As Florida Lawmakers Race To Pass Gambling Bill, Churchill Downs And Calder Look Toward Jai Alai

With the clock ticking down to Friday's conclusion of the 2018 legislative session in Florida, lawmakers are scrambling to pass a wide-ranging gambling bill. Nothing new there, since legislators have been working unsuccessfully on gambling bills for several years.

What makes 2018 different is a constitutional amendment that will be on the general ballot this November. If approved, that ballot initiative – known as the Voter Control of Gambling in Florida – would require a separate state-wide vote for any additional expansion of gambling in the Sunshine State.

In other words, if legislators and lobbyists want to pass gambling legislation without the pesky public's affirmation, they'd better hurry.

On Monday the Florida House approved a bill that would lock up a compact with the Seminole tribe for 20 years, declare “designated player” card games offered at pari-mutuel facilities illegal and ban certain video games that are said to resemble slot machines. It would restrict slot machines at pari-mutuel facilities to Dade and Broward counties. There is no decoupling of casinos and pari-mutuel operations in the House bill.

By definition, decoupling would allow an existing pari-mutuel licensee with slots or card rooms to keep its casino but cease live racing or jai alai performances.

The Senate bill, which has passed a key committee, would permit decoupling of dog tracks and non-Thoroughbred horse tracks. It also would permit slots in counties outside of Dade and Broward that have held local referendums, including licensed pari-mutuel facilities that offered flag-drop races.

As you can see, there's quite a difference between the two measures.

Meanwhile, Churchill Downs Inc., owner of Calder racetrack and casino near Miami, appears to be hedging its bets. If decoupling happens, CDI can keep its casino and possibly cut the cord completely and get out of the horse racing business in South Florida. Currently, there must be live racing at Calder for CDI to operate a casino.

If decoupling doesn't happen – and it's a long shot to pass at this point – CDI officials may have another plan. Calder has obtained a pari-mutuel permit to conduct a summer jai alai meeting, and based on a previous decision by state officials may be able to link that permit to its casino and allow the Thoroughbred permit to lapse. Jai alai is a round-robin game in which players bounce a hard rubber ball against a wall using a basket-like glove. In years past, it enjoyed moderate popularity, especially among Florida tourists,  but the modern-day version of the game is amateurish.

“The entire thoroughbred industry should be concerned that Churchill Downs has decided to attempt to exploit a bizarre statutory loophole to secure a summer jai alai permit at its Calder facility, in an apparent attempt to stop its horseracing activities and contributions in Florida but continue its slot machine operations,” said Brent Fernung, owner of Journeyman Stud in Ocala and president of the Florida Thoroughbred Breeders' and Owners' Association. “To say that the FTBOA is disappointed would be an understatement. “

In 2014, CDI took the first step toward ending its presence as a racetrack company in South Florida, reaching a seven-year deal with The Stronach Group to lease the track and a small portion of the stabling area for a summer and fall race meeting. In 2016, CDI demolished the Calder grandstand, making it increasingly uncomfortable for anyone wishing to attend live racing at the newly branded Gulfstream Park West – which has been a success as a simulcast signal, handling far more than Calder did in recent years while under CDI management. A quarter of the land comprising Calder was sold for industrial park development a year later.

The lease between CDI and The Stronach Group runs through 2020, the same year a purse agreement between Calder and Florida horsemen expires. That agreement includes almost $8 million in annual purse money from slot machines inside the Calder Casino. That's about 10 percent of the $75 million in total South Florida purse money currently offered.

Completion of this scheme will take time and money, since CDI will have to construct some form of glass-enclosed jai alai arena like the one the late John Brunetti, owner of Hialeah Park, built in Florida City, south of Miami.

Using the jai alai pari-mutuel permit and constructing a court next to the Calder Casino would allow Churchill to accomplish two key goals: sell the property where the racing and stabling occurs and stop paying 10 percent of net revenue from slot machines to support horse racing.

Corporate communications at Churchill Downs Inc. did not respond to an inquiry on company plans for the jai alai permit.

“We hope Churchill Downs and the horsemen find a way to work it out,” said Tim Ritvo, chief operating officer of The Stronach Group's racing division. “Loss of that purse money would result in a reduction in race days.”

“It's confirmation, if we needed it, that Churchill's only interest in being here is for the casino,” said Glen Berman, executive director of the Florida Horsemen's Benevolent and Protective Association.

“It is hard to believe that the home of the Kentucky Derby would continue to back away from its storied history, abandoning the horsemen and breeders that helped build its brand and doing great harm to Florida's Thoroughbred industry,” said Fernung.

“With that said, Churchill Downs has more hoops to jump through and challenges to face related to this summer jai alai permit. It is far from a done deal,” Fernung added. “Obviously, the entire Florida Thoroughbred industry has a vested interest in this matter. The FTBOA will continue its ongoing efforts to work with Churchill Downs and Calder to find a more industry-friendly and reasonable approach to continuing their racino operations in a manner satisfactory to all concerned.”