Senate Bill S2360

                                 BILL NUMBER:  S2360

 TITLE OF BILL :
An act to amend the racing, pari-mutuel wagering and breeding law, in
relation to payments by off track betting corporations to regional
harness tracks for out-of-state and out-of-country simulcasting
revenue


 PURPOSE :
To phase out additional payments made by off track betting
corporations conducting simulcast to those regional harness track or
tracks that had previously received additional payments.

 SUMMARY OF PROVISIONS :

Section 1: Details dates and percentages of payment phase out.
Calendar year 2009 would retain the traditional two (2)percent payment
of excess handle, Each subsequent year there after would be a half (5)
percentage point reduction in payments. No payment of excess handle
would be made from the beginning of calendar year 2013 onward.

Section 2: Effective date language.

 EXISTING LAW :
Currently subdivision 3(b) (3)-(4) of section 1016 requires OTBs to
              

pay regional harness tracks six (6) percent of the sum retained by the
OTB from wagers accepted on harness races run at out of state tracks,
of the sum retained by the OTBs, five (5) percent is to be distributed
in the same manner as though such payments were made on the races
conducted at the harness trade In addition, one (1) percent of such
wagers shall be paid to the licensed regional harness track for the
purpose of increasing track purses. In OTB regions where there are
multiple regional harness tracks these payments are made to the
regional track conducting a live meet on the day out-of-state
simulcasting occurs. If either no regional track is conducting a meet,
or more than one regional track is conducting a meet, the distribution
is to be made either (i) in the proportion that each track's handle
bore to the total regional licensed harness track handle during the
preceding calendar month or (ii) in accordance with a contractual
agreement between the regional tracks and the OTB corporation,
Subdivision 2(a) of section 1017-a requires OTBs to make an additional
"maintenance of effort" payment to their regional harness tracks
measured by the level of payments received by the regional harness
tracks during 2002 from their regional OTB attributable to wagering on
out-of-state harness races run after 6:00 p.m. OTBs engaged in the
simulcasting of out-or-state or out-of-country thoroughbred racing
after 7:30 p.m.  are required to submit a payment schedule to be
approved by the State Racing and Wagering Board. In order to be
approved this payment schedule must be identical to the actual
payments and distributions of such payments to tracks and purses made
by such OTBs pursuant to the provisions of section 1016 during the
year of 2002, as derived from out-of-state harness races displayed
after 6:00 p.m. If approved by the board, such scheduled payments
shall be made from revenues derived from any simulcasting under
sections 1016 and 1017-a.

 JUSTIFICATION :
Under the current law regional harness tracks that are not running
live racing are receiving maintenance of effort payments
notwithstanding that they are closed. The intent of the 2003
legislation was to provide harness tracks with a "hold harmless"
payment stream to offset the losses anticipated from bettors defecting
from harness racing to wager on the nighttime out-of-state and
out-of-country thoroughbred races. This payment requirement was not
meant to provide a source of revenue to harness tracks not running
live races. Recently, the State Racing and Wagering Board incorrectly
interpreted 1017-a (2) (a) as requiting the maintenance of effort
calculation to be made on a track by track basis in regions with more
than one regional licensed harness track. It was the Board's
interpretation that regional harness tracks could become entitled to
more than the amount they received in 2002 but under no circumstances
could they receive less individually, even if the aggregate level of
payments under section 1016 to all tracks within the region matched,
or exceeded, the total level of payments to all the tracks during
2002. This ruling is inconsistent with the Legislature's intent
expressed in section 1016 that distribution of revenue in multitrack
regions be made based on the proportion of each track's live handle.
Therefore, in a region with two or more regional harness tracks, if
one track is not running the entire section 1016 payment goes to the
track running live racing, but the track not running nonetheless
remains eligible to receive maintenance of effort payments.  The
Board's misinterpretation of section 1017-a (2) (a) unfairly requires
OTBs to subsidize those harness tracks not conducting live race
meetings. In addition, the additional payments made pursuant to
section 1017 -a (2) (b) are no longer appropriate. Harness tracks have
been given permission to install video Lottery Terminals (VLTs).  The
success of VLTs has been well documented and these VLT operations have
provided harness tracks with a generous new stream of revenue.  VLT s
have brought increased attendance to harness tracks, as well as,
afforded them the opportunity to increase purses. Allowing harness
tracks to install VLTs and at the same time requiring OTBs to make
additional payments if handle exceeds a designated amount is
tantamount to New York State subsidizing these private entities twice.
It needs to be recognized that the exodus of harness bettors for the
new world of nighttime thoroughbred wagering is not as great as was
expected, OTBs have handled well over $100 million in annual wagering
statewide on nighttime thoroughbred racing without significant
detriment to the wagering done on regional harness tracks. In fact
regional harness tracks are themselves authorized to simulcast these
nighttime thoroughbred races and can partake in this new endeavor just
a.s OTBs can, This legislation does not call for the end of all OTB
payments to regional harness tracks. It simply is a fair
redistribution of the wagering handle to all parties involved that is
in line with the intent of the 2003 legislation when passed. This
legislation is not intended to deprive revenue to those regional
harness tracks running live races.  OTBs will continue to contribute
the six (6) percent that is required by subdivisions (3) (c) (3)-(4)
of section 1016. OTBs will continue to pay their fair share to those
regional harness tracks conducting live racing meets. It is merely the
intention of this legislation to end a subsidy to private harness
tracks not running live racing and that are not being adversely
affected in any way from the simulcasting of nighttime thoroughbred
racing by their regional OTBs.

 LEGISLATIVE HISTORY :
A8613 of 2007.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediately.