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Business Observer Friday, Jul. 26, 2019 3 months ago

Finish line nears for dog racing businesses

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With the passage of Amendment 13, a way of life — and many jobs — will be lost at Florida’s dog tracks. Operators are in a race to find new uses for the properties.
by: Brian Hartz Tampa Bay Editor

What happens when the government, acceding to the will of the electorate, declares your business illegal?

That’s the dilemma facing the owners of the Sunshine State’s greyhound tracks in the wake of last year’s passage of Florida Amendment 13. The measure not only bans betting on dog races but also bans dog racing, in general, when wagering is involved.

Although they’ve handled the setback in different ways, the owners and operators of three Gulf Coast dog tracks — Derby Lane in St. Petersburg, the Sarasota Kennel Club and the Naples-Fort Myers Greyhound Track — all sing the same refrain: When life hands you lemons, make lemonade. Or try to. 

“We were all surprised” the amendment passed, says Derby Lane owner Richard Winning. “It was at the bottom of a list of very confusing amendments. I don’t think people understood what they were voting for, and what they would be getting.”

While surprised Amendment 13 specifically passed, dog track owners knew their industry was under attack for many years. And not only did it pass, but Floridians spoke loudly — the measure passed with nearly 70% of the vote.

Technically, the ban doesn’t take effect until Jan. 1, 2021, but dog tracks have already been confronted with tough business decisions about the future. Key to their survival? A big shift in marketing — away from live racing and toward poker and other card games.

The need to downsize is another commonality among the track owners. When live, on-site dog racing goes away, they won’t be able to justify the taxes and maintenance costs they pay to keep up their large properties. 

PROACTIVE APPROACH

Sarasota Kennel Club was first out of the gate, so to speak, when it came time to make the tough call. The Collins family has owned and operated the venerable entertainment venue since 1944. As of May 4, it no longer runs greyhound races on its grounds and never will again, foregoing the chance to have one last hurrah before the new law takes effect.

Sarasota Kennel Club owner/operator Jack Collins. Courtesy photo.

“We opted not to run another season and just go ahead and be done with it,” says SKC President Jack Collins, who represents the third generation of the family to operate the facility. His sister Debra, brother Christopher and son Cole make their living at the track, as well.

Collins worked with lobbyists over the years to push for legislation that would decouple poker rooms and dog tracks, but the efforts always came to an unceremonious end in Tallahassee. Lawmakers, he says, “would tie it onto something else that had no chance of passing.”

Decoupling would have allowed SKC to run fewer dog races while still being able to offer poker and off-track, simulcast betting on dog and horse races.

“By law, you had to run the dogs a certain percentage of days to operate the simulcasts and card rooms,” he says. “We would run them six days and two nights a week for roughly five and a half months. We would do most of our business between Christmas and Easter.”

Because SKC operated on a seasonal basis, the loss of dog racing won’t affect it as much as some of the other tracks. Collins, who says SKC’s gross annual revenue usually ranges between $12 million and $15 million, sees the change as a net positive. “It sounds like a lot of [lost] revenue, but bottom line, it cost us money to run the dogs.”

Of course, wiping dog racing expenses off the books doesn’t solve the problem of what to do with the track and surrounding grounds. Acknowledging the stark financial reality, the Collins family has opted to sell the Sarasota Kennel Club property, at 5400 Bradenton Road, to a developer.

“We have a contract on the whole property at the moment,” Collins says. “The gentleman who’s purchasing it has in mind a mixed-use, age 50 and over residential facility.”

Collins expects the deal to close by January, adding the wording of the contract would give SKC the option to lease the poker room facility until it can find a suitable new home.

“We are looking at properties throughout Sarasota County,” he says. “Here, we have 30 acres, but we probably need only four or five.”

Next up, a marketing challenge awaits SKC. “The dog people and poker people are totally different,” Collins says.

THE SHOW MUST GO ON

At the Naples-Fort Myers Greyhound Track in Bonita Springs, Vice President Isadore Havenick plans to phase out dog racing in May 2020. As rationale for that timing, he says, “We don’t want to put people out of work all at the same time. We also hope it will also help the greyhound adoption groups.”

