TABLE OF CONTENTS. Page. ExecutiveSummary IntroductionandBackground Findings Synopsis of Responses to Letter Survey Part1...

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2 TABLE OF CONTENTS Page ExecutiveSummary... 1 IntroductionandBackground... 2 Findings... 4 Synopsis of Responses to Letter Survey... 7 Part Part Appendices Letter Survey and List of Recipients Executive Summary and Feasibility Recommendations of Hialeah Study Responses to Letter Survey Department of Business & Professional Regulation Statute Matrix with Tax Revenue i

3 1 EXECUTIVESUMMARY 1 Without exception respondents to Part I - Tax Reductions for Pari-mutuel Industry of the survey expressed the need for a reduction or repeal of various pari-mutuel taxes. Our request, however, that similarly situated groups submit an agreed upon recommendation for specific reductions did not generate the desired responses. Suggestions for tax relief were varied, some very general while others were very specific, as were the respective costs of implementation. Respondents agreed that any tax relief granted to permitholders should be shared with the owners and breeders of the racing animals and jai alai players. Further, permitholders expressed their intention, provided tax relief is granted, to continue capital improvement initiatives and to aggressively market their product in order to stimulate growth in the industry. Competition from cruises-to-nowhere, Indian casinos, Internet gambling and the state-sponsored lottery are each seen as contributing to the decline in interest and attendance at pari-mutuel events and many pari-mutuel interests believe the only way they can compete with these venues is if they are allowed similar gaming opportunities. Permitholders in the South Florida market area were more divided on issues surrounding the state/city purchase of Hialeah Park Fart II - Hialeah Park Feasibility Study] and operation of a limited 21-day meet. While all responding permitholders from that area question whether the estimated $41 million purchase price for Hialeah Park is a reasonable figure, they are in disagreement over the impact of a 21-day meet and division of the remaining race dates between Gulfstream and Calder on state revenue collections, as well as its impact on other pari-mutuel interests. A review of the Hialeah Park Feasibility Study, prepared pursuant to Chapter , Laws of Florida, by Public Financial Management, Inc., and Masvidal Partners, Inc., appears to address issues set forth for evaluation in the RFP issued by the Department of State. 1

4 INTRODUCTION I AND BACKGROUND I Florida law all ows pari-mutuel wagering on thoroughbred and harness horse racing, greyhound racing and jai alai games. From time to time, quarter horse racing has been conducted, as well. Since authorization of pari-mutuel wagering in 1931, Florida s pari-mutuel industry has developed into one of the largest and arguably the most complex in the nation. The state has historically enforced a wide range of regulatory controls over the daily operations of pari-mutuel permitholders. This complicated set of laws and regulations has been primarily designed to protect the health of the pari-mutuel industry and, consequently, the state revenues generated by wagering activities. The pari-mutuel wagering industry in Florida was once an entertainment monopoly. Over the years, however, the industry began to face competition for discretionary entertainment dollars from an increasingly large array of other entertainment and gaming venues. Today in Florida, the industry is forced to compete with five Indian reservations, unregulated Internet gaming, an estimated 28 gambling vessels and the state operated lottery for discretionary entertainment dollars. For a variety of reasons, the industry appears to be in the midst of a long-term decline in popularity, both locally and nationally. Over the last decade there has been a steady decline in attendance and wagering handle. According to Department of Business and Professional Regulation statistics, while the total number of racing days was nearly identical, total paid attendance at pari-mutuel events decreased from over 16 million in Fiscal Year 1987/88 to slightly more than 7.6 million in Fiscal Year 1997/98. Pari-mutuel handle decreased from $6,006,768,479 in Fiscal Year 1987/88 to $1,609,182,244 in Fiscal Year 1997/98. Likewise, tax revenue to the state has continued to decline, with $130,021,801 in collections for Fiscal Year 1987/88 and $71,475,527 in collections for Fiscal Year 1997/98. Continuing in this spiral, revenue collections decreased by yet another $8 million in Fiscal Year 1998/99 to an estimated $62,934,837. Total state revenue collections from pari-mutuel performances alone [this figure excludes revenue receipts from occupational licenses, escheated tickets, cardroom revenues, etc.] were $58,859,208 for the past fiscal year. Section , F.S., requires $29,915,500 of annual parimutuel revenue collections to be divided equally between and distributed to all counties in the state. Once this payment to counties and the cost of operation for the Division, which is approximately $15 million, is deducted from those receipts, the unencumbered balance from pari-mutuel revenue collections in the General Revenue Fund is approximately $13.9 million. The Division estimates that amount to further decrease in FY 1999/2000.

