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This entry was published on 2022-04-29
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SECTION 208
Conditions of franchise award
Racing, Pari-Mutuel Wagering and Breeding Law (PML) CHAPTER 47-A, ARTICLE 2
§ 208. Conditions of franchise award. 1. In consideration of the
franchise and in accordance with its franchise agreement, the franchised
corporation shall remit to the state, each year, no later than April
fifth, a franchise fee payment. The franchise fee shall be calculated
and equal to the lesser of paragraph (a) or (b) of this subdivision as
follows: (a) adjusted net income, including all sources of audited
generally accepted accounting principles net income as of December
thirty-first (i) plus the amount of depreciation and amortization for
such year as set forth on the statement of cash flows (ii) less the
amount received by the franchised corporation for capital expenditures
and (iii) less principal payments made for the repayment of debt; or (b)
operating cash which is defined as cash available on December
thirty-first (i) which excludes all restricted cash accounts, segregated
accounts as per audited financial statements and cash on hand needed to
fund the on-track pari-mutuel operations through the vault, (ii) less
ninety days of operating expenses pursuant to generally accepted
accounting principles which shall be an average calculated by dividing
the current year's annual budget by the number of days in such year and
multiplying that number by ninety.

2. As a condition of franchise acceptance, the franchised corporation
and its predecessor shall irrevocably relinquish any present or future
rights that it might have, or might claim, with respect to thoroughbred
racing facilities and associated assets located in Queens county,
Saratoga county and jointly located in Nassau and Queens counties
whereat running races, steeplechases or race meetings and pari-mutuel
betting on the outcome of the same have been conducted, including (a)
all the land underlying the racetracks, (b) all improvements thereon and
all physical assets thereon, and (c) all assets associated with the
franchise and the operation of the racetracks, including, without
limitation all rights to intellectual property and simulcasting now
existing or hereafter created, and any and all franchise rights or
interests in such assets including but not limited to leasehold
improvements and interests. The franchised corporation shall take all
appropriate action on the date of substantial consummation, as defined
by the federal bankruptcy code, of the confirmed chapter eleven plan of
reorganization of the non-profit racing association known as The New
York Racing Association, Inc. in the pending bankruptcy case in the
Southern District of New York to ensure that the People of the State of
New York are vested with unencumbered ownership in the real estate for
the three racetracks, including all improvements thereon.

3. As a condition of franchise acceptance, the franchised corporation
shall make application with the commission for live thoroughbred racing
dates at thoroughbred racing facilities located in Queens county,
Saratoga county and jointly located in Nassau and Queens counties in a
manner substantially similar to the racing dates presently undertaken.

4. As a condition of franchise acceptance, the franchised corporation
shall agree that it will conduct running races, steeplechases and race
meetings in accordance with the provisions thereof and that all running
races, steeplechases or race meetings conducted thereunder shall be
subject to such reasonable rules and regulations from time to time
prescribed by the gaming commission.

4-a. As a condition of franchise acceptance, the franchised
corporation shall enter into a franchise agreement that shall require
such franchised corporation to use its best efforts to satisfy
performance standards, measured every four years by the franchise
oversight board. Such performance standards shall relate to racing
dates, New York bred horse races, horse stalls, jockey and equine
safety, state concentrated animal feeding operation, backstretch
conditions, the Saratoga training facility, handle and attendance,
purses, expenses of the franchised corporation, and the communities
surrounding Aqueduct racetrack, Belmont Park racetrack and the Saratoga
race course. As a condition of franchise acceptance, the franchised
corporation shall continue to lease for nominal consideration the
ballfield property near the Aqueduct racetrack that includes lots 62,
118, 119, 127, 133, 135, 136 and 138 of block 11535; lots 73, 110 and
113 of block 11536; lots 5, 9, 10, 12, 14 and 110 of block 11551; and
lot 204 of block 11562 in Queens County, as a ballfield for the
appropriate community organization, and convey the parcel near the
Aqueduct racetrack that includes lot 1 of blocks 11558 and 11560 in
Queens county to the New York city public school construction authority
should such authority desire and commit to purchase such parcel at fair
market value.

