Public Hearing to Develop Potential Legislation to Enhance the Racing Industry in New York State

WRITTEN STATEMENTS SUBMITTED:16

Cheryl Hecht 103 17 Program Director

Pederson-Krag Center 18 19 ---oOo--- 20 21 22 23 24 25 1 SENATOR BONACIC: First of all, good 2 afternoon. Let me welcome everyone. 3 My name is Senator Bonacic, and I chair the 4 Racing & Wagering Committee. 5 And I see Senator Flanagan in the audience, 6 and I invite him to come up and join us. 7 Let me just point out my colleagues that have 8 come to this hearing today. 9 To my left, is Senator Shirley Huntley. 10 We're joined by 11 Senator Andrea Stewart-Cousins, 12 Senator Jack Martins. 13 Senator Flanagan is coming up. 14 And, I've saved the best to last, 15 Senator Marty Golden. 16 Well, this is a continuation of hearings that 17 we've had throughout the state. 18 In September, we had a hearing in 19 Ontario County, also in Albany. 20 County. And this will be our final hearing, 21 in Nassau County. 22 And the purpose of the hearings is to solicit 23 testimony on, number one, the feasibility of moving 24 forward with a constitutional amendment for casino 25 gaming in the state of New York. 1 And the second area that we want to solicit 2 testimony is, how we can bring more efficiencies, 3 and, enhance the racing industry. 4 So, without further ado, I will ask my 5 colleagues if they have any opening remarks. 6 Marty work you like to make any? 7 SENATOR GOLDEN: No, thank you, 8 Mr. Chairman. 9 SENATOR BONACIC: Okay. 10 Anybody? 11 (Other senators respond in the 12 negative.) 13 SENATOR BONACIC: Let's start with our first 14 witness, Mr. Christian Goode, from Resorts World 15 New York. 16 Christian, good morning. 17 CHRISTIAN GOODE: Good morning, Senator. 18 SENATOR BONACIC: Good afternoon now. 19 CHRISTIAN GOODE: Afternoon, correct. 20 Good afternoon, Senators. 21 First, I would like to thank you for the 22 opportunity to come and discuss the topics that 23 Senator Bonacic has outlined. 24 As you guys now, we are set to open later 25 this month Resorts World New York City at 1 Aqueduct Race Track. 2 It's been a project that I think will open 3 one day short of the 10-year anniversary of the 4 New York State legislature signing into law the VLT 5 facilities, as well as the development in the 6 Catskills. 7 So, we're very excited about it. 8 Just, briefly, as a background: Our project 9 is a well over $800 million investment in Queens, 10 New York. 11 Currently, we have about 1,200 construction 12 workers on site. 13 We've hired 650 permanent workers, which that 14 number will grow to 1,350 in the very near future. 15 So, we're very excited about what we have 16 going on there. 17 The purpose of my presentation, or my 18 testimony, today is to talk about the constitutional 19 amendment, and the impact on racing. 20 First, as the Committee has heard in Albany, 21 and in Canandaigua, almost everybody has an opinion: 22 Good, bad, different, concur, not concur. 23 We applaud the process of getting out in the 24 public eye, having these type of hearings so 25 everybody's position can be heard. 1 And, I would just like to thank the Chairman 2 for giving us this opportunity. 3 First, and foremost, I would like to say that 4 Resorts World New York City fully supports 5 progressing the constitutional amendment to enable 6 table games. 7 We think that it's very important that we 8 have some facts that get on the record. 9 One is, gaming's a reality. 10 If we look around: New Jersey's had gaming 11 since 1979; 12 Connecticut's had casino gaming since 1992; 13 Pennsylvania enacted in 2004, with a racino 14 model which is similar to what New York has, and 15 last summer authorized table games. 16 So, if you look at all the jurisdictions 17 around us, it's a reality. 18 The only -- New York has taken a proactive 19 step in having these hearings, and talking about the 20 issue. 21 We just want to be on record that we fully 22 support it, for a couple reasons. 23 We, as an entity, have done lots of research 24 in terms of, what the market looks like, what 25 New Yorkers' habits are, what we can bring to the 1 table. 2 The one thing that's become clear to us is 3 that, currently, New York exports dollars to other 4 states for gaming. We estimate that number to be 5 between three and five billion dollars that goes out 6 of the state, in terms of gaming, that's recognized 7 as revenue to other -- in other jurisdictions, as 8 well as the non-gaming, whether it be hotels, 9 conventions, so on and so forth. 10 We think that it's important that New York 11 consider how to keep some of that money here. 12 New York has one of the largest populations 13 that has a propensity game. We are the 14 second-largest state that feeds the Las~Vegas 15 market, behind California, which is the largest, 16 simply because of its location and close proximity. 17 What we think is important is to focus on 18 three non-controversial issues; the first being: 19 What does New York need the most? New York needs 20 jobs. 21 New York needs, second: revenue. 22 We need to expand the tax base. We need to 23 bring more dollars into the state of New York. 24 And, lastly, we think it's important to note 25 that New York needs private investment. 1 I think that you've seen in the last couple 2 of years, there's been lots of discussion on how to 3 kick-start the economy. 4 One's with public funds and infrastructure 5 projects at the federal level. 6 And with the economic woes that this nation, 7 and New York is no different, have faced over the 8 past four-plus years, we think that it's important 9 that we find a way to stimulate and encourage 10 private investment. 11 We think the constitutional amendment will do 12 that. 13 When you give the nine race track casinos -- 14 or, eight race track casinos, I'm sorry, in the 15 state the ability to offer something new to the 16 patrons that -- and residents of New York, and more 17 particularly, to people that are coming from outside 18 of New York, that come to New York anyway, we think 19 that that's the step in the right direction. 20 We think that we can build on industry and a 21 market here that's second to none. 22 As my colleague, NYGA chairman, 23 Jim Featherstonhaugh, noted a few weeks back, we -- 24 enhanced gaming is not the answer. It's not the 25 save-all, it's not the end-all, but it's definitely 1 part of the solution to some of the problems. 2 It's not a panacea for the racing industry. 3 Enhanced gaming would help the racing industry. 4 Ten cents on every dollar that Aqueduct makes 5 is going to go directly to support racing, in terms 6 of breeding and purses. 7 In 2012 alone, we expect to contribute 8 $55 million to purses. 9 I have folks in the audience I brought in 10 from OTB. I think that they'll applaud that. 11 As you get better purses, you get better 12 competition, and that will help to stimulate their 13 business. 14 So, we think New York's got the right model. 15 We are not here to talk about changing a model or 16 doing something different. 17 We think New York has been very proactive and 18 aggressive in supporting the racing the industry, 19 and we look forward to being a partner in that 20 process, going forward. 21 The one thing that -- getting back to the 22 issue of the constitutional amendment, ourselves, 23 along with all of the other members of NYGA, we have 24 gone through and looked at the models, looked at 25 what table games can do, in terms of how many units. 1 Every track is different in terms of what 2 they can do. But, collectively, if the 3 constitutional amendment passes, and table games are 4 authorized and legal in 2014, we have over a 5 billion dollars in shovel-ready projects. Projects 6 that put people to work immediately, construction 7 workers, and will create tens -- maybe tens of 8 thousands of new jobs at these facilities, depending 9 on what each operator elects to do, in terms of, 10 capital investment, and creating a business model 11 that works for their area. 12 Not -- every track is different, in terms of 13 what they can offer, and what the population and 14 what tourism can support. 15 At Resorts World New York City, we have taken 16 a different approach. We've looked to go outside 17 the box. 18 Our business model is not based on just 19 capturing people from Queens and coming in, or 20 Long Island, or Nassau County, or -- or that 21 immediate market. We take a much more global 22 perspective. 23 We look at New York as being probably the 24 most-frequented international destination in the 25 world, from a business standpoint, of what comes 1 through here in banking, and financial markets, and, 2 just the rich history. New York City alone garners 3 50 million visitors annually. 4 What we want to do is, bring -- increase that 5 number, and provide another amenity for when people 6 come to New York City. 7 And, we think that we're well positioned to 8 do that. We think we've been good partners, and we 9 think we'll continue to be good partners. 10 As I'm sure the Committee's aware, a 11 significant -- 70 percent of every dollar of win 12 that comes into our VLT facility goes to benefit 13 education, primarily at 44 percent, racing, and the 14 lottery, and other administrative-type costs. 15 We believe that that model has been efficient 16 to date. I think the State's recognized -- after we 17 open, will recognize over a billion dollars in 18 support for education, primarily. And, we think 19 that we can expand that. 20 The one thing that we've spent a lot of time 21 on, is looking at what a convention center could do 22 to complement what's already in New York. 23 We already have the Javits Center. It's 24 842,000 square feet. But, if you compare that to 25 what happens in the rest of the country, it ranks 1 Number 12 in terms of facility size; with the 2 largest being in Chicago, at McCormick; then you 3 have Orlando, then you have Las~Vegas, and you have 4 various other markets. 5 What we think table games can do is, help 6 that model work. 7 Convention centers, I think have been looked 8 at in the city of New York, in expanding Javits, 9 looked at the state level here. And, economically, 10 it's always been a challenge of how you (a) build 11 it; how you support it; and from an operating 12 perspective. 13 We have spent a lot of time, we've -- in the 14 process of developing conceptual ideas of how that 15 would work, at Aqueduct. But we think that's just 16 one indication of a shovel-ready project that would 17 put thousands of construction workers to work 18 immediately. It would bring real permanent career 19 jobs to the Queens County and to New York City. 20 So, with that, I will not bore you with the 21 rest of my testimony; but, rather, take questions 22 from the Committee. 23 24 25 1 SENATOR BONACIC: Mr. Goode, thank you for 2 your remarks. 3 I'm going to ask you a question that I asked 4 you in Albany, because I think that it's worth 5 repeating, so my colleagues can hear this. 6 When the racino opens at Aqueduct, you 7 indicated there'd be 1,300 permanent jobs. 8 How many applications did you have for those 9 1,300 jobs? 10 CHRISTIAN GOODE: We, as of today, have 11 37,000 applications for 1,350 jobs. 12 We opened an on-site job center. 13 One of the things that we became acutely 14 aware of, from the beginning of opening, that we've 15 done -- and, separately, we've done job fairs in 16 Manhattan, we've done them in other areas of Queens, 17 working with the employment centers of Jamaica, the 18 airport opportunity centers -- collectively, have 19 37,000 applications. 20 These are people showing up every day. 21 There's at least 500 to 1,000 people, show up every 22 day, that want a job. 23 95 percent of those are from the local 24 immediate area. You'll probably see some statistics 25 coming out soon. 1 Currently, our employment base is 2 70-plus percent from the very immediate 3 South Ozone Park area. 4 We're bringing real jobs, and there's a 5 thirst. There's demand for more jobs. 6 And I think nothing's more evident than what 7 we've seen. 8 We were pleasantly surprised of the pool that 9 we have been able to draw from, and hire from. 10 So... 11 SENATOR BONACIC: Are you familiar with the 12 tax policies of other casinos, and what they pay to 13 their states -- 14 CHRISTIAN GOODE: Sure. 15 SENATOR BONACIC: -- compared to the 16 Native American tax contributions to New York State? 17 And, could you elaborate? 18 CHRISTIAN GOODE: Sure. 19 I mean, I will give you a couple of the big 20 examples, without getting into too much detail. 21 Nevada, and Atlantic City, pay below 22 10 percent. Around 7 to 8. 23 There's some sliding scale that goes there, 24 but, about 7 to 8 percent of gross gaming revenues 25 paid to the State in terms of taxes. 1 You have New York, where it varies by track, 2 but, Aqueduct will be about 70. 3 You have Mississippi, which is sub-10. 4 You have Pennsylvania, which is about 56. 5 54, if you blend it with table games, which were 6 originally enabled. 7 Indian tribes are quite unique. 8 In the state of New York, the Seneca Nation 9 has a compact, where they, I think, pay -- it was a 10 stepped process, but I think they're at the top end, 11 which is supposed to be 25 percent. 12 I think that the Committee recognizes that 13 that money has not been turned over to the State in 14 the last year and a half, two years; but, rather, 15 held in escrow, in dispute. 