NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1162
SPONSOR: Rosenthal L TITLE OF BILL:
An act to amend the tax law, in relation to the investment of funds
wagered on video lottery gaming for certain horse races; to repeal
certain provisions of the tax law relating thereto; and to repeal para-
graph b of subdivision 1 of section 1355 of the racing, pari-mutuel
wagering and breeding law relating thereto
PURPOSE:
This legislation will end racing subsidies in New York State and invest
the revenue generated from video lottery gaming facilities at racetracks
to education and communities throughout the state.
SUMMARY OF SPECIFIC PROVISIONS:
Section one amends subdivision f of section 1612 of the tax law.
Section two amends paragraph 1-b of subdivision b of section 1612 of the
tax law.
Section three amends subdivision f-1 of section 1612 of the tax law.
Section four amends paragraph 2 of subdivision b of section 1612 of the
tax law.
Section five repeals paragraph 3 of subdivision b of section 1612 of the
tax law.
Section six amends subdivision h of section 1612 of the tax law.
Section seven amends paragraph 5 of subdivision a of section 1617-a of
the tax law.
Section eight repeals paragraph b of subdivision 1 of section 1355 of
the racing, pari-mutuel wagering and breeding law.
Section nine contains the severability clause. Section ten establishes
the effective date.
JUSTIFICATION:
Attendance at horse racing venues in New York State has sharply declined
over the years. While the summer racing season at Saratoga remains popu-
lar, stands at Yonkers Raceway, Aqueduct Racetrack and others are prac-
tically empty. The decline in the popularity of horse racing in recent
years has been partly attributed to the public's increasing disapproval
of cruelty within the industry, evidenced by doping scandals and the
high numbers of injuries and deaths. Despite horse racing's diminishing
attraction, New York State continues to provide millions of dollars in
subsidies each year to prop up the industry. Other states, including
Kentucky, California, Illinois, and Texas do not provide state subsidies
to their racing industry.
Each year, approximately $250 million in revenue generated by the
state's casino industry is diverted to support the horse racing indus-
try. This revenue would be better spent investing in New York State's
education system as well as economic development in communities where
racing occurs. A 2021 Marist poll found that just 9% of New Yorkers
support state subsidies of horse racing, and as the horse racing indus-
try continues to decline in popularity, it is time to reinvest these
subsidies in areas that will truly help New Yorkers.
LEGISLATIVE HISTORY:
2021-22: A.8468-A - Referred to Ways and Means;
S.8485 - Referred to Racing, Gaming and Wagering
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
1162
2023-2024 Regular Sessions
IN ASSEMBLY
January 13, 2023
___________
Introduced by M. of A. L. ROSENTHAL -- read once and referred to the
Committee on Ways and Means
AN ACT to amend the tax law, in relation to the investment of funds
wagered on video lottery gaming for certain horse races; to repeal
certain provisions of the tax law relating thereto; and to repeal
paragraph b of subdivision 1 of section 1355 of the racing, pari-mutu-
el wagering and breeding law relating thereto
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision f of section 1612 of the tax law, as amended by
2 chapter 174 of the laws of 2013, paragraph 1 as amended by section 2 of
3 part OO of chapter 59 of the laws of 2014 and paragraph 3 as amended by
4 section 2 of part V of chapter 59 of the laws of 2020, is amended to
5 read as follows:
6 f. As consideration for the operation of the video lottery gaming
7 facility at Aqueduct racetrack, the division shall cause the investment
8 in the education system of the state of New York and the racing industry
9 of the following percentages of the vendor fee to be deposited or paid,
10 as follows:
11 1. Six and one-half percent of the total wagered after payout of
12 prizes for the first year of operation of video lottery gaming at Aque-
13 duct racetrack, seven percent of the total wagered after payout of
14 prizes for the second year of operation, and seven and one-half percent
15 of the total wagered after payout of prizes for the third year of opera-
16 tion and thereafter, for the purpose of [enhancing purses at Aqueduct
17 racetrack, Belmont Park racetrack and Saratoga race course. One percent
18 of the gross purse enhancement amount, as required by this subdivision,
19 shall be paid to the gaming commission to be used exclusively to promote
20 and ensure equine health and safety in New York. Any portion of such
21 funding to the gaming commission unused during a fiscal year shall be
22 returned on a pro rata basis in accordance with the amounts originally
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04176-01-3
A. 1162 2
1 contributed and shall be used for the purpose of enhancing purses at
2 such tracks] funding the education system of the state of New York,
3 shall be deposited in the state lottery fund for additional lottery
4 grants to eligible school districts, including schools serving students
5 with disabilities and schools with preschool special education programs.
