Amends the racing, pari-mutuel wagering and breeding law, in relation to simulcasting; repealer

1000 - Statement of Purpose - In contrast to current section § 1000, this statement of purpose is intended to show that simulcasting is no longer an experiment but is vital to the success of New York racing.

1001 - Definitions - This section is designed to provide a complete guide to the meaning of terms in the article. Two definitions deserve particular attention. The definition of "account wagering" would now include Internet wagering as a form of "communication through other electronic means."

The "market origin fee account" establishes a simplified system under which OTBs will only need to pay one general fee to the state for wagers which will then be paid over by the state to the various racing entities in the state. The division of the fees in the "market origin fee account" is designed to protect individual racetracks and the breeding funds by insuring that they receive basically the same percentages of handle from the OTBs that they received in 2004 as indicated by the Racing and Wagering Board's annual report.

1002 - General Jurisdiction - This is similar to existing § 1002 of the Racing Law.

1003 - Simulcasting Authorized - This proposal requires all racing associations to grant a compulsory license under which the racetracks make their signals available to OTB's so long as the OTB branches are not in the immediate vicinity of the racing association.

1004 - Simulcast Licensing - This provision eliminates the extensive plan of operations requirements imposed on OTBs in order to obtain a simulcast license. So long as the facility complies with local laws and zoning requirements, it can he a simulcast branch. Also food and beverage service is authorized. The provision validates the existing OTB private EZ bet branches by statute, and it mandates public disclosure of EZ Bet agreements.

1005 - Racing & Wagering Board Authority Over Simulcasting and Account Wagers - Besides its general powers in § 117 of the proposal, the board can now suspend or revoke the license of a simulcast licensee.

1006 - Simulcasts to Racing Associations - This provision authorizes track-to-track simulcasting. It provides for a uniform tax rate, and all determinations of purse shares at racing associations within New York are to be made by agreement between the horsemen and the track, and not with any legislative involvement.

1007 - Simulcasts to Off-Track Betting Corporation Branches - This provision authorizes the OTBs to accept simulcasts. It provides for a uniform tax rate and payment of a market origin fee account by the OTBs. The market origin fee is set at a level which will closely match the amounts currently being paid by OTBs to New York racetracks and the breeding funds.

The use of takeout as the basis for determining the OTB payments mitigates much of the traditional OTB complaints about NYRA lowering takeout excessively. If overall NYRA takeout is lowered from 20% to 18.5%, under this proposal, OTB payments will also decrease. 11 you posit an effective tax rate of 6.25% of takeout when you include taxes and breakage, OTB pays the State in taxes and market origin fees 8.85% of handle when NYRA takeout is 20%. When NYRA takeout is 18.5%, the OTBs pay 8.186% of handle to the State. The use of takeout as a basis spares OTBs 44% of the cost of any NYRA takeout decrease.

1008 - Televised Horse Races - This section allows for unlimited televising of horse racing. First of all, one of the tenets of the bill is to maximize the availability of horse racing. If a racetrack wants to televise its races, it should be able to do so. Secondly, a restraint on televising horse racing is extremely likely to run afoul of the First Amendment. Under GREATER NEW ORLEANS BROAD. ASS'N V. UNITED STATES , 527 U.S,. 173 (U.S. 1999), and evolving standards of protection given commercial speech, it is very unlikely that a ban on broadcasting truthful, lawful horse races could pass muster. Finally, limits on televising horse racing make no sense when most everyone who has access to satellite TV can watch all the racing they could ever want on TVG or HRTV. Additionally, most everyone with an Internet connection can watch live racing. It makes no sense from a constitutional or policy standpoint to limit in-home access to horse racing.

1009 - Conditions for Account Wagering Licenses - This provision establishes general standards for telephone account wagering. It provides for the use of PIN technology to protect access to accounts, and it allows for racing associations, OTBs and multi-jurisdictional account wagering providers to form partnerships to engage in account wagering.

1010 - Licensed Account Wagering at Racing Associations - This section requires that racing associations inside New York State must comply with § 1004 in order to offer account wagering.

1011 - Licensed Account Wagering at Off-Track Betting Corporations - This section allows OTBs that offer account wagering to determine the extent to which the surcharge of current §532 of the Racing Law will be applicable to account wagers.

