Schwartz: VLTs Hinge on Agreement With Horsemen

The New York Racing Association cannot proceed with its video lottery terminal program unless it strikes a deal with its horsemen to reduce the revenue-sharing for purses in the later years of the program, NYRA chairman Barry Schwartz said.

Under legislation approved by state lawmakers, NYRA will get slightly more than 20% of VLT revenues during the first five years of the program. In years six through 10, the NYRA share dips to 17.5%, which Schwartz said must be changed if VLTs are to be installed at Aqueduct.

"Unless we get an understanding from the horsemen, we can't go forward," Schwartz said.

Arrangements with MGM MIRAGE, which would manage the VLT program at Aqueduct, and the financing terms are based upon NYRA receiving 20% of VLT revenue. He said if the machines create a windfall and NYRA can pay off its debt associated with opening the VLT operation, which he said might be accomplished in the first five years, then the lower revenue share for NYRA can be absorbed.

Schwartz said the 20% is needed until the debt is paid off. "I'm not going to put this organization at risk that could leave us holding the bag in the sixth year," he said.

Schwartz said talks with the New York Thoroughbred Horsemen's Association before the legislation was passed May 2 indicated an agreement for a lower purse share will be attained.

"There is ample money to make everyone happy," Schwartz said. "I just don't know who threw in this monkey wrench for years six through 10."

VLTs could boost purses by at least $30 million in the first year of operation, Schwartz said.

The legislation is up in the air because Gov. George Pataki is threatening to veto vast portions of the state budget. Lawmakers insist they have the votes for an override. Pataki has until May 14 to act or the budget, with the VLT provisions, would become law.

The VLT law would sunset in 10 years. For NYRA, it also extends its franchise to operate its three New York tracks until 2013 if it can get the VLTs running by March 2004.

The bill also ends the $450 minimum balance bettors must have to open a NYRA telephone betting account, which NYRA officials said has put their program at a disadvantage with OTB corporations and other providers.

It also gives tracks flexibility in setting pari-mutuel takeout levels. Schwartz, who has pushed efforts to lower takeouts, said that under current law, it could take an entire legislative session to get a point dropped off the takeout.

Under the bill approved by lawmakers, the levels could be lowered quickly with the approval of the New York State Racing and Wagering Board. Schwartz said he does have some changes in mind for takeout rates, but he wouldn't disclose them.

Schwartz said the most damaging aspect of the new racing bill is the lifting of simulcasting restrictions for off-track betting parlors. He said it removes the incentive for OTB parlors to take NYRA races.

"Now they can take the races that they can buy the cheapest," Schwartz said. "It's the most insane logic I've ever heard." (Schwartz said OTB corporation officials have said: "People will bet on chickens running around a track.")

"This is certainly going to cost us business," Schwartz said. "It allows more money to go to out-of-state racetracks. And anyone in favor of this idea has to realize they're giving OTBs an incentive to push for racing in other states at the expense of New York."