Implements various provisions of law relating to racing, pari-mutuel wagering and breeding

Section 2 Amends section 105 of the racing, pari-mutuel wagering and breeding law to include palm Sunday as a date authorized for racing or licensed race meetings at which pari-mutuel betting is permitted.

Section 3 Adds Racing & wagering Law section 113 to clearly establish in the law the ability of host racetracks and OTBs to establish rebate programs for new or preferred customers. The definition of a rebate is a reduction in the takeout percentage, adding a bonus on winnings obtained, or awards of merchandise or services for certain previously designated customers. The Racing & Wagering Board must annually approve of the rebate programs.

There are conditions to approving rebate programs. The conditions are that: a disclosure of benefits of past programs is required, rebates are granted solely on the amount wagered or or the frequency of betting, accurate record keeping is maintained on rebate program

disbursements, and the rebate programs are in the best interests of racing.

Section 4 Amends Racing & Wagering Law section 243 to expand the number of persons that are qualified to obtain a free pass, card or badge to enter a thoroughbred race track to include any other person or guest that is deemed appropriate by the operator of such thoroughbred race track.

Section 5 Amends Racing & Wagering Law section 324 to expand the number of persons that are qualified to obtain a free pass, card or badge to enter a harness race track to include any other person or guest that is deemed appropriate by the operator of such harness race track. In addition, free passes may be issued to the general public in connection with any track sponsored promotional campaign or marketing program to increase live race attendance.

Section 6 Amends Racing & Wagering Law section 422 to expand the number of persons that are qualified to obtain a free pass, card or badge to enter a quarter horse race track to include any other person or guest that is deemed appropriate by the operator of such quarter horse race track. Also, free passes may be issued to the general public to increase public participation at such quarter horse events.

Section 7 Amends the Racing, Pari-mutuel Wagering and Breeding Law relating to establishing a task force on the utilization of retired race horses.

Section 8 Amends General Municipal Law § 195-n to require that licensed manufacturers of bell jar tickets imprint an approved New York State legend on all bell jar tickets sold in New York State.

Section 9 Amends § 195-0 of the General Municipal Law to require that licensed distributors who purchase bell jar tickets for resale in New York purchase and resell only tickets with the approved New York State legend. An exception is created for bell jar tickets that are banded single-sided single-tabbed, double-sided single-tabbed or folded bell jar tickets.

Section 10: Details dates and percentages of payment phase out for payments under Subdivision 2 of Section 1017 "Maintenance of Effort" and "Additional Payments". Calendar year 2009 and 2010 would be a fifty (50) percentage point reduction in payments. No payment of excess handle would be made from the beginning of calendar year 2011 onward.

Sections 11 and 12: Amend the Racing & Wagering Law section 1016 to reduce the "dark day" (the day when NYRA is not conducting a race meet) payment obligations applicable to off-track betting corporations (OTBs) from one percent of total daily pools on out-of-state thoroughbred races to 3/4 of 1 percent of such pools. In addition, it eliminates the requirement that a regional licensed harness track itself not display simulcasts of, or accept wagering upon, such out-of-state thoroughbred races in order to be eligible to receive, or share in the receipt of such payments from its regional OTB. The amended payment obligations would only apply during the first 120 days in each calendar year.

Section 13: Amends Racing & Wagering Law section 1017 to clarify that maintenance of effort payments by regional OTBs to the licensed harness tracks in their regions for calendar year 2009 are to be adjusted for any reduction in the number of racing programs conducted by any such track in that calendar year below the number of racing programs conducted by that track during the base year 2002. This section would also terminate such maintenance of effort obligations for calendar years subsequent to 2010. It also reduces the additional payment obligations of regional OTBs with respect to aggregate annual statewide handle on nighttime thoroughbred simulcast races during a phase-out period prior to full elimination thereof at the conclusion of the phase-out period.

Section 14 of the bill amends Subdivisions band c of Section 1617 -a of the tax law, as amended by Section 2 of Part Z3 of Chapter 62 of the laws of 2003. Subdivision b sets forth revised time periods for which video gaming machines can operate at vendor tracks having fewer than 1,575 video lottery machines and vendor tracks having more than 1,575 video lottery machines.

Section 15 and 16 amends Section 1 of part J of chapter 405 of the laws of 1999 and Paragraph 1 of subdivision a of section 1612 of the tax law, as amended by chapter 336 of the laws of 1999 to expand the operational hours and curb restrictions on where quick draw can be held.

Section 17: Amends Racing & Wagering Law section 1003(1) to delete standards for the approval or denial of an application to conduct simulcasting in individual or group residences or other residential areas.

Further, it explicitly allows any racing association or Off-track Betting Corporation (OTB) to televise horse races into individual or group residences, homes or other areas in this State with the express written approval of the OTB region into which such broadcasting or video-streaming Occurs.

