptical that will change.


  • james nicholson

    This is just the beginning. Other states and eventually ALL states are going to allow casino gambling without horse racing. Coupling in the first place was just a ruse by the states themselves to get casinos foot in the door. Now that the money is flowing and the voters have Power Ball tickets in hand, horse racing is as relevant as people in straw hats coming to watch Seabiscuit run.
    This will not happen overnight. There will be some hard fights by horseman and fans alike. But they will not be able to beat 2 things. 1) The money. 2) Offtrack betting. Horse Racing will look more like it does in Europe. There will only a few tracks with top notch racing in the coming years. Sorry to say this is just progress.
    This is tragic to me personally, I started on the track galloping hoses at River Downs 40 plus years ago.

  • daltemose

    pouring money into purses isn’t working
    taking racing stars to the breeders shed isn’t working
    exorbitant salaries isn’t working
    relying on outside financial help isn’t working
    doping isn’t working

    bettors are ignored–any questions?

    • David

      Yes, US Racing seems to be slowly going the way of British Aristocracy during pre-WW II – poor policy and failure to equitably cut in the Tenants or, taxing Bettors without a plan to sweeten the deal in order to expand the player base. . . same result.

  • machete joe

    Considering Im here in Oldsmar for the Tampa meet, and everywhere I go is full of “race trackers”.. Whether it’s the bars, or laundry mats, stores, resturaunts, there are always people who are stating how thankful they are for our business.. Many of them, don’t even know Tampa has a track, and it’s funny you explain it to them, and it’s like a light goes off in their head.. “Oh thats where all the horse people come from”.. YEAH, and when they go, what are you going to do all winter? You going to get any of that 3 billion being gifted to the Seminole casinos? Alot of Florida is seasonally affected. Having horse racing in these places are a big boon to small businesses.. I’d say it’s the biggest thing these local govts have to help these business… Saving the racing industry is far more important to places like Oldsmar, than they can even imagine..

    • FloridaHorsemen

      Machete, you hit the nail on the head. Thank you!

  • Len

    I wonder if the tribal casinos have a favorable state and federal tax rate – or maybe exempt. If so that might be a good advertising response to their campaign. Lost jobs also mean lost revenues to the state. Timing might be right to look to concerns of the broader base to gain support. Relying solely on those connected to the industry no matter how distant still favors the casinos who likely have a wider berth across the population. Just saying.

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