New York Deal Includes Other Pari-Mutuel Provisions

A deal to bring video lottery terminals to New York racetracks with an increased slice of the pie for track operators includes other provisions, including removal of restrictions on pari-mutuel takeout. The VLT deal is expected to bring the state $165 million this year, legislative sources said.

The legislature has agreed to remove all restrictions on takeout levels that tracks can set for wagers, a move track officials said would give them flexibility to more quickly to adjust rates to attract bettors. The takeout changes would still require New York State Racing and Wagering Board approval.

Also, after years of trying, off-track betting companies appear to have won the ability for unlimited simulcasting. They have long sought to simulcast out-of-state Thoroughbred races at night, but the push was blocked by the state's Standardbred industry.

The deal includes some revenue-sharing provisions to help hold harness tracks harmless from the new competition. The legislatue also embraced a revenue-raising proposal to impose an assessment on handle at tracks and OTB parlors. The revenue would support the operation of the state racing board.

Legislative negotiators are confident the VLT deal will hold in spite of Gov. George Pataki's veto threat of the larger budget package that the legislature will approve in the coming days. Still on the negotiating table is whether to permit off-track betting parlors to also offer VLTs.

New York City Mayor Michael Bloomberg, who opposed the deal for OTBs, said money is needed so much by the city that that "even if it's not the optimal way to do it, it may be the least painful balance our budget." Late word was that the OTB plan was in trouble.

Under the terms of the racetrack VLT deal, the split given to tracks and to the state's education pot will increase at the expense of the share for the state Lottery Division, which will run the program. Racetracks would see their share of the VLT pot grow from 12.5% under the existing VLT law to 20.25% in the first three years of the program, sources said. Overall, the New York racing industry would receive 29% of the VLT pot.

The original VLT program was approved in October 2001 but never started by eligible racetracks because they said the revenue sharing arrangement would cost them money. The state is facing a $12-billion deficit, and officials have been pushing the tracks to get the VLTs running to help bring the state revenue.

Under existing law, 60% of revenue goes to state education programs, 15% to the Lottery Division, and 25% to the racing industry, a portion of which goes to tracks, purses, and breed development. Under the plan agreed to April 29, the racing industry's share would increase to 29% of the pot, while education would get 61% and lottery 10%.

This is how the 29% share for the industry would break down during the first three years: 20.25% for tracks, 7.5% for purses, and 1.25% for breed development. In years four and five, tracks would get 20%, purses 7.75%, and breed development 1.25%. In years six through 10, tracks would keep 17.5%, purses would get 10%, and breeding funds would increase to 1.5%.

The legislative deal also extends the VLT program for 10 years, instead of expiring in 2007 as currently scheduled. Also, VLTs will be able to be operate for 16 consecutive hours a day, up from 12 hours under current law.