ITEM 1. BUSINESS
The Registrant's sole business is the ownership and operation of a harness horse racing facility located at 6000 South High Street, Columbus, Ohio. Racing operations at the South High Street facility started in 1959 and there has been no material change in the method of conducting this business. In addition to the racetrack itself, there are parking, grandstand, clubhouse and eating facilities for Registrant's customers and barn and stable facilities for the horses. Revenue is derived primarily from commissions on parimutuel wagering (net of parimutuel taxes), admission fees to enter the facilities and concessions, programs and parking. In 1998, commissions on parimutuel wagering net of parimutuel taxes represented 64% of revenues, in 1997 65%, and in 1996 61%. In 1998, admissions represented 2% of revenues, in 1997 2%, and in 1996 3%. In 1998, revenues from concessions, parking and programs amounted to 10% of revenues, in 1997 11%, and in 1996 12%. During each off-season period in 1998, 1997 and 1996, the Registrant employed 17 persons. During the last three years, average daily attendance has declined from 3,295 in 1996 to 2,219 in 1997 and to 2,187 in 1998. However, during 1997 and 1998, because of the full-card simulcasting program, Registrant did not track attendance for people entering the facility prior to 6:00 p.m.
The number of races conducted during a live racing program varies from 9 races during the week to 11 or 12 races on weekends. The nearest racetrack competition is Beulah Park, a thoroughbred horse racetrack approximately 6 miles away. Beulah Park typically conducts live racing from the middle of September until the first weekend of May, during which time Registrant is not open.
Registrant conducts its business pursuant to a permit issued annually by the Ohio Racing Commission. All of the racing conducted by Registrant is conducted in accordance with applicable Ohio statutes and the rules and regulations of the Ohio Racing Commission. The Ohio Racing Commission regulates and controls the forms of wagering that are permitted at the racetrack, the procedures to be followed as to wagering, the wagering information to be provided to the public, the number of races permitted during a racing program and the days and time of day racing will be permitted. The Commission also approves full- card simulcasting schedules. All persons who work at the racetrack must be licensed by the Ohio Racing Commission. All owners, trainers, drivers and other persons involved in the racing program must be licensed by the Ohio Racing Commission. For the period covered by this report, Registrant was issued a permit by the Ohio Racing Commission to conduct harness live racing at its facilities for a period of 61 days together with full-card simulcasting on those days and an additional 11 days (Sundays).
Except on special occasions such as Memorial Day, July 4 and Labor Day, Registrant conducts its racing at night 6 days a week. The 71 day period in 1998 commenced May 2nd and continued through July 11th. Registrant then leased its facilities to Mid-America Racing Association, Inc. for 60 days of live racing, which period ended September 19, 1998. Mid-America Racing conducted full-card simulcasting on live racing days and on an additional 10 days (Sundays). This lease generated 7% of total revenue in 1998. This lease is on file with the Commission.
During 1998, major racing programs conducted at Registrant's facilities included the Little Brown Jug Preview, the Scarlet O'Hara, the Pink Bonnet, the Ohio Sires Stakes events and Ohio Fair stakes events. Forms of competition faced by Registrant during its summer racing schedule include, in addition to the normal summer events, professional baseball (minor league in Columbus and major league in Cincinnati and Cleveland), outdoor music concerts and other similar entertainment events. Riverboat gambling has been approved in Indiana and land-based casinos have been approved in Michigan. At the present time there is not sufficient information to determine if these gambling opportunities had a noticeable effect upon the wagering conducted at Registrant's facility. Legalized gambling in the form of the Ohio lottery has been in existence for many years and has had an adverse effect upon wagering at Registrant's facility.
In 1997, the Ohio legislature approved legislation which permits full card simulcasting at racetracks in Ohio. This legislation enables Ohio racetracks to bring in to their facilities via television day and night full race programs conducted at racetracks located outside the State of Ohio. As a result of this legislation, during its regular racing meet from May to July, Registrant, in addition to its regular live racing program in the evening shows at its facility via television during the day and night races being conducted at other tracks in Ohio and tracks outside of Ohio. Customers at Registrant's facility are able to wager on all of these races.