16 The thing that I think is very interesting 17 about what Native Americans have been contributing 18 to the State, I think they've had a very positive 19 impact in Western New York, in terms of jobs. I 20 mean, I don't think anybody can take away from that. 21 But, as the market develops, they've taken a 22 position that they're not -- their exclusivity, 23 quote/unquote, has been breached. 24 Now, I'm not here to argue or debate the 25 merits of that claim. 1 What I'm saying is, the truth of what's come 2 to the State coffers to support the economics of the 3 state, I think, in this last year, year and a half, 4 are zero. 5 What you can see, going forward, is, the 6 Department of Interior has recently issued some 7 memorandum, partic- -- and that -- that was, uhm -- 8 ultimately, been litigated, and went to the 9 Supreme Court, where Indian tribes, in June of 2011, 10 there was a case in Southern California. It was 11 "Schwarzenegger versus Rincon" [sic]. 12 The Supreme Court has ruled that tribes are 13 required to pay for services that they use, a 14 reasonable amount. 15 So, if it's fire, kind of global, water, 16 sewage; any of those type of things. And, also for 17 regulatory. 18 But, on top of that, there is no real 19 requirement or obligation to pay unless they have 20 true exclusivity, or what you perceive to be 21 exclusivity. 22 And, as everybody's aware of, Native American 23 tribes are sovereign nations, and they can always 24 take the ability -- you know, take the position, as 25 tribes in New York State have done, is that: If we 1 don't true exclusivity, we're not going to pay. 2 And we think that that's probably supported 3 by the U.S. Court decision. 4 There's other metrics that go to that, but I 5 think, primarily, what you're going to see is, as 6 time goes on, tribes, in order to support their own 7 governments and find new revenue sources, are going 8 to increasingly not want to pay. And I think 9 they're going to be supported by the federal 10 government and the court system in that. 11 SENATOR BONACIC: Okay. 12 And my last question: Based on your 13 experience, where gaming is located at race tracks, 14 is there any correlation between, having gaming, and 15 seeing increased attending at -- attendance at 16 racing? Or, vice versa; do people come in for 17 racing, and then you find they gamble more? 18 CHRISTIAN GOODE: I think that our -- that 19 facility in Aqueduct's going to be something 20 different than what you've seen across the state, or 21 in other states. 22 I think that you will actually see an 23 increase in racing, on-track handle, because you're 24 going to have more of a quantum of people coming to 25 the track. And I think it's another outlet for 1 people that want to wager, to get interested in. 2 If you looked back at our -- if you stop 3 over, and invite everybody to come for a tour of our 4 facility, we've actually gone to great lengths, and 5 from a capital standpoint, to provide our patrons 6 that come into the casino with an opportunity to 7 view the racing. 8 We've built terraces. We've put up glass 9 walls on the track side so people can see it. 10 We think that you're actually going to see a 11 material increase, in terms of what on-track 12 handle's going to be, because I think we're going to 13 introduce it to people that have never seen it 14 before. 15 I won't speak for other jurisdictions. 16 I've actually worked at jurisdictions where 17 they have racing, and VLTs came on, not in this 18 state, but in other states. It's a little bit 19 different. There is some correlation. 20 I think Aqueduct is going to be very unique, 21 because I think that you're going to get introduced, 22 a large, new audience, or market, to a new product. 23 So, I think you'll see an increase. 24 SENATOR BONACIC: Okay. 25 I have no further questions. 1 Senator Golden would like to ask you some 2 questions. 3 SENATOR GOLDEN: Thank you, Mr. Chairman. 4 I'm glad that he's somebody -- Mr. Goode is 5 creating jobs in the state of New York. 6 And, I congratulate you, especially when I 7 see the City getting ready for another -- City of 8 New York getting ready for another series of 9 layoffs, and, you have 37,000 applications for that 10 number of positions that you presently have. 11 The question: The OTB, we had a serious 12 number of layoffs. 13 Have -- there any preference in any of those 14 applications that they're looking for positions at 15 the -- in your new organization? 16 CHRISTIAN GOODE: You know, there is no 17 policy. We didn't give preference up-front. 18 And, in fact, nobody asked us to, and I don't 19 know that it would be legal or illegal. 20 What I would say is, we hire people that have 21 the best ability to add value to our organization. 22 And, with 37,000 applications, we didn't 23 specifically ask if anybody was laid off from OTB; 24 vice versa. 25 I presume that we've hired people that used 1 to work at OTB, based on their background. They 2 have customer service experience, they have some 3 kind of gaming experience. 4 I don't have those statistics, though, 5 Senator. 6 SENATOR GOLDEN: Well, Mr. Goode, I would 7 ask you, if you could, if you could check out, 8 legally, what can be done in that area. 9 CHRISTIAN GOODE: Sure. 10 SENATOR GOLDEN: You already have a force 11 that's already trained, and works with the public; 12 knows how to deal with the public, and those issues. 13 I think it would be a wise investment on your 14 part, to take a look and see if you can get that 15 talent, and put that talent to work. 16 CHRISTIAN GOODE: Sure. 17 I will -- 18 SENATOR GOLDEN: So, if you could, I would 19 appreciate that. 20 CHRISTIAN GOODE: I will look into it 21 personally, and report back to you, if I have any 22 statistics, or I can garner any, and, you know, look 23 at the viability of doing such. 24 SENATOR GOLDEN: Where do you -- on sports 25 betting, how do you fall on the sports betting? How 1 does that help, or not help, your operation, going 2 forward, if that were to become a possibility here 3 in the state of New York? 4 CHRISTIAN GOODE: We haven't really looked at 5 it. 6 Obviously, if you look at casinos in 7 Las~Vegas, they do a significant amount of handle, 8 in terms of sports betting. 9 What I'll tell you about sports betting, just 10 globally, it's kind of a zero-sum game. 11 The idea is to get the same betters on both 12 sides, and the casino take, what they call, 13 "a commissioner," or "a vigorish," right, 14 10 percent, whatever it happens to be, depending on 15 the type of wager. 16 Uhm, I guess the best way to say it is, is 17 that we would be foolish if we didn't recognize that 18 there's a multi-billion-dollar market that exists, 19 whether it be off-shore; whether it be in the back 20 streets, in terms of the, you know, old model, where 21 you have local people that do it. 22 We would be more than, willing, and 23 interested, in looking at that option. We haven't 24 done so to date. 25 But, I would say that I think there's a 1 billion-dollar market out there, and if we could 2 find a way to make that fit with our property, we 3 would obviously welcome it. 4 SENATOR GOLDEN: I can't, Mr. Goode, find a 5 reason why we should not put gambling on as a 6 constitutional amendment here in the state of 7 New York. 8 I can't -- haven't -- nobody has given me a 9 good reason why we should not do it. 10 I'm sure I'll hear some, now that I've opened 11 my good mouth here. 12 But, the -- I believe that that's a way. We 13 definitely have to advance that. 14 And I want to ask you a question on the 15 federal mandate, with the four states. 16 How does -- is that -- how does that muster 17 any constitutionality at the federal level, where 18 they have gambling -- sports gambling in just four 19 states? 20 CHRISTIAN GOODE: Typically, uhm -- up until 21 the most recent, the poker issue, where Full Tilt 22 was shut down, typically, gaming is a state-level 23 initiative; right? 24 Why poker is -- been taken up at the federal 25 level, is because of some interstate commerce-type 1 issues; right? It's not directly gaming policy. 2 Whereas, if you look at legalized sports 3 betting, if that's the question, that's more of a 4 state issue; whether it be, Delaware, New Jersey, 5 have recently looked to taking it up. 6 Nevada, obviously, has legalized it. 7 I think that, from a federal, if you maintain 8 it, and it's on site, I think it's a state issue. I 9 don't think there's a federal overlay. 10 The issue becomes, if you're taking Internet 11 wagering, because you violate some interstate 12 commerce and bank regulatory acts. 13 SENATOR GOLDEN: The constitutionality level 14 that's going before the Jersey voters this November, 15 is that a two-year mandate like here in the state of 16 New York? 17 CHRISTIAN GOODE: I don't believe that it's a 18 two-year mandate. 19 I don't know that, though. 20 SENATOR GOLDEN: So, if it were voted on this 21 November, it would become law, or you're not sure? 22 CHRISTIAN GOODE: I'm not positive, but I 23 believe that to be the case. 24 SENATOR GOLDEN: That's another reason I 25 don't see why we should not be doing that here in 1 the state of New York. 2 I'm going to move my questioning over, one 3 more question, so I can turn it over to my 4 colleagues, for two more questions. 5 The actual convention center -- 6 CHRISTIAN GOODE: Uh-huh? 7 SENATOR HUNTLEY: -- have we, mapped, 8 strategized, Governor-approved, Mayor-approved, 9 moving forward on this, on -- and its inroads? And, 10 what it can do to the Jacob Javits Center, as a 11 complement, or as a hinderance? 12 CHRISTIAN GOODE: What we've done, we're 13 still in the infancy; we're still in the planning 14 stages. 15 We've commissioned an independent economic 16 review from a firm that's world-renowned at doing 17 convention analysis. 18 We've commissioned some renderings and 19 preliminary designs of a facility, and how it would 20 fit on our leasehold at Aqueduct. 21 We've started the process of reaching out to 22 various stakeholders at the city and state level. 23 We've had preliminary meetings, kind of just 24 generally talking about the concept, to see, you 25 know, what the reaction is. 1 Obviously, we don't want to go down a path 2 that's not supported or beneficial for all 3 stakeholders. 4 Relative to the Javits Center, I think 5 there's a couple of things that people would agree 6 with. 7 One is, the Javits Center plays a role, going 8 forward. 9 We are not looking to attract any event that 10 goes to the Javits Center. We think that it's great 11 for the city to have it. We think it serves well 12 for the -- I think it's fairly well occupied with, 13 you know, your garden shows, boat shows, kind of 14 city, or, what I would say, limited regionality of 15 events. We think it's well -- it serves that 16 purpose. 17 As far as large national, and particularly 18 international conventions, I think that you -- 19 people that have been familiar with it will -- would 20 tell you that there's a couple of challenges that it 21 has. 22 One, is it has poor access, in terms of, how 23 getting materials in for events is problem for 24 meeting or event planners. 25 Hotel rooms are a challenge. 1 And, the traffic congestion that you see in 2 that area is also a challenge. 3 So, from a meeting, kind of, planner 4 standpoint, I think it works, as I said, good for 5 local or small regional events. But, national, 6 international, we think that we would complement it. 7 As a matter of fact, we would want to work, 8 and create a partnership, with the Javits Center, to 9 make sure that we're bringing in the most dollars to 10 New York from outside. 11 We've actually went as far as determining 12 flight times and distances, particularly from 13 Europe, South America, and the rest of the U.S., and 14 Canada, to see how it makes sense. 15 We think that a convention -- and our 16 research shows, that a convention delegate, on 17 average, spends, depending on if it's national or 18 international, between 1,200 and 2,000 dollars, per 19 delegate, per event. 20 If you translate that, our facility would 21 immediately be able to handle, approximately, 22 a million delegates a year. And we think that 23 there's a market out there, because New York is 24 underserved. 25 A lot of these large conventions are going to 1 Orlando, they're going to Philadelphia, they're 2 going to Las~Vegas, and other -- Chicago, 3 particularly. 4 That, instantly, is a multi-billion-dollar 5 economic impact for the city of New York and the 6 state of New York. 7 So, what we want to do is, be complementary 8 to Javits. They have a role to play. We recognize 9 that. We would absolutely welcome working out a 10 cooperative relationship, or even an "MOU" -- 11 a memorandum of understanding -- that events that 12 typically have gone to Javits, we have no interest 13 in, because that's not making the pie bigger. 14 Our goal is to bring people from other areas, 15 back to New York. We think it has natural 16 attributes, in terms of, whether it be the recently 17 unveiled 9/11 Memorial -- which is, you know, 18 phenomenal, and historic -- to the Statue of 19 Liberty, to Central Park, to the Broadway shows, to 20 all the other things that New York has to offer. 21 We think, instead of having conventions go 22 somewhere else, and New Yorkers go somewhere else, 23 let's bring all of the other people back to 24 New York. 25 We think that helps a lot of the 1 stakeholders. 