6 [One and one-half percent of the gross purse enhancement amount, as
7 required by this subdivision, shall be paid to an account established
8 pursuant to section two hundred twenty-one-a of the racing, pari-mutuel
9 wagering and breeding law to be used exclusively to provide health
10 insurance for jockeys.]
11 2. [One] Eight and one-half percent of the total wagered after payout
12 of prizes [for the first year of operation of video lottery gaming at
13 Aqueduct racetrack, one and one-quarter percent of the total wagered
14 after payout of prizes for the second year of operation, and one and
15 one-half percent of the total wagered after payout of prizes for the
16 third year of operation and thereafter, for an appropriate breeding fund
17 for the manner of racing conducted at Aqueduct racetrack, Belmont Park
18 racetrack and Saratoga race course] shall be deposited in the state
19 lottery fund for additional lottery grants to eligible school districts,
20 including schools serving students with disabilities and schools with
21 preschool special education programs.
22 3. [Four percent of the total revenue wagered after payout of prizes
23 to be deposited into an account of the franchised corporation estab-
24 lished pursuant to section two hundred six of the racing, pari-mutuel
25 wagering and breeding law to be used for capital expenditures in main-
26 taining and upgrading Aqueduct racetrack, Belmont Park racetrack and
27 Saratoga race course. Capital expenditures may include funding the
28 construction of and initially equipping a state-based equine drug test-
29 ing and research laboratory to be used pursuant to subdivision seven of
30 section nine hundred two of the racing, pari-mutuel wagering and breed-
31 ing law.
32 4. Three percent of the total revenue wagered after payout for prizes
33 to be deposited into an account of the franchised corporation estab-
34 lished pursuant to section two hundred six of the racing, pari-mutuel
35 wagering and breeding law to be used for general thoroughbred racing
36 operations at Aqueduct racetrack, Belmont Park racetrack and Saratoga
37 race course.
38 5.] Paragraphs one[,] and two[, three and four] of this subdivision
39 shall be known collectively as the "[racing] education support
40 payments".
41 § 2. Paragraph 1-b of subdivision b of section 1612 of the tax law, as
42 added by section 2 of part EE of chapter 59 of the laws of 2019, is
43 amended to read as follows:
44 1-b. Notwithstanding any provision of law to the contrary, free play
45 allowance credits authorized by the division pursuant to subdivision i
46 of section sixteen hundred seventeen-a of this article shall not be
47 included in the calculation of the total amount wagered on video lottery
48 games, the total amount wagered after payout of prizes, the vendor fees
49 payable to the operators of video lottery gaming facilities, fees paya-
50 ble to the division's video lottery gaming equipment contractors, [or]
51 racing support payments, or education support payments.
52 § 3. Subdivision f-1 of section 1612 of the tax law, as amended by
53 chapter 175 of the laws of 2013, is amended to read as follows:
54 f-1. As consideration for operation of video lottery gaming facility
55 located in the county of Nassau or Suffolk and operated by a corporation
56 established pursuant to section five hundred two of the racing, pari-mu-
A. 1162 3
1 tuel wagering and breeding law, the division shall cause the [investment
2 in the racing industry of the] following [percentages] percentage of the
3 vendor fee to be deposited or paid as follows:
4 [1. Two and three tenths] Five percent of the total wagered after
5 payout of prizes [for the purpose of enhancing purses at Aqueduct race-
6 track, Belmont Park racetrack and Saratoga race course, provided, howev-
7 er, that any amount that is in excess of the amount necessary to main-
8 tain purse support from video lottery gaming at Aqueduct racetrack,
9 Belmont Park racetrack and Saratoga race course at the same level real-
10 ized in two thousand thirteen, to be adjusted by the consumer price
11 index for all urban consumers, as published annually by the United
12 States department of labor, bureau of labor statistics, shall instead be
13 returned to the commission] shall be deposited in the state lottery fund
14 for additional lottery grants to eligible school districts, including
15 schools serving students with disabilities and schools with preschool
16 special education programs.
17 [2. five tenths percent of the total wagered after payout of prizes
18 for the appropriate breeding fund for the manner of racing at Aqueduct
19 racetrack, Belmont Park racetrack and Saratoga race course, provided,
20 however, that any amount that is in excess of the amount necessary to
21 maintain payments from video lottery gaming at Aqueduct racetrack at the
22 same level realized in two thousand thirteen, to be adjusted by the
23 consumer price index for all urban consumers, as published annually by
24 the United States department of labor, bureau of labor statistics, shall
25 instead be returned to the commission.