Section 18 amends Paragraph 4 of Subdivision a of Section 1612 of the Lottery Law to increase the percentage that the Division of Lottery (the "Division") shall pay into the Lottery Prize Account for the payment of prizes out of total ticket sales for the game of Lotto from up to forty percent (40%) to up to fifty percent (50%).

Section 19 is the effective date of the provisions of the bill.

Justification

A.9998 (signed by the Governor on 2/13/2008) requires the new NYRA Over- sight Board to establish two new local advisory boards: one for Aqueduct and one for Saratoga. This legislation would provide equal input for the communities surrounding the Belmont racing facility.

The inclusion of Palm Sunday as a date that the Board is authorized to allow horse racing or licensing race meetings at which pari-mutuel betting is permitted affords the public more recreational opportunities to enjoy the excitement and relaxation of horse racing.

Certain off-shore and out of state betting houses are offering rebate programs for their racing events. These rebate programs may be one reason why increases in New York State betting handle has been depressed. This bill merely authorizes New York racetrack operators and OTBs to offer their patrons the same types of rebate programs that are being offered elsewhere.

Restriction of free passes is an outdated law in need of revision. Under current law, horse owners may obtain free passes, however members of the horse owner's family are precluded from receiving such passes. In addition, attendance at horse racing events has generally been in decline for the past thirty years. This measure will allow horse race track operators to issue more free passes to promote attendance of individuals at live horse racing events. Allowing the issuance of more free passes will not only increase attendance and the excitement of those horse racing events, it may encourage an increase

in betting handle at such racing facilities and the patronage of restaurants located at such tracks.

In 2005, legislation was chaptered to establish a Task Force to identify new work that is suitable for retired race horses. Race horses in this state provide millions of persons across the country with a valuable entertainment forum. However, those race horses, once retired, sometimes do not have bright prospects for future employment. Increasing the value of such animals will go a long way towards keeping such animals alive and increase their ability to retire with dignity. Further, this Task Force is to explore the possibility of developing new markets to increase the value of retired race horses.

A New York State legend would relieve administrative burdens on volunteer organizations who conduct games of chance, licensed bell jar ticket distributors and local governments who license games of chance. All bell jar tickets sold in New York State must be approved by the New York State Racing and Wagering Board prior to sale in New York State to ensure that the game complies with games of chance statutes and the rules and regulations of the Board. There are literally thousands of different types of bell jar games that have been approved over the last fifteen years, and hundreds more that are submitted every year to the Board. In many cases, there are bell jar games that are very similar in name and appearance to an approved game when, in fact, the game has not been approved. Licensed authorized organizations may only sell bell jar tickets that have been approved by the Board. It is often difficult for such organizations, which are comprised of volunteers, to keep track of the thousands of approved bell jar tickets and discern between an approved bell jar game and an unapproved one. By requiring an approved New York State legend on approved bell jar tickets, organizations and New York State distributors could simply look at a ticket to determine if it has been approved for sale in New York, thereby reducing their respective paperwork load and erroneous purchases of unapproved tickets.

Furthermore, an approval legend would be a valuable tool for law enforcement, local municipal inspectors and licensing officials who regulate games of chance. The presence of the legend would facilitate the tracking of tickets and the absence of the legend would be PRIMA FACIE evidence that the ticket is unlawful for sale. Several states have adopted the requirement of a state logo or approval statement. An exception to the requirement is created for bell jar tickets that are banded single-sided single-tabbed, double-sided single-tabbed or folded because their size makes the requirement impracticable. This exception is consistent with Board Rule (9 N.Y.C.R.R.) 5608.3(e), which excludes such tickets from certain construction standards applicable to other bell jar tickets.

The Board would prescribe a unique seal, such as a letters "NYSRWB" configured in a unique shape or the geographic shape of New York State.

While the State has provided relief to the thoroughbred and harness tracks in the authorization of Video Lottery Terminals, the amounts required to be paid from the Off-Track Betting Corporations to the harness and thoroughbred tracks have continued at rates last readjusted in 2003. The revenue to localities has been drained to those tracks which now have an additional major revenue source. The continuation of payments by the Off-Track Betting Corporations to those tracks offering Video Lottery Terminals is maintained at current levels for purse enhancements. This will ensure that off-track betting will provide a reasonable revenue for the support of government while being conducted in a manner compatible with the well-being of the horse racing and breeding industries in the state.

Chapter 62 of the Laws of 2003 amended the Racing & wagering Law on the acceptance of wagering upon and the display of simulcasts of races run at out-of-state thoroughbred tracks. A maintenance of effort obligation was imposed on OTBs, measured by the level of commissions received by regional harness tracks in 2002 as derived from OTB wagering on out-of-state harness races conducted after 6 PM. The 2003 amendments also required OTBs to make supplemental payments to the harness industry to the extent that aggregate statewide handle on nighttime thoroughbred races exceeded $100 million.

