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Ten Florida dog tracks and frontons — including Miami Jai Alai and the Palm Beach Kennel Club — might have to shell out almost $2 million for refusing to pay for software they use to offer lucrative off-track betting. Last month, Hillsborough Circuit Judge Marva L. Crenshaw granted summary judgment in favor of Delaware-based software provider Autotote Systems in its lawsuit against the tracks alleging unjust enrichment and failure to pay and acknowledge debts. The defendants had argued that a Florida gambling statute prevented them from paying for the use of the software. A total of $650,000 in fees accumulated during their two years of refusing to pay. The 10 Florida gambling facilities are the only Autotote customers who have refused to pay based on this interpretation of state law. Harry Purnell, a partner at Rutledge Ecenia Purnell & Hoffman in Tallahassee, Fla., who represents the defendants, did not return repeated calls for comment. Officials from two of the defendants, the Palm Beach Kennel Club and Melbourne Greyhound Park, declined to comment on the pending litigation. Attempts to reach the remaining defendants for comment were unsuccessful. Judge Crenshaw’s August decision determined that the gambling facilities owe Autotote for the interface fees, but did not specify an amount owed. Now Autotote’s attorneys, Roger Slade and Marc Pugliese, partners at Pathman Lewis in Miami, say they plan to file a claim for civil theft in Hillsborough Circuit Court. That would allow their client to collect triple damages on the money owed. If Judge Crenshaw finds in favor of Autotote, a subsidiary of Delaware-based Scientific Games Corp., on the civil theft claim, the gambling facilities would have to pay $1.95 million, based on the unpaid interface fees. GROWING POPULARITY Autotote’s software makes it possible for patrons at racetracks and other gambling venues to bet on horse races at a number of other tracks around the country. Simulcast technology allows a guest facility in one state to televise a race at a host track in another state and accept bets on the out-of-state race. Over the past 10 years, betting on simulcast horse races has grown in popularity, with gambling venues nationwide seeking to tap into gambling profits from races in other states. To connect the host track with the guest facilities and to ensure that funds are transmitted and winnings are paid off, all the participating facilities must be connected by computer. That’s where Autotote comes in. Unless all bets are pooled in a common fund, payoffs cannot be calculated. The Autotote computer software allows the funds from all the participating facilities to be commingled and calculates payoffs at the guest and host sites. Autotote is one of three software companies in the United States that provides this service for simulcast betting. Florida gambling facilities rake in millions of dollars each year from simulcast betting. For the fiscal year ending June 30, 2002, gamblers in Florida placed $250 million in bets on simulcast events, according to the Florida Department of Business and Professional Regulation. Florida statute regulates simulcast gambling. Under state law, guest facilities are allowed to keep one-third of the net proceeds from the simulcast betting. Software providers charge gambling facilities a percentage of the handle, or bets placed. Florida law requires that all betting money going from a guest site for a host track be routed through one of three Florida hubs, including Calder Race Course in northern Miami-Dade County. Only the hubs can transmit funds directly to sites outside Florida. All Florida sites that offer simulcast gambling must contract with one of the three Florida hub tracks. CALDER STOPS PAYING Until March 2002, Calder paid the bill for the Autotote system. It covered interface fees for all its guest facilities in an effort to popularize simulcast racing. But on March 29, 2002, Calder sent a letter to all its guest sites, notifying them that they would be responsible for paying their own interface fees, Slade said. After Calder sent out the notification, Slade said, Autotote began sending Calder’s 11 guest facilities invoices for the interface fees. “So we’re sending them invoices, and we’re sending them invoices, and nobody’s paying,” he said. Autotote followed up with demand letters, but still received no payments. After almost two years of fruitless collection efforts, Autotote filed suit in February in Hillsborough Circuit Court. Attorneys from both sides agreed on the venue. The suit originally named 11 defendants and alleged nonpayment. The defendants were the Palm Beach Kennel Club, Miami Jai Alai, Dania Jai Alai, Flagler Kennel Club in Miami, St. Petersburg Kennel Club, Tampa Greyhound Track, Orlando Seminole Jai Alai, Daytona Beach Kennel Club, Melbourne Greyhound Track, Fort Pierce Jai Alai and Washington County Kennel Club in Ebro. Washington County Kennel Club subsequently decided to pay the interface fees and was dropped from the suit. But the remaining 10 defendants refused. In the suit, the defendants argued that the Florida law governing simulcast racing specified how the simulcast betting money must be doled out and that it did not allow them to pay a software provider. The 10 gambling facilities were the only ones in Florida that refused to pay Autotote after Calder stopped paying the interfacing fees. FEE OMISSION According to the Florida statute on interstate wagering, Section 550.6305, net proceeds are defined as the amount of takeout remaining after the payment of state taxes, purses, cost to the permit holder required to be paid to the out-of-state track and breeders awards. Of the net proceeds, one-third of the money must go to the guest facility, one-third goes to the host track and one-third is paid by the host track as purses at the host track. The defendants argued that the omission of any provision allowing them to spend earnings on software services precluded them from paying Autotote. But Autotote argued that the case was simple — it provided a service to clients and was entitled to payment. “A state legislature is not going to pass a law that says somebody can’t pay” for a provided service, Slade said. He likened it to pirating cable or satellite TV. “But this is worse,” Slade said. “Not only are these people stealing our services, but they are collecting admissions.” Judge Crenshaw agreed, rejecting the argument that Florida law bars a racetrack from paying a software provider. “I think the statute is clear,” Crenshaw said in oral comments during a July 28 hearing on the plaintiff’s motion for summary judgment. “I don’t think there is anything in the statute that precludes the plaintiffs from recovering for the services they provided.” Slade said that in addition to seeking three times the owed fees under Florida’s civil theft statute, he also intends to ask Crenshaw to order the tracks to pay additional fees for continued use of the software as they become due.

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