26 3. one and three tenths percent of the total revenue wagered after
27 payout of prizes to be deposited into an account of the franchised
28 corporation established pursuant to section two hundred six of the
29 racing, pari-mutuel wagering and breeding law to be used for capital
30 expenditures in maintaining and upgrading Aqueduct racetrack, Belmont
31 Park racetrack and Saratoga race course, provided, however, that any
32 amount that is in excess of the amount necessary to maintain payments
33 for capital expenditures from video lottery gaming at Aqueduct racetrack
34 at the same level realized in two thousand thirteen, to be adjusted by
35 the consumer price index for all urban consumers, as published annually
36 by the United States department of labor, bureau of labor statistics,
37 shall instead be returned to the commission.
38 4. Nine tenths percent of the total revenue wagered after payout for
39 prizes to be deposited into an account of the franchised corporation
40 established pursuant to section two hundred six of the racing, pari-mu-
41 tuel wagering and breeding law to be used for general thoroughbred
42 racing operations at Aqueduct racetrack, Belmont Park racetrack and
43 Saratoga race course, provided, however, that any amount that is in
44 excess of the amount necessary to maintain payments for general
45 thoroughbred racing operations from video lottery gaming at Aqueduct
46 racetrack at the same level realized in two thousand thirteen, to be
47 adjusted by the consumer price index for all urban consumers, as
48 published annually by the United States department of labor, bureau of
49 labor statistics, shall instead be returned to the commission.]
50 § 4. The opening paragraph of paragraph 2 of subdivision b of section
51 1612 of the tax law, as amended by section 2 of part S of chapter 39 of
52 the laws of 2019, is amended to read as follows:
53 As consideration for the operation of a video lottery gaming facility,
54 the division, shall cause the investment [in the racing industry] in
55 those counties that host video lottery gaming facilities, of a portion
56 of the vendor fee received pursuant to paragraph one of this subdivision
A. 1162 4
1 in the manner set forth in this subdivision. With the exception of
2 Aqueduct racetrack, a video lottery gaming facility authorized pursuant
3 to paragraph five of subdivision a of section sixteen hundred seven-
4 teen-a of this article or a facility in the county of Nassau or Suffolk
5 operated by a corporation established pursuant to section five hundred
6 two of the racing, pari-mutuel wagering and breeding law, each such
7 track shall dedicate a portion of its vendor fees, received pursuant to
8 clause (A), (B), (B-1), (B-2), (C), or (D) of subparagraph (ii) of para-
9 graph one of this subdivision, for the purpose of [enhancing purses at
10 such track] funding economic development, job creation, and workforce
11 protections in the counties that host video lottery gaming facilities,
12 in an amount equal to eight and three-quarters percent of the total
13 revenue wagered at the vendor track after pay out for prizes. [One
14 percent of the gross purse enhancement amount, as required by this
15 subdivision, shall be paid to the gaming commission to be used exclu-
16 sively to promote and ensure equine health and safety in New York. Any
17 portion of such funding to the gaming commission unused during a fiscal
18 year shall be returned to the video lottery gaming operators on a pro
19 rata basis in accordance with the amounts originally contributed by each
20 operator and shall be used for the purpose of enhancing purses at such
21 track] Such funds shall be credited to the host county in which each
22 vendor track resides. Such funds shall be utilized by such counties for
23 the purposes of economic development, job creation, and workforce
24 protections. If a vendor track ceases racing operations, such vendor fee
25 shall continue to be paid.
26 [One and one-half percent of the gross purse enhancement amount at a
27 thoroughbred track, as required by this subdivision, shall be paid to an
28 account established pursuant to section two hundred twenty-one-a of the
29 racing, pari-mutuel wagering and breeding law to be used exclusively to
30 provide health insurance for jockeys.] In addition, with the exception
31 of Aqueduct racetrack, a video lottery gaming facility authorized pursu-
32 ant to paragraph five of subdivision a of section sixteen hundred seven-
33 teen-a of this article or a facility in the county of Nassau or Suffolk
34 operated by a corporation established pursuant to section five hundred
35 two of the racing, pari-mutuel wagering and breeding law, one and one-
36 quarter percent of total revenue wagered at the vendor track after pay
37 out for prizes, received pursuant to clause (A), (B), (B-1), (B-2), (C),
38 or (D) of subparagraph (ii) of paragraph one of this subdivision, shall
39 be distributed [to the appropriate breeding fund for the manner of
40 racing conducted by such track] for funding economic development, job
41 creation, and workforce protections in the counties that host video
42 lottery gaming facilities.
