Relates to fiscal requirements with respect to conducting horse races at raceways and racetracks

Section 2:Amends clause (G) of subparagraph 6 of paragraph b of subdivision 1 of section 1016 of the Racing, Pari-Mutuel Wagering and Breeding law to ensure that dark day payments made by Off-Track Betting Corporations exclusively for purses conducted by all New York State harness tracks will not be reduced as the dark day payments are eliminated.

Section 3:Amends paragraph a of subdivision 2 of section 1017 of the Racing, Pari-Mutuel Wagering and Breeding Law to reduce and then eliminate after January 1, 2018 all of Off-Track Betting Corporations maintenance of effort payments to those regional harness track or tracks. The maintenance of effort payment schedule to purses will remain identical to the current payments and distributions made by such Off-Track Betting Corporation.

Section 4:Amends clause (G) of subparagraph (ii) of paragraph 1 of subdivision b of section 1612 of the Tax Law to apply the blended tax rate formula to a vendor track located in Ontario County as if it were located within region five of development zone two as defined by section 1310 of the Racing, Pari-Mutuel Wagering and Breeding Law.

Sections 5:Amends subparagraph (iii) of paragraph 1 of subdivision b of section 1612 of the Tax Law to increase the amount of the vendor's marketing allowance.

Section 6:Amends clause (H) of subparagraph (ii) of paragraph (1) of subdivision (b) of section 1612 of the Tax Law to include video lottery vendors operating at Aqueduct racetrack and a track in Sullivan County to be eligible for a vendor's capital award, increase and cap the annual amount, and extended the capital awards program another four years, eliminate matching requirement for vendor tracks in Sullivan and Saratoga Counties.

Section 7:Amends paragraph 2 of subdivision c of section 1612 of the Tax Law to make revenue available for the capital awards program.

Section 8:Effective date.

Existing law

Section 1: Under the current law, Off-Track Betting Corporations are required to make dark days payments to their regional tracks occur when the New York Racing Association is not conducting a thoroughbred race meeting, and no licensed harness track is accepting wagers on, or displaying the signal of, any thoroughbred track. On these dark days, simulcast licensees can broadcast out-of-state thoroughbred races, but they must make payments to the regional harness tracks and purses, which are not open for business that day, in accordance with section 1016.

Section 2: Under the current law, of the dark day payment sums retained by a licensed harness facility from Off-Track Betting Corporations when the New York Racing Association is not conducting a thoroughbred race meeting, and no licensed harness track is accepting wagers on or displaying the signal of any thoroughbred track fifty percent shall be used exclusively for purses awarded in races conducted by such licensed facility and the remaining fifty percent shall be retained by such licensed facility for its general purposes. In a harness special betting district the portion of the dark day payments retained by a licensed harness facility are to be used for purses or the written contract between a harness racing association or corporation and its representative horsemen's association.

Section 3: Starting in May 2003, Off-Track Betting Corporations were permitted to accept wagers on simulcast nighttime out-of-state thoroughbred races. In exchange, Off-Track Betting Corporations were required to make maintenance of effort payments to their regional harness tracks, to hold the tracks harmless from the new competition. Under the current law, Off-Track Betting Corporations are required to make maintenance of effort payments to their regional harness tracks measured by the level of payments received by the regional harness tracks during 2002 from their regional Off-Track Betting Corporation attributable to wagering on out-of-state harness races run after 6:00 p.m. Off-Track Betting Corporations engaged in the simulcasting of out-or-state or out-of-country thoroughbred racing after 6:00 p.m. are required to submit a payment schedule to be approved by the Gaming Commission. In order to be approved by the Gaming Commission, the payment schedule shall be identical to the actual payments and distributions of such payments to tracks and purses made by such Off-Track Betting Corporations pursuant to the provisions of section one thousand fifteen of this article during the year two thousand two, as derived from out-of-state harness races displayed after 6:00 P.M. If approved by the Gaming Commission, such scheduled payments shall be made from revenues derived from any simulcasting under sections 1016 and 1017-a.

Section 4: Under current law vendor tracks in Western New York are not eligible for parity with commercial casinos in Region 5.

Section 5: Under current law the marketing allowance is capped at ten percent of the first $100 million for seven of the nine video lottery operations. This bill would allow all nine properties eligible to receive eleven percent of the marketing program up to $100 million of net win annually, nine percent on $101 million to $200 million in net win, and eight percent on any amount over $200 million.

Section 6: Under current law the capital awards program allows four percent of net win at certain vendor tracks to be utilized for capital improvements (capped at $2.5 million annually). Neither video lottery operators at Aqueduct racetrack or a track in Sullivan County are eligible to receive the award. This bill would make those two properties eligible and increase the percentage to five percent of net win, capping the award at four million for seven upstate vendor properties and capping the award for both Aqueduct and a track in Westchester County at $15 million. The bill would waive the matching

component for some of the properties, and extend the capital awards program for another four years.

Section 7: Currently ten percent of video lottery operators are allocated for use by the Gaming Commission for paying gaming manufacturers and gaming operations. Any surplus funds are redirected to the general fund. This bill would redirect any remaining funds into the capital awards program to offset any future costs associated with this bill.

Justification

Section 1: The reduction and elimination of these required statutory dark day payments would provide relief to Off-Track Betting Corporations, which has been requested by the Off-Track Betting Corporations for a significant period of time. As stated by the Off-Track Betting Corporations this fiscal relief to the Off-Track Betting Corporations and participating localities would be beneficial to both those localities and the horse racing and breeding industries in the state.

Section 2: Purse money is an indication of the success of the entire New York State horse racing industry. Particularly, the harness horse racing industry is at greater risk than the thoroughbred horse racing industry. Maintaining the current statutory dark day payments by Off-Track Betting Corporations by off-track betting facilities conducted by in-state thoroughbred racing corporations used exclusively for purses conducted by all New York State harness tracks is essential in holding the harness horse racing industry and purses harmless with this legislation.

Section 3: Maintenance of effort payments began to be provided to harness tracks in 2003 to make up for an anticipated shortfall in revenue after the State gave Off-Track Betting Corporations at their request the ability to offer thoroughbred simulcast races at night. Reducing these payments while preserving all maintenance of effort payments to purses will continue to support racing, while providing the relief requested by Off-Track Betting Corporations.

Section 4: The Western New York vendor track in Ontario County is in close proximity to the new commercial casino in Region 5. Their operations will be impacted severely with the new addition of this facility. This will allow parity in the tax regime of all the gaming facilities in the region.

Section 5: Video lottery operations need to continually market their properties to maintain their existing customers in an extremely competitive market place. Any new marketing resources will increase the amount of revenue available to the state for education funding. With the addition of new games made available in FY 2015-16 budget, the increase in the marketing allowance will allow further marketing of the new products.

Section 6: Video lottery operations need to upgrade and continually reinvest back into their properties. The increase capital award will allow all nine properties to reinvest and stay competitive thus ensuring that the state maximized on the revenue potential and sees a return on the video lottery assets for funding education. The bill would extend the program for four years, operators need certainty when making investment decisions and extending the program will allow for future planning.

Section 7: ensures that any future cost of the vendor capital program will be taken from existing revenue allocated to the video lottery program.

Fiscal implications

Sections 4 - 6 costs covered by section 7, would increase future revenue for education.

Local fiscal implications

Sections 1 - 3 will generate additional revenues for County governments which have Regional Off-Track Betting Corporations.

Legislative history

New bill.

Effective date

This act shall take effect immediately.