New York Tracks Push for More VLT Revenue

New York racetrack officials have angered some government budget negotiators with their push for a more lucrative video lottery terminal program.

In response to track concerns about inadequacies in the VLT law, and desperate for cash to balance the state budget, state leaders recently signed off on a deal to increase the VLT revenue splits so tracks would make more money. The deal also calls for the VLT law to sunset in five years instead of three, with an option for renewal.

The parameters, which include permission to operate the machines for more hours each day, is to be included in a new state budget, the final terms of which are still being put together.

Racetrack officials insist they need more revenue, a claim that, according to government negotiators who spoke on condition of anonymity, has them appearing greedy. The situation has off-track betting corporations pushing lawmakers and Gov. George Pataki to let them offer VLTs in teletheaters.

All but two racing entities in the state signed a letter to senior legislators arguing the tracks need an additional 8% to 10% of revenue "to make the program fiscally viable." A deal made by government leaders calls for an increase of 5%.

Under the VLT law, players get 90% of money bet in the form of winnings. Of the remaining 10%, the state would get 60%; the Lottery Division, which will oversee the VLT program, would get 15%; and the remaining 25% would go to racetracks, purses, and breeding programs.

In a May 7 letter, the tracks insist any additional revenue "goes directly to track operators and not be shared with our horsemen." They said the revenue is needed to not only keep them from losing money, but to create business plans that show a profit so the tracks can get bank loans for construction to house the VLTs.

The tracks agreed with the government leaders' deal to extend the law to five years, but they want the VLTs to be online until 2 a.m. seven days a week. Current law permits them to operate until 10 p.m. on weeknights and midnight on weekends.

The letter was signed by Finger Lakes and five Standardbred tracks: Batavia Downs, Buffalo Raceway, Monticello Raceway, Vernon Downs, and Yonkers Raceway. Saratoga Equine Sports Center officials did not sign the letter; sources said the harness track is prepared to operate under terms of the deal crafted by government leaders.

The New York Racing Association did not sign the letter but is pushing for its own incentives. NYRA, which operates as a not-for-profit entity, is unable to obtain financing as easily as the other tracks, which are either for-profit, or in the case of Batavia Downs, owned by an OTB corporation that can float bonds.

Sources say NYRA wants to create a financing scheme for capital costs related to VLTs that would use a state entity through which money could be borrowed.
The VLT program is already falling behind schedule. The head of the Lottery Division recently told lawmakers it could be as late as March 2003 before the machines are operational.