BILL NUMBER:S4173

TITLE OF BILL:  An act to amend the tax law and the racing,
pari-mutuel wagering and breeding law, in relation to vendor's fees

GENERAL PURPOSE: To require casinos authorized pursuant to Article 1,

Section 9 of the state Constitution to be located at existing
racetracks that are conducting video lottery gaming and to require
such facilities to make racing support payments to regional tracks for
purse enhancements and capital expenditures.

SUMMARY OF SPECIFIC PROVISIONS: This bill amends Section 1612 of the
Tax Law to extend the current 41% vendor fee for video lottery
facility operators within 40 miles of a Native American Casino to
those racetracks operating VLTs that are within 40 miles of a
commercial casino authorized by Section 9 subdivision 1 of the
Constitution. The bill further adds a new Section 1113 to the Racing,
Pari-Mutuel Wagering and Breeding Law to provide that the operation of
casino gaming at a facility pursuant to Section 9, subdivision 1 of
the Constitution could only be conducted by a racetrack that on or
before September 1, 2011 was licensed to conduct video lottery gaming
provided that the conduct of casino gaming occurs only at the premises
or a contiguous premises where video lottery gaming was authorized to
be conducted. The net proceeds from casino gaming must be applied
exclusively to support education except that 10% of such funds could
              

be used for the support of local government in the host communities as
prescribed by the local legislative body.

The bill further provides that as consideration for the operation of
casino gaming that the state Gaming Commission shall require an
investment in the horse racing industry of a portion of the vendor fee
retained by the gambling facility. In this regard, any gambling
facility located within a 40 mile radius of a regional racetrack must
dedicate 7 1/2% of its total revenue after payout of prizes to the
enhancement of purses at such track during such time that the
racetrack is conducting a live race meeting. These payments, though,
could not be less than any purse enhancement payments received by the
racetrack from the conduct of video lottery gaming in calendar year
2012.

In addition, each gambling facility would have to pay 4% of its vendor
fee after pay-out of prizes to a regional track located within a 40
mile radius for capital expenditures at such track when the racetrack
is conducting a live race meeting. Furthermore, 1 1/2% of total
revenue wagered at the gambling facility after pay-out of prizes must
be distributed to the appropriate breeding fund. Whenever two or more
regional tracks are located within a 40 mile radius of a casino and
are both conducting a live race meeting the racing support payments
would be apportioned equally. Similarly, if two or more casinos are
located within the 40 mile radius of a regional track the racing
support payments would be apportioned equally.

Finally, the bill provides that for the purposes of its provisions the
term "regional track" would also encompass a gambling facility that


also conducts live horse racing pursuant to Article 2, 3 and 4 of the
Racing, Pari-Mutuel Wagering and Breeding Law.

JUSTIFICATION: Since 2001, the framework for expanding casino gaming
in New York has been in place, namely the nine racetracks that conduct
video lottery gaming at their facilities throughout the state. They
have the infrastructure to support expanded gaming and, thus, are the
logical sites for commercial casinos. These racinos, which employ over
5,000 persons, have been dependable partners for the state, having
generated four billion dollars in education aid since 2004 and through
their racing support payments have helped revitalize the racing
industry in the state through expanded purse levels and breeder
awards.

Indeed, the equine industry in New York generates an economic impact
in New York of $42 billion (2011 figures) resulting in close to 33,000
full-time jobs. Breeders, trainers, and owners of racehorses account
for 64% of the direct economic impact and 52% of the jobs.  The
state's eleven major racetracks generate 23% of the total economic
impact with expenditures mainly funded by commissions or takeout from
race wagering. Expenditures by breeders, trainers and owners are
primarily funded by purses which include enhanced purses for New York
bred horses. The racing support payments derived from video lottery
terminals which have increased purse levels and breeder awards have
resulted in growing agribusiness in the state and the breeding
industry in particular. According to the Jockey Club's 2012 Report of
Mares Bred, New York thoroughbred stallions covered 43.1% more mares
in 2012 than in 2011. This success story, which is still in its
infancy, could be endangered if commercial casinos are allowed to
operate without mandated racing contributions when those casinos
directly compete with live racing. Other states which have authorized
commercial casinos, including Pennsylvania, Maryland, Ohio, and
Massachusetts, have made allowances for gaming revenues to be invested
in the racing industry. New York should do the same, and this bill
accomplishes that goal.

EFFECTS OF PRESENT LAW: The bill amends Section 1612 of the Tax Law
and adds a new Section 1113 to the Racing, Pari-Mutuel and Wagering
and Breeding Law.

FISCAL IMPLICATIONS: None to the State.

EFFECTIVE DATE: Immediately