February 26, 2017
Tom LaMarra, Blood-Horse

A state group that studies the impact of tax changes in Florida offered a general assessment Feb. 26 that decoupling horse racing from gaming would have minimal effect on pari-mutuel revenue for state government.

The Florida Revenue Estimating Impact Conference met for the second time in two days to mostly examine legislation tied to a $3 billion gaming compact with the Seminole tribe. The bills would authorize slot machines at other locations in the state and allow tracks to decouple—not being required to offer live racing to keep slots and card rooms operating.

Legislation that passed the Senate Regulated Industries Committee would allow decoupling of Quarter Horse, Standardbred, and greyhound racing, as well as jai alai. In regard to Thoroughbred racing, only a “summer” license—specifically Calder Race Course—would be included.

During the Friday conference it was noted that decoupling at Calder would have no affect on current revenue because Gulfstream Park would pick up the racing days. It already has for the past two years by leasing Calder and operating 40-day meets.

Harness racing in Florida is held only at Isle Casino at Pompano Park. Conference officials said they don’t know if Pompano plans to continue, reduce, or eliminate live racing if the legislation becomes law, but because it would continue to offer full-card simulcasts and serve as an inter-track host site, the facility “would continue to generate the majority of revenue” it now provides the state.

Pompano is an interesting case. Total handle—albeit most of it derived from off-track sources—has increased by 50% the past two years because of efforts by employees on the racing side of the operation. Yet, on a Feb. 23 earnings teleconference for owner Isle of Capri Casinos, senior vice president and chief executive officer Eric Hausler, in response to a question from a stock analyst regarding Florida, said: “The positives for us are a tax reduction of course. There’s also talk about decoupling us from horse racing. That would obviously be a positive as well.”

Hausler was referring to the Senate bill, which would reduce the tax levied on slots at pari-mutuel facilities from 35% to 25% whether or not they decouple.

The state lists five Quarter Horse tracks, including those that have offered barrel or flag-drop racing at meets that have since been ruled illegal. The only sanctioned meet is at Hialeah Park, which supports decoupling but hasn’t indicated whether it will maintain, reduce, or end live racing if the bill becomes law.

The revenue loss in pari-mutuel and licensing taxes if racing were to end at Hialeah would be about $114,000 a year, conference officials said.

According to a survey, six greyhound tracks most likely would end live racing, and another is expected to cut its number of performances by 50%. If decoupling did pass, dog racing most likely would continue at six or seven tracks.

Conference officials noted Palm Beach Kennel Club, which under one bill would be eligible to ask the legislature for approval for slots because Palm Beach County already approved a slots referendum, is currently required to offer 200 performances under its two licenses but actually holds 338 a year. On Friday, the 15-race matinee program at Palm Beach produced total handle of $567,371, an enormous number for a dog track.

The revenue estimators only looked at taxes from pari-mutuel revenue and licensing fees for live racing. They aren’t charged with examining the overall economic impact of horse racing and breeding, which led United Florida Horsemen, a group that opposes any form of decoupling, to issue a statement after the conference.

“As Florida economists discussed decoupling this morning, Florida horsemen remind our policymakers that real business, jobs, and lives are at stake,” the organization said. “No slot machine can contribute the broad economic value of a horse, from breeding and green space, to the labor intensity of horse care, to the money returned to Florida’s economy through horse racing.

“In listening to today’s projections of slot-machine revenue riches, it’s easy to forget that money still comes out of real people’s pockets. But given that gambling is here to stay,  it makes no sense to watch our citizens’ money fly out the door to pad casinos’ bottom lines instead of back into our economy through the many benefits of live horse racing.”

Whether decoupling provisions are approved by the full legislature remains to be seen. The Senate bill, in which they are included, is said by some lawmakers to violate the intent of the Seminole compact because it also would allow six new locations to request approval to install slots. One of them is located in Gadsden County, where one of the renegade Quarter Horse tracks was operating.