As a result of this legislation, Registrant and its nearest racetrack competitor Beulah Park could be open year round conducting both live racing and bringing racing in from out of state in competition with each other. This situation would not be advantageous to either track and, as a result, Registrant and Beulah Park entered into an agreement to not be open at the same. Pursuant to this agreement, during 1998 Beulah Park operated from the middle of September to the first of May while Registrant was closed. During that period of time revenues derived from simulcasting at Beulah Park at night when it is not conducting live racing was, after deducting of certain expenses, shared with Scioto Downs ($70,915 during 1998 and $49,874 during 1997). Overall, during 1998, as a result of full card simulcasting, wagering on live racing declined and the additional wagering on simulcast races offset the decline in wagering on live racing. No live racing or full card simulcasting has been conducted at Registrant's facilities since September 19, 1998. The 1999 racing season will commence May 1, 1999.
During the racing season, the Registrant has employed approximately 350 people, most all of whom are parimutuel clerks employed during the hours the track is open for simulcasting and live racing which is approximately twelve noon to midnight. As a part of the full card simulcast racing program, Registrant sends its live races via television to all other tracks in Ohio and as many facilities outside the State of Ohio that it can contract with to receive the signal, which could be as many as 25 facilities. Registrant will receive a percentage (in most instances 3%) of the amount wagered on its races at these other facilities outside the State of Ohio. Total export signal revenue was $243,216 in 1998.
ITEM 2.
ITEM 2. PROPERTIES
Registrant's place of business is located at 6000 South High Street, Columbus, Ohio. Registrant owns in fee approximately 173 acres of land at this location. Situated thereon are the physical facilities necessary for the operation of a harness horse racing business, including the race track, grandstand with a capacity of 10,000, and enclosed clubhouse buildings with a capacity of 1,500 for customers, in which are located eating and pari-mutuel wagering facilities (including simulcasting), barns, a paddock, and related facilities for the horses, drivers, and trainers. In addition, a substantial (approximately 6,000-space) parking area is provided for customers. These facilities are used fully during the racing season, which covered 141 days commencing in May and ending in mid-September.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Registrant is not a party to any material pending legal proceedings other than routine litigation incidental to its business, most of which is covered by insurance.
Registrant has no knowledge of any material pending legal proceedings to which any director, officer or affiliate of the Registrant, any owner of record or beneficiary of more than five percent of the voting securities of the Registrant, or any associate of any such director, officer or security holder is a party adverse to the Registrant or has a material interest adverse to the Registrant.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable.
PART II
The following items are incorporated herein by reference from the indicated pages of the Annual Report to Stockholders for the fiscal year ended October 31, 1998:
PART III
ITEMS 10, 11, 12 and 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT; EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information called for by Items 10, 11, 12 and 13 is incorporated herein by reference to the definitive Proxy Statement of the Registrant dated February 4, 1999, relating to the Annual Meeting of Stockholders to be held on February 23, 1999.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
SCIOTO DOWNS, INC. Index to Financial Statements and Financial Statement Schedules
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SCIOTO DOWNS, INC. (Registrant)
----------------------------------- By /s/ Robert S. Steele ----------------------------------- President, Chief Operating Officer, Director ----------------------------------- Title
----------------------------------- Date: January 29, 1999 By /s/ Robert S. Steele ----------------------------------- President, Chief Operating Officer, Director ----------------------------------- Title
----------------------------------- Date: January 29, 1999 By /s/ LaVerne A. Hill ----------------------------------- Vice President, Director ----------------------------------- Title
----------------------------------- Date: January 29, 1999 By /s/ William C. Heer ----------------------------------- Treasurer, Director ----------------------------------- Title
----------------------------------- Date: January 29, 1999 By /s/ John J. Chester ----------------------------------- Director ----------------------------------- Title
----------------------------------- Date: January 29, 1999 By /s/ John F. Fissell ----------------------------------- Director ----------------------------------- Title
----------------------------------- Date: January 29, 1999 By /s/ Robert E. Suchy ----------------------------------- Controller ----------------------------------- Title
INDEX TO EXHIBITS ANNUAL REPORT ON FORM 10-K for the year ended October 31, 1998
* Previously filed with Securities and Exchange Commission