NYRA Plans 100,000-Square-Foot VLT Area at Aqueduct

The New York Racing Association has submitted plans to state regulators to build a 100,000 square-foot, video lottery terminal area at Aqueduct racetrack, but the chairman of NYRA says the proposal won't work unless the state revises its new video lottery terminal law to give tracks more help with expenses.

Barry Schwartz, the NYRA chief, said state lawmakers "are going to have to get involved'' to address some of the racing industry's concerns about the VLT law that, according to the state agency administering the program, requires racetracks to pick up nearly all the costs of running the VLTs. Tracks can keep up to 25% of the VLT revenues, but must dedicate a sizeable portion to purses and pay the operating costs with the exception of the VLT leases.

Racetracks planning to get VLTs had until Friday, Jan. 18, to submit business plans to the state Lottery Division, which is administering the VLT program, showing various aspects of the operation of the devices. Officials have said they expect the devices could be turned on sometime in November.

But racetracks in recent weeks have been complaining they will barely break even, if that, from having to pay all salaries, security and construction costs of the VLTs. In Canada, they note, the provincial government takes more of the VLT revenues, but picks up nearly all the expenses. But state officials have been privately saying they don't see how tracks will be getting more money out of VLTs, especially given the state's deficit problems. Moreover, litigation is being readied to challenge the state's decision to share anything with tracks, arguing lottery revenues can only be turned over to education.

Schwartz said NYRA officials have been finding a slew of new expenses they didn't envision when the VLT law was approved last fall. For instance, he said property taxes will rise because the value of the track will be going up. He said NYRA has come across millions of dollars of expenses not anticipated.

"We're a long way from having a plan that works because, given the parameters, the economics of it clearly don't work, and I'm probably speaking for all of racing,'' the NYRA chairman said. He said NYRA, like the other tracks, merely followed instructions from state lottery officials about the creation of the business plan. "We didn't get much latitude in creating a model. They gave us a model and said plug in the numbers. Clearly, it not a model that, at first blush, is going to work,'' he said.

Schwartz declined to provide any specific details about costs involved in construction or other aspects of the VLT program for NYRA. He said Aqueduct would be renovated on the second and part of the third floors to accommodate 2,500 VLTs. Counting back office space and other areas, the VLTs will be taking up 200,000 square feet of space. "It looks very exciting. The more I look at it, the more eager I am to do it,'' he said of the plans drawn up by a contractor that has done other work for NYRA, including the new entrances
at Saratoga.

Despite his concerns, Schwartz said the plan remains workable, particularly if the Legislature gets involved and re-writes the law to mandate that the tracks not be liable for all the expenses of putting in and running the VLTs. "I believe it's going to happen. It's a question of going through these issues,'' he said.

The VLT law permits the devices at all the tracks in the state, except Belmont and Saratoga. Harness tracks, including two near Buffalo and one just down the street from NYRA's Saratoga track, can get the devices with the approval of county legislatures. A bid by the Saratoga Equine Sports Center to put VLTs at its site is nearing approval in the next two months, despite opposition by NYRA and some local business interests.