5 Not only have tax collections continued to decrease during the last fiscal year, the past year has seen a further decline in the number of operating facilities in the state with the closure of Tampa Jai Alai. There are 40 pari-mutuel permits issued throughout the State of Florida; however, of that number, only 31 are presently active. Recently, in an effort to create a favorable business climate and stimulate economic growth in the state, the Legislature has sought to reduce the tax burdens on Florida businesses. In that vein, the Committee on Regulated Services was author&d to undertake an interim project which examined potential tax reductions for the pari-mutuel industry. In addition, the 1998 Legislature required the Department of State, in conjunction with the Office of the Mayor of Hialeah, to conduct a comprehensive study of the feasibility of state or municipal ownership of Hialeah Park and the operation of a limited race meet. Hialeah Park is situated on approximately 200 acres of land located in the heart of the City of Hialeah, Dade County, Florida. Hialeah Park, renown for its flocks of pink flamingo, is the oldest pari-mutuel facility in the state. The Park was placed on the National Register of Historic Places in 1979 and designated as a Local Historic Site by Dade County in The Dade County designation referred to the Park as an architectural jewel, celebrated for the beauty of its formal gardens and one of South Florida s finest historic sites. Once a thriving hub of parimutuel activity, attendance and wagering at Hialeah Park have declined dramatically in recent years. A review of this issue was approved by the Speaker as the committee s second interim project. In particular, this project seeks information concerning the potential impact of a state and/or city purchase of Hialeah Park on other pari-mutuel interests. To generate discussion on these two issues, in a letter survey dated July 7, 1999, Representative David I. Bitner, Chairman of the Consumer Affairs Council, posed several specific questions to 55 groups and individuals known to have an interest in issues affecting the pari-mutuel industry. In addition, affected segments of the pari-mutuel industry were encouraged to communicate with similarly situated segments of the industry in order that the specific recommendations submitted would be reflective of the entire group. Respondents were requested to submit their written responses to these questions to the committee staff no later than August 16, The committee received 13 responses to the inquiry which represented 32 separate entities, e.g. permitholders, owners/breeders groups and similar organizations.

6 FINDINGS A common theme among all respondents was the belief that tax relief was necessary to the survival of many facilities. Responses were varied and ranged in their costs of implementation. For example, Pensacola Greyhound Track recommended that permitholders be allowed to retain escheats [uncashed A common theme among all respondents winning tickets] which would generate was the belief that tax relief was necessary approximately $67,000 annually for that to the survival of many facilities. track. Gulfstream Park, on the other hand, recommended the tax on handle be repealed completely. Absent eliminating the tax on handle, Gulfstream recommended a combination of reduced tax rates which would result in tax savings industry-wide of approximately $14.38 million. A majority of respondents indicated their intent to use a portion of any future tax relief for capital improvements. One thoroughbred permitholder suggested that all taxes which otherwise would be paid on admissions, parking, programs and concessions be retained by the permitholder and set aside specifically for capital improvement projects. Respondents unanimously expressed the belief that tax relief for permitholders should be shared with other segments of the industry. Several responses, in fact, suggested that the tax relief would/should be shared SO/SO in the form of increased purses, while representatives of thoroughbred owners and breeders suggested that all, or a majority, of the tax relief should go to purses. However, at least one permitholder counseled that the tax savings should come without statutory mandates. The organization representing Florida jockeys Respondents unanimously expressed the supports tax reductions for the pari-mutuel belief that tax relief for permitholders industry and requested funding assistance - should be shared with other segments of a yearly contribution of $750,000 adjusted the industry. annually for medical inflation - for their benefits program which provides jockeys and their dependents with health insurance, life insurance, disability insurance and other supplemental benefits. An equally common sentiment expressed was that unequal competition from unregulated and untaxed operations - Indian gaming, cruises to no-where, Internet gambling, etc. - and competition from the state-operated lottery, have adversely impacted virtually all segments of the pari-mutuel industry and have significantly eroded the industry s customer base. In fact, some permitholders expressed the belief that their efforts to grow the fan base may not be sufficient to overcome the unequal competition presented by these venues. Many permitholders 4

7 already market their product aggressively and have incorporated additional entertainment options, e.g., free concerts, flea markets, and other ancillary businesses, to stimulate interest and growth in the industry. In addition to unregulated gaming opportunities and the Florida Lottery, some permitholders must also compete with other lower-taxed pari-mutuel operations within their geographical location. Increased purses were seen by owners and breeders of racing animals and most Increased purses were seen by owners permitholders as integral to ensuring and breeders of racing animals and most quality racing animals and the permitholders as integral to ensuring continued growth of the industry. quality racing animals and the continued growth of the industry. Most permitholders agreed that if tax relief is implemented they would not only increase purses, but would also increase marketing efforts and make additional capital improvements to stimulate growth in the industry. There was less agreement among those surveyed concerning Part II - the Hialeah Park Feasibility Study and the impact of the state/city purchase of Hialeah Park and operation of a limited race meet. By and large, greyhound permitholders, with the exception of the two greyhound tracks in the South Florida Market area, expressed no opinion or felt there would be little impact, Both Flagler and Hollywood Greyhound Tracks, however, expressed their belief that additional live dates for Gulfstream and Calder would adversely impact their operation and would also ultimately adversely impact revenue collections. Thoroughbred tracks and thoroughbred owners and breeders, on the other hand, see the potential for a significant positive impact on state revenue collections provided that the remaining Hialeah dates are split between Calder and Gulfstream. Gulfstream expressed the need for the existing South Florida thoroughbred tracks to have significant input into any ongoing operation of Hialeah Park by the state or city in order for the effort to be successful. Both groups representing thoroughbred owners, breeders and trainers agree that the state/city purchase of Hialeah Park and operation of a limited race meet with additional race days for Calder and Gulfstream, would stimulate the economy and would, in the long run, provide good year round racing which would be beneficial to the industry and state revenue collections. Greyhound tracks expressed no opinion on the use of state revenue to purchase Hialeah Park, except to request that if state monies are utilized, such monies would not reduce revenue available for tax reductions for the greyhound industry. Thoroughbred tracks, owners and breeders, favor the use of state revenue to purchase Hialeah Park. FTBOA suggests consideration of bond issuance wherein the debt would be repaid from the additional tax revenues generated by the other tracks operating in the dates currently run by Hialeah. 5

8 Gulfstream Park, however, strongly objects to any bond issue which would be funded from a revenue stream from within the industry. There was disagreement on whether There was disagreement on whether the estimated the estimated $41 million cost to $41 million cost to acquire and renovate Hialeah acquire and renovate Hlaleah Park IS Park is a reasonable figure. The two greyhound [a reasonable figure. 1 tracks in the South Florida market area and Calder/Tropical indicated they were mostly in disagreement with that estimate. Gulfstream Park made note that the $8+ million for renovations is the amount estimated to be needed to bring the facility into compliance with current building code standards and contends it would take a significantly greater monetary investment to make Hialeah Park suitable to host a showcase meet. The remaining greyhound tracks expressed no opinion on the purchase price while the FTBOA voiced agreement. Similarly, most responding greyhound tracks expressed no opinion on the other findings of the Hialeah Park Feasibility Study, while the two thoroughbred tracks and the FTBOA indicated they were mostly in agreement with the report. Virtually all respondents took the opportunity to offer additional comments. Gulfstream Park and the National Association of Jai Alai Frontons made arguments for tax reform wherein the tax assessment would be on profits rather than on handle. Flagler and Hollywood Greyhound Tracks proposed that all South Florida non-thoroughbred facilities be allowed to simulcast thoroughbreds during all local thoroughbred racing seasons while Calder/Tropical suggests that such a requirement would be detrimental to their operation. Several respondents decried the unfair competitive edge possessed by unregulated gaming interests in the state and believe that pari-mutuels should be given similar gaming opportunities. Telephone/account wagering, offtrack betting parlors, and higher limit poker were some of the suggested expansions. Finally, the Hialeah Park Feasibility Study [the Study], prepared pursuant to Chapter , Laws of Florida, by Public Financial Management, Inc. and Masvidal Partners, Inc., appears to address issues set forth for evaluation in the RFP issued by the Department of State. The Study addressed several critical issues in detail, including: the historical significance of preserving Hialeah Park; an evaluation of legal and constitutional impediments to the ownership and operation of Hialeah Park by either the state or the City of Hialeah; real estate appraisals; potential sources of funding of capital costs; and, the potential use or disposition of property deemed unnecessary for the operation of the Meet. The Study recommends that the State and/or City of Hialeah purchase Hialeah Park and operate a 21 day race meet. The Study further concludes that the purchase is feasible. For a synopsis of the Study s recommendations including financial, public policy, and legal considerations, please see Appendix entitled Executive Summary and Feasibility Recommendation. 6

9 NOTE Letter surveys were mailed to 55 individuals and groups who are known to have an interest in pari-mutuel issues. Specific questions were framed for permitholders, owners and breeders of racing animals and jai alai players and additional comments were solicited from all interested parties. The committee received 13 responses which represented 32 separate entities, e.g., permitholders, owners/breeders groups and similar organizations. This document represents a summarized compilation of those responses. Abbreviated responses to each specific question are found underneath the question and are grouped according to type. For example, responses to Question 1 begin with responses from 16 greyhound permitholders which are grouped under the heading Greyhound Tracks. Many respondents did not submit comments for each specific question; therefore, you will not find comments from each organization under each question. Additionally, even though no opinion may have been expressed on a specific question, unless an organization specifically stated no opinion to a particular question, no comment was ascribed to that organization at all. Lastly, the final category entitled Other sets forth the remaining observations from the survey group. 7

10 PART I TAX REDUCTIONS FOR PARI-MUTUEL INDUSTRY GREYHOUND TRACKS Flagler Greyhound Track b A tax rate of 2% would be helpful; however, Flagler contends it would take a 0% tax rate to make them competitive with Hialeah Park and Miami Jai Alai. Hollywood Greyhound Track b One possibility would be to limit the tax rate imposed on greyhound facilities in their market area to no higher than any other permitholder in the market area. [The market area is comprised of Hollywood and Flagler Greyhound Tracks, three thoroughbred tracks, one harness track and two jai alai frontons.] According to Hollywood s calculation a fixed rate of 2% for all greyhound permitholders would result in tax relief of $2.7 million for Hollywood alone and $23.3 million industry-wide. Jacksonville Kennel Club, Orange Park Kennel Club, St. Johns Greyhound Park, Tampa Greyhound Track, St. Petersburg Kennel Club, Palm Beach Kennel Club, Daytona Beach Kennel Club, Seminole Greyhound Park, Melbourne Greyhound Park, Washington County Kennel Club, Sanford-Orlando Kennel Club and Sarasota Kennel Club [hereinafter referred to as Jacksonville Kennel Club, et at] b Did not provide a specific recommendation as to the form and amount of tax relief but stated that the industry is sorely in need of substantial relief. 8

11 Committee on Regulated Services October 5,199~ Jefferson County Kennel Club b Allow a credit against the first $15 million ITW handle for any parimutuel facility that handles less than $30 million annually. Based on JCKC s ITW guest handle for year ending 6/30/99 of $7,362,330 and present tax rate of 7.6%, the credit would generate tax relief for them of $559,537. Pensacola Greyhound Track b Allow permitholders to retain escheats [uncashed winning tickets]; based on 1997/98 tax information, this would generate approximately $67,000 annually for Pensacola Greyhound. b Reduce daily license fee from $80 per race to $40 per race. b Unspecified tax rate reduction both for live and intertrack wagers. JAI ALAI FRONTONS National Association of Jai-Alai Frontons, Inc. c Supports tax relief and requests that if there is any reduction for other segments of the industry that there would also be a proportionate reduction for the jai alai industry. HARNESS TRACK Pompano Park Racing b Reduce tax on live handle and simulcast from 1% to 0.50% resulting in a tax savings to the permitholder of $281,989; reduce tax on ITW of simulcast from 2.4% to 1.20% resulting in a tax savings of $432,859; and, reduce tax on ITW from 3.3% to 1.60% resulting in a tax savings of $196,773.

12 Part I - Tax Reductions for Pari-Mutuel Industry Synopsis of Responses THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Reduce tax on handle for live thoroughbred races to 0.5% which Gulfstream Park would result in a $1 million tax savings for Calder and $417,000 tax savings for Tropical; reduce the ITW tax rate from 3.3% to 2.4% which would result in a $315,000 tax savings for Calder and $156,000 for Tropical. b Eliminate or reduce tax on handle on thoroughbred racing. In priority order: 1) eliminate tax on live handle entirely or equalize between all tracks at as low a rate as possible; eliminating completely would result in a tax savings to Gulfstream of approximately $1.93 million annually and $3.16 million statewide; 2) eliminate ITW tax [a pari-mutuel meet which is conducted in Florida and broadcast to a pari-mutuel facility other than the one conducting the meet] or reduce substantially; eliminating completely would result in a tax savings to Gulfstream of approximately $826,748 annually and $3.99 million statewide; 3) eliminate ISW tax [a pari-mutuel meet which is conducted outside of Florida and simulcast to Florida facilities] or reduce substantially; eliminating completely would result in a tax savings to Gulfstream of approximately $1.3 million and $7.23 million statewide. GREYHOUND TRACKS Flagler Greyhound Track b Yes. Improve lighting, increase the time line for seating replacement program and remodel older areas. 10

13 Committee on Regulated Services October 5,1999 Hollywood Greyhound Track Yes. A portion of tax relief would go toward capital improvements continuing to improve and develop properties. by Jacksonville Kennel Club, et al Did not specify amount which may be dedicated to capital improvements but made note that many of their facilities were quite large and costly to maintain and upgrade. Additionally, many facilities recently made significant capital improvements to accommodate the operation of cardrooms which have generated limited returns. Jefferson County Kennel Club b Tax relief monies would be allocated for upkeep and maintenance; no expansions or upgrading is anticipated. Pensacola Greyhound Track b Current owners have always made and will continue to make every effort to assure the facility is maintained in accordance with the safety and comfort of the patron in mind. HARNESS TRACK Pompano Park Racing b Yes. Proposes to take an unspecified portion of the tax relief to make capital improvements. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Suggests that taxes paid on admissions, parking, programs and concessions be earmarked for capital improvement projects. 11

14 Part I - Tax Reductions for Pari-Mutuel Industry Synopsis of Responses Gulfstream Park b Yes. A large portion of any tax savings will go toward capital improvements. Gulfstream has identified approximately $21 million worth of needed capital repairs and improvements. GREYHOUND TRACKS Flagler Greyhound Track Yes. Would share tax-relief with greyhound owners and breeders in effort to attract the best greyhounds; would be able to compete for better greyhounds if able to offer better purses. Hollywood Greyhound Track b Yes. Would share tax-relief with kennels in the form of increased purses. Jacksonville Kennel Club, et al b Anticipates sharing the requested tax relief with greyhound owners in the form of increased purses. Jefferson County Kennel Club b Yes. Would share tax-relief with kennel operators and greyhound owners. Pensacola Greyhound Track b Anticipates they would share 25% of requested tax relief from retention of escheated tickets with kennel operators in the form of increased purses. Additionally, an unspecified percentage of tax 12

15 Committee on Regulated Services October 5,199~ savings real&d as a result of any decreased tax on live and inter-track wagering would be available to supplement purses. HARNESS TRACK Pompano Park Racing b Yes. The suggested tax reductions set forth in their response to Question 1 would result in the following increases to purses above the presently required 8%. Live handle and simulcast: $70,497; ITW of simulcast: $108,215; and, ITW: $49,080. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Yes, 50/50. Gulfstream Park t Yes. Approximately half of any tax savings would go directly to purses; these tax savings should come without statutory mandates. GREYHOUND TRACKS Flagler Greyhound Track b Present active simulcast network and weekly flea markets. Hollywood Greyhound Track t Aggressively markets intertrack and simulcast wagering opportunities. 13

16 Part I - Tax Reductions for Pari-Mutuel Industry Synopsis of Responses Jacksonville Kennel Club, et al b Marketing, including the promotion of live greyhound racing and other forms of pari-mutuel wagering through the utilization of inter-track and simulcast wagering opportunities including international marketing, and the establishment and operation of cardrooms. Jefferson County Kennel Club b Presently simulcast races from three other pari-mutuel facilities and advertising k$63,000 for previous year]. HARNESS TRACK Pompano Park Racing b Pompano is presently remodeling an entire floor as a simulcast area with individual and wide screen televisions; has increased their marketing campaign to include direct mail and database marketing; and, offers rewards for increased play and attendance. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Calder aggressively markets thoroughbred racing not only to South Florida residents and tourists but also throughout the United States, Canada, Mexico and the Caribbean through media purchases, direct mail, promotions and special events. Calder also contributes funds toward the identification and education of new fans in conjunction with FHPBA. Gulfstream Park b Gulfstream is a founding member and a member of the Board of Directors of the National Thoroughbred Racing Association, an organisation dedicated to the growth and promotion of the sport. In addition, Gulfstream has: one of the lowest take-out rates in the country; a Customer Service Department; free programs and parking; 14

