Bill S2415-2013

Provides for the amount to be paid by off track betting corporations to regional harness tracks from certain simulcasting revenue

Provides for the amount to be paid by off track betting corporations to regional harness tracks from out-of-state and out-of-country simulcast revenue.

Details

Actions

  • Jan 17, 2013: REFERRED TO RACING, GAMING AND WAGERING

Memo

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.


Text

STATE OF NEW YORK ________________________________________________________________________ 2415 2013-2