NY Gov. Proposes Racing Purse Surcharge

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New York State would impose a racing purse surcharge as part of an overall budget-balancing exercise proposed today by Gov. Andrew Cuomo.

The governor wants to slap a 2.75% state surcharge on purses for all horse races run in New York.

The proceeds--about $7.6 million this year and $8.5 million in 2012--will go toward wiping out a recurring deficit by the industry’s regulatory arm at the State Racing and Wagering Board.

The administration, as part of its overall 2011 budget plan released Feb. 1, wants the ensure the racing board’s expenses are “fully borne by the racing industry rather than by taxpayers.’’

The governor’s new budget plan – which must be approved by the legislature--also includes a sharp expansion of free-play offerings by racetrack-based casinos in New York. The free offerings to entice more bettors is expected to sharply increase gambling to the point where the state--which gets a share of the betting proceeds--would get $38 million in new revenues from the racinos this year.

The amount of free play would be capped at 10% of the new machine income of each facility, the Cuomo plan proposes.

The governor also proposed to extend at the same levels the existing pari-mutuel tax for another year. That law also governs the state’s rules for simulcasting by tracks.

Richard Violette, president of the New York Thoroughbred Horsemen’s Association, criticized the surcharge as “a slap in the face’’ that goes against Cuomo’s pledge not to raise new taxes to help erase the state’s deficit.

“Regardless of how you dress this up, this is an almost 3% tax on New York horsemen,” he said.

Violette said the new industry revenues appear to be going to fund a new drug testing facility at SUNY Morrisville, which is doing the work performed for years at Cornell University. But he said the deal to move the drug lab to Morrisville was supposed to be revenue-neutral.

Moreover, he said, the horsemen’s group kicked in $500,000 for lab testing equipment and another $150,000 for the transition costs to the new lab. Moreover, he said the state--which owns the now-closed New York City Off Track Betting Corp.--owes about $15 million in purse money the OTB never paid. He added the state two years ago also began charging Thoroughbred owners $10 per start at tracks.

“It’s a little bit of piling on and it flies in the face of no new taxes,” he said of Cuomo’s tax pledge. “They understand that raising taxes is not good for business, so it’s kind of confusing why they’re proposing to do it here.”

Violette added that a couple of farms have left the state and trainers are moving elsewhere. Purses at NYRA tracks have fallen below $100 million, down from about $120 million three years ago, he said.

“When all is said and done here, race horse owners are easy targets because they’re quote unquote wealthy race horse owners. We need wealthy race horse owners because these are also businessmen making decisions whether they want to do business in a state where they have a chance to break even or make some money. And those decisions make jobs,” he said.