Repeals the New York city off-track betting corporation provisions and authorizes the transfer to a private vendor; repealer

Section 1. Short Title. The New York City Off Track Betting Privatization Act.

Section 2. Defines registered sports bar as any facility licensed to sell alcoholic beverages by the State Liquor Authority that meets the following criteria:

* Is registered with the State Liquor Authority as a sports bar;

* Has at least two television screens that measure no less than 40 inches diagonally;

* Offers horse racing and over sporting events on television to its patrons;

* Pays an annual registration fee of $400 per interactive gaming device installed.

A registered sports bar may offer the use of interactive gaming devices subject to the fee described above.

Section 3. Defines interactive gaming device.

Section 4. Provides that the State Liquor Authority shall not deny any sports bar as defined herein, registration as a sports bar as long as its license to sell and serve alcohol remains in good standing.

Section 5. Creates the New York City Off Track Betting Corporation Retiree Health Insurance Guarantee Account to serve as the repository for the annual licensing fee. Funds from this account are dedicated to paying for the health insurance benefits of current retirees from the New York City OTB.

Section 6. Repeals Article 6 of the Racing, Pari-mutuel Wagering and Breeding Law.

Section 7. Establishes the New York Off Track Betting Corporation as a private entity and provides a process for selecting an operator to run such entity. Provides that the new entity is not liable for any of the debts and obligations of the former New York City OTB.

Process for selecting an independent vendor to run the New York City Off Track Betting Corporation.

ACTION DATE

Provision to Allow Submitting or 120 days after effective Amending of Proposals date of the act

State Comptroller to recommend 10 days after the close of the third party reviewer from one of bidding process the ten largest accounting firms as measured by gross revenue

Selection of Third Party reviewer 20 days after the close of by Governor, Speaker and Temporary the bidding process President of the Senate

Transmittal of proposals to reviewer, 25 days after effective & revealing of the names & business date of the act address of the potential vendors

Recommendation by Reviewer: reveals 40 days after the close of the name of the vendor and reasons the bidding process for recommendation

Public hearing 10 days after recommendation

Selection of Vendor 15 days after the public hearing

Minimum bid Minimum cash component of any bid shall be $250 million, provided that nothing shall prevent a potential vendor from a larger cash component

Work Force Retention The vendor must select 20 percent of its work force from employers of the former New York City OTB

Justification

The New York City Off-track Betting Corporation is insolvent and facing closure. This will have serious repercussions for the horse racing industry in the rest of the State. Nearly $1.1 billion dollars, almost half of all money wagered on horse racing in New York State, is wagered through the New York City Off-track Betting Corporation. The revenue distributed to the racing industry, which is derived from wagering through New York City Off Track Betting Corporation, plays an integral role in sustaining the viability of the entire horse racing industry in New York State. Also, the New York City Off Track Betting Corporation employs approximately 1,300 people in the greater New York City and surrounding metropolitan area. Additionally, since its inception in 1973, New York's regional off-track betting system has provided state and local governments with significant revenues to support government operations and to aid in reducing increases in local property taxation and that the New York City Off Track Betting Corporation is an essential part of that system. The regional off-track betting system has been integrated into the state's pari-mutuel racing and breeding industry to provide statewide accessibility and exposure to New York's quality thoroughbred and harness racing. Such accessibility and exposure has significantly contributed to the economic well-being of New York's racetracks, their horsemen and employees and the growth of horse breeding in the state.

Legislative history

New bill

Fiscal implications

There are two revenue streams that will result from passage of this bill and the subsequent selection of a private operator to run the New York City OTB. The first is a one-time payment of $250 million to finance the pension obligations of the current NYC OTB retirees.

The second is from a licensing fee which will offset some of the costs of the health insurance benefits of current retirees. Revenue from this fee is based upon the number of interactive gaming devices installed in each bar, the number of bars participating and a fee of $400 per interactive gaming device.

NUMBER OF BARS THAT WILL INSTALL KIOSKS

NUMBER OF KIOSKS

2,000 2,500 3,000 3,500 4,000 4,500

2 $1,600,000 $2,000,000 $2,400,000 $2,800,000 $3,200,000 $ 3,600,000

5 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $ 9,000,000

8 $6,400,000 $8,000,000 $9,600,000 $11,200,000 $12,800,000 $14,000,000

10 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000

Effective date

The first day of the month next succeeding the day on which it shall have become law.