Since the maintenance of effort and additional payment obligations were imposed 3 years ago, the net effect has been to reduce the revenue retained by OTBs which could have then been transferred to local governments. Despite the expanded wagering and simulcasting authorizations enacted in 2003, the incremental revenue increases from elimination of the nighttime thoroughbred simulcasting wagering restrictions have proven to be insufficient to replace the revenue transferred to the harness racing industry to hold them harmless for the OTB authorization to broadcast nighttime thoroughbred racing.

Since, nearly all harness tracks are operating video lottery games, this has helped to increase revenue for the harness tracks and purses. However, requiring OTBs to continue the maintenance of effort and other payments are placing inequitable burdens on the regional OTB system. This bill would address the unintended inequities instituted in the 2003 law and enable OTBs to retain revenue which can be transferred to local governments.

Enactment of this bill will allow video lottery facilities to compete successfully with racinos and other gaming facilities in neighboring states by expanding the hours of operation, providing a much needed economic benefit to the state.

This bill would the duly cumbersome and arbitrary restrictions on facilities allowed to host quick draw. If more establishments are allowed to host quick draw, there is an anticipated revenue benefit to the state of $35 million dollars.

This bill allows the Lottery to address the continuing decline in Lotto sales. Since the 2001-02 State Fiscal Year, Lotto sales have declined every year. A comparison of sales for 2003-04 to sales for 2007-08 shows an annual decline of 10.4%. For the Fiscal Year ended March 31, 2008, sales had declined to only $208,400,000 from earlier levels of over $356,000,000 a year. If the 10.4% annual plunge in sales continues through the State Fiscal year ending March 31, 2012, sales for that year will total only $134,420,000. The aid to education from this game in that time period will also drop from an estimated $109,858,000 last year to only $70,860,000 in the fiscal year ending on March 31,2012. Under the current law, Lotto sales for the State Fiscal Year ending March 31, 2010 are expected to be $167,371,000, which would result in $21,628,000 less revenue to education than in 2008. This degradation is continuing at a time when the Lottery and the State can least afford declines in non-tax revenues.

The projected decline described in the preceding paragraph is based on the assumption that the 10.4% decline encountered over the past few years will continue at the same rate, but the current fiscal year is showing a decline of even steeper proportions. Lotto has degraded at a rate of 20.8% during the first 37 weeks of the current fiscal year when compared to the same period a year ago. If the same accelerated downward trend continues, the consequential decline in aid to education will be even more significant than what is currently projected.

This bill will allow the Lottery the flexibility to raise the prize payout percentage for the Lotto game to any percentage up to fifty percent (50%). Based on market trends and research, it may be determined that a prize payout between forty-one percent (41%) and forty-nine percent (49%) of sales may also be effective.

By increasing the payout limit for Lotto to up to fifty percent (50%), it is expected that sales will increase or at a minimum, stabilize. The current decrease in Lotto sales can be attributed to the rise in popularity of lottery games such as Mega Millions and Powerball that have jackpot sizes that are much larger than Lotto jackpots. If the payout percentage permitted by law is increased, the Lottery will be able to address Lotto jackpot size, the number of winners in the game, and the size of non-jackpot prize amounts. Lottery customers will find these changes attractive. They'll play Lotto more and stem the decline of the game. In conjunction with an increase in the prize payout percentage for Lotto, the Lottery will re-launch Lotto with a comprehensive marketing campaign designed to reignite public interest and increase sales by emphasizing the increased jackpot amounts and overall better prize structure.

While a reintroduction of Lotto and a prize payout increase to fifty percent (50%) is expected to increase sales, if the changes simply stabilize annual sales at $186,762,000 (a projected State Fiscal Year 2009 level), the projected aid to education will increase over a three-year period by $1,168,000 to $239,327,000, as compared to the predicted declining Lotto three-year combined earnings figure of $238,158,000 which is predicted to occur without a change in the prize payout percentage. The first year of the change may possibly show a slight decrease in earnings; however, this change has to be viewed as a proactive way to stem a very predictable and likely decline in aid to education.

Legislative history

No prior legislative history.

Fiscal implications

An undetermined net economic benefit to the state.

Local fiscal implications

None.

Effective date

This act shall take effect immediately provided that the amendments to section 212 of the racing, pari-mutuel wagering and breeding law made by section one of this act shall not affect the repeal of such section as provided in section 110 of chapter 18 of the laws of 2008 and shall be deemed repealed therewith. Section 8 and 9 shall take effect on the first of January next succeeding the year in which it shall have become a law, provided, however, that any rules and regulations necessary for the timely implementation of this act shall be promulgated on or before such effective date. Section 14 shall take effect on the thirtieth day after it shall have become a law; provided that the amendments made to section 1617-a of the tax law by section one of this act shall not affect the repeal of such section and shall expire and be deemed repealed therewith.