The same bureaucrats in Tallahassee, Fla., who define a “horse race” as two equines ambling down a dirt path at a snail's pace have been sued by the Florida Horsemen's Benevolent and Protective Association for giving Calder Race Course a summer jai alai permit that will allow the Churchill Downs Inc.-owned track to stiff Thoroughbred owners and breeders for $10 million a year in slot machine revenue.
Churchill Downs has also been named in the “permit swapping” lawsuit filed against the state of Florida, Department of Business and Professional Regulation's Division of Pari-Mutuel Wagering. The suit was filed Tuesday on behalf of the FHBPA by attorney Bradford Beilly in Leon County Circuit Court in Florida's panhandle.
The horsemen's organization is challenging whether the state acted properly and legally in giving Calder a jai alai permit, the consequences of which could have a significant impact on Florida's Thoroughbred industry.
Calder was among the Miami-Dade and Broward county pari-mutuel operations that successfully lobbied for approval of a 2004 state-wide referendum permitting slot machines. In a final push for an advertising campaign to sway Florida voters, Calder officials convinced the FHBPA to contribute $1 million in exchange for what the lawsuit described as “a proverbial seat at the table” should Calder win the right to operate slot machines. The money came out of Calder's purse funds over three race meetings.
The law requires Thoroughbred tracks to maintain purse contracts with the FHBPA in order to operate slot machines. Under the current revenue sharing agreement, which expires in 2020, Calder pays 10 percent of its slots revenue toward purses. During the 2017-'18 fiscal year, that 10 percent amounted to $8.8 million. The Florida Thoroughbred Breeders' and Owners' Association has a separate agreement for an undisclosed amount believed to be in excess of $1 million annually.
Calder continues to pay the purse money, even after the company agreed to lease the racetrack to Gulfstream Park management to run the required racing dates at Calder – which no longer has a grandstand – under the name Gulfstream Park West.
Unbeknownst to the FHBPA, on Aug. 31, 2017, Calder president and general manager Maureen Adams applied for a summer jai alai permit on behalf of Calder. The application was based on a section of the pari-mutuel statute, Chapter 550.0745, approved in the 1980s and designed to help underperforming pari-mutuel operations by allowing them to convert their permits to a summer jai alai permit. The operation in question had to show that it had the “smallest play” within a county for two previous years prior to applying for a permit conversion. If the operation with the smallest play for two consecutive years declined to convert, a new permit would be made available to others. An unclaimed permit is the one that Calder sought.
Adams cited an unnamed pari-mutuel facility from fiscal years 2005-'06 and 2006-'07 in her application, meaning Calder was trying to scoop up an unclaimed jai alai permit that would have been available to the lowest performer from those two consecutive fiscal years.
Without fanfare or notification to interested parties (including the FHBPA), the Division of Pari-Mutuel Wagering approved the summer jai alai permit for Calder on Feb. 9, 2018.
When the FHBPA heard rumors that Calder was seeking a jai alai permit, the organization promptly filed a records request with the Division of Pari-Mutuel Wagering, asking to see Calder's application and the wagering calculations it may have been based on. The state did not comply fully, according to the complaint, leaving out the requested wagering calculations. As a result the FHBPA compiled its own calculations, based on public records, and concluded that no permit holder qualified from 2005-'06 and 2006-'07 by having the “smallest play” in two consecutive years.
On July 3, 2018, the FHBPA filed a petition with the Division of Pari-Mutuel Wagering for a formal administrative hearing on the issue of the Calder permit.
On July 24, 2018, the Division dismissed the petition with prejudice, saying the FHBPA filing was untimely because it was required to file its petition within 21 days of Calder being quietly approved for the permit on Feb. 9 – not when the FHBPA first learned of the permit months later.
On July 31, 2018, Calder president Adams sent a letter to Robert Ehrhardt, director of the Division of Pari-Mutuel Wagering, seeking clarification on whether it can keep its slots operation going when it switches from Thoroughbred racing to jai alai.
“Calder wishes to discontinue live Thoroughbred racing and to obtain a license to operate a full schedule of live jai alai games under its summer jai alai permit,” Adams wrote. “Calder intends on conducting live jai alai games at the same physical location or piece of property where it currently coinducts Thoroughbred racing. Calder will only make this change if the Division authorizes Calder to continue slot machine gaming while conducting a full schedule of live jai alai games under its summer jai alai permit.”
The law does not require summer jai alai permit holders to share revenue from slot machines, as Thoroughbred permit holders are required to do.
The FHBPA lawsuit seeks the administrative hearing it was denied by the Division of Pari-Mutuel Wagering and questions whether the premise on which the permit was based – namely, how the wagering calculations were compiled – is valid. Finally, the FHBPA seeks clarification on whether there is a statute of limitations on permit conversions.
The cold and calculating move by Calder Race Course and its parent company to discontinue live racing is a transparent effort to cut horsemen out of the revenue sharing from slots required by law of a Thoroughbred racetrack. It should be pointed out that it's the same horsemen who financially supported the efforts to get slots approved.
But Calder Race Course isn't the only entity to shaft the FHBPA. The Division of Pari-Mutuel Wagering has treated the horsemen unfairly, too, first by not notifying them that Calder was swapping its permit to cut out live racing, then by denying them an opportunity for an administrative hearing because they didn't protest something they didn't know about quickly enough.
Let's hope the horsemen get a fair hearing in civil court.
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