Provides for the amount to be paid by off track betting corporations to regional harness tracks from certain simulcasting revenue

Section 2: Effective date language.

Existing law

Currently subdivision 3(b) (3)-(4) of section 1016 requires OTBs to pay regional harness tracks six (6) percent of the sum retained by the OTB from wagers accepted on harness races run at out of state tracks, of the sum retained by the OTBs, five (5) percent is to be distributed in the same manner as though such payments were made on the races conducted at the harness trade In addition, one (1) percent of such wagers shall be paid to the licensed regional harness track for the purpose of increasing track purses. In OTB regions where there are multiple regional harness tracks these payments are made to the regional track conducting a live meet on the day out-of-state simulcasting occurs. If either no regional track is conducting a meet, or more than one regional track is conducting a meet, the distribution is to be made either (i) in the proportion that each track's handle bore to the total regional licensed harness track handle during the preceding calendar month or (ii) in accordance with a contractual agreement between the regional tracks and the OTB corporation, Subdivision 2(a) of section 1017-a requires OTBs to make an additional "maintenance of effort" payment to their regional harness tracks measured by the level of payments received by the regional harness tracks during 2002 from their regional OTB attributable to wagering on out-of-state harness races run after 6:00 p.m. OTBs engaged in the simulcasting of out-or-state or out-of-country thoroughbred racing after 7:30 p.m. are required to submit a payment schedule to be approved by the State Racing and Wagering Board. In order to be approved this payment schedule must be identical to the actual payments and distributions of such payments to tracks and purses made by such OTBs pursuant to the provisions of section 1016 during the year of 2002, as derived from out-of-state harness races displayed after 6:00 p.m. If approved by the board, such scheduled payments shall be made from revenues derived from any simulcasting under sections 1016 and 1017-a.

Justification

Under the current law regional harness tracks that are not running live racing are receiving maintenance of effort payments notwithstanding that they are closed. The intent of the 2003 legislation was to provide harness tracks with a "hold harmless" payment stream to offset the losses anticipated from bettors defecting from harness racing to wager on the nighttime out-of-state and out-of-country thoroughbred races. This payment requirement was not meant to provide a source of revenue to harness tracks not running live races. Recently, the State Racing and Wagering Board incorrectly interpreted 1017-a (2) (a) as requiting the maintenance of effort calculation to be made on a track by track basis in regions with more than one regional licensed harness track. It was the Board's interpretation that regional harness tracks could become entitled to more than the amount they received in 2002 but under no circumstances could they receive less individually, even if the aggregate level of payments under section 1016 to all tracks within the region matched, or exceeded, the total level of payments to all the tracks during 2002. This ruling is inconsistent with the Legislature's intent expressed in section 1016 that distribution of revenue in multitrack regions be made based on the proportion of each track's live handle. Therefore, in a region with two or more regional harness tracks, if one track is not running the entire section 1016 payment goes to the track running live racing, but the track not running nonetheless remains eligible to receive maintenance of effort payments. The Board's misinterpretation of section 1017-a (2) (a) unfairly requires OTBs to subsidize those harness tracks not conducting live race meetings. In addition, the additional payments made pursuant to section 1017 -a (2) (b) are no longer appropriate. Harness tracks have been given permission to install video Lottery Terminals (VLTs). The success of VLTs has been well documented and these VLT operations have provided harness tracks with a generous new stream of revenue. VLT s have brought increased attendance to harness tracks, as well as, afforded them the opportunity to increase purses. Allowing harness tracks to install VLTs and at the same time requiring OTBs to make additional payments if handle exceeds a designated amount is tantamount to New York State subsidizing these private entities twice. It needs to be recognized that the exodus of harness bettors for the new world of nighttime thoroughbred wagering is not as great as was expected, OTBs have handled well over $100 million in annual wagering statewide on nighttime thoroughbred racing without significant detriment to the wagering done on regional harness tracks. In fact regional harness tracks are themselves authorized to simulcast these nighttime thoroughbred races and can partake in this new endeavor just a.s OTBs can, This legislation does not call for the end of all OTB payments to regional harness tracks. It simply is a fair redistribution of the wagering handle to all parties involved that is in line with the intent of the 2003 legislation when passed. This legislation is not intended to deprive revenue to those regional harness tracks running live races. OTBs will continue to contribute the six (6) percent that is required by subdivisions (3) (c) (3)-(4) of section 1016. OTBs will continue to pay their fair share to those regional harness tracks conducting live racing meets. It is merely the intention of this legislation to end a subsidy to private harness tracks not running live racing and that are not being adversely affected in any way from the simulcasting of nighttime thoroughbred racing by their regional OTBs.

Legislative history

A8613 of 2007.

Fiscal implications

None.

Effective date

Immediately.