BILL NUMBER: S8580

SPONSOR: KENNEDY
 
TITLE OF BILL:

An act to amend the racing, pari-mutuel wagering and breeding law and
the tax law, in relation to compensation for directors of the regional
off-track betting corporation

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill clarifies that board members of regional off-track betting
corporations are only entitled to compensation authorized by statute and
that regional off-track betting corporations implement their promotional
plans as intended and accurately account for the distribution of promo-
tional items.

 
SUMMARY OF PROVISIONS:

Section 1 amends section 502 of the racing, pari-mutuel wagering and
breeding law to clarify that directors are not permitted to receive any
compensation that is not provided for in law. Additionally, this section
              

is amended that reimbursement for the expenses incurred by a director
will only be received after certification, sworn under penalty of perju-
ry, that such expenses actually incurred.

Section 2 amends section 1617-a of the tax law and adds a new section
requiring video lottery gaming agents to submit annual marketing and
promotion plans for video gaming facilities to the gaming commission for
review and approval. Each video gaming facility will also submit a year-
ly report to the gaming commission detailing the accounting of the use
and implementation of the marketing promotional plan, including the name
and address of each person receiving promotional items or things of
value in excess of fifty dollars.

Section 3 sets the effective date.

 
JUSTIFICATION:

A recent audit completed by the State Comptroller determined that offi-
cials at one regional off-track betting (OTB) corporation that is also a
video lottery gaming agent spent almost $1.3 million to purchase sport-
ing event suites and concert tickets, purportedly as part of a promo-
tional program intended to reward loyal customers and target prospective
customers, but were instead distributed to OTB board members, execu-
tives, employees and other non-players. This audit also revealed that
some OTBs are awarding compensation to board members in the form of
health insurance benefits, although the existing statute expressly sets
forth the maximum compensation to be provided to any board member of a
regional OTB corporations.

Regional OTBs are public benefit corporations that distribute revenue to
its participating local governments. Therefore, every dollar spent on
health insurance or other unwarranted benefits for board members is a
dollar less that is distributed to municipalities that rely on OTB
revenue to address taxpayer needs, such as maintaining roads, sewers,
bridges, and schools. In 2017, one regional OTB spent $230,000 on health
insurance for its directors. This means that $230,000 was taken out of

taxpayers' pockets to pay for health benefits to which board members
were not entitled.

Additionally, from 2017 to 2019, that same OTB spent nearly $1.3 million
on a marketing program involving the purchase of sports arena suites,
concert tickets, and concession fees. Although those marketing and
promotional expenses were intended to be used to retain and reward loyal
customers of OTB, a 2021 audit of the Comptroller determined that board
members received numerous tickets and other promotional benefits.

The Comptroller further concluded that Ihjad these resources been used
for promotions such as retaining and rewarding loyal customers and
targeting prospective customers, (OTB) could have increased . . . reven-
ues to participating municipalities."

Although the existing statute expressly sets forth the maximum compen-
sation to be provided to any board member of a regional off-track
betting (OTB) corporations, some OTBs are flouting this statutory
mandate and awarding compensation to board members in the form of health
insurance benefits, free concert tickets, free sporting event tickets,
and other fringe benefits that are not authorized by statute. This
legislation is intended to increase accountability and oversight by
ensuring any promotional plans are implemented as intended and by codi-
fying existing law and making clear that no compensation may be awarded
to an OTB board member unless expressly authorized by statute. All
participating New York municipalities will benefit from the increased
transparency and accountability required by this legislation.

 
PRIOR LEGISLATIVE HISTORY:

None

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

TBD

 
EFFECTIVE DATE:
This act shall take effect immediately