17 Committee on Regulated Services October 5,1999 a free concert series every weekend; a joint marketing effort with the horsemen that features on-site fan education; and, has created a preferred customer program that features frequent player benefits. GREYHOUND TRACKS Flagler Greyhound Track b Would commit to further improvements in its facility including the exploration of ancillary businesses to attract a broader segment of the population. Hollywood Greyhound Track b Capital improvements, increased purses, aggressive marketing of intertrack and simulcast wagering opportunities. Jacksonville Kennel Club, et al b Increased purses will ensure a dependable supply of quality animals and ensure the continued economic viability of the breeding, training and owning of greyhounds; continue and enhance, where possible, marketing of live racing, intertrack and simulcast wagering, cardrooms, food and beverages; and, where appropriate and necessary, make enhancements to existing pari-mutuel facilities. Jefferson County Kennel Club b Would share tax relief with kennel operators and greyhound owners, would spend more on advertising and would run various monetary promotions. 15

18 Part I - Tax Reductions for Pari-Mutuel Industry Synopsis of Responses HARNESS TRACK Pompano Park Racing b Continue capital improvement programs and marketing endeavors. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. t Increased purses and increased marketing. Gulfstream Park b Increased purses and further expand promotional activities and facility improvements. GREYHOUND OWNERS/BREEDERS Florida Greyhound Association, Inc. b Tax should be reduced so that it is no higher on greyhound racing than on other pari-mutuels and the Legislature should create a sales tax exemption on sales of food for racing greyhounds. JOCKEY S GUILD b Supports tax relief for the pari-mutuel industry but did not provide specifics. 16

19 Committee on Regulated Services October 5,1999 THOROUGHBRED OWNERS/BREEDERS Florida Horsemen s Benevolent & Protective Association, Inc. b Tax on live handle at all thoroughbred tracks, with exception of Hialeah, should be equal and should be reduced to Tampa Bay s level of 0.5% and the ITW tax rate should be no higher than 2.4% for both Florida performances and out-of-state performances. FHBPA suggests that a uniform live tax rate of 0.5% and 2.4% for ITW would have a positive impact to the thoroughbred industry of $4.2 million. Florida Thoroughbred Breeders and Owners Association b Tax relief for the entire pari-mutuel industry is necessary. GREYHOUND OWNERS/BREEDERS Florida Greyhound Association, Inc. t Tax relief should be split 50/50 between permitholder and kennel operators. JOCKEY S GUILD b Tax relief should be shared with Florida jockeys. Suggests an annual contribution of $750,000 adjusted annually for medical inflation, to fund benefits program. 17

20 Part I - Tax Reductions for Pari-Mutuel Industry Synopsis of Responses THOROUGHBRED OWNERS/BREEDERS Florida Horsemen s Benevolent & Protective Association, Inc. b Entire $4.2 million tax relief [based on their suggested 0.5% live rate and 2.4% rate for all ITWJ should go to purses at the respective tracks that generated the tax relief. Florida Thoroughbred Breeders and Owners Association b Yes. The vast majority of funds generated through any tax reduction should be paid into increased purses and owners awards for Florida horsemen. GREYHOUND OWNERS/BREEDERS Florida Greyhound Association, Inc. b Establish a breeders program for Florida-bred greyhounds. THOROUGHBRED OWNERS/BREEDERS Florida Horsemen s Benevolent & Protective Association, Inc. t Florida horsemen already work with tracks to promote industry by promoting concerts, family days, inside track rooms, etc. Florida Thoroughbred Breeders and Owners Association b Remove Gulfstream Park s exemption from payment of Florida Owners Awards. 18

21 PART II HIALEAH PARK FEASIBILITY STUDY GREYHOUND TRACKS Flagler Greyhound Track b Negative. Wh enever Hialeah Park operates, Flagler has decreased attendance. Also, non-thoroughbred permitholders are prevented from simulcast wagering on day-time thoroughbred events in the Broward/Dade market area which has an additional adverse impact on Flagler. Hollywood Greyhound Track b Negative. The operation of a limited race meet at Hialeah, which in turn triggers additional live operational days at Gulfstream, would have a dramatic competitive impact on Hollywood. Also, nonthoroughbred permitholders are prevented from simulcast wagering on day-time thoroughbred events in the Broward/Dade market area which has an additional adverse impact Hollywood. If Hollywood s tax rate were reduced so that it was equal to, or less than, the other tracks in the market area, the impact would not be as great. Jacksonville Kennel Club, et al b No Opinion. Jefferson County Kennel Club b No impact. Pensacola Greyhound Track b No Opinion. 19

22 Committee on Regulated Services October $1999 THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Positive. Purses would increase in South Florida; anticipates that the 2I-day meet would likely produce purse levels higher than those currently being offered by Hialeah. Gulfstream Park b Expressed concern. Main concerns center around the source of revenue to purchase Hialeah Park and what type of entity is established to operate the thoroughbred-related activities at the track. Opposes a bond issue which would be funded from a revenue stream from within the industry. To ensure that any on-going operation of Hialeah Park is an enhancement, and not a detriment, to the industry, Gulfstream believes the existing tracks in South Florida must have significant input. THOROUGHBRED OWNERS/BREEDERS Florida Horsemen s Benevolent & Protective Association, Inc. b Positive impact if the following occurred: 1) should be no longer than 21 days; 2) should take place during the month of April; 3) should have a reasonable take-out rate between 21.6% and 19.7%; 4) should be heavily marketed as a Festival of Major League Turf Racing; and, 5) Gulfstream & Calder would run an additional 20 days each. FHBPA estimates that this would result in a $6.2 million [75% increase] increase to purses. Florida Thoroughbred Breeders and Owners Association b Positive impact. The purchase of Hialeah Park by the state should end the date fight; a limited 2I-day meet in April would allow the other tracks in the area to expand and would keep high quality racing in Florida for a longer period of time; and, simulcast revenues would probably increase. 20

