New York Negotiators Give Tracks More Revenues from VLTs

State negotiators have agreed to pump more money into racetracks to help get New York's new video lottery terminal program up and running this year.

Racetracks will get a larger take of revenues--an additional five percent--from VLT bets, which can be used for construction of gambling parlors and other capital costs, according to sources this morning at the state Capitol who spoke on condition of anonymity.

In addition, the VLT law--originally slated to run for three years on a pilot basis--will be extended for five years. Tracks had complained that the three-year window would make it all but impossible for them to obtain loans from private lenders to do things like build areas to hold the betting devices.

Negotiators with Governor George Pataki's office and the state Legislature also agreed to extend the number of hours the VLTs can be turned on at racetracks. The original law, passed last October, restricted the devices' operations to 10 a.m. to 10 p.m. on weekdays and from 10 a.m. to midnight on weekends. The new deal extends the hours, though negotiators this morning said it is still unclear precisely number of hours that tracks will be able to operate the VLTs; racetracks were pushing for 18 hours per day.

The VLT talks became wrapped up into negotiations involving New York's 2002 state budget. The Pataki administration planned on an initial $60 million in revenues from the VLTs from a revenue sharing deal in which the state gets most of the money generated by the VLTs.

But tracks have been complaining that the VLT program is a money loser for them, a debate that has contributed to a delay in implementing the program this year--thereby risking the state's ability to collect its $60 million from a partial year operation of the program. In the past 24 hours, state officials began working on a plan to try to satisfy the tracks to get the VLT revenues coming into the cash-starved cash.

However, it is unclear whether the arrangement goes far enough. One track source said racetracks are pushing for an additional 8 percent in revenue sharing, not the five percent agreed to. Moreover, the extra revenue sharing for the tracks is limited for capital purposes, so it is unclear for how many years the tracks will be able to keep getting the extra share. One lobbying source said some tracks may still try to negotiate a more lucrative VLT package in the couple of weeks before a final state budget is adopted.

The October law requires 90 percent of wagers to be returned for winnings. Of the remainder, 60 percent goes to the state for education and 15 percent goes to the Division of Lottery to administer the program. The remaining 25 percent goes to the tracks, which must then split the proceeds with purses and breeding funds.

Tracks have maintained they could not afford to operate the VLTs under the October formula because the costs of everything from construction to new staffing would not be covered.