NYRA Pursues Video Lottery Revenue Pact

NYRA Pursues Video Lottery Revenue Pact
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New York Racing Association officials say they are rushing toward a new video lottery terminal revenue sharing deal with horsemen and breeders that would avoid the need for pending legislation at the state Capitol to reach a VLT agreement.

"We thought we were there, and I think we are very, very close to a deal with both the horsemen and the breeders, and we're confident that we can get something done," said Charles Hayward, NYRA's president.

But the head of the New York Thoroughbred Horsemen's Association said legislation could still be needed. "The purpose of the legislation is if NYRA doesn't sign the contract. To this date, they have not signed the contract," said Richard Bomze, the horsemen's president.

With the 2005 legislative session winding down in New York state, legislation was recently introduced to force implementation of a VLT revenue sharing arrangement if racetracks in New York don't reach deals with horsemen and breeders within 90 days of the bill's effective date. The Assembly's racing committee passed the measure last week.

The measure requires tracks to set VLT splits at about the same level as required under a now-lapsed state law. The situation arose when a mid-level appeal court last year struck down the VLT revenue sharing arrangement as unconstitutional. The state Legislature in March then attempted to "fix" the VLT law by steering more VLT revenues to tracks and leaving it up to them to negotiate separate revenue sharing contracts with horsemen and breeders.

But soon after the Legislature acted, the state's top court reversed the decision, saying that the previous VLT splits for horsemen and breeders is legal. That left owners and breeders crying foul, arguing that tracks have no incentive to negotiate VLT splits fairly with them.

So they turned to Senator William Larkin and Assemblyman Gary Pretlow, who introduced the mandated VLT revenue sharing legislation. It would hike VLT splits for horsemen in a series of steps over a number of years based on the track's VLT performance. The percentage of racetrack VLT revenues dedicated to purses, for instance, would start out at 23.5% for the first $50 million of a track's VLT take.

The bill, according to a sponsors' memo accompanying the legislation, "removes any ambiguity in the law that the VLT racetrack vendor is free to negotiate with horse owners and breeding funds to arrive at the optimum allocation of the VLT vendor fee to ensure that the racetrack facility is properly maintained and quality events are sponsored so that overall attendance at such VLT vendor facility increases."

The horsemen say the introduction of the legislation has helped. "NYRA has finally come back to the table," Bomze said of new VLT talks. He cautioned that horsemen want a guarantee of future VLT revenues for purses, either through contract or legislation. "I'm not so sure we're going to get a contract, and we do need a guarantee," Bomze said.

Hayward said NYRA has already offered the horsemen a deal that would provide purses with VLT revenues at the "pre-fix" level in state law. "If they're seeking greater than that, that could be a problem," he said. Hayward recently said the cost of the VLT construction at Aqueduct, set to begin this summer, has soared since first proposed three years ago, resulting in a longer payback time for its VLT financial partner, MGM Mirage of Las Vegas.

"We have been negotiating with the horsemen, and we believe the negotiations are going very well," said C. Steven Duncker, NYRA's co-chairman.

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