1012 - Licensed Account Wagering at Multi-Jurisdictional Account Wagering Providers (ADWs) - This provision authorizes account wagering firms located outside New York state to offer account wagering accounts to New York residents. The current New York ban on out-of-state firms is almost certainly unlawful under the Supreme Court cases interpreting the dormant commerce clause. See most recently GRANHOLM V. HEALD , 125 S. Ct. 1885 (U.S. 2005). A state simply cannot put up a tariff and block firms from out-of-state from entering the New York market. This provision allows for New York to benefit from authorizing these account wagering providers into the New York market. The out-of-state firms will pay the same market origin fee as the OTBs (minus a small deduction if they are distributing funds to non-host tracks outside New York state from the bet made by the New York resident) and will in addition pay five per cent of takeout to the county of residence of the New York bettor. The tax rate on these out-of-state firms will be somewhat less than the tax rate on in-state firms, but that is based on the assumption that these firms will be subject to tax in their home states. This provision should provide a constitutional vehicle which will provide greater benefits for New York racing and will provide greater consumer choice for New York bettors.

Section 2. Technical Changes

Section 3. Technical Changes

Section 4. Technical Changes

Section 5. Allows for the acceptance of wagers on Palm Sunday.

Section 6. Allows OTBs to enter into joint ventures.

Section 7. Removes the prohibition on the sale of food and beverage in OTBs.

Section 8. Allows New York City OTB to keep all funds derived from uncashed tickets. Under current law these funds must be turned over to the State.

Section 9. Relates to job security for employees of regional off-track betting corporations.

Section 10. Amends provisions of law as they pertain to surcharge on winning wagers.

Section 11. Adds a new section 533 to the Racing law pertaining authorizing OTBs to offer rebates under certain set conditions.

Section 12. Amends the penal law to define "Account Wagering" and "Multi-Jurisdictional account wagering provider."

Section 13. Amends the penal law by adding two new subsections, 225.45 and 225.50 to make the above referenced activities defined in section 12 of the bill illegal when conducted without a license.

Justification

There is nobody who will say anything positive about New York's Racing Law. It has been composed over many decades in a totally ad hoc fashion with almost no oversight. Not only is the legislation ad hoc, it often is developed and drafted at the very end of the session, without any way for anyone to review it. The result has been that the Racing Law is often unclear, ambiguous, and incomprehensible. There have been numerous "sunset" provisions in the Racing Law because few people knew whether the bills being passed would be effective. The Racing Law has become the functional equivalent of crab grass. It is a weed that has grown unaided and unwanted that has completely enveloped New York racing.

All the flaws of the Racing Law might have been acceptable if New York racing were thriving. But it isn't. In the absence of video lottery terminals (VLTs), no sectors of New York racing are remotely thriving. The OTBs are not providing revenue, the harness tracks and Finger Lakes prior to VLTs - were dead on their feet, and the New York Racing Association (NYRA) has faced enormous financial challenges and self-made legal difficulties. New York handle in 2004 was, when you account for inflation, 30% of where it was in 1974, when we had no simulcasting, no winter thoroughbred racing, three exactas and one trifecta a day, and OTB barely existed outside the City of New York. Given these failings, in the best of all possible worlds, the Racing Law would and should be totally rewritten.

It should be acknowledged that New York is hardly alone in crafting an inscrutable law on horse racing. The laws in many of the states with mature racing markets - California, New Jersey, and Illinois - are similarly obscure. The difference is that New York State remains the largest market for horse racing, and only New York State has six government operated OTB systems to make the racing picture even more complicated. Thus, the problems inherent in the Racing Law seem even more significant in New York.

Finally, another of the age old adages dealing with horse racing is the admonition to "First, do no harm." A total rewrite of the Racing Law from scratch would harm many of the participants in racing. Thus, the need for a major rewrite of the Racing Law is tempered by the effort to reduce the harm on participants who may have relied to their detriment on the existing provisions of the Racing Law. Thus this revision of Article X of the racing law strives to minimize the harm to the participants in racing.

Finally, even if the best racing law could be constructed and enacted, it would not solve the problems of New York racing. The problem is how do you get people in New York to attend the races and/or bet on horse racing. Hopefully, enactment of this legislation will provide a good first step in this direction.

Legislative history

New bill.

Fiscal implications

None to the State.

Effective date

This act shall take effect immediately.