43 § 5. Paragraph 3 of subdivision b of section 1612 of the tax law is
44 REPEALED.
45 § 6. Subdivision h of section 1612 of the tax law, as amended by
46 section 3 of part S of chapter 39 of the laws of 2019, is amended to
47 read as follows:
48 h. As consideration for the operation of a video lottery gaming facil-
49 ity located in Orange county, the division shall cause the investment in
50 the [racing industry] education system of the state of New York at the
51 following amount from the vendor fee to be paid as follows:
52 [As amount to the horsemen for purses at a licensed racetrack in
53 Sullivan county in an] An amount equal to eight and three-quarters
54 percent of the total revenue wagered at the video lottery gaming facili-
55 ty, after pay out for prizes to be deposited in the state lottery fund
56 for additional lottery grants to eligible school districts, including
A. 1162 5
1 schools serving students with disabilities and schools with preschool
2 special education programs. [The facility located in Orange county, as
3 defined in paragraph five of subdivision a of section sixteen hundred
4 seventeen-a of this article shall pay to the horsemen at a licensed
5 racetrack at Yonkers racetrack an amount to maintain purses for such
6 horsemen at the same dollar levels realized in two thousand eighteen, to
7 be adjusted by the consumer price index for all urban consumers, as
8 published annually by the United States department of labor bureau of
9 labor statistics.] In addition, one and one-quarter percent of total
10 revenue wagered at the video lottery gaming facility after pay out for
11 prizes, received pursuant to clause (B) of subparagraph (ii) of para-
12 graph one of subdivision b of this section, shall be distributed to the
13 [appropriate breeding] state lottery fund for [the manner of racing
14 conducted by such track] additional lottery grants to eligible school
15 districts, including schools serving students with disabilities and
16 schools with preschool special education programs. In no circumstance
17 shall net proceeds of the lottery, including the proceeds from video
18 lottery gaming, be used for the payment of non-lottery expenses of the
19 gaming commission, administrative or otherwise.
20 § 7. Paragraph 5 of subdivision a of section 1617-a of the tax law, as
21 added by section 4 of part S of chapter 39 of the laws of 2019, is
22 amended to read as follows:
23 (5) At a facility located in Orange county to be operated by the enti-
24 ty otherwise licensed to operate video lottery gaming at Monticello
25 racetrack, provided that: (i) such licensed entity is no longer operat-
26 ing video lottery gaming at Monticello racetrack [and provided that
27 Monticello racetrack is conducting racing operations]; (ii) such facili-
28 ty in Orange county is not sited within a thirty mile radius of the
29 video lottery gaming facility at Yonkers racetrack; and (iii) the
30 licensed entity, its subsidiaries and affiliates, including the entity
31 licensed to operate a commercial gaming facility in Sullivan county, and
32 the entity licensed to operate video lottery gaming at Yonkers racetrack
33 enter into a mitigation agreement, to be approved by the gaming commis-
34 sion, which shall include, but not be limited to, terms that require:
35 (A) the operator of the facility in Orange county to make an annual
36 payment to the entity licensed to operate video lottery gaming or
37 commercial gaming at Yonkers racetrack to account for the effects that
38 siting such facility in Orange county would likely have on the gross
39 gaming revenue of the entity licensed to operate at Yonkers racetrack;
40 (B) employment levels at the affected facilities; and (C) that upon
41 expiration or termination of the agreement, the authority to operate
42 video lottery gaming in Orange county shall cease. Notwithstanding any
43 other provision of this subdivision, at no time shall an entity operat-
44 ing video lottery gaming in Orange county be permitted to apply for or
45 receive a license to operate a commercial gaming facility in that coun-
46 ty.
47 § 8. Paragraph (b) of subdivision 1 of section 1355 of the racing,
48 pari-mutuel wagering and breeding law is REPEALED.
49 § 9. Severability. If any provision or term of this act is, for any
50 reason, declared unconstitutional or invalid or ineffective by any
51 competent jurisdiction, such decision shall not affect the validity of
52 the effectiveness of the remaining portions of this act or any part
53 thereof.
54 § 10. This act shall take effect immediately.
