Pari-mutuel challenges: Economy, Seminoles -- and each other

When slot machines began spinning at South Florida pari-mutuels back in 2006, some expected gobs of cash to roll in. And while the casinos are turning over healthy amounts to the state ($143 million in slot taxes last fiscal year), all agree that the industry hasn’t been as robust as expected.


Leaders at five South Florida horse tracks, dog tracks and jai-alai frontons spoke Tuesday about their challenges during the Florida Gaming Congress at the Seminole Hard Rock Hotel & Casino in Hollywood.


Among their woes:

The economy: Business is down this year, partially because of end of the 2 percent Bush payroll tax cuts, which gave people more disposable income. Some racinos are down double-digit percentages compared to last year. Others see the federal government’s repeated bickering (fiscal cliff, sequestration, etc.) and customers simply aren’t letting loose of their dollars, said Austin Miller, president of Calder Casino and Race Course in Miami Gardens.
 “People are scared,” Miller said.


Hollywood Doggie Beach Pictures

Each other: Florida’s hyper-competitive market often has casinos chasing after each other’s patrons. This is especially true in poker, where players caravan from one card room to another, based on who has the biggest high-hand jackpot promotion.
“I’ve never seen crazier promotions in poker than I have here,” said Casino Miami Jai-Alai President Dave Jonas, who ran Philadelphia Park Casino. “We’ve just ruined that product.” The bright spot, they say, is that more people are visiting casinos as more open.
“I think you’ve seen growth as the new pari-mutuels have come on board,” said Dan Adkins, CEO of Mardi Gras Casino in Hallandale Beach.

South Florida’s diverse entertainment landscape: “South Florida has competition I didn’t understand until I got here,” Jonas said. “Now it’s the boat show, Calle Ocho festival or the South Beach Wine & Food Festival. It’s walking out of the door with half a dozen options every day.” To that end, some casinos have muscled up on their music and comedy offerings, which “brings a different set of faces” to the casinos, they say.

Their pari-mutuel commitment: Jai-alai frontons have to pay players, and track owners must maintain their horses or dogs. Magic City Casino VP Izzy Havenick said his dog racing operations in Miami and Naples operated at a $6.5 million loss last year, and few young people are interested in the pari-mutuels.
 “I haven’t seen a new pari-mutuel customer in five years,” he said.
Since 2011, they have asked the state for “decoupling,” i.e., eliminating the requirement that pari-mutuels have a required number of performances to keep their casino licenses. In a rare agreement with the dog racing industry, members of GREY2K USA, a nonprofit organization aimed at eliminating dog racing, also supports decoupling. Adkins predicted dog racing would be extinct in 10 years.

The Seminole Indians: As they have often stated, the pari-mutuel leaders complain that their 35 percent slot tax hamstrings their ability to reinvest in their product; the Seminoles pay an estimated 12 percent on their revenues.
“You can easily argue that it’s not a fair fight,” Miller said. “For example, we gave away a Toyota, while the Hard Rock’s giveaway was a $125,000 Mercedes-Benz SL 550.” He said the Hard Rock’s advertising buys are about five times that of the average pari-mutuel casino.