Thoroughbred breeders and trainers are accusing gambling regulators of erring when they allowed Calder Race Course to keep its lucrative slot-machine license after demolishing the grandstand where bettors once watched horses compete.
But during an administrative hearing Tuesday, lawyers for Calder accused the horsemen of trying to force the track to build a glitzy new stadium despite the dramatic decline in horse betting that prompted the destruction of the aged facility two years ago.
The challenge highlights the growing tension between the greyhound and horse industries and racetrack operators, who have sought to do away with live racing while keeping more-profitable gambling activities such as slots and poker, a process known as “decoupling.”
The Florida Horsemen’s Benevolent and Protective Association filed the complaint against state gambling regulators last year, after the Division of Pari-Mutuel Wagering renewed the slots license for the Miami Gardens casino.
Under Florida law, slot-machine gaming areas must be “contiguous and connected to the live gaming facility.”
The complaint alleges that the renewal of Calder’s slot-machine license after the grandstand was torn down amounts to an “unadopted rule.”
In general, the horsemen want slots players to be able to view live races, believing that seeing the activity will enhance the odds that gamblers will also wager on horses.
When Calder added slots in 2010, the area where gamblers played the machines was connected to the live gaming facility, the parties involved in the case agreed.
But after the 400,000-plus square foot grandstand was razed in 2016, only a partially covered sidewalk now connects the slots area and the live racing area, Bradford Beilly, the horsemen’s lawyer, argued.
The destruction of the grandstand “materially changed” the configuration of the track, Beilly told Administrative Law Judge Lawrence P. Stevenson.
“There is nothing between the slots facility anymore and whatever Calder deems to be its live gaming facility,” he said.
But James Lewis, a lawyer who represents the state Division of Pari-Mutuel Wagering, said that “but for the demolition of the grandstand, Calder’s layout remains the same.”
The “contiguous and connected” requirement is fulfilled “by a sidewalk,” he said.
The complaint about the alleged unadopted rule is “a red herring,” said attorney Wilbur Brewton, who represents Calder.
“What this case is really all about is that the horsemen want to dictate how Calder should operate its pari-mutuel business” and “tell Calder to build an air-conditioned grandstand building,” he said.
According to testimony Tuesday and court records, Calder began tearing down the grandstand in 2015, about a year after its parent company, Churchill Downs, reached a deal with The Stronach Group, which owns Gulfstream Park. Under the agreement, Gulfstream --- which is eight miles away --- runs 40 races a year at Calder, the minimum number of live races required for Calder to maintain its slots license.
The tracks, which are also required to have revenue-sharing agreements with horsemen’s associations, cut a deal with the Florida Horsemen’s Benevolent and Protective Association in which the breeders and trainers receive 10 percent of the revenue generated by the slots at the Calder site, according to testimony Tuesday. That amounts to about $8 million a year from the $80 million that Calder generates in revenue from slots, Calder President and General Manager Maureen Adams told the judge.
The track decided to “outsource” the races because it was losing about $5.5 million a year on the horse races, Adams said.
When asked if she was concerned that tearing down the grandstand could put Calder’s slots license at risk, Adams answered: “Absolutely not.”
Beilly also raised the decoupling issue with Adams, asking her --- over Brewton’s objections --- if Calder wanted to eliminate live racing.
“We have actively participated with all other pari-mutuels in South Florida in a quest to have the legislation changed so that we could be free to either conduct pari-mutuel wagering or not, based on customer demand and whether or not the customer demand is there and whether or not the activity could be profitable,” she said.
The horsemen’s association first notified gambling regulators about concerns regarding Calder’s slots license in October 2016, after the demolition was completed, according to court records.
Division employees --- including two investigators --- visited the site after the demolition but did not launch any official inquiries into whether the changes would affect the slots license, according to Tuesday’s testimony.
But Beilly said that gambling regulators never formally ruled that the walkway met the requirements of the law.
“Where on record did anybody at the division make a conclusion, other than issuing licenses, that they (Calder) remained in compliance once the facility was knocked down?” Beilly asked.
The judge didn’t give any indication of how he might rule in the case, but said it seemed “that basically not a whole lot of thought was given to” the demolition.
“The investigator went out and said, eh, it’s contiguous. It wasn’t a big deal to the division until your client made it an issue,” Stevenson told Beilly, adding that regulators treated the elimination of the grandstand as if “it wasn’t a big deal.”
“…That’s what I’m going to walk away with, that impression, for better or worse. It’s contiguous. It hasn’t moved. The grandstand’s gone. Nothing else has moved. That may be good enough,” the judge said, describing gambling regulators’ attitude toward the demolition.
Stevenson said he is “up in the air” about his conclusions, and that his impression could benefit either side.
“Depends on whether I think it’s a big deal or not, to knock down the grandstand,” he said.
After the hearing, Beilly maintained that the post-grandstand track doesn’t meet the statute’s requirements.
“Remember, it needs to be connected to a live gaming facility, and that word live gaming facility doesn’t fit into walking across pavers,” Beilly told The News Service of Florida. “So, that was the whole point of the statute, that it would be connected and be contiguous to the live gaming facility --- which was the original grandstand building --- and once it’s gone it’s connected to nowhere.”