23 Part II - Hialeah Park Feasibility Study Synopsis of Responses GREYHOUND TRACKS Flagler Greyhound Track b Negative. Whenever Hialeah Park operates, Flagler has decreased attendance. Additionally, the simulcast prohibition for local tracks adversely impacts Flagler. Hollywood Greyhound Track b Negative. Assuming a shortened Hialeah meet triggers additional live days at Gulfstream the state would lose substantial tax revenue. One dollar of handle at Hollywood equals approximately 7 cents of tax revenue compared to approximately 2 cents for a dollar wagered at Gulfstream. Jacksonville Kennel Club, et al b No Opinion. Jefferson County Kennel Club b No impact. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Positive. At the existing tax rates, assuming Gulfstream runs 20 additional days and Calder runs 30 additional days, tax collections are estimated to increase by $1.7 million annually. 21

24 Committee on Regulated Services October 5,1999 Gulfstream Park b At the existing tax rates, any additional days of operation at Gulfstream Park would increase tax revenues to the state. THOROUGHBRED OWNERS/BREEDERS Florida Horsemen s Benevolent & Protective Association, Inc. b FHBPA estimates the scenario outlined under Question 1 would generate in excess of $2 million in increased tax revenue without imposing a pari-mutuel tax on the 21 day race meet. Florida Thoroughbred Breeders and Owners Association b FTBOA believes that in the long run Florida breeders, owners, and trainers will benefit from reducing the Hialeah Meet and expanding both the Gulfstream and Calder Meets. Good year-around racing should stimulate the economy and increase jobs in the agriculture portion of the industry. GREYHOUND TRACKS Flagler Greyhound Track b No Opinion. 22

25 Part II - Hialeah Park Feasibility Study Synopsis of Responses Hollywood Greyhound Track b No Opinion. Jacksonville Kennel Club, et al b No opinion, except that if state monies are utilized, such monies should not reduce revenue available for tax reductions for the greyhound industry. Jefferson County Kennel Club b No Opinion. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Yes. Gulfstream Park b Yes. State revenues and not those generated by the other segments of the thoroughbred racing industry. THOROUGHBRED OWNERS/BREEDERS Florida Thoroughbred Breeders and Owners Association b Yes. Suggests consideration of bond issuance; debt could be repaid from additional tax revenues generated by the other tracks operating in the dates currently run by Hialeah. 23

26 Committee on Replated Services October 5,199~ GREYHOUND TRACKS Flagler Greyhound Track w Mostly Disagree. Hollywood Greyhound Track b Mostly Disagree. Jacksonville Kennel Club, et al b No opinion, except that if state monies are utilized, such monies should not reduce revenue available for tax reductions for the greyhound industry. Jefferson County Kennel Club b No Opinion. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. t Mostly Disagree. The appraisal was based upon the highest and best use of the property, not upon its value as a race track. Gulfstream Park No opinion on the purchase price for the land and facilities [$30,650,000], except to note that the property was not appraised as a race track, but rather for its highest and best use. Gulfstream also 24

27 Part II - Hialeah Park Feasibility Study Synopsis of Responses notes that the $8,350,000 for renovations is the amount estimated to be needed to bring the facility into compliance with current building code standards. Gulfstream contends it would take a significantly greater monetary investment to make Hialeah Park suitable to host a showcase meet. THOROUGHBRED OWNERS/BREEDERS Florida Thoroughbred Breeders and Owners Association b Yes. GREYHOUND TRACKS Flagler Greyhound Track b No Opinion. Hollywood Greyhound Track b Mostly Disagree. Jacksonville Kennel Club, et al b No Opinion. Jefferson County Kennel Club b No Opinion. 25

28 Committee on Regulated Services October 5,1999 THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Mostly Agree. Gulfstream Park b Mostly Agree. THOROUGHBRED OWNERS/BREEDERS Florida Thoroughbred Breeders and Owners Association b Mostly Agree. GREYHOUND TRACKS Flagler Greyhound Track b Flagler competes with cruises to nowhere, unregulated Indian gaming and lower-taxed pari-mutuel operations in their market area and believes that tax relief may only prolong business for a short time in the face of such competition. Flagler believes the remedy to this form of competition is to permit the facilities in this market area similar gaming opportunities, including higher limit poker. b Allow South Florida non-thoroughbred facilities to simulcast thoroughbreds during all local thoroughbred racing seasons. Hollywood Greyhound Track b The single biggest threat to the pari-mutuel industry is unequal competition; no amount of marketing can overcome the unfair competition in the Hollywood market area. Enact legislation that would prohibit cruises-to-nowhere; allow existing pari-mutuel facilities 26

