Provides for the amount to be paid by off-track betting corporations to regional harness tracks from out-of-state and out-of-country simulcast revenue.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A747
SPONSOR: Pretlow TITLE OF BILL:
An act to amend the racing, pari-mutuel wagering and breeding law, in
relation to payments by off track betting corporations to regional
harness tracks for out-of-state and out-of-country simulcasting revenue
PURPOSE:
To phase out additional payments made by off track betting corporations
conducting simulcast to those regional harness track or tracks that had
previously received additional payments.
SUMMARY OF PROVISIONS:
Section 1: Details dates and percentages of payment phase out. Calendar
year 2009 would retain the traditional two (2) percent payment of excess
handle, Each subsequent year there after would be a half (5) percentage
point reduction in payments. No payment of excess handle would be made
from the beginning of calendar year 2015 onward.
Section 2: Effective date language.
EXISTING LAW:
Currently subdivision 3(b)(3)-(4) of section 1016 requires OTBs to pay
regional harness tracks six (6) percent of the sum retained by the OTB
from wagers accepted on harness races run at out of state tracks, Of the
sum retained by the OTBs, five (5) percent is to be distributed in the
same manner as though such payments were made on the races conducted at
the harness trade In addition, one (1) percent of such wagers shall be
paid to the licensed regional harness track for the purpose of increas-
ing track purses. In OTB regions where there are multiple regional
harness tracks these payments are made to the regional track conducting
a live meet on the day out-of-state simulcasting occurs. If either no
regional track is conducting a meet, or more than one regional track is
conducting a meet, the distribution is to be made either (i) in the
proportion that each track's handle bore to the total regional licensed
harness track handle during the preceding calendar month or (ii) in
accordance with a contractual agreement between the regional tracks and
the OTB corporation, Subdivision 2(a) of section 1017-a requires OTBs to
make an additional "maintenance of effort" payment to their regional
harness tracks measured by the level of payments received by the
regional harness tracks during 20 02 from their regional OTB attribut-
able to wagering on out-of-state harness races run after 6:00 p.m. OTBs
submitted in accordance with Assembly Rule III, Sec 1(f) engaged in the
simulcasting of out-or-state or out-of-country thoroughbred racing after
7:30 p.m. are required to submit a payment schedule to be approved by
the State Racing and Wagering Board. In order to be approved this
payment schedule must be identical to the actual payments and distrib-
utions of such payments to tracks and purses made by such OTBs pursuant
to the provisions of section 1015 during the year of 2002, as derived
from out-of-state harness races displayed after 6:00 p.m. If approved by
the board, such scheduled payments shall be made from revenues derived
from any simulcasting under sections 1016 and 1017-a.
JUSTIFICATION:
Under the current law regional harness tracks that are not running live
racing are receiving maintenance of effort payments notwithstanding that
they are closed. The intent of the 2003 legislation was to provide
harness tracks with a "hold harmless" payment stream to offset the loss-
es anticipated from bettors defecting from harness racing to wager on
the nighttime out-of-state and out-of-country thoroughbred races. This
payment requirement was not meant to provide a source of revenue to
harness tracks not running live races. Recently, the State Racing and
Wagering Board incorrectly interpreted 1017-a (2)(a) as requiting the
maintenance of effort calculation to be made on a track by track basis
in regions with more than one regional licensed harness track. It was
the Board's interpretation that regional harness tracks could become
entitled to more than the amount they received in 2002 but under no
circumstances could they receive less individually; even if the aggre-
gate level of payments under section 1016 to all tracks within the
region matched, or exceeded, the total level of payments to all the
tracks during 2002. This ruling is inconsistent with the Legislature's
intent expressed in section 1016 that distribution of revenue in multi-
track regions be made based on the proportion of each track's live
handle. Therefore, in a region with two or more regional harness tracks,
if one track is not running the entire section 1016 payment goes to the
track running live racing, but the track not running nonetheless remains
eligible to receive maintenance of effort payments. The Board's misin-
terpretation of section 1017-a (2)(a) unfairly requires OTBs to subsi-
dize those harness tracks not conducting live race meetings. In addi-
tion, the additional payments made pursuant to section 1017 -a (2)(b)
are no longer appropriate. Harness tracks have been given permission to
install Video Lottery Terminals (VLTs). The success of VLTs has been
well documented and these VLT operations have provided harness tracks
with a generous new stream of revenue. VLTs have brought increased
attendance to harness tracks, as well as, afforded them the opportunity
to increase purses. Allowing harness tracks to install VLTs and at the
same time requiring OTBs to make additional payments if handle exceeds a
designated amount is tantamount to New York State subsidizing these
private entities twice. It needs to be recognized that the exodus of
harness bettors for the new world of nighttime thoroughbred wagering is
not as great as was expected, OTBs have handled well over $100 million
in annual wagering statewide on nighttime thoroughbred racing without
significant detriment to the wagering done on regional harness tracks.
In fact regional harness tracks are themselves authorized to simulcast
these nighttime thoroughbred races and can partake in this new endeavor
just as OTBs can. This legislation does not call for the end of all OTB
payments to regional harness tracks. It simply is a fair redistribution
of the wagering handle to all parties involved that is in line with the
intent of the 2003 legislation when passed. This legislation is not
intended to deprive revenue to those regional harness tracks running
live races. OTBs will continue to contribute the six (6) percent that is
required by subdivisions (3)(c)(3)-(4) of section 1016. OTBs will
continue to pay their fair share to those regional harness tracks
conducting live racing meets. It is merely the intention of this legis-
lation to end a subsidy to private harness tracks not running live
racing and that are not being adversely affected in any way from the
simulcasting of nighttime thoroughbred racing by their regional OTBs.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect immediately.
