Senate Bill S2415

                                BILL NUMBER:S2415

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 thereafter 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 payment
s 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
multi-track 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. VLTs 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 as 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 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:
2010: A.5772/S.2360 - Held in Racing, Gaming and Wagering
A.8613 of 2007.

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.