Lawmakers in New York have agreed to repair a state law that has kept Aqueduct and Yonkers Raceway from opening their video lottery terminal casinos in a deal that will bring the state up to $1 billion in revenue each year.The deal addresses a 2004 appeals court ruling that knocked down the 2001 VLT law because it illegally diverted VLT revenue to purses and breeding funds instead of entirely to education programs in the court's opinion.Negotiators were still ironing out final details the afternoon of March 25, but the broad parameters of the agreement were confirmed by legislative leaders. "We believe what we're doing is a fix," Senate Majority Leader Joseph Bruno said.Gov. George Pataki warned that any deal legislators may have reached does not yet include him. "We have some questions about what they're doing and how they're doing it,'' Pataki said of the way VLT revenue would be distributed.The governor originally proposed a flat 29% vendor fee for the tracks. A subsequent industry-backed bill set the industry share of VLT proceeds at 32% on the first $50 million in revenue, 29% for the next $100 million, and 26% thereafter.The bill also included money for marketing, which would total 8% on the first $100 million in VLT revenue and 5% thereafter. Purse and breeding-fund payments would come out of the overall vendor fee paid to the tracks.NYRA officials and the horsemen signed a legally binding memorandum of understanding that if the measure with the higher revenue-sharing percentages were approved exactly as is, NYRA would agree to the purse and breeding-fund splits contained in that bill, NYRA president Charles Hayward said. But since talks continue on the exact splits, Hayward acknowledged the memorandum would have to be amended to reflect any subsequent changes."But we're still going to do the right thing," Hayward said of deals with the horsemen for purses and breeding funds.After three years of battling over the issue, NYRA officials believe the time has come to begin construction on the Aqueduct VLT casino. "We're cautiously optimistic and pleased that government is working hard to try to get this done," Hayward said.The deal changes the portion of the 2001 law that shares part of VLT proceeds with purses and breeding funds. It instead directs that the money be taken from VLT proceeds the tracks receive, a percentage that's being increased to boost revenue for racing.The deal includes new money for the tracks for "marketing," out of which the purse and breeding funds would be derived. The exact amount is subject to final talks.The agreement also makes certain MGM Mirage, the New York Racing Association's partner for the Aqueduct VLT parlor, would remain the operator even if NYRA's franchise isn't renewed after its scheduled expiration at the end of 2007. MGM has refused to begin construction of the VLT parlor because it wasn't assured it could recoup its investment if it were replaced by another VLT partner should NYRA loses its franchise.The agreement is to be a part of the state's 2005 budget, which will be up for passage beginning the week of March 28. Together, Aqueduct and Yonkers are expected to bring the state about $1 billion in annual VLT revenue, Bruno said.