New York Adopts VLT, Casino Legislation
by Tom Precious
Date Posted: 10/24/2001 12:26:22 PM
Last Updated: 12/13/2001 10:31:05 AM

Officials in New York gave final approval early this morning to a historic gambling package giving most racetracks video lottery terminals, allowing up to six Indian-owned casinos in Western New York and the Catskills and expanding the state's lottery offerings.

The VLT measure permits the devices at Aqueduct and Finger Lakes Thoroughbred tracks and Monticello, Vernon Downs and Yonkers harness tracks. At three upstate harness tracks - Saratoga Springs, Batavia Downs and Buffalo Raceway - the devices would be permitted only if approved by county legislators.

The devices would be banned at the New York Racing Association's Saratoga and Belmont tracks. NYRA has opposed VLTs at Saratoga, and officials said a host of financial and political pressure kept Belmont from being included.

The package is the single greatest expansion of gambling in New York history. Senate Majority Leader Joseph Bruno, a Republican who represents Saratoga and is NYRA's biggest booster at the Capitol, said the VLT bill will boost purses and help bring a vastly higher quality of horses to racing in the state.

"New York state will become the premier racing state," Bruno said.

In addition to the package for Indian casinos and VLTs, the state Senate also pushed through resolutions to amend the state constitution to permit non-Indian casinos in New York, pending legislative and local approval. But the resolution would still need to be approved by the Assembly, and a second time by the Legislature before it could go before voters, at the earliest, in November 2003.

How the VLT revenues would be split became a major negotiating point over the past 24 hours. In the end, the sides agreed on a complex sliding scale that gives a substantial portion to the state government. For starters, 15% of net revenues comes off the top for administrative costs at the state Lottery Division, which will be running the VLT program.

Officials believe the Lottery's role will make the plan hold up to expected legal challenges by gambling opponents who say the VLTs are illegal.

Racetracks will get between 12% to 25% commission, which will be negotiated by the lottery agency. The range is designed to give some flexibility to the program in order to permit the lottery agency to consider such things as higher capital costs at one track over another. In the first year, 35% of the track's commission goes to purses and 5% to breeders' funds, rising to 45% for purses and 5% for breeding funds in the subsequent years.

At least 60%, and up to 73%, will go to education funding in the state in what some insiders were calling the "slots for tots" VLT measure. By law, the lottery must dedicate its revenues to education spending. Since the state lottery, then, can't fund programs like racetrack purses, negotiators were looking to treat the racetracks like other lottery vendors in the state; in turn, the tracks would put money into purses and breeders' funds.

The legislation is silent on how many devices each track can offer; that will be worked out in the coming months with the state Lottery Division and individual tracks.

The devices, which would be permitted on a pilot-type basis that sunsets three years after the program is running, could be turned on up to 12 hours a day, from 10 a.m. until 10 p.m., and from noon til midnight on weekends, holidays and the day before holidays. It is unclear when the first VLTs could be installed, though lottery officials have told sources it could take upwards of one year to get the system in place.

Bruno said the entire gambling package would be worth at least $1 billion a year in revenues for the state's budget, an enticing sum at a time when state leaders are frantically to fill a deepening hole created by the Sept. 11 terrorists attacks and the ensuing tailspin of the state's economy.

"We need to be competing," Bruno said as a reason for letting New York tracks offer VLTs.

Racing lobbyists have been frantically working the issue the past several days. At first, only Aqueduct and Yonkers were a part of the VLT measure. But harness industry officials, helped they said by New York Racing Association Chairman Barry Schwartz, pushed for a more statewide approach. The local opt-in provision was being seen as a way for Bruno to appease officials in Saratoga, where many officials, including those at NYRA, do not want the VLTs. Bruno said he would not take a position on whether the Saratoga harness track should get VLTs.

The big losers in the gambling package are the state's off-track betting corporations. Besides losing a bid to get the VLTs for their parlors, they could not convince lawmakers to adopt their plan to sharply lower commissions that they pay to racetracks, as well as other incentives, such as the right to simulcast Thoroughbred races at night. Sources say the OTBs were told to take that fight up next year.

The casino measure will permit casinos in Buffalo, Niagara Falls and a third undetermined site in Western New York, as well as authorization for up to three casinos in the Catskills region; it awaits Seneca and federal government approval. The package also permits New York to join the multi-state lottery game known as Powerball.

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