2 It helps to Port Authority, in terms of 3 volume through airports. 4 It helps in terms of sales tax. 5 It helps all the other hotels in the area, in 6 terms of occupancy and rate. 7 So, we think it's a win-win situation. 8 And, we look forward to having more in-depth, 9 detailed discussions with everybody, as soon as we 10 have our plan complete. 11 We expect to have it in the very near future. 12 We've been focused on opening, but we 13 definitely are following up, opening up what the 14 next step is, and taking more, a global, long-term 15 view of what development looks like at Aqueduct. 16 SENATOR GOLDEN: Thank you, Mr. Goode. 17 I would like to be kept abreast of the plans, 18 going forward. 19 I don't know if this is the proper committee, 20 and this Chairman here, to bring those plans to, and 21 have a future sit-down. 22 And, I guess you touched on infrastructure. 23 I guess the infrastructure is very important 24 in the Queens and surrounding area of Long Island, 25 and how you handle the hotel rooms, and how you 1 handle the ability to get around. 2 And, I -- we would be interested in seeing 3 that. 4 CHRISTIAN GOODE: Sure. 5 SENATOR GOLDEN: Thank you. 6 CHRISTIAN GOODE: And I'll just quickly tell 7 you, that we've already started the process of 8 retaining professionals in the, traffic and, kind 9 of, infrastructure planning, so we can understand 10 what the impacts would, and start developing those 11 plans of how to address it. Because the last thing 12 that we want to do is, have any more congestion. 13 The Queens has enough of that. 14 And, so, we're proactively approaching 15 that -- 16 SENATOR GOLDEN: Thank you, Mr. Goode. 17 CHRISTIAN GOODE: -- milestone. 18 SENATOR BONACIC: Mr. Goode, I'd just would 19 ask, if you would put the microphone a little 20 closer, and can you speak loudly for the people in 21 the audience, too. 22 CHRISTIAN GOODE: Apologies. 23 SENATOR BONACIC: I have, Senator Huntley, 24 would like to ask a question or two. 25 SENATOR HUNTLEY: Ah, yes, Mr. Goode. 1 Well, the Senator took all of my questions 2 about the convention center, so I won't have to 3 repeat all that, but, you do know I'm a great 4 supporter of the convention center. 5 When I toured the building, I thought, first 6 of all, it's a fantastic building. The layout is 7 great. 8 And, you know, I know people in that 9 community would love to see the convention center 10 come, because I think, basically, it will be used 11 more locally, than from, comparing it to 12 Jacob Javits. 13 So, I know that's one of the reasons that I 14 think it's an excellent idea. 15 CHRISTIAN GOODE: Well, thank you for the 16 kind words, Senator. We appreciate your support 17 today. 18 And, you know, one of the key things that I 19 think needs to be, and I didn't touch on it earlier, 20 is the amount of jobs that come to the community. 21 People that are constituents of 22 Senator Huntley and live in her district, they want 23 to give up the long commute into Manhattan, and the 24 tireless time on the road or on the public 25 transportation. 1 You know, our plan brings 10,000 jobs, 2 direct, and indirect. You know, if we go forward 3 with the convention center, it could bring that 4 right to Queens County. 5 And that's the kind of real impact I think 6 we're looking at. 7 And in order to achieve that, the 8 constitutional amendment helps it, because, it's not 9 just convention center, it's not just gaming, it's 10 about a collection of what can be brought to the 11 site, and what can be brought to New York. 12 So, we -- again, Senator Huntley, we thank 13 you for your support today. 14 And, we will be sitting down with you. And, 15 once our plans are unveiled, we will take the time 16 to go and walk everybody through it. 17 Our goal is to address everybody's concerns 18 up-front. We don't want to go through a process, 19 where we haven't thought of everything. 20 So, your feedbacks is critical, and I 21 appreciate it. 22 SENATOR HUNTLEY: Okay, one other question. 23 You said that there were 1350 jobs -- 24 CHRISTIAN GOODE: Uh-huh. 25 SENATOR HUNTLEY: -- 1,350 jobs. 1 CHRISTIAN GOODE: Yep. 2 SENATOR HUNTLEY: You've already hired 3 650 people? 4 CHRISTIAN GOODE: We actually -- 5 SENATOR HUNTLEY: 650? Am I right? 6 CHRISTIAN GOODE: Yes. 7 We have about 250 that actually, on process, 8 working. 9 The other three to four hundred are in the 10 licensing process, from the Division of Lottery, 11 that should come on board. 12 I think some are coming on -- I think most 13 come on this coming Monday. And then we'll have 14 another wave of hiring before opening Times Square 15 Casino. 16 SENATOR HUNTLEY: That would mean you'd have 17 a balance of about 700 more people to hire? 18 CHRISTIAN GOODE: Correct. 19 We'll probably, when we open Times Square 20 Casino in the end of October, we'll probably have 21 around 900 employees -- 900 to 1,000 employees. The 22 other 350 will come on when, the second phase, and 23 Fifth Avenue Casino opens in December. 24 SENATOR HUNTLEY: Okay, thank you. 25 SENATOR BONACIC: We're joined by 1 Assemblyman Edward Ra. 2 Thank you for being here. 3 Senator Flanagan has a question. 4 SENATOR FLANAGAN: Thank you, Mr. Chairman. 5 Mr. Goode, I appreciate you being here. 6 And I'm acting as an agent for my colleague, 7 Senator Martins, who is at a -- on his way to a 8 League of Women Voters event. 9 But, my question, on behalf of 10 Senator Martins, is: Absent the racinos -- 11 CHRISTIAN GOODE: Uh-huh? 12 SENATOR FLANAGAN: -- do you take, or does 13 the Association take, any position relative to the 14 location of any new casinos in the state of 15 New York? 16 CHRISTIAN GOODE: Sure. I mean, we take -- 17 us, as a founding member, and NYGA, in general, 18 takes a very strong position. 19 We think that it's important that we 20 recognize that we have gaming at these eight tracks. 21 It's been very successful, from a New York State 22 perspective. 23 The one thing that I don't think any of us 24 here, or any NYGA member, I'm sure, doesn't support, 25 is the proliferation of gaming. 1 It doesn't need to be on every corner. 2 There's a time and place for everything. 3 We think the facilities that have been 4 authorized, and it will be up and operational by the 5 end of this year, are the right locations. And if 6 you take a map of New York State, it's well 7 distributed, so everybody that wants the opportunity 8 to go game, has the ability. 9 But, what we don't think anybody wants is, 10 downtown Las~Vegas, or the Atlantic City Boardwalk, 11 in their backyard. 12 So, we don't think that there's any need or 13 necessity to expand gaming. 14 What we want, what we support, is enhancing 15 gaming; enhancing the offering that's available at 16 our existing facilities. 17 I don't think that the people in New York or, 18 particularly, our member tracks support, or think 19 that it's necessary, to have a casino on every 20 corner. 21 We think we have very good geographically 22 distributed sites. We think, gaming's already 23 there. It's been a positive impact on those local 24 economies, and, you know, obviously on the state of 25 New York economy. 1 And, we think enhancing that service offering 2 is the appropriate way, forward. 3 What we don't support is, having a casino on 4 every corner, or having, you know, every, you pick 5 it, be it, a bar, or whatever, having the ability to 6 have further gaming. 7 When you start getting into that model, where 8 it's widespread, that's when you start getting the 9 socioeconomic impacts that we all fear. Right? 10 And as an operator, and I speak for ourselves 11 and for NYGA, we go to great lengths working with 12 the New York State Council on Problem Gambling. 13 We do extensive training for every employee 14 that we hire; not only at Aqueduct, every facility 15 does that we're very cognizant. 16 The one thing that we don't support, is any 17 kind of initiative that could have a negative impact 18 on our communities that we operate in, or a negative 19 impact on New York State. 20 So, I think that you have good partners, that 21 are very cognizant of the impacts, and are very 22 proactive in making sure that problem gaming is 23 addressed, people have the help necessary, and, 24 people are properly trained. 25 The last thing we want to do is, somebody 1 that has a problem, to be in our facility. That's 2 not what we're here. 3 We're here as an entertainment choice, as a 4 hospitality destination, in the area. 5 Our goal at Aqueduct is to bring people from 6 outside of New York here, because of our proximity 7 to JFK. 8 But, any kind of expansion outside of the 9 existing facilities, I think is not a good move for 10 the state of New York. 11 SENATOR FLANAGAN: Thank you very much. 12 SENATOR BONACIC: Senator Cousins. 13 SENATOR STEWART-COUSINS: Yes, thank you for 14 your testimony, Mr. Goode. 15 CHRISTIAN GOODE: Thank you, Senator. 16 SENATOR STEWART-COUSINS: And, I want to 17 thank you, Mr. Chairman, for having this hearing 18 here. 19 And, frankly, I didn't have a question. 20 I just wanted to reiterate what 21 Senator Golden said, with regard to the OTB workers. 22 And, I know that you said that you would 23 personally, look into, see; but, again, it's a 24 force that's ready, informed, and certainly willing. 25 So, I just want to reemphasize, that it would 1 really, of course, within the legal parameters, be, 2 I think, an asset and a benefit to you, as well as, 3 you know, support for workers who have already been 4 in the industry. 5 CHRISTIAN GOODE: As I said, Senator, we -- 6 I'm are more than happy to look into that. 7 Our business is not OTB. I'm not -- 8 SENATOR STEWART-COUSINS: I understand that. 9 CHRISTIAN GOODE: -- personally, or our 10 company, is not intimately associated with what 11 happened there. 12 SENATOR STEWART-COUSINS: I know that. 13 CHRISTIAN GOODE: So -- but, we will 14 definitely look into it, and I'll come back directly 15 to the members of the Committee. 16 SENATOR STEWART-COUSINS: Thank you so much. 17 SENATOR BONACIC: Mr. Goode, are you in a 18 position to share with us, when you will be opening 19 the racino at Aqueduct, or you haven't made that 20 decision? 21 CHRISTIAN GOODE: We have not publicly come 22 out with that. 23 SENATOR BONACIC: Okay, fine. 24 CHRISTIAN GOODE: That will be forthcoming in 25 the very near future. 1 The one thing, that, we are looking forward 2 to bringing the best product to market, and we think 3 everybody will be happy. But, that will be public 4 information in the very near future. 5 SENATOR BONACIC: Thank you very much for 6 being here. 7 CHRISTIAN GOODE: Thank you. 8 SENATOR BONACIC: Our next set of people that 9 will testify is a panel. 10 Joseph Cairo, who's president of 11 Nassau Regional Off-Track Betting; Jeff Casale, 12 president of Suffolk Regional Off-Track Betting; 13 John Signor -- if he's -- John is here -- president 14 & CEO of Capital Off-Track Betting. 15 And, I see that -- okay. 16 Gentlemen, thank you very much for being 17 here. 18 JOSEPH CAIRO, JR.: Thank you, Senator. 19 Mr. Chairman, and other Senators, my name 20 is Joe Cairo. I'm the president of Nassau OTB. 21 And, we have prepared, and submitted to you, 22 written testimony. And rather than read it into the 23 record, we just submit it to you; ask you that it be 24 accepted. And, if I may, just make a few comments. 25 Nassau OTB is suffering the same economic 1 woes that the other OTBs throughout the state are. 2 We believe the outdated and unbalanced 3 statutory distributions, together with the economic 4 decline, has affected us, of course, in a very 5 negative way. 6 We have made efforts over the past 18 months, 7 that our administration has been there, to cut 8 costs. 9 We've reduced the number of exempt employees; 10 We've reduced salary and payroll by almost 11 $3 million; 12 We've closed some locations that were not 13 profitable; 14 We've increased the number of Fast Tracks, 15 and increased the Internet betting, which is at a 16 very low cost to us, and at the same time, is 17 profitable. 18 In fact, our handle has increased slightly, 19 by about 8 percent. We attribute that, in part, to 20 the closing of New York City OTB. 21 My concern, and our concern at Nassau OTB, is 22 that we feel we need relief. We need some relief 23 from the regulations which we believe are outdated. 24 And, also, we want to just play on a level playing 25 field. 1 We have the Race Palace, which opened several 2 years ago; almost 10 years ago. It's located in 3 Plainview, which is just on the Nassau -- in 4 Nassau County, but on the Suffolk County border. 5 I heard the previous speaker talk about -- 6 Mr. Goode -- not having every street corner, 7 perhaps, affording the opportunity, but, we feel 8 that the Race Palace is far enough removed, probably 9 25 or 30 miles from Aqueduct, and certainly further 10 from Yonkers. 11 We'd like VLTs there. 12 Why would we like that? Because it will 13 increase the profitability of Nassau OTB. And as 14 you all know, whatever money we make, we don't 15 retain. It goes to the County. 16 And our concern is really Nassau County -- 17 and being parochial, perhaps -- Nassau County, and 18 the taxpayers of Nassau County. 19 And, we'd like to have that opportunity. 