Anti-Trust Concerns Lead to Veto of New York Legislation

Legislation designed to make it easier for New York tracks to coordinate racing schedules and sell their products jointly has been vetoed by Gov. George Pataki, who said the bill could "work to the detriment of New Yorkers who patronize horse racing and betting facilities."

The governor, with the advice of state Attorney General Eliot Spitzer, raised concerns about the exemption from certain anti-trust laws the bill would have provided. The bill would have allowed tracks to more freely get together to sell or purchase simulcast packages and to jointly plan racing times and dates.

Backers of the bill cited a 60-year-old U.S. Supreme Court anti-trust decision, but Spitzer advised Pataki the bill failed "to specifically provide for active state supervision of the authorized anti-competitive activities."

"I share the Attorney General's concern that this bill could have the unintended consequence of encouraging conduct which may be subject to civil and criminal sanctions under federal law," Pataki wrote in a veto message issued Oct. 28. He said he "was not persuaded that granting a broad anti-trust exemption to the horse racing industry would serve the public interest."

The measure, introduced by Sen. William Larkin and Assemblyman Alexander Gromack, the heads of the legislature's racing committees, was intended to help tracks better compete with the rest of the gambling industry. Working together on joint simulcasting deals could have cut track costs for incoming signals, according to a memo in support of the bill, and raised revenues for outgoing signals.

"This bill makes certain that these joint agreements do not run afoul of the federal and state antitrust laws," the memo states. "It is arguable that some joint arrangements between competitive racetracks could pose antitrust questions. The need to preserve the state's ailing racetracks should, however, outweigh any limited anti-competitive effects of this bill."