5. A franchise may be revoked and cancelled by the commission only for
the reasons and in the manner prescribed under the provisions of
sections two hundred twelve and two hundred forty-four of this article.
The action of the commission in revoking a franchise shall be reviewable
in the supreme court in the manner provided by and subject to the
provisions of article seventy-eight of the civil practice law and rules.

6. (a) All contracts entered into by the franchised corporation for
the procurement of goods or services shall be pursuant to a competitive
bidding purchasing policy approved by the franchise oversight board.

(b) In its review of the contracts pursuant to this section in any
contract in excess of one hundred thousand dollars, the franchise
oversight board may review the character and fitness of the entity or
its principals entering into contracts with a franchised corporation and
provided further the oversight board may require such information as it
deems necessary including the power to subpoena such books, records, and
other pertinent information related to the contracts from the contractor
or vendor of any contract.

7. Notwithstanding the provisions of section seven of the general
business law, or any other inconsistent provision of general, special or
local law, the commission shall specify annually the dates on which, and
the hour of the first post time for days during which, such franchised
corporation may operate at the places and for the full number of days
specified in its franchise.

8. The commission shall permit the franchised corporation to conduct
pari-mutuel betting in the manner and subject to the conditions
prescribed by this chapter, at the racetracks described in such racing
franchise for the duration of such racing franchise.

9. (a) The franchised corporation shall maintain a separate account
for all funds held on deposit in trust by the corporation for individual
horsemen's accounts. Purse funds shall be paid by the corporation as
required to meet its purse payment obligations. Funds held in horsemen's
accounts shall only be released or applied as requested and directed by
the individual horseman. Through calendar year two thousand twenty-five
the New York Jockey Injury Compensation Fund, Inc. may use up to two
million dollars from the account established pursuant to this
subdivision to pay the annual costs required by section two hundred
twenty-one of this article.

(b) Unless otherwise permitted by written agreement with the
horsemen's organization recognized pursuant to section two hundred
twenty-eight of this article the franchised corporation shall fund
purses in an amount (on an annual basis and not a per-race basis) in
excess of that required by this chapter, so as to reduce the purse
cushion at the end of each calendar year by the amount set forth below:
Year Reduction of Purse Maximum Purse Cushion at

Cushion for Calendar Year Year End Not to Exceed
2008 $0 $20.0 million
2009 $1.0 million $19.0 million
2010 $1.0 million $18.0 million
2011 $2.0 million $16.0 million
2012 $2.0 million $14.0 million
2013 $3.0 million $11.0 million
2014 $3.0 million $8.0 million
2015 $2.0 million $6.0 million
Thereafter the maximum purse cushion at year end shall not exceed $6.0
million.

(c) The franchised corporation shall establish and maintain a separate
account for funds to be held on deposit in trust by the franchised
corporation for the horsemen's organization recognized pursuant to
section two hundred twenty-eight of this article. Starting in two
thousand eighteen and annually thereafter, funds from the account
established pursuant to this subdivision shall be deposited in the
separate account established under this paragraph in an amount to be
agreed upon by the franchised corporation and the horsemen's
organization recognized pursuant to section two hundred twenty-eight of
this article. Funds held in this account shall be used by such
recognized horsemen's organization solely as collateral to secure
workers' compensation insurance coverage, including through the New York
Jockey Injury Compensation Fund, Inc. Such coverage shall include high
deductible programs and forms of self-insurance.

(d) In the event the horsemen's organization recognized pursuant to
section two hundred twenty-eight of this article determines that the
funds are no longer needed as collateral to secure workers' compensation
insurance coverage, then, upon agreement by the franchised corporation
and such appropriately recognized horsemen's organization, funds in the
separate account established under paragraph (c) of this subdivision
shall be returned to the account established pursuant to paragraph (a)
of this subdivision.

(e) The account shall be subject to annual audit by a certified public
accountant approved and paid by the appropriately recognized horsemen's
organization.