20 We think the Race Palace is an ideal location 21 for that. 22 And we're not only concerned about the money 23 that we make, to turn over to the County, both 24 through operations and through the surcharge, but 25 we're concerned about the workers. 1 There are a number of people here, who I'm 2 sure you'll hear from shortly, who are employees of 3 Nassau OTB. 4 We have about 245 employees -- 247 to be 5 exact -- and we're concerned about them, and we 6 don't want them to lose their jobs. 7 We don't want to go to the same way that 8 New York City did. And, you see what's happening in 9 Suffolk now. Suffolk now has a pending bankruptcy 10 application before the federal court. 11 So that's -- they are our concerns. We've 12 outlined them in the statement. 13 And, we would ask you for that consideration 14 in the future. And, we look towards, hopefully, 15 benefiting the -- all of the OTBs, and, in essence, 16 the taxpayers of our counties. 17 Thank you for this opportunity. 18 SENATOR BONACIC: Thank you. 19 JOHN SIGNOR: Is this on? 20 SENATOR BONACIC: John. 21 JOHN SIGNOR: Sure. 22 Can you hear me? 23 JOSEPH CAIRO, JR.: Yeah, it's on. 24 JOHN SIGNOR: Okay. 25 Yeah, thanks, Chairman, and, thank you, 1 Senators, for having us today. 2 I'm -- my name is John Signor. I'm the 3 president of Capital OTB. 4 And, I'll just follow up on Mr. Cairo's 5 remarks. 6 Uhm, you know, the issues -- and I'll talk 7 about some of the issues -- but, first of all, if 8 you look at the OTBs, when they were created, 9 since their inception: 10 We provided over $3 billion to the tracks, to 11 help to fund the industry, most of that going to 12 New York State tracks; 13 $3 billion to local governments, to help, you 14 know, fund important county programs, city programs, 15 and help property-tax relief; 16 And, a billion dollars to New York State 17 taxpayers. 18 There are -- you know, the issues; I'll raise 19 a couple of the issues that we've discussed many 20 times. 21 In our view, the out-of-state Internet sites 22 are a hinderance to the success of OTBs in 23 New York State. And I think they're also having a 24 negative impact on the tracks in New York State as 25 well. 1 We estimate, anywhere between 300 million and 2 500 million dollars of handle are being wagered by 3 New York State residents with out-of-state Internet 4 sites. And that, that -- and, the state taxpayers 5 and local taxpayers do not benefit one penny from 6 those wagers. 7 So, half a billion dollars is being spent by 8 New York taxpayers on horse racing, much of it being 9 bet on New York tracks, and not a penny of benefit 10 to state and local taxpayers. 11 Also, the breeding funds in New York State 12 are suffering as well; thoroughbred and harness 13 breeding funds. 14 And, also, our regulator, the Racing & 15 Wagering Board, which now finds itself with a hole 16 in their budget as a result of New York City OTB 17 being closed, if these bets were being made in 18 New York State, through OTBs and tracks, then that 19 budget would be -- that hole in the Racing & 20 Wagering Board budget would be filled. 21 Another issue is just payments to the tracks. 22 You know, the payments we are making are via 23 antiquated laws from, 30 years ago, 20 years ago, 24 prior to when the tracks had VLTs. 25 We just that think the payments schedule 1 should be more equitable. We're not saying 2 eliminate all the payments, but we're saying, look 3 at some of those payments. And it may be, the 4 "hold harmless" payments, and some of the others 5 that we think are unfair, and probably are not 6 needed by the tracks as a result of them generating 7 the money they're generating through VLTs. 8 The other thing, and Joe mentioned it, is, 9 our money goes to the taxpayers. We don't retain 10 any money: we don't have a rainy-day fund, we don't 11 have a reserve fund. 12 Any profits we generate in a given quarter 13 are distributed to local governments. 14 That's our charge, and that's what we do. 15 We have a dual mission: We generate money 16 for local governments; and, we provide -- and we 17 support the racing industry in New York State. 18 And I'll just talk a little bit about 19 Capital OTB. 20 And, Joe touched on what he did, and we're 21 doing similar things at Capital. And I know all the 22 other OTBs are doing it. 23 We've cut spending seven years in a row, to 24 the tune of about $5 million; 25 We've reduced staff from several years ago, 1 from 450, we're down to 250 employees, which is 2 still a, you know, large Upstate corporation. 3 We're in the process now of building a new 4 teletheater in city of Albany. It's going to be a 5 state-of-the-art facility, a multi-million dollar 6 facility. And, probably, is going to be one of the, 7 you know, most successful state-of-the-art 8 facilities in the state, if not the country. 9 And some other things we've done, is with 10 tracks. We partnered with several New York State 11 tracks. 12 Vernon Downs: We partnered with Vernon Downs 13 and did a marketing plan. And as a result of that, 14 they're handle this year is up about 30 percent. 15 Last year, we did a marketing plan with them. 16 Their handle was up about 20 percent. 17 And we did similar things with Finger Lakes 18 Race Track; thoroughbred track. 19 One of the things that we have, that other 20 OTBs don't have, but we want to bring them into 21 the mix, is, we own our own TV station, and we 22 operate our own TV station. 23 So, if you're in -- if you go to the Saratoga 24 meet, Channel 12, if you will, in the 25 Capital region, we show horse-racing shows all 1 morning, from 9 a.m. till 12 p.m., basically, 2 promoting racing, promoting Saratoga, having 3 interviews with the, you know, Hall of Fame 4 trainers, jockeys, owners of the biggest horses in 5 the country. 6 And, we're now working with a vendor, to try 7 to bring that TV station national, where we can have 8 shows that can also look at Florida tracks, 9 California tracks, as well as New York tracks. 10 And we also think that gives us an 11 opportunity to bring New York tracks to a national 12 audience. 13 So, we're excited about that. 14 And then I would just point to, there were 15 two reviews of OTBs done in 2002. 16 There was the task force on the future of 17 OTBs. And there were -- I think a former staffer 18 of the Senate, John McCluskey (ph.), was on that 19 task force for a while; 20 And, there was an audit by the Office of 21 State Comptroller. 22 And we view these reviews as, basically, 23 independent reviews of OTB. They both came in to 24 look at our operations, and, looked at the payments 25 we were making; the competition from the 1 out-of-state ADWs; and, some of the consent issues 2 we have to deal with, with respect to placing 3 Easy Bets or Fast Tracks, and some of our branches. 4 And, for the most part, these independent 5 reviews did not mention consolidation. They 6 generally listed, that, you know, these out-of-state 7 Internet sites are being able to come in and poach 8 our biggest betters. 9 Now, keep in mind, previously, I don't know, 10 about four years ago, the policy of the Racing & 11 Wagering Board was not to allow out-of-state 12 entities to take bets from New York residents. 13 And, for whatever reason, that policy 14 changed. And I think that was a bad policy 15 decision, and has led to a lot of the heartache, if 16 you will, or the financial stress that the OTBs are 17 under now. And, probably was one of the major nails 18 in the coffin at New York City OTB, unfortunately. 19 And, those reports came up with 20 recommendations. And the recommendations are things 21 that we've been pushing for the last seven years, or 22 more. 23 "Reduce the payments to the tracks that have 24 VLTs." 25 We don't want to hurt the tracks, but we just 1 want to be treated fairly. We do represent the 2 taxpayers, and our money does go to help taxpayers. 3 "Require the out-of-state Internet sites to 4 be regulated, and pay the same fees we pay." 5 I think we'd probably go a step further, and 6 say, prohibit them, and don't let them take bets 7 from New York residents. 8 And, on the "consent" issue, you know, allow 9 us to place -- if we want to close a branch and put 10 an Easy Bet in its place, allow us to do that 11 without going to a regional harness track, or 12 another track, and getting denied, because that's 13 hurting our business as well. 14 You know, and on the "consolidation" issue, I 15 know it has been brought up a lot. 16 You know, like I said, it's unnecessary, for 17 the same reason Governor Cuomo has ten economic 18 panels out there. 19 There -- you know, this state is not one size 20 fits all. Each region has its own needs. 21 Joe has relationships with his county that 22 can get things done in his county. 23 I have relationships with my local 24 governments, and we brief them, we work with them, 25 and we try to do the best we can, to make -- to 1 generate the maximum revenues back to the 2 localities. 3 And, the other thing is, we're -- you know, 4 we're an open book. 5 Our board meetings are open; 6 We're -- you know, our -- we have independent 7 audits that are sent to everybody. I think, to the 8 legislature, to this Committee; 9 And, we're overseen by the counties. And the 10 counties put a lot of pressure on the us, to make 11 sure that we run our operations efficiently and 12 effectively, and are as profitable as we can be. 13 So, again, I would say, you know, one thing: 14 I would go back to those reports; see what they did. 15 They didn't have an agenda. 16 There are people here who are going to say: 17 Oh, we want to take over OTB. Or, OTB should be 18 this and that. 19 I mean, you know, people are coming with 20 agendas and reasons. 21 I would say: Look at those objective reports 22 that talk about the issues OTBs are facing. 23 And I think, if action is taken on those 24 recommendations, and those issues, you can -- you 25 will see OTBs become more profitable, and more 1 viable. 2 SENATOR BONACIC: Thank you. 3 Just a couple questions, if I may. 4 I know you're building, and you referred to 5 it, Mr. Signor, a new teletheater operation. 6 Can you tell us, when it will be completed, 7 what did it cost, the size of it, how is it 8 different than what you have there now? 9 JOHN SIGNOR: Yeah, you know, Chairman, we 10 went -- I visited, and my staff visited, probably 11 six facilities in other states. We went to 12 Connecticut, we went to Pennsylvania, went to 13 New Jersey, went to the Race Palace; casinos and OTB 14 facilities alike. And, what we tried to do is, take 15 the best we found from all of the facilities. 16 You hear a lot about Woodbridge in 17 New Jersey, a facility that's, I think, the most 18 successful OTB facility in the country. It handles 19 the most money. It's a 20,000-square-foot facility. 20 So, ours is going to be a 23,000-square-foot 21 facility. Costs us about $4 million to build. It's 22 going to be a state-of-the-art facility, HDTVs all 23 over. 24 It's gonna -- and we're partnering with a 25 sports bar; a popular sports-bar facility in the 1 Capital region. 2 So we think that it's going to be, not only a 3 place for horse racing fans, but also casual 4 betters. We think that we're -- we'll be able to 5 bring more casual people into the facility and turn 6 them into horse racing fans, going forward, which 7 will help grow the sport. 8 But, it's a -- it's going to be a 9 state-of-the-art facility, and, we expect it to be 10 done by January 1st. 11 SENATOR BONACIC: Do you think this is a 12 trend, that OTB should be closing parlors and moving 13 more to these regional teletheater operations? 14 JOHN SIGNOR: Yeah, I mean, you know, we do 15 two-thirds of our business through our branches and 16 Easy Bets. So, we still do -- we're going to do 17 about $155 million this year. We still do 18 $100 million through our branches. 19 So, that's a lot of money. 20 And our branches -- many of our branches are 21 still profitable and successful. 22 You know, that is the trend. 23 Our -- as Mr. Cairo said, you know, our 24 Internet wagering site is successful. It's going to 25 increase substantially this year over last year. 1 So, we are -- you know, we are dealing with 2 technology, and doing the best we can, to make sure 3 that we offer a high-quality Internet wagering 4 platform. 5 I think, over time, that may be the way to 6 go. I don't think -- you know, I think it's too 7 soon to say that's the direction we have to go. 8 You know, we -- when we have a branch that 9 doesn't make money, we close it. And we've closed 10 some branches this year. But, we still have 11 30 branches and 30 Easy Bet locations, and most of 12 those are profitable, and most of those are -- you 13 know, are helping county -- generating money for the 14 counties. 15 SENATOR BONACIC: Thank you, Mr. Signor. 16 I said before, on the introduction of the 17 panel, that Jeff Casale was here, the president of 18 Suffolk Regional. 19 He is not here, and I just wanted to correct 20 the record. 21 I would like to address a couple of questions 22 to Mr. Cairo, if I can. 23 We know that Suffolk is in the process of a 24 bankruptcy proceeding. 25 Can you tell me what impediments there would 1 be to a merger of, Nassau and Suffolk, OTB? 2 JOSEPH CAIRO, JR.: I think that Mr. Signor 3 indicated that, obviously, Nassau and Suffolk, 4 County, you know, we have -- we have different -- 5 different interests, perhaps, to the extent that 6 Nassau County is unique, and somewhat different, 7 from Suffolk County. 