“It’s sad whenever anything changes. But we live in a world that is constantly changing. We knew this was coming eventually, so we’re moving forward to the future.” Isadore Havenick, vice president of the Naples-Fort Myers Greyhound Track

Like other dog tracks around the state, Naples-Fort Myers doesn’t directly employ the trainers and other kennel staff who work with the racing dogs. They’re independent contractors, Havenick says, though some of his staff members are cross-trained to assist “the dog people,” as he refers to them, on race days. As a result, Havenick doesn’t expect any layoffs.

Havenick says he plans to run another season of dog racing because he and his team need more time to figure out how they’ll reshape their operation. Like Collins, he says there wasn’t much crossover between poker players and racing bettors, and the company will have to direct its marketing resources toward the former and away from the latter.

“We’ll still have poker, but that’s a different type of customer,” he says. And because of strict regulations on the pari-mutuel gambling industry in Florida, Havenick can’t just expand the venue’s card game offerings, which means drawing more players will be key to survival.

Naples-Fort Myers Greyhound Track Vice President Isadore Havenick. Courtesy photo.

Naples-Fort Myers also plans to carry on with racing because it needs the money. Though he declined to disclose the track’s gross annual revenue, Havenick says wagering on dog races routinely accounted for 30% to 50% of the venue’s income.

But instead of selling its property, located at 10601 Bonita Beach Road SE, the Naples-Fort Myers Greyhound Track wants to stay put. Havenick says the plan is to work with Bonita Springs city government to build a newer, smaller building that will be more economically viable.

“The current building is about 225,000 square feet and was built in the 1960s,” he says. “It will be too expensive to maintain once dog racing goes away. We’re not going to sell anything, but to keep everyone employed, we need to be in a smaller space.”

Havenick says he was caught off guard by the passage of Amendment 13 and didn’t have a contingency plan in place — another lesson learned the hard way.

“All the polling showed it wasn’t going to pass, but a lot of people have a dog and love dogs,” he says. “It was never above 50% in any of the polling, so we did not plan for that outcome. We tried to be ready, but we were all shocked.”  

'CRUX OF THE BUSINESS'  

At the opposite end of the spectrum is Derby Lane, the St. Petersburg dog track that’s been pitched as a potential site for a new Tampa Bay Rays stadium. Owner Richard Winning, however, says he’s had no contact with team officials, nor has he been approached by local government about the possibility of redeveloping the site, northeast of St. Pete on Gandy Boulevard and would be easier to get to for Rays fans coming from Tampa.

File. Greyhounds race at the Sarasota Kennel Club in 2010.

“We’ll continue to race until the end of 2020 while evaluating the property,” Winning says. “We will continue to simulcast horses, dogs, jai alai, and of course we will still have cards, but eventually we won’t need all the land. We will look at all opportunities.”

Unlike some of the other tracks in Florida, Derby Lane runs dog races year-round.

And like Havenick in Bonita Springs, Winning says Derby Lane’s marketing efforts will shift toward its poker room. He says the track will offer promotions of some sort — “I just don’t yet know what they will be” — aimed at converting race bettors into poker players.

“Hopefully [racing fans] will come back,” he says. “We compete with five other poker rooms in the area, so we’ll do what we can to create a good customer experience. We are absolutely going to focus on poker and card games. That will be the crux of the business.”

But like Collins and Havenick, Winning is cognizant of the looming real estate dilemma he faces. “We have a huge building sitting in the middle of our property,” he says. “Do we stay here? Do we move?” 

SIGN OF THE TIMES

Mostly track owners are sanguine yet clear-eyed about the end of an era in Florida, saying there’s little, if anything, they could have done to stop it. 

“It’s sad whenever anything changes," says Havenick. "But we live in a world that is constantly changing. We knew this was coming eventually, so we’re moving forward to the future.”

Collins and Winning, meanwhile, both see Amendment 13 as a sign of things to come for businesses that make money from animals.

“I think horse races will be next,” Collins says. “I wouldn’t be surprised at all if they outlaw horse racing in California, the way the thinking is in California. That’s the problem with a Constitutional amendment — nobody is safe. I mean, what if all of a sudden you’re not allowed to harvest trees?”

Winning concurs. “We saw this coming for years," he says. "Activists have been attacking it, and dog racing was easy pickings. They’ve also been targeting Sea World, going after the zoo; they got rid of the circus. Next, they’ll go after hunting dogs; they’ll go after everything.”

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