29 Part II - Hialeah Park Feasibility Study Synopsis of Responses to compete with Indian gaming by offering similar gaming opportunities or, at a minimum, permit the pari-mutuel facilities located within Hollywood s market area to offer additional gaming subject to local approval. b Allow South Florida non-thoroughbred facilities to simulcast thoroughbreds during all local thoroughbred racing seasons. Jacksonville Kennel Club, et al b Amend the current cardroom statute to allow for such games to be conducted meaningfully - no specifics were given. Jefferson County Kennel Club b Small pari-mutuel facilities should operate in virtually a tax free situation. GREYHOUND OWNERS/BREEDERS Florida Greyhound Association, Inc. b Re-institute the 20% of permitholders guest commission on non- greyhound wagers. b Clarify legislative intent for purse requirements as found in s , Florida Statutes, to remove confusion. JOCKEYS GUILD b Listed two options taken by other states to fund a benefits program: 1) an annual distribution of a portion of uncashed pari-mutuel tickets, and 2) an annual distribution from slots proceeds. 27

30 Committee on Regulated Services October 5,1999 JAI ALAI FRONTONS National Association of Jai-Alai Frontons, Inc. THOROUGHBRED t A tax on handle is an outdated concept; any tax should be assessed on profits, not handle. OWNERS/BREEDERS Florida Horsemen s Benevolent & Protective Association, Inc. Telephone/account wagering is seen as the simplest method of expanding the growth of the pari-mutuel industry and off-track betting parlors [OTB] is viewed as another possibility. Florida Thoroughbred Breeders and Owners Association b Imperative that industry has the opportunity to compete whether it is new forms of gaming, account wagering or other avenues. It is equally important that the revenue derived from old and new sources are fairly divided between the breeders and owners of the thoroughbred horses and the racetracks. THOROUGHBRED TRACKS Calder Race Course, Inc./Tropical Park, Inc. b Each facility should stand on its own with no supplements or subsidies from any permitholder to another. t Mandatory simulcasting to any permitholder within 25 miles of another permitholder or to Hialeah when they are not racing live would be detrimental to Calder and the rest of the industry. Gulfstream Park b Thoroughbred racing industry should pay tax on profits, not on gross receipts/handle. Should repeal unfair taxes and study the repeal of all mandates to the industry on how revenues are split. 28

31 APPENDICES 29

32 LETTER SURVEY AND LIST OF RECIPIENTS

33 Florida House of Representatives John Thrasher, Speaker Regulated Services Consumer Affairs Council John Morroni Chair William F. Anchews Vice Chair July 7, 1999 Dear Recently, the Legislature has sought to reduce the tax burdens on Florida businesses in an effort to create a favorable business climate and stimulate economic growth in the state. In that vein, the Speaker has authorized the committee to undertake an interim project which examines potential tax reductions for the pari-mutuel industry. In addition, the 1998 Legislature required the Department of State, in conjunction with the Office of the Mayor of Hialeah, to conduct a comprehensive study of the feasibility of state or municipal ownership of Hialeah Park and the operation of a limited [2 1 days] race meet. The report was submitted to the Legislature on January 2 1, 1999, but was not considered during the 1999 Legislative Session. A review of this issue was approved by the Speaker as the committee s second interim project. In particular, this project seeks information concerning the potential impact of a state and/or city purchase of Hialeah Park on other pari-mutuel interests. This letter is divided into two parts and solicits input from the pari-mutuel industry regarding these two issues. Several specific questions are posed, and you are also welcome to make additional comments which you believe are pertinent to the discussion. In addition, affected segments of the pari-mutuel industry are encouraged to communicate with similarly situated segments in order that the specific recommendations submitted will be reflective of the entire group. Since September committee hearings are quickly approaching, your immediate response to this inquiry is requested. Room 408, House Office Building 402 South Monroe Street Tallahassee, Florida (850)

34 July 7, 1999 Page 2 Part I - Tax Reductions for Pari-Mutuel Industry In order to prepare the committee to make thoughtful and informed decisions concerning potential requests for pari-mutuel tax reductions, please respond to the following questions. Question 1. If you are or represent a permitholder, what do you see as appropriate, fair and reasonable tax relief for your industry? When making your recommendations, please specify the percentages as well as the actual dollar amounts represented by the proposed reduction to your facility and to your particular segment of the industry based on taxes paid in the Fiscal Year ending June 30, Question 2. If you are or represent a permitholder, would any portion of the requested tax relief be utilized to make capital improvements to the pari-mutuel facility? If so, what amount and for what improvement? Question 3. If you are or represent a permitholder, would you propose to share the requested tax relief with other segments of.the pari-mutuel industry, e.g. owners, breeders, players, etc.? If so, please provide specifics. Question 4. If you are or represent a permitholder, what actions are you presently undertaking to stimulate the economic growth of your industry? Question 5. If additional tax relief is implemented, what additional action would you, as a permitholder, undertake to further stimulate the economic growth of your industry? Question 6. If you are or represent an owner or breeder of racing animals or if you represent jai alai players, what do you see as appropriate, fair and reasonable tax relief for the industry? Question 7. If you are or represent an owner or breeder of racing animals or if you represent jai alai players, would you propose that the permitholder share the suggested tax relief with other segments of the pari-mutuel industry, e.g., owners, breeders, players, etc.? Please provide specifics. Question 8. If you are or represent an owner or breeder of racing animals or if you represent jai alai players, what additional action, if any, would you suggest to stimulate the economic growth of your industry if additional tax relief is implemented? Part II - Hialeah Park Feasibility Study In order to prepare the committee to make thoughtful and informed decisions concerning the Hialeah Park Feasibility Study recommendations, please respond to the following questions. Question 1. What impact, if any, would the state/city purchase of Hialeah Park and operation of a limited race meet, as contemplated in the Feasibility Study, have on your segment of the pari- mutuel industry, e.g., simulcast transmissions?