8 We have had worked -- putting that aside, we 9 have worked through some joint efforts over the past 10 years. 11 We share -- from the inception of OTB in 12 1970 -- in the mid-1970s -- 1975, January, we 13 share a phone room, which has been in effect since 14 that time. 15 Suffolk controls the phone room. We pay a 16 proportionate share, depending upon the handle. 17 So, we've worked together, that way. 18 We also work together with respect to the 19 print shop. They have a print shop, where the daily 20 publications come out of. 21 And, so, we've worked together in that 22 regard. 23 I would not be, Nassau OTB, would not be 24 adverse to looking at working more closely with 25 Suffolk, or perhaps even a merger for Long Island. 1 However, we're concerned about Nassau County. 2 We're concerned about the statute which shows that 3 our profit goes to the County, and that's really 4 what our bottom line is. 5 We, right now, are monitoring. We're 6 attending the hearings -- the Suffolk County 7 bankruptcy hearings. And, we are willing to help as 8 much as we can. 9 We just don't want to -- at this point in 10 time, we have to wait and see what the outcome is, 11 or what -- how that continues, to see how much we 12 can become involved with them. 13 SENATOR BONACIC: Okay. 14 Let me ask you this question: If you had 15 $15 million in reserves in your OTB, what would you 16 do with it? 17 JOSEPH CAIRO, JR.: Well, first of all, we 18 don't have 15 million. 19 SENATOR BONACIC: Well, I realize that. 20 But -- 21 JOSEPH CAIRO, JR.: And we -- 22 SENATOR BONACIC: But there is an OTB that 23 does have it. 24 And I'm asking you, number one: Should an 25 OTB have 15 million in reserves, or should that 1 money have been returned to the taxpayers? 2 That's question one. 3 And, number two: If you had 15 million, what 4 would do you with it, to enhance your revenues, if 5 anything? 6 JOSEPH CAIRO, JR.: Well, I think that what 7 we're doing, is -- I think what we're -- 8 To try to answer your question as best as I 9 can: I think what we're doing, is, we're looking to 10 make Nassau OTB more profitable for the benefit 11 of -- obviously, of Nassau County. 12 And, in doing that, as John has done, we've 13 closed some parlors that are not profitable. 14 There would be -- if we had that excess 15 funding, that extra funding, we would, perhaps, look 16 at other locations, which we are doing. 17 We have found that -- while the Race Palace 18 has been successful -- and it's been very 19 successful -- we find that, obviously, local 20 branches bring in the bulk of our revenue, together 21 with the two things that are emerging, are, (a) the 22 Fast Tracks; and, so, we would want more Fast Track 23 locations. 24 As a matter of fact, we currently have 25 twelve. We're allowed, by law, to have eighteen. 1 As you most likely, or probably, are aware, 2 because we fall within a radius of all of our -- all 3 of Nassau County falls within the radius prescribed 4 by law, from a NYRA location, from Belmont Race 5 Track, we need NYRA's approve for any Fast Track. 6 And we have tried -- since we came into the 7 administration 18 months ago, we've tried to develop 8 a healthy relationship with NYRA, as best we can. 9 So, we would look to get more locations, in 10 that regard. That seems to be more profitable, 11 there's very low overhead, you don't have to have 12 employees there. And we've been successful in that 13 regard. 14 We, also -- the Internet is also growing. 15 As you see by the statement, the Internet -- 16 our Internet betting grows each and every year. And 17 while that grows, as John said, we are hurt by the 18 out-of-state which is not -- which are not regulated 19 the way that we are. 20 So, we would look to -- we would look to, 21 obviously, market, and expand upon that. 22 And, then, there are facilities which need to 23 be upgraded -- we don't have the funds for that -- 24 to make them more user-friendly, so that more 25 patrons would come in. 1 I heard the previous person testify, and as 2 John indicated, the new location that they're 3 developing up there, we'd like to, obviously, 4 explore that. 5 Perhaps an additional Race Palace in another 6 part of the county, because the Race Palace, right 7 now, is our prime source. You know, it does better 8 than any of the other locations. 9 And, then, we've also been hurt -- we've been 10 hurt. 11 And, very candidly, when New York City 12 closed, we had a bit of an upswing in some of our 13 parlors, like Green Acres, which is in 14 Valley Stream, which borders the city. 15 But by the same token, we've been hurt, 16 because of NYRA's opening of the Belmont Cafe, which 17 has been very profitable for them, which is in the 18 Elmont community, which is a community that borders 19 Franklin Square. It's probably a mile from the 20 Franklin Square branch, which, traditionally, has 21 always been our most active and profitable branch 22 save the Race Palace. 23 And, Belmont Cafe is probably a mile away, 24 and we've lost a significant -- we've -- a 25 significant amount of handle there. And we actually 1 are in a -- are down at the Franklin Square branch. 2 So, if we had the money, that's some of the 3 things we would do. 4 But, again, Senator, or Mr. Chairman, I 5 believe our mission is to -- at least, in part, is 6 to make a reasonable return for the County. And 7 that -- that, really, is what I follow. 8 SENATOR BONACIC: Do you know if Suffolk has 9 closed any parlors since they declared bankruptcy? 10 JOSEPH CAIRO, JR.: Yes, Suffolk has closed 11 parlors. I don't know if it was simultaneous with, 12 just before, or just after, but, they have closed 13 parlors. 14 SENATOR BONACIC: Okay. 15 This is a question that I have, that -- I 16 like the way Capital runs their OTB, from what we've 17 been watching all the OTBs. 18 JOSEPH CAIRO, JR.: Uh-huh. 19 SENATOR BONACIC: Do you -- would Nassau 20 object if the operations of Capital OTB got expanded 21 into New York City? 22 Do -- would you see a problem with that, with 23 Nassau? 24 I would ask, if the Suffolk gentleman was 25 here, I would ask both of you the same question. 1 JOSEPH CAIRO, JR.: I will tell you this: 2 That I've been associated with Nassau OTB since May 3 of last year. 4 And, very candidly, while I have high respect 5 for many of the gentlemen and ladies that I've met 6 in OTB, you know, from the various regions, that 7 Mr. Signor is certainly very impressive. Does a 8 great job where he's at. 9 And I think that I certainly would support 10 exploring that, or looking into that, because of 11 the -- of what I've seen of his operation, and more 12 importantly, how I've seen him work, and accomplish 13 things over the past 18 months. 14 So, we would have no objection to Capital 15 certainly exploring that. 16 SENATOR BONACIC: My last question: I asked 17 you the impediments of a merger between Nassau and 18 Suffolk. 19 And you -- you said, you know, "uniqueness." 20 But, can you give me a logical reason why it 21 wouldn't work? 22 JOSEPH CAIRO, JR.: You know, it might work. 23 Right now, to be very candid with you, 24 Suffolk's in trouble. You know, there's a 25 bankruptcy there. 1 If there were a planned bankruptcy 2 application, certainly, which I think has, both, 3 procedural issues and, perhaps, you know, 4 substantive issues, if -- if, as part of that plan, 5 something came out of that that made 6 recommendations, we would certainly look at that. 7 Nassau and Suffolk are dissimilar, and they 8 are unique in their own respects. But, by the same 9 token, I'm sure, you know, it's Long Island, and 10 people of have long spoken about, you know, it 11 making sense to do that, not only in OTB, but in 12 other areas of government or quasi-government. 13 So, it's something that we would look at. 14 Right now, Senator, with the bankruptcy 15 application, again, we want to be helpful, but, my 16 charge, and my obligation, is to the people of 17 Nassau County. And I want to lend a helping hand. 18 I want to lend a helping hand. 19 And, forgive me, and I hope I'm not being too 20 brash, but, if they're in quicksand, and we can lend 21 a helping hand and pull them out, then we want to do 22 it. 23 I don't want Nassau County to fall into the 24 quicksand and go down; go down with Suffolk. 25 SENATOR BONACIC: Okay. 1 I think you've answered this question, but, 2 between Suffolk and Nassau, you don't have -- you 3 have one betting facility? It's not separate? 4 JOSEPH CAIRO, JR.: Excuse me, the -- we 5 have -- we have separate -- 6 SENATOR BONACIC: Phone-betting facilities, 7 is what I -- 8 JOSEPH CAIRO, JR.: Oh, we have one, I'm 9 sorry, phone betting. 10 Yes. 11 SENATOR BONACIC: And one for both? 12 JOSEPH CAIRO, JR.: One for both. 13 SENATOR BONACIC: Yeah. 14 JOSEPH CAIRO, JR.: It's been that way since 15 the 1970s. Suffolk man -- it's located in 16 Suffolk County. They man it, and we share in a -- 17 in the cost proportionate to the handle. 18 SENATOR BONACIC: Okay, thank you, gentlemen. 19 Senator Golden has a couple questions. 20 SENATOR GOLDEN: Thank you, Mr. Chairman. 21 Thank you, gentlemen, for your testimony here 22 today. 23 The -- if racing, obviously, isn't enhanced, 24 to some degree, in this state, and across the 25 nation, OTBs are just going to fall like dominoes. 1 And, that's what we see happening. 2 We need -- we see some strong OTBs here. We 3 got strong management themes. We have a good 4 direction. You know how to turn a dollar, and make 5 it work in your particular regions today. 6 New York City, particularly, I get a kick out 7 of it, that we closed almost a billion-dollar 8 operation. And, we have yet to open that up into 9 any gaming operation that would be successful for 10 the future. 11 We have a bill that would put the gambling of 12 OTB into sports bars, with kiosks, and allow for 13 that to happen, enhancing the sporting bars, 14 enhancing their license, enhancing their kiosks, for 15 dollars that they would have to pay the State to 16 operate. And, we believe that that would be 17 profitable. 18 What's your feeling, gentlemen? 19 Why don't we start with you, John. 20 JOHN SIGNOR: Yeah, you're talking about 21 New York City, Senator? 22 SENATOR GOLDEN: Yes. 23 JOSEPH CAIRO, JR.: Yeah, you know, we were 24 the ones who -- or, Capital OTB, created Easy Bets, 25 if you will; came up with the first Easy Bet in 1 New York State. And, we have over 30 locations in 2 sports bars, restaurants, bowling alleys, et cetera. 3 And, they are low-cost, and they do provide revenues 4 for the County. 5 So, I think, if you find the right locations, 6 they will be profitable. 7 How profitable, will depend on, you know, how 8 large the facility is, and so forth. 9 I think an analysis should be done, but, 10 clearly, that is one way to get some of that handle 11 back into -- you know, some of that handle from 12 New York City back into the New York racing 13 industry. 14 SENATOR GOLDEN: Joe? 15 JOSEPH CAIRO, JR.: Yeah, completely agree. 16 SENATOR GOLDEN: The brick-and-mortar, 17 obviously, is a major problem. And I think that 18 handles the brick-and-mortar, and handles it well. 19 To enhance your industry, though, you 20 mentioned VLTs. 21 What about sporting -- sports bars; actually 22 having sporting as a commodity in your entities? 23 JOHN SIGNOR: Yeah, I think we would support 24 that. 25 And the good thing about, obviously, sports 1 betting is, you don't need a big investment of 2 capital. 3 Our facilities, we could do it. 4 Joe could do it at the Race Palace, I could 5 do it at our new teletheater, and, there might be 6 some technological changes that would have take 7 place, and some enhancements that way. But, 8 obviously, there wouldn't have to be a huge 9 investment of dollars that, unfortunately, neither 10 of us have. 11 But, that's something that I think we would 12 support. 13 SENATOR GOLDEN: Anyone who has the 14 $15 million. 15 I'm only kidding. 16 Joe? 17 JOSEPH CAIRO, JR.: Yeah, we spoke -- John 18 and I spoke about that earlier. 19 And, tell us when we start, and, we're ready. 20 SENATOR GOLDEN: Good. 21 The NYRA; we've heard a lot about NYRA, and 22 we continue to hear a lot about NYRA. 23 You find them as -- do they have a hold on 24 your industry? 25 Are they helpful to your industry -- I know 1 the answer here, but I want to get it from you -- 2 or, are they hurting your industry, in the 3 regulations that they have, and the hold over you? 4 JOHN SIGNOR: Well, no. I mean, you know, 5 we've had a good -- generally, a good relationship 6 with NYRA. 7 I think, with the fall of New York City, if 8 you will, I think NYRA has done fairly good job in 9 trying to gather a lot of that handle that would 10 have otherwise been lost. 11 I think a lot of that handle has been lost to 12 out-of-state Internet sites. You know, Twinspires, 13 and some of these other large Internet -- 14 out-of-state Internet sites. 15 So -- I mean, you know -- you know, I don't 16 think NYRA's in profitability yet, but I do think 17 that they were aggressive in trying to get that 18 handle, so I think they deserve some credit on that 19 front. 20 You know, could they be more, you know, 21 cooperative? Of course they could. We probably, 22 all of us, could be. 23 But, you know, we've -- like I said, we've 24 reached out to every track in the state, to try to 25 do marketing plans with them. 1 The only two that took us up on it were 2 Vernon Downs and Finger Lakes. And both of those, 3 you know, it was a win-win for both entities. 