Schwartz: Video Gaming Not a Panacea

The video lottery terminals proposed for New York racetrack appear to be less of a good deal than when a law that permits them was rushed through two months ago, the head of the New York Racing Association said.

"The costs are going to be enormous," NYRA chairman Barry Schwartz said.
He estimated construction will cost the association $50 million to $60 million. Such money will be hard to raise from lenders for what has been dubbed a pilot program that expires in three years.

"There's not a chance that if this is successful that (the state) won't renew it, but you can't tell that to a bank," Schwartz said.

The timing issue is further complicated because NYRA's franchise to run Aqueduct, as well as Belmont Park and Saratoga, runs out in six years. (Only Aqueduct will have VLTs.)

"Who's going to loan us the money? We can't pay it back in three years," Schwartz said.

The NYRA chief was less than enthusiastic about VLTs after he dispatched his top aides to Albany a week ago to hear from state Lottery Division officials about their plans for the VLT program. The lottery will operate the VLTs; that was done to try to bypass expected legal challenges that new law is unconstitutional.

"I think everybody at that meeting was extremely disappointed," Schwartz said.

For starters, he said lottery officials made it clear the only costs the state will pick up, as it does with other lottery vendors, will be to lease the VLT machines. But construction costs, which in some cases will require new buildings or major additions, security, and other expenses, will be the responsibility of the racetracks.

Equally troubling, Schwartz said, was a push by lottery officials that tracks not try to integrate their VLT operations with racing programs. But Schwartz, who pointed to Woodbine in Canada, said the VLTs should be used to help encourage more people to bet on racing.

"I don't want that," Schwartz said. "I want someone at a VLT to be able to see a monitor saying three minutes to post time."

While the state lottery's goal is to try to maximize revenues to the state, Schwartz said he has a different vision.

"My goal is to make racing better, and to use the VLTs to help me accomplish that," he said.

Given the expected tremendous capital costs, Schwartz said it is difficult, for now, to see how NYRA will make much money from VLTs. The state will cut deals with individual tracks that will allow them to keep 12% to 25% of revenue -- before expenses.

"I don't believe even if it's 25% that it's big enough to offset all the expenses that are going to be incurred," Schwartz said.

Schwartz said the issue will be the central topic at a NYRA board meeting the week of Dec. 10. He said the swiftness with which the VLT law was approved -- the racing industry was hardly involved in the process -- has created problems that are now only beginning to surface.

In a related matter, Schwartz agreed the tide may be turning in Saratoga Springs to the point that Saratoga Equine Sports Center, the city's harness track, could get VLTs. NYRA's Saratoga Thoroughbred track, by its own request, will not have the machines.

The harness facility, if county lawmakers approve, is permitted to install VLTs. County officials say a decision is due by mid-January.

Schwartz said NYRA still opposes VLTs for the Saratoga harness track, and he dismissed claims by pro-VLT forces that the Standardbred track will be forced to close without the devices.

"Is that a reason to introduce gambling to a community, because of the interests of one group?" Schwartz said.

But Schwartz is adamant NYRA will not want the machines even if the harness track has them. "Where would I put 2,000 slot machines?" he said,

Schwartz also said NYRA is not actively lobbying against Saratoga Equine Sports Center.