Florida Legislature: Battle Lines are Drawn on Decoupling and the Seminole Compact

By Jim Freer

The Florida Legislature is nearing the mid-point of its 2016 regular session, which will end March 11.

Here is a look at what could lie ahead on the hot-button issues of decoupling for pari-mutuels, on which a bill might be introduced within several days, and a revised Gaming Compact with the Seminole Tribe which has seven casinos in Florida

Decoupled pari-mutuels would be able to stop holding live races and jai-alai games while still having other gaming such as poker, in-bound simulcasts and slot machines.

Decoupling is a divisive topic within the state’s thoroughbred industry. 

Calder Casino & Race Course wants it. So does Hialeah Park, which now has quarter horse racing, and so do most of Florida’s 15 greyhound tracks. Their main argument in seeking decoupling is that they would give up events that have become unprofitable while shifting money to other gaming and to possible upgrades of infrastructure or redevelopment of land now used for racing.

The Horsemen’s Case

The Florida Horsemen’s Benevolent and Protective Association and the Florida Thoroughbred Breeders’ and Owners’ Association are opposed to decoupling. 

They maintain that decoupled pari-mutuels would have unfair advantages in competing for gaming dollars with thoroughbred tracks, leading to spillover economic impact on Florida’s racing and breeding industries. That is a main reason why the Florida HBPA is opposed to decoupling, even if it were only for greyhound tracks.

Gulfstream Park does not want to stop its racing. But it is willing to accept decoupling for some other pari-mutuels, if a deal provides it with some economic incentives.

Gulfstream has not released public details. But one change reportedly under consideration in the Legislature is cutting the state tax rate from 35 percent to 25 percent on pari-mutuels’ slot machine revenues. Another would be setting aside a percentage of decoupled pari-mutuels’ slot revenues to be added to race purses at Florida thoroughbred tracks.

The Calder Question

Calder already has what can be called “partial decoupling.”  Since 2014 it has had racing only in October and November. 

Calder  Casino & Race Course

Calder Casino & Race Course

Gulfstream is holding those meets using the name Gulfstream Park West under a lease agreement that the two tracks signed  in June 2014.

The agreement extends through 2020. It ended 12 months of head-to-head weekend racing that took place amid the two tracks’ dispute over racing dates. Each side obtained a primary goal. 

Gulfstream now has racing year-round and unopposed in South Florida.

A state law requires a pari-mutuel to have at least 40 performances (race days) a year to keep a  casino license.  Churchill Downs Inc., the Louisville, Ky.,-based parent of Calder, obtained permission from the Florida Division of Pari-Mutuel Wagering to keep its casino  under the lease agreement.

If decoupling is approved for Calder, CDI would no longer need the lease agreement to keep the Calder casino.

CDI and Calder do not comment on pending legislation. But if Calder is decoupled there is the prospect that they would attempt to  break the lease with Gulfstream and its parent The Stronach Group.

In that event, there are concerns among groups including  horsemen and  breeders, that Calder might close its remaining 430 stalls (now leased by Gulfstream).

Details of the Florida HBPA’s position may be found on its www.nodecoupling.com Web site.

This week, Rep. Jose Felix Diaz (R-Miami) told several Florida newspapers that he expects perhaps by the end of this week to introduce a bill that would allow decoupling for greyhound tracks, but likely not for horse tracks. Diaz is chairman of the House Regulatory Affairs Committee, which has initial jurisdiction over gaming bills.

Seminole Compact

The Legislature is reviewing Gov. Rick Scott’s proposed new Gaming Compact for the Seminoles.

What the Legislature does on the Seminole Compact could be the major factor in determining what it does or doesn’t do on decoupling and several other gaming issues.  A central question is whether the Seminoles will in effect be given veto power over some future non-racing activities at Florida pari-mutuels.

The Scott-Seminole deal calls for the Seminoles to significantly increase their payments to the state, based on percentages of their gaming revenues, to a minimum total of $3 billion over the next seven years. In return, the Seminoles would gain exclusive rights to have craps tables and roulette in Florida.

Under the Scott-Seminole proposal, the Seminoles could void the Compact and stop or reduce gaming payments to the state if the Legislature, courts or regulators allow Florida pari-mutuels to have changes beyond certain limits.

Perhaps most significant is that the Compact would be void if the Legislature or courts allow any county other than Palm Beach to have slot machines at pari-mutuels.  Miami-Dade and Broward are currently the only counties where pari-mutuels can have licenses for casinos, with Las Vegas-style slot machines.

That is a central issue for Tampa Bay Downs, which is in Hillsborough County and does not have slot machines. The Oldsmar track’s gaming consists of its racing, simulcasting and poker.

Tampa Bay Downs competes for gaming dollars with the Seminole Hard Rock Hotel & Casino in Tampa. That casino has poker, Las Vegas-style slot machines and blackjack. Like the other Seminole casinos, it does not have simulcasts from pari-mutuels.

It is noteworthy that under the Scott-Seminole deal decoupling would not void the Seminoles’ obligations to make payments to the state.

 

Seminoles and Decoupling

The Seminoles are not taking a stand on decoupling, James Allen, president of Seminole Gaming, said on Jan. 20 during a presentation to the Florida Senate’s Regulated Industries Committee.  That committee has initial Senate jurisdiction over gaming issues

On Monday Feb. 1, the Seminoles said that if they can obtain a satisfactory Compact they would be ready to spend up to $1.8 billion to expand their two biggest properties. Those are the Seminole Hard Rock Hotel/Casinos in Hollywood and Tampa.

In an agreement that ended last Aug. 1, the Seminoles paid the state a total of about $1 billion in return for the exclusive right to have blackjack and baccarat in Florida.

The Seminoles have continued to operate those table games and pay revenues to the state.

Any new Seminole Compact must be approved by the Legislature. In non-voting workshops, several members of the Senate Regulated Industries Committee have said they don’t like some of the Scott-Seminoles deal’s provisions–including geographic restrictions on expansion of pari-mutuel casinos.

Thus, there is the prospect that the Legislature might decide to postpone other gaming issues for a year, and attempt to just reach a new agreement with the Seminoles.

 

 

 

 

 

 

 

 

 

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