4 So, I think more of that, could take place, 5 and should take place, between all of the tracks, 6 and all of the OTBs, to be -- you know, to be frank. 7 SENATOR GOLDEN: Joe? 8 JOSEPH CAIRO, JR.: NYRA is -- I've had a 9 long-time relationship. I live a couple of miles 10 away from Belmont. I represented it as local 11 councilman, that community, for almost 20 years. We 12 always tried, and did have, a nice relationship with 13 NYRA. Tried to work together. 14 They worked on behalf of the community. In 15 the past, five to ten years, they probably -- as 16 Assemblyman Ra can tell you, they probably -- or as 17 Senator Martins, both of them represent that area -- 18 they -- they've been even more active with the 19 community. 20 OTB, we've tried to develop a relationship. 21 Charles Haywood has been a gentleman 22 throughout, as have been the people at NYRA. 23 They're in our backyard. 24 On the other hand, the Belmont Cafe, you 25 know, at Belmont, has hurt us drastically at the 1 Franklin Square branch. 2 And we do have -- and we do plan on meeting 3 with them. We've spoken about this, and with some 4 of the NYRA board members, to try to work 5 cooperatively, the way John has, with some of the 6 other locations, the other tracks, for both of our 7 benefit. 8 They're in Nassau County, Belmont is in 9 Nassau County, and we want to work with them, we 10 want to work together, to the benefit of both. 11 SENATOR GOLDEN: How does Aqueduct, help, or 12 hurt, you? 13 JOSEPH CAIRO, JR.: When they open up? I 14 think it's going to hurt. 15 I think it's going to hurt. I don't know to 16 what extent. 17 A fellow who was at Nassau OTB, from the 18 inception, who retired just six months ago, said 19 it's going to take 35 percent of our handle away. 20 I don't know if that's true. 21 Others say it could be 10 percent. 22 But, I think it's going to hurt. 23 Aqueduct is a stone's throw. I live 11 miles 24 from Aqueduct. And, probably, 23 or 24 miles from 25 the Race Palace. 1 Aqueduct is close by. 2 Our most profitable locations are -- or, the 3 most active are, Franklin Square, and Green Acres, 4 and they're the closest to the city line. 5 So, I don't know to what extent, but I think 6 it definitely will have a negative impact on us. 7 SENATOR GOLDEN: The last question, 8 Mr. Chairman. 9 The Internet sales of sports betting, if that 10 were to become a reality here in the state of 11 New York, obviously, it would be a major boom, and 12 would put you -- both of you much more competitive 13 than you presently are? 14 I presume the answer to that -- 15 JOHN SIGNOR: Absolutely. 16 SENATOR GOLDEN: -- would be yes? 17 JOSEPH CAIRO, JR.: Absolutely. 18 SENATOR GOLDEN: And the phone betting as 19 well? 20 JOSEPH CAIRO, JR.: Yep. 21 JOHN SIGNOR: Yes. 22 SENATOR GOLDEN: Thank you very much. 23 JOHN SIGNOR: Thank you. 24 JOSEPH CAIRO, JR.: Thank you. 25 SENATOR BONACIC: Mr. Cairo, just let me 1 bounce something off of you. 2 If Belmont sought casino gaming at the track, 3 and any legislation contained a local referendum 4 approval from the community, reading the pulse of 5 the people today, you say, it passes, or doesn't 6 pass? 7 JOSEPH CAIRO, JR.: Belmont is located in 8 Elmont, and it borders on the north side to the 9 village of Floral Park. 10 Elmont is a very vibrant community. It is 11 probably the most active community, 12 civic-association wise, of any in the town of 13 Hempstead, or perhaps, even in Nassau County. 14 It's a very vital community. 15 It, unfortunately, Senator, has a very high 16 rate of unemployment. 17 And I heard, you know, Senator Golden, and 18 Senator Cousins, talking before, about, you know, 19 employment and OTB workers, et cetera. 20 I think that it would have a ground swell of 21 support. 22 And I think that -- despite, at first, some 23 opposition from the Floral Park community, I think 24 that the Elmont community, and the other neighboring 25 communities, as such, would be very much in support 1 of it. 2 SENATOR BONACIC: Thank you. 3 Are we good? 4 SENATOR GOLDEN: I have one question. 5 SENATOR BONACIC: Senator Golden has another 6 question. 7 SENATOR GOLDEN: One quick question. 8 The -- you talked about closing locations, 9 and opening up new locations. 10 Are you recycling some of the people that 11 have been laid off in your areas into the new 12 positions? 13 JOHN SIGNOR: Capital OTB? 14 SENATOR GOLDEN: Yes. 15 JOHN SIGNOR: Yeah, a lot of people have gone 16 through early retirement from last year, and 17 attrition over the years. 18 So, we haven't -- fortunately, we haven't had 19 to lay people off, but, you know, unless -- you 20 know, if with don't get the help that we're seeking, 21 at some point, that could be a reality. 22 SENATOR GOLDEN: And, Joe, layoffs -- 23 JOSEPH CAIRO, JR.: Yeah, we haven't had 24 layoffs. 25 And, ironically, just the other day, a 1 gentleman called me, who had been at New York City 2 OTB. 3 And, we haven't hired many people either, 4 although we did have -- we did take advantage of the 5 early incentive retirement. 6 And I just -- ironically, the other day, I 7 got a call from a gentleman who worked for New York 8 City OTB, and he's coming in one day next week. 9 But, fortunately, we haven't had any layoffs 10 yet. But, again, you know, we're in a decline. 11 Just as John said: We need some help. 12 SENATOR GOLDEN: Thank you, gentlemen. 13 Thank you, Mr. Chairman. 14 SENATOR BONACIC: Thank you both for coming, 15 and, it was very appreciative. 16 JOSEPH CAIRO, JR.: Thank you, Chairman. 17 JOHN SIGNOR: Thank you. 18 SENATOR BONACIC: Our next speakers are: 19 Lenny Allen, who is president of Local 2021, 20 DC 37; and, Barry Yomtov -- I hope I pronounced that 21 right -- president of Local 858, 22 International Brotherhood of Teamsters. 23 Lenny, why don't you start. 24 LENNY ALLEN: Thank you. 25 Good afternoon, Chairman Bonacic, and members 1 of the Racing -- Senate Racing, Wagering & Gaming 2 Committee. 3 My name is Lenny Allen, president of 4 Local 2021, and I'm representing the former 5 employees of the New York City Off-Track Betting 6 Corporation. 7 As you know, the New York City OTB 8 Corporation was shut down on December the 7th, 2010, 9 as a result of legislative inaction by the 10 New York State Senate. 11 On December the 20th, 2010, the corporation 12 ceased its operations entirely, this, in spite of 13 the fact that the corporation had $14 million which 14 could have kept the doors open until March of 2011. 15 As a result of this closure, close to 16 1,000 members of Local 2021 lost their jobs; 17 100 were forced to retire; and all employees and 18 retirees lost their health insurance and 19 supplemental benefits, which includes, optical, 20 podiatry, dental, and prescription drugs, to 21 individuals, who, upon retirement, were entitled to, 22 and were receiving, these benefits at the time of 23 closure. 24 The closure, or shutdown, of New York City 25 OTB continues to adversely impact Local 2021 1 members, and its parent union, District Council 37. 2 Local 2021 gave up some very significant 3 concessions through agreements with the turnaround 4 specialist Greg Rayburn, including a significant 5 downsizing of its workforce. 6 The closure of OTB has meant our members have 7 faced: 8 Foreclosures; 9 Had to discontinue paying school tuition; 10 Had to make payments of health insurance 11 coverage that they previously did not have to pay, 12 taking up 50 to 60 percent of their pension money to 13 pay for health insurance; 14 Have faced unemployment -- the filing of 15 unemployment benefits, which, for many, is about to 16 cease; 17 Homelessness, resulting from income 18 insecurity; 19 Not to mention the even greater loss to the 20 State, such as: 21 The loss of revenue to the State, 750 million 22 dollars in handle; 23 Increase in illegal bookies operating 24 throughout New York City. The purpose of the 25 creation of New York City OTB was to prevent the 1 operation of bookies. We are now aiding and 2 abetting their proliferation; 3 The decline in revenue and spending in local 4 communities as a result of the neighborhood parlors 5 closing; 6 The increased rate of unemployment to our 7 communities of Upstate New York that's supported by 8 the racing industry. 9 This loss is enormous, and must be reversed 10 if we are to revive the racing industry in 11 New York State. 12 This was done in spite of the fact that the 13 corporation had funds equivalent to 14 million, 14 which could have allowed it to continue operating 15 until March of 2011. 16 We would like to know: What happened to this 17 14 million? 18 The money was promised to our members through 19 an agreement with the New York City OTB Corporation, 20 which would have paid for the severance of our 21 members. 22 Adding insult to injury, this past 23 September the 23rd, Governor Andrew Cuomo vetoed the 24 bill, Senate 4489, and Assembly 5785 -- which passed 25 the Assembly by 77 to 47, and the Senate by 1 51 to 11 -- that would have restored health coverage 2 for about 900 retirees from the City's Off-Track 3 Betting Corporation, under the premise that the 4 legislation had failed to make any appropriation to 5 accompany the legislation. 6 Sadly, the closure of New York City OTB did 7 not have to happen. 8 At the time, when New York City was exploring 9 alternatives to the closure, DC 37, Local 2021, 10 stepped up and offered significant labor concessions 11 during the negotiations with New York City's OTB 12 turnaround specialist Greg Rayburn, who was paid a 13 monthly salary of $125,000, to reorganize 14 New York City through a bankruptcy restructuring. 15 These givebacks included a major downsizing 16 of the workforce, reduced pay, and the closure of 17 dozen unprofitable branches. 18 Before its closure, New York City OTB 19 accounted for 51 percent of the revenue generated by 20 OTBs in New York State. Its absence would only 21 mean that other OTBs would shortly follow suit -- 22 Nassau and Suffolk -- and the New York racing 23 industry will not be able to withstand the collapse 24 of the industry. 25 We are facing an emergency situation. 1 If the revitalization of the New York racing 2 industry is not a priority this year, or in the next 3 legislative session, then racing, as we have known 4 it, will not only cease to exist, but retooling will 5 be -- will not be possible. 6 One of the ways we believe that the industry 7 can begin its restructuring, or revitalization, is 8 to bring back the operational presence of betting in 9 New York City. 10 This session, a bill was introduced in the 11 Assembly and Senate which would very easily bring 12 back the operations of New York City OTB. 13 This would be possible if Assembly Bill 7301, 14 sponsored by Assemblyman Pretlow, and, Senate 15 Bill 5054, sponsored by Senator Lanza, was passed by 16 the legislation and signed by the Governor. 17 This legislation would expand the operations 18 of the Catskill region into New York City. 19 This legislation would cost the State 20 absolutely nothing. It would bring workers back to 21 work immediately, and it would generate revenue that 22 our State so desperately needs, and has not been 23 realized since OTB's closure. 24 Put simply: This legislation is a jobs bill; 25 an initiative to jump start our local economy. 1 Many of our Legislators and our Governor have 2 talked about jobs being their number one priority. 3 This bill is the quickest, most viable, and 4 most sustainable jobs program which would benefit 5 our regional economic council, not to mention, that 6 the creation of these jobs will mean health 7 insurance coverage for those employees. 8 Given the latest economic forecast for the 9 last quarter, where no jobs were generated, this 10 legislation would hire those who lost their jobs, 11 many of whom served for the life of the corporation, 12 who now know how -- who have the know-how and 13 ability to hit the ground running. 14 This not only makes sense, but it's the right 15 thing to do. 16 The operations of these parlors should be 17 given to an operator with a proven track record, a 18 managerial prowess, transparency in its accounting 19 practices, and devoid of criminal and legal 20 scrutiny. Most of all, one who invests in this 21 endeavor without any State assistance or bailout to 22 be successful in its sustainability. 23 Donald Groth, the CEO of the Catskill region, 24 was one of the first employees of New York City OTB 25 at its creation. Mr. Groth's knowledge of the 1 racing industry is unmatched. 2 The Catskill Region OTB is the only 3 profitable OTB in the State, and most successful in 4 the country. 5 It is my belief that NYRA should not be 6 allowed to open up parlors in New York City. The 7 operation or revitalization of a New York City 8 presence must be, at a centerpiece of existence, 9 include the employees and retirees of New York City 10 being made whole. 11 The injustice unnecessarily placed upon these 12 individuals must be rectified, as they were the 13 victims repeatedly. 14 Priority must be: Bringing back the 15 employees who lost their jobs, in addition to their 16 health benefits, December of 2010. 17 The loss of health insurance benefits for 18 people already retired, and those ineligible to 19 retire, being the unforeseen consequences of the 20 Legislature's inaction. 21 Finally, on the issue of consolidation: If 22 consolidation means privatization, we oppose it. 23 I believe the uniqueness of New York City 24 dictates a different approach for New York City. 25 And, as such, we oppose the consolidation of all 1 OTBs. 2 I believe it's premature, and unnecessary. 3 The real need is a change in the racing 4 revenue distribution formula. 5 I have worked over three decades, for, and 6 around, New York City OTB, and my experience has 7 shown me that the current formula does not even the 8 playing feel for all of those involved in the 9 industry, and needs to be revised if we're going to 10 address the structural changes of facing all OTBs 11 in the state. 12 In conclusion: I would like to read an 13 excerpt from Senator Addabbo's, a co-sponsor of 14 Senate 4489, and a member of this Committee, who 15 wrote, in his reaction to the Governor Cuomo's veto 16 message, and I quote: 17 "I would be prepared to make additional 18 appropriate budget cuts in spending, or seek to 19 further eliminate wasteful allocations, in order to 20 absorb the costs of Senate Bill 4489 and 21 Assembly Bill 5785. 22 "I stand with the union members of DC 37, 23 Local 2021, and the Teamsters Local 858, who speak 24 for the New York City OTB retirees now in crisis. 25 "We cannot continue monthly COBRA premiums 1 which exceed their monthly pension income. Many of 2 the 900 retirees are unwell and aging, but who do 3 not satisfy Medicare age requirements, are in the 4 hospital, and under unmanageable stress over how to 5 pay their medical bills. 6 "Ineligible to enroll in Medicare, retirees 7 have considered enrollment in Medicaid, only to be 8 told that the average OTB retiree monthly income is 9 slightly higher than the 2011 Medicaid monthly 10 income guideline, of $14,000 -- I'm sorry, of 11 $1,410 for a family of two, monthly. 12 "Once again, these retirees were ineligible 13 for Medicaid. So, today, these New York City OTB 14 retirees are laying in hospital beds, uninsured, 15 through no fault of their own." 16 End of quote. 17 Addabbo concludes: 18 "I'll fight with the unions as we next 19 propose a budget amendment, as soon as possible, to 20 dispel the Governor's concern that a lack of funding 21 by the Legislature to pay for the OTB health benefit 22 was the reason he vetoed the bill. 23 "Expect to see the return of this OTB health 24 bill in some form when the Senate convenes early 25 next year. 1 "Until we get it right the next time, all 2 OTBs' retirees under age 65 are between a rock and 3 a hard place. No one should have to endure the 4 financial hardships, and choose which benefits to 5 leave behind." 6 I would like to thank, Chairman Bonacic, and 7 the members of the Racing and Wagering and Gaming 8 Committee for holding this hearing today. 9 It is my sincere hope that the crisis facing 10 the racing industry in New York State, and the dire 11 consequences of its potential collapse, will be 12 given the urgency that the current situation 13 dictates. 14 Again, thank you. And, I will answer any 15 question that you may have. 16 SENATOR BONACIC: I would ask that the other 17 gentleman give his remarks, and then we could 18 address questions to either gentleman. 19 Thank you. 20 BARRY YOMTOV: Thank you, Senator. 21 Chairman Bonacic, members of the Racing, 22 Wagering & Gaming Committee, I'm Barry Yomtov. I'm 23 the president of Teamsters Local 858, and, I thank 24 you for the opportunity to present testimony at this 25 most important hearing. 1 Local 858 represents the branch managers and 2 the restaurant supervisors formerly employed by 3 New York City OTB, as well as all collective 4 bargaining employees of Nassau Regional OTB. 5 I'm going to confine my remarks to an issue 6 that has, to date, received little publicity: 7 That's, the loss of revenue to state and local 8 government, and the racing industry, as well as the 9 costs associated with the closure of New York City 10 OTB. 11 When OTB closed on December 7th, all 12 statutory payments ceased. We've heard a lot about 13 the loss of revenue. No one has actually put a 14 number on it. 15 By way of example: A few days after OTB 16 closed in December, I spoke to the Comptroller of 17 City OTB, and I asked him a very simple question: 18 How much did we pay to Nassau County that year, in 19 2010, surcharge money, for the bets we took at 20 Belmont Park? 21 And he told me the number was $900,000. 22 That's for one track, one OTB; a track that 23 was open, approximately, five months in the year. 24 By contrast, the Comptroller of Nassau County 25 recently reported that Nassau OTB turned over the 1 sum of $1 million for the first six months of this 2 year, from surcharge money, from all sources. 3 On an annualized basis, the $900,000 that 4 City OTB paid Nassau County was slightly less than 5 half of the total surcharge money that the County 6 will receive from Nassau. 7 Now, the reason I make this comparison, is to 8 show the magnitude, and the significance, of the 9 surcharge payments that the City OTB was paying to 10 governments outside of the city of New York. 11 And this is repeated, time and time again, in 12 any county of the state. 13 Where there was a track that we took bets on, 14 that county received 50 percent of the surcharge 15 money. 16 And over the years, the amount of money that 17 City OTB contributed to these local counties funded 18 worthy public services, and public projects, which 19 are no longer being funded as a result of our 20 closure. 21 In addition to the surcharge money there's a 22 pari-mutuel tax. That also ceased. 23 The Governor's Office released a report 24 entitled "2011-2012 Executive Budget: Economic and 25 Review Outlook." 1 On page 326 of this report, he states, as 2 follows: 3 "All funds receipts from pari-mutuel taxes 4 are projected to decline to $14 million in 5 2010-2011; a decrease of $3 million, or 6 17.6 percent. 7 "This decline is largely due to the loss of 8 pari-mutuel tax that was generated through the 9 operation of a New York City Off-Track Betting 10 Corporation. 11 "While a small portion is expected to move to 12 NYRA and other regional OTBs, it is estimated that 13 the closure will result in a $3.2 million decline in 14 pari-mutuel tax receipts from the OTBs in 15 2011-2012." 16 Additionally, regulatory fees payable to the 17 Racing & Wagering Board have also ceased. 18 Included in Governor Cuomo's budget proposal, 19 but not enacted, was a two and three-quarter percent 20 surcharge on the purses from the New York State 21 tracks, to fund the activities of the Racing & 22 Wagering Board. 23 This was necessitated by the loss of the 24 regulatory fees formerly paid by New York City OTB. 25 In addition, payments to the State Breeding 1 and Development Fund have also ceased. 2 At that time, almost 25 percent of the 3 Breeding and Development Fund budget came from 4 City OTB; some $3 million a year. 5 Now, these losses are compounded by the costs 6 associated with the closure. 7 The thousand members of our Local, and 8 Lenny's Local, are now receiving unemployment 9 benefits. 10 In addition to unemployment benefits, they 11 are also receiving publicly financed healthcare 12 services for themselves and their families. 13 I know of, many of my people, many of my 14 members in the city, are on food stamps. 15 They're receiving food stamps, they're 16 receiving publicly financed healthcare, for 17 themselves and their families. 18 There's also the loss of state and local 19 income taxes that are our laid-off members paid as 20 part of their salaries. These are losses that 21 amount to millions and millions of dollars. 22 The decline in economic activity attributed 23 to the layoffs is unimaginable. I can't even begin 24 to place a figure on it. 25 There is also been a decline in business 1 activity, from the businesses surrounding our 2 locations. Every one of our branches had a 3 convenient store, a fast-food outlet, a newsstand, 4 that was patronized by our customers, frequently, 5 more than once a day. 6 I believe, that in order to put a number on 7 the losses and costs, that there should be some sort 8 of an inquiry, perhaps by the State Comptroller or 9 Budget Director, to try to assess the amount of 10 money that has been lost as a result of City OTB's 11 closure, as well as the additional costs involved, 12 mostly payable by the State, in the form of these 13 unemployment benefits and healthcare services. 14 By enacting legislation reestablishing an OTB 15 presence in the five boroughs, the losses and costs 16 that I stated will be largely eliminated. 17 The restoration of jobs will remove those who 18 were laid off from the unemployment rolls and put 19 them back on the tax rolls; their health insurance 20 will be restored, and that will take them off of any 21 sort of publicly financed healthcare that they are 22 now receiving. 23 The restored jobs will reestablish the 24 economic activity associated with those jobs. 25 As Lenny had mentioned in his testimony, many 1 of our people, have lost their homes, or on the 2 verge of losing them. 3 Our people did not bank their paychecks. 4 They lived from paycheck to paycheck, and all of 5 that money was circulated back into the economy, 6 when they paid their bills, when they sent their 7 kids to school, and when they bought food for 8 themselves, to put on the tables. 9 The state racing industry will also benefit 10 from the reestablishment of a City presence. All of 11 the statutory payments that were made to the state 12 and local government will be restored. 13 So, this is not only a jobs bill, as Lenny 14 had mentioned, it's also a revenue bill, to restore 15 the lost revenue that occurred once City OTB closed. 16 And, this can be accomplished at no cost to 17 the City of -- to the State of New York. 18 Moreover, these revenues that will be 19 restored will provide a funding source for the lost 20 healthcare benefits of our retirees. 21 I ask the Committee to give serious thought 22 to the adverse financial impact the closure of 23 New York City OTB has had on the, state, local 24 governments, and the racing industry, in its 25 deliberations. 1 Reopening City OTB, or an OTB presence in the 2 city, is a win-win for the employees, the State, the 3 racing industry. 4 I understand the Committee will be 5 considering the possibility of consolidation of the 6 OTBs. 7 Consolidation -- the thought, the process -- 8 is a time-consuming one. 9 And we urge the Committee -- I urge the 10 Committee -- to look, first, to reopening an OTB 11 presence in the City prior to considering any sort 12 of consolidation. 13 This is something that needs to be done soon, 14 Senators. We're running out of time for the City. 15 The other OTBs are also facing, you know, financial 16 difficulties. 17 And, we need statutory relief, in addition to 18 reopening City OTB. We all do. 19 And this is something that has been discussed 20 by commissions, committees, task forces, for many, 21 many years. But, I believe, now, with the City OTB 22 having closed as a result of its bankruptcy, 23 Suffolk County on the verge of closing, 24 Nassau County has been losing money for the past 25 three years, I think it's time that everyone come 1 together, and enact legislation that will revive the 2 OTB system in the state of New York, but, 3 especially, to reopen branches in the city, as the, 4 first, and foremost, need at the time. 5 I thank you, gentlemen -- ladies and 6 gentlemen. 7 SENATOR BONACIC: Gentlemen, thank you. 8 I should have said this before, but, I would 9 appreciate, if, when the witnesses come forward -- 10 they've already submitted testimony as to what they 11 want us to hear. 12 We're all going to read what you've said. 13 I would appreciate, for purposes of brevity, 14 and to have a more productive interaction, that you 15 summarize your high points. 16 And this is not directed to you two 17 gentlemen; it's just directed to the two speakers 18 that will come after you. 19 If you could summarize, and I think 20 questions, back and forth, would be more helpful to 21 us than spending the time just reading. 22 We have to be out of here at 2:30, we've lost 23 some senators that have other commitments, and, we 24 want to make sure that everybody has their say. 25 I have one question for Mr. Allen. 1 LENNY ALLEN: Yes, sir. 2 SENATOR BONACIC: I know that you have been 3 promoting that the Catskill OTB take over the 4 New York City operation. 5 If there isn't support from the Legislature 6 or the Governor to do that, are you amenable to 7 another OTB taking over New York City operations and 8 reopening? 9 LENNY ALLEN: Senator, let me answer, this 10 way: Our concern, as a union, is getting justice 11 for the workers who lost their jobs. 12 The reason why we're advocating for the 13 Catskills, because we see it as being the simplist 14 way to achieve that. Otherwise, they have the money 15 without getting any government assistance. 16 We have a good labor relation with the 17 Catskills, you know. 18 I don't see -- I think it would be more 19 difficult for any other OTB region, at this time, to 20 step in, and pick up the pieces of New York City. 21 I'm not against anything that's going to put 22 our workers back to work. 23 That's the short answer. 24 SENATOR BONACIC: Okay, thank you, 25 Mr. Allen. 1 Senator Golden, do you have any questions? 2 SENATOR GOLDEN: Thank you, Mr. Chairman. 3 Thank you, gentlemen. 4 Good afternoon. 5 LENNY ALLEN: Good afternoon. 6 SENATOR GOLDEN: The -- before we even start, 7 you know, I want explain, and -- not explain, but, 8 tell you, that we supported the benefits for the 9 employees. The Governor has vetoed that bill. 10 That does not mean that we do not continue to 11 champion what we believe is a good cause. 12 And, we will continue to champion that cause. 13 LENNY ALLEN: Thank you. 14 SENATOR GOLDEN: The -- yours is one OTB that 15 fell. And, if racing is not enhanced across the 16 state of New York, others will fall as well. 17 You just can't take an almost billion-dollar 18 hit to an industry and not expect fallout at the 19 other tracks and other OTBs. 20 So, it's imperative that we get back on 21 track. 22 Following up on the Chairman's question, 23 about another OTB: I don't think you really care, 24 as long as we get an operation that is a profitable 25 operation, that has a direction, and a leadership, 1 that will allow for the OTB in New York City to 2 exist, and to do its almost a billion dollars in 3 economic activity. 4 And that's -- and I'm going to throw another 5 question out there, along the same lines: If we're 6 looking at possibly another OTB, if Capital didn't 7 do that, what about an open bid, for anybody, to 8 come in and take that operation up, as long as it 9 remained a public-private operation? 10 LENNY ALLEN: I would have to give that some 11 thought, Senator, because, what we're looking for is 12 union jobs, with benefits, you know. 13 And -- I know that I've had conversations 14 with the Catskills, and they're willing to provide 15 union jobs, with benefits. 16 It depends on what the other bidders are 17 going to say to us, that can satisfy the needs of 18 our members. 19 SENATOR GOLDEN: I hear, you, Lenny. 20 And, Barry? 21 BARRY YOMTOV: Yeah, I would like to respond 22 as well. 23 Privatizing any component of the off-track 24 system would only add another layer of profit-taking 25 out of the available funds. 1 We believe that those funds should go to, 2 state, local government, and the racing industry, 3 not to a private operator who will seek to maximize 4 their profit, at the expense of the workers, and 5 perhaps even at the expense of the government. 6 SENATOR GOLDEN: And we still want to get 7 some operation going. And if you have a 8 private-public operation that brings a profitability 9 to the -- and a sustainable profitability to the 10 industry, I don't know why you would not want to do 11 that, as long as your employees are getting back to 12 work, and they're getting the monies and the 13 benefits that they deserve. 14 BARRY YOMTOV: Well, with that proviso, that 15 they are getting the benefits and salaries that 16 they're accustomed to receiving. 17 SENATOR GOLDEN: Obviously -- 18 BARRY YOMTOV: I mean, I think it's something 19 we can discuss. Certainly, we're not slamming the 20 door in the face of that, but, I think it's 21 something we need to explore. 22 SENATOR GOLDEN: Thank you. 23 Obviously, you would also not be against 24 the -- if the constitutional amendment were to pass 25 this year and next year, or next year and the year 1 following, that we could get a sports betting here 2 in the city, and state of New York. 3 BARRY YOMTOV: Well, I believe -- pardon me, 4 sir, but, I believe that the off-track betting 5 system, we're already capable of taking sports bets, 6 and it would be a natural second product for us. 7 You know, we only have one product. 8 The tracks now have two: They have the horse 9 racing, and many of them have VLTs. 10 We need an additional product. And sports 11 betting is a natural extension of the services that 12 we're currently offering. It's -- our machines are 13 already capable of handling sports betting, sir. 14 SENATOR GOLDEN: And the Internet sales as 15 well, I presume? 16 LENNY ALLEN: Yeah, let me weigh in. 17 You know, my union has advocated, they're 18 taking the sports betting, for years. I mean, this 19 is not something that's new to us. 20 We thought that, like my colleague Barry 21 said, that it would bring additional revenue into 22 the game, other than the horses. 23 So, we would be supportive. 24 SENATOR GOLDEN: Now the only guy making 25 money is the bookie right now in New York City. 1 LENNY ALLEN: Well, that's the way it seems. 2 I believe that the bookie picked up the most 3 of that $750 million handle. 4 SENATOR GOLDEN: Okay. 5 And, last in closing: I, also, in support of 6 the Lanza bill, if that were the last bill standing, 7 to put people back to work. 8 But, I do believe, you have to change with 9 the times. You have to change the industry, you 10 have to remake yourself. You have to get out there, 11 and you have to exist in a profitable mode. 12 So, I would hope that, we, as a committee, 13 and, you, as the stakeholders, that we can come up 14 with something that is a twenty-first-century model 15 that works, going forward. 16 LENNY ALLEN: Thank you, Senator. 17 SENATOR GOLDEN: Thank you. 18 BARRY YOMTOV: Thank you, Senators. 19 SENATOR BONACIC: Thank you. 20 Senator Huntley. 21 SENATOR HUNTLEY: Ah, yes. 22 Lenny, I just want to, basically, make a 23 comment. 24 LENNY ALLEN: Yes, ma'am. 25 SENATOR HUNTLEY: You know I support your 1 efforts in the union. 2 I understand about the Catskill plan, which I 3 thought was a good one. I also support that. 4 And I think, like -- much like Joe Addabbo 5 said, we need to really go back and do something 6 about this. 7 I also understand, people, with no health 8 insurance, families; children, who can't go to 9 college. 10 You know, and sometimes, people don't 11 understand it, until it happens to them. 12 And I tell all of my constituents that, and 13 wherever I speak. 14 You know, a lot of times, people can tell 15 other people how to do things. But, when they fall 16 into the same hole, then it becomes really an 17 important issue. 18 But, I support your efforts. 19 LENNY ALLEN: Thank you for your support, 20 Senator. 21 SENATOR STEWART-COUSINS: You're very 22 welcome. 23 SENATOR BONACIC: Thank you, gentlemen, for 24 being here today. 25 1 And our next speaker is, Mr. Rick Violette, 2 who's president of the New York Thoroughbred 3 Horseman's Association. 4 JAMES GALLAGHER: I'm sorry, but 5 Mr. Violette is in transit from Manhattan. He was 6 attending the NYRA board meeting, which just 7 concluded, roughly, an hour ago. 8 And -- but, my name is Jim Gallagher. I'm 9 the executive director of the New York Thoroughbred 10 Horsemen's Association. 11 And, based upon Chairman Bonacic's 12 consideration of trying to limit it, the length of 13 speeches that might be given, Rick really did want 14 me to read a thing that he had put together, 15 relative to an issue that is of great importance to 16 the horsemen. It's a very controversial issue right 17 now, which revolves around Lasix. 18 There is a move to, basically, ban the 19 race-day medication of Lasix. 20 Lasix has been used in horse racing for over 21 40 years, and science, over that time, has shown 22 that 80 percent of thoroughbreds, under racing 23 conditions, bleed without Lasix. 24 The way a bleeding episode is documented is 25 through endoscopic exam. They put an endoscope 1 through the horse's nostrils, into his lung, and 2 make a determination as to the severity of the 3 bleeding episode. And, they're generally rated, 4 from 1 to 4. 5 And if a horse bleeds visibly through its 6 nostrils, it's called "epistaxis." 7 Recently, in 2009, there was a South African 8 study which was conducted, which was funded by 9 the -- a subsidiary of the Jockey Club, called the 10 "Grayson Research Foundation," which was a 11 triple-blind, placebo included, and done under 12 racing conditions, that concluded that Lasix was an 13 effective medication in preventing the onset and the 14 severity of a bleeding episode. 15 Horsemen want to prevent any bleeding 16 incident in a racehorse, because it can lead to 17 bigger, more significant bleeding episodes. 18 There's a couple of misconceptions regarding 19 Lasix that I would like to seek to clarify to the 20 Committee. 21 Lasix does not enhance performance, but 22 allows a horse to run to its natural abilities. It 23 does not mask the presence of other drugs. 24 This has been -- drug testing has been going 25 on for many, many years, with the onset of Lasix. 1 And, it in no way interferes with actual testing 2 procedures that are conducted, either in New York or 3 nationally. 4 Somehow that Lasix shortens the racing career 5 of our thoroughbred athletes, this is absolutely 6 untrue. 7 We race year-round here in New York. 8 And we, in the United States, average 9 6.4 starts per thoroughbred that races, which 10 compares with: Australia at 6.2; England at 5.4; 11 France at 5.6; and, Ireland, which is at 3.7. 12 Many people ask: Why don't Europeans race on 13 Lasix? Why don't their horses have bleeding 14 problems? 15 Well, it's a very, very basic diagnostic fact 16 that they do not use endoscopic exams in European 17 countries. 18 The only way a horse is determined to be a 19 bleeder is when it visibly bleeds through its 20 nostrils. 21 Here in the United States, we're doing 22 nuclear scintigraphy, nuclear ultrasounds and scans, 23 and, obviously, we're also doing endoscopic exams, 24 on horses, after they breeze, as well as after they 25 race. 1 And, it just does not make any sense to have 2 a horse go into a crisis mode, and not be able to 3 detect the onset of such a crisis. 4 So, we just look at this as being very, very 5 wrong-headed. 6 Another thing I would just like to dispel, 7 and I was discussing this earlier today with some 8 people that are on the panel, was that: We're 9 conducting more drug testing on thoroughbred, and I 10 should say, for that matter, on horses, than we are 11 in any other professional sport in the 12 United States. 13 Half of our race card at Belmont Park this 14 afternoon, is going to be sent to the test barn, 15 where they are going to, basically, take blood and 16 urine samples from the horses that race in those 17 races, and ship them off to Morrisville College -- 18 work that had previously been done at 19 Cornell University -- a renowned equine 20 toxicology-and-testing laboratory. 21 And, basically, there is no other sport -- I 22 mean, guys could watch Tony Romo throw a football 23 and get ribs broken. And, he'll come back and play 24 the second half. And, for sure, he received a shot 25 of lidocaine in his ribs, during half time, and 1 comes back to appear; 2 Or, a tennis player will take 3 anti-inflammatory drugs while playing. 4 This is absolutely prohibited in thoroughbred 5 racing. 6 The only medication that we allow to be used 7 on race day, under very regulated circumstances, is 8 Lasix. 9 It's given four hours before the race. It's 10 given by a veterinarian who works for the 11 Association; has absolutely no other job to do but 12 to administer Lasix to the horses in that 13 afternoon's race card. 14 The point that I'm trying to make, is, it's 15 also disclosed to the public. I mean, this is a 16 very, very efficacious, good drug that, basically, 17 helps horses. 18 That's all that we're interested in 19 maintaining. 20 And, on that note, I'll say, that, since 21 Lasix is the only permitted race-day medication, 22 it's the humane thing to do, to administer this drug 23 to these horses. 24 Horses bleed, and Lasix works. And that's 25 just the plain facts. 1 SENATOR BONACIC: Thank you, Mr. Gallagher. 2 Any questions? 3 We have no further questions. 4 Thank you very much for appearing today. 5 JAMES GALLAGHER: Thank you. 6 SENATOR BONACIC: Our next speaker is, 7 Mr. Charles Hayward. 8 I understand that he is not in the building. 9 Mr. Crawl (ph.), I see that you're 10 standing. 11 Would you like to come up and speak? 12 MR. CRAWL (ph.): First of all, I'd like to 13 deliver apologies for Mr. Hayward. 14 The board meeting is out, and he is on his 15 way here, but, I don't think that he's going to make 16 it, based on traffic. 17 SENATOR BONACIC: Okay. 18 MR. CRAWL (ph.): So, it's up to you. I 19 mean, we will submit testimony, and you can conclude 20 the hearing. Or, if you would like, I could make a 21 few remarks. 22 It's up to the -- 23 SENATOR BONACIC: I thank you for that 24 courtesy. 25 But, what we're going to do is, keep the 1 hearing open until Monday, October 10, at 5 p.m. 2 I would suggest, that, have Mr. Hayward 3 submit written remarks, and, we'll look to adjourn 4 this hearing. 5 MR. CRAWL (ph.): Thank you, Senator. 6 Again, we apologize. 7 SENATOR BONACIC: First of all, I would like 8 to acknowledge, even though we didn't have all 9 testimony today, we've received written testimony 10 from the following individual: Cheryl Hecht, and the 11 organization, Pederson-Krag Center. 12 I would like to thank my colleagues who 13 attended today, and participated. 14 I would like to thank all of the panel 15 members that came and spoke, to solicit the 16 testimony. 17 It is now five minutes after two, on 18 October 5, 2011, and, we now adjourn this Senate 19 meeting. 20 Thank you all. 21 (Whereupon, at 2:05 p.m., the public 22 hearing, held before the New York State Senate 23 Standing Committee on Racing, Gaming & Wagering, 24 concluded.) 25 ---oOo---