Churchill Downs Inc.'s Calder Casino in South Florida is in danger of losing its slots license after an administrative law judge ruled that the operation is not compliant with state law because of the absence of a “contiguous and connected” building from which to conduct wagering on live racing.
Without compliant live racing, Calder would not have been able to maintain a slots license, which it first acquired in 2009. Live race meets at Calder are now operated by Gulfstream Park under the name Gulfstream Park West, even though the Calder grandstand was razed in 2015.
Administrative law judge John G. Van Laningham on Friday issued a recommendation that Florida's Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, enter a final order denying Calder's application for renewal of a slot machine license for the fiscal year 2018-19. The recommendation could jeopardize a renewal of the annual license, which expires July 9, 2019.
It wasn't immediately clear how the recommendation may affect Calder's scheme to eventually connect a pari-mutuel permit for a recently opened jai-alai fronton on the Calder property to the slots casino.
The 2018-19 renewal of the Calder slots license was challenged by the Florida Horsemen's Benevolent and Protective Association, even though it could cost horsemen millions of dollars in annual purses. Under the current agreement between the FHBPA and Calder, 10% of slots revenue goes to purses, about $9 million of $90 million in annual slots revenue. That agreement expires Dec. 31, 2020.
The FHBPA challenged whether the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, violated Florida statute in approving Calder's slots license when the casino was built in a separate building that was not directly adjacent to the racetrack's grandstand. The law approving slots states that a gaming facility may be located in a separate building if it is “contiguous and connected to” the facility for wagering on live races.
Van Laningham wrote that the requirement “thus guards against the slot machine operation from becoming the tail that wags the dog, by requiring at least a kind of structural parity between the live gaming area (for racing) and the slots machine building.”
Following a similar arrangement at the Pompano Park harness track and slots casino, the Department of Business and Professional Regulation said a covered walkway between the slots and live wagering buildings would suffice to remain compliant.
However, when the Calder grandstand was torn down and the live racing area moved to the apron of the racetrack, there was no covered walkway or permanent building in which to wager.
“Consider Calder's current configuration,” Van Laningham wrote. “For slot machines, there is a new casino. For live gaming, in stark contrast, there is a collapsible canopy tent where the grandstand used to be, near the apron, and some outdoor seating, trackside. The unmistakable message is that the live horse races, having declined in popularity, have been degraded, demoted, reduced to second-class status; horse racing is no longer the main attraction, but an afterthought.
“Almost certainly, the legislature wanted to prevent slot machine gaming from cannibalizing the preexisting live gaming business, which would be a reasonably foreseeable consequence of building a brand new slot machine gaming facility or casino at some distance from the current live gaming (racing) facility.”
Florida statute “clearly and unambiguously mandates that the live gaming facility (for racing) be a building,” Van Laningham wrote in his opinion. “Calder's current 'live viewing area' is not a compliant 'live gaming facility.'
“Because Calder does not have a compliant live gaming (racing) facility, its casino is not 'contiguous and connected to' a live gaming facility as required by (statute). Even if Calder's 'live viewing area' were a compliant live gaming (racing) facility, which it is not, Calder's slots machine building is not 'contiguous and connected to' the 'live viewing area.'
“Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, enter a final order denying Calder's application for renewal of its slot machine license for the fiscal year 2018-19.”
In the wake of the recommendation by the administrative law judge to strip the Calder Casino of its slots license, Florida HBPA president Stephen Screnci said, “It's unfortunate it came down to this. If they had followed the statute that was required, none of this would have been necessary.”
CORRECTION: The agreement between Calder and the Florida HBPA on slot machine revenue expires Dec. 31, 2020. An earlier version of this article had the incorrect date.
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