Florida Statute 550: A Broken Revenue Model

BY STEVE KOCH

F
lorida breeders produce champion Thoroughbreds. Florida bettors churn billions. But when 90% of those billions flow through digital platforms, the breeders get shorted.

The revenue crisis is a symptom of deeper problems. Chapter 550’s funding mechanism is unhinged from industry performance: success increases obligations while revenues stay flat. The statute contains five structural failures that prevent capturing modern revenue streams and constrain industry development.

Today, approximately 90% of all wagering nationally occurs via electronic and online platforms. More often known as advance deposit wagers (ADW), Florida’s Thoroughbred breeders receive zero revenue from in-state smart-phone and computer wagers. Not one dollar, not even from the smart-phone show-bettor sunning at the racetrack finish line.

The principle is straightforward: the industry producing the horses deserves a fair share of revenue from any wager on those horses.

Florida’s vertically integrated racetracks encourage this shift, often owned by parent companies operating their own ADW platforms. Revenue flows to these platforms, bypassing Chapter 550’s funding mechanisms.

Any platform accepting wagers in Florida on Thoroughbred races, or accepting wagers on Florida Thoroughbred races, should contribute to the breeding industry. This includes ADW, fixed odds betting, international and non-commingled pools, and all other emerging digital formats.

Under current implementation, some horsemen’s agreements carry the full burden of returning Chapter 550 revenues to the breeding industry while the track carries none, violating the fundamental partnership between tracks and horsemen that the statute envisions.

The burden should be distributed across the racing ecosystem.

Chapter 550 revenues may not incentivize Florida-bred runners outside the sunshine state unless the Florida racetracks and horsemen’s associations agree. They never have. This presses breeders to choose domestic awards over the global market.

More than 50% of Florida-bred wins and purse earnings come from out-of-state races. Yet gatekeepers, whose interests may not align with breeding and agricultural development, block initiatives that would cement Thoroughbred leadership amongst the state’s agricultural exports.

Kentucky, the nation’s dominant Thoroughbred breeding state, allocated over $15.5 million in 2024 for export breeder incentives. Florida restricts them.

Florida should eliminate these restrictions and correctly vest that authority with FTBOA, the breeding experts.

Chapter 550 requires returning 17-40% of breeder award funds to racetracks for purse supplements. This provision perhaps made sense during wealthier times for the industry. But with breeder revenue down 37% in real terms, the statute takes scarce dollars meant to sustain the agricultural foundation of racing and redirects them to the tracks that benefit from the broken funding model.

The statute should eliminate this clawback.

Under Chapter 550, racetracks that serve as “host” facilities for intertrack wagering collect revenues when they import out-of-state races for Florida bettors. The statute allows tracks to keep these revenues even as they reduce or eliminate their own live racing, a direction openly signaled via decoupling initiatives.

As Powell testified before the Florida Gaming Control Commission in September:

The result: tracks collect intertrack wagering benefits while abandoning the live racing the statute was designed to support. Host track benefits should transfer to facilities that maintain live racing commitments.

The Florida Gaming Control Commission regulates pari-mutuel wagering but has no authority to monitor the dominant and emerging wagering channels. The actual volume of Florida ADW is unknowable and unaudited. The state’s gaming regulator is blind to the largest revenue stream it supposedly oversees. Powell describes the situation bluntly:

The Commission should have authority to monitor and audit all wagers of all kinds, including ADW, in or on Florida, regardless of where servers are located.

Chapter 550 is not just outdated, it is actively failing. It captures zero revenue from the dominant wagering channel. It gives regulators no authority over digital platforms. It forces breeders to choose between domestic awards and global competition. And it diverts scarce breeding dollars back to the tracks that benefit from these failures.

Florida must repair these structural defects. The state’s breeding industry competes nationally today but could dominate – held back only by an obsolete framework. Fix the structure, and Florida’s natural advantages will do the rest.