35 July 7,1999 Page 3 Question 2. What impact, if any, would a state/city operated 21-day race meet at Hialeah Park and provision of additional thoroughbred race days at other pari,mutuel facilities have on state revenue tax collections from your segment of the industry? Question 3. Do you favor the use of any state revenue to purchase Hialeah Park? Please circle the answer which most closely represents your beliefs. Yes No No Opinion Question 4. Do you believe that the estimated $41 million cost to acquire and renovate Hialeah Park property is a reasonable figure? Please circle the answer which most closely represents your beliefs. Strongly Agree Mostly Agree Mostly Disagree Strongly Disagree No Opinion Question 5. Overall, do you agree with the other fmdings of the Hialeah Park Feasibility Study? Please circle the answer which most closely represents your beliefs.,. Strongly Agree Mostly Agree Mostly Disagree Strongly Disagree No Opinion Chairman Morroni and I want to thank you in advance for taking the time to respond to this inquiry. Please do not hesitate to call upon committee staff, Paul Liepshutz or Janet Clark Morris, if you have any question concerning the interim projects or this request. I would greatly appreciate it if you would provide your written response to the committee office no later than August 16, Sincerely, DIB/jmb Enclosure: Executive Summary Hialeah Park Feasibility Study David I. Bitner Chairman Consumer Affairs Council

36 Mr. Gary R. Rutledge 215 South Monroe Street Ste 420 Tallahassee, Florida Mr. Robert E. Flora P. 0. Box Tallahassee, Florida Mr. Jack Cory P. 0. Box 1347 Tallahassee, Florida l 347 Mr. Michael J. Labun Building 0, Unit Winkler Road Ft. Myers, Florida Mrs. Alison B. Dudley The Rubin Group East Jefferson Street Ste E Tallahassee, Florida 3230 l Mr. John R. Culbreath P. 0. Box 1385 Tallahassee, Florida Mr. Brian D. Ballard 403 East Park Avenue Tallahassee, Florida Mr. Ronald L. Book 2999 N. E. 191 Street PH6 Aventura, Florida Mr. Daniel W. Pollock P. 0. Box 1655 Tallahassee, Florida l 655 Mr. Gene McGee 3 15 South Calhoun Street Ste 505 Tallahassee, Florida

37 Mr. Thomas F. Panza NationsBank Building 3rd Floor 3600 North Federal Highway Ft. Lauderdale, Florida Mr. Bernie J. Friedman P. 0. Box 9057 Ft. Lauderdale, Florida 333 lo-9057 Mr. Carl Adams P. 0. Box Tallahassee, Florida Mr. Glenn L. Jones 2991 Bayshore Drive Tallahassee, Florida Mr. Jim K. Tillman P. 0. Box Tallahassee, Florida Mr. Douglas L. Mannheimer Broad and Cassel P. 0. Drawer Tallahassee, Florida Ms. Linda C. Cox 3 18 North Monroe Street Tallahassee, Florida 3230 l-7622 Mr. Wilbur E. Brewton P.O.Box11189 Tallahassee, Florida Mr. John Van Lindt 2200 East 4th Avenue Hialeah, Florida Mr. Marvin F. Arrington 106 South Monroe Street 2nd Floor Tallahassee, Florida l 530 Mr. Jon E. Johnson P. 0. Box Tallahassee, Florida

38 Mr. Matthew A. Bryan Smith Bryan & Myers 3 11 East Park Avenue Tallahassee, Florida Mr. Kent Sterling P. 0. Box 1808 Opa Locka, Florida Mr. Richard E. Hancock 4727 N. W. 80th Avenue Ocala, Florida Mr. John M. Hater, President Tampa Greyhound Track P. 0. Box 8096 Tampa, Florida Mr. Fred Havenick, President Naples-Fort Myers Greyhound Track P. 0. Box 2567 Bonita Springs, Florida Mr. Harry J. Olsen, President Daytona Beach Kennel Club P. 0. Box Daytona Beach, Florida Mr. Patrick J. Rooney, President Palm Beach Kennel Club 1111 North Congress Avenue West Palm Beach, Florida Mr. Bernard Hartman, President Hollywood Greyhound Track P. 0. Box 2007 Hollywood, Florida Mr. Daniel K. Adkins, General Manager Hollywood Greyhound Track P. 0. Box 2007 Hollywood, Florida 33022

39 Mr. Howard I. Korman, President Jacksonville Kennel Club P. 0. Box Jacksonville, Florida Mr. Steve Andris, President Jefferson County Kennel Club P. 0. Box 400 Monticello, Florida Mr. Herman Maisel, President Pensacola Greyhound Track P. 0. Box Pensacola, Florida Mr. Dane N. Towell, President Sanford-Orlando Kennel Club P. 0. Box Longwood, Florida Mr. Jack G. Collins, President Sarasota Kennel Club 5400 Bradenton Road Sarasota, Florida Mr. Robert 0. Christmas, President Seminole Greyhound Park 2000 Seminola Boulevard Casselberry, Florida Mr. Patrick T. Biddix, President Melbourne Greyhound Park 1100 North Wickham Road Melbourne, Florida Mr. A. V. Weaver, Jr., President Derby Lane P. 0. Box St. Petersburg, Florida Mr. R. B. Winning, General Manager Derby Lane P. 0. Box St. Petersburg, Florida