Relates to increasing investment in certain regional race tracks located within forty miles of a casino gambling facility

Section 9 of the state Constitution to be located at existing racetracks that are conducting video lottery gaming and to require such facilities to make racing support payments to regional tracks for purse enhancements and capital expenditures.

Summary of specific provisions

This bill amends Section 1612 of the Tax Law to extend the current 41% vendor fee for video lottery facility operators within 40 miles of a Native American Casino to those racetracks operating VLTs that are within 40 miles of a commercial casino authorized by Section 9 subdivision 1 of the Constitution. The bill further adds a new Section 1113 to the Racing, Pari-Mutuel Wagering and Breeding Law to provide that the operation of casino gaming at a facility pursuant to Section 9, subdivision 1 of the Constitution could only be conducted by a racetrack that on or before September 1, 2011 was licensed to conduct video lottery gaming provided that the conduct of casino gaming occurs only at the premises or a contiguous premises where video lottery gaming was authorized to be conducted. The net proceeds from casino gaming must be applied exclusively to support education except that 10% of such funds could be used for the support of local government in the host communities as prescribed by the local legislative body.

The bill further provides that as consideration for the operation of casino gaming that the state Gaming Commission shall require an investment in the horse racing industry of a portion of the vendor fee retained by the gambling facility. In this regard, any gambling facility located within a 40 mile radius of a regional racetrack must dedicate 7 1/2% of its total revenue after payout of prizes to the enhancement of purses at such track during such time that the racetrack is conducting a live race meeting. These payments, though, could not be less than any purse enhancement payments received by the racetrack from the conduct of video lottery gaming in calendar year 2012.

In addition, each gambling facility would have to pay 4% of its vendor fee after pay-out of prizes to a regional track located within a 40 mile radius for capital expenditures at such track when the racetrack is conducting a live race meeting. Furthermore, 1 1/2% of total revenue wagered at the gambling facility after pay-out of prizes must be distributed to the appropriate breeding fund. Whenever two or more regional tracks are located within a 40 mile radius of a casino and are both conducting a live race meeting the racing support payments would be apportioned equally. Similarly, if two or more casinos are located within the 40 mile radius of a regional track the racing support payments would be apportioned equally.

Finally, the bill provides that for the purposes of its provisions the term "regional track" would also encompass a gambling facility that

also conducts live horse racing pursuant to Article 2, 3 and 4 of the Racing, Pari-Mutuel Wagering and Breeding Law.

Justification

Since 2001, the framework for expanding casino gaming in New York has been in place, namely the nine racetracks that conduct video lottery gaming at their facilities throughout the state. They have the infrastructure to support expanded gaming and, thus, are the logical sites for commercial casinos. These racinos, which employ over 5,000 persons, have been dependable partners for the state, having generated four billion dollars in education aid since 2004 and through their racing support payments have helped revitalize the racing industry in the state through expanded purse levels and breeder awards.

Indeed, the equine industry in New York generates an economic impact in New York of $42 billion (2011 figures) resulting in close to 33,000 full-time jobs. Breeders, trainers, and owners of racehorses account for 64% of the direct economic impact and 52% of the jobs. The state's eleven major racetracks generate 23% of the total economic impact with expenditures mainly funded by commissions or takeout from race wagering. Expenditures by breeders, trainers and owners are primarily funded by purses which include enhanced purses for New York bred horses. The racing support payments derived from video lottery terminals which have increased purse levels and breeder awards have resulted in growing agribusiness in the state and the breeding industry in particular. According to the Jockey Club's 2012 Report of Mares Bred, New York thoroughbred stallions covered 43.1% more mares in 2012 than in 2011. This success story, which is still in its infancy, could be endangered if commercial casinos are allowed to operate without mandated racing contributions when those casinos directly compete with live racing. Other states which have authorized commercial casinos, including Pennsylvania, Maryland, Ohio, and Massachusetts, have made allowances for gaming revenues to be invested in the racing industry. New York should do the same, and this bill accomplishes that goal.

Effects of present law

The bill amends Section 1612 of the Tax Law and adds a new Section 1113 to the Racing, Pari-Mutuel and Wagering and Breeding Law.

Fiscal implications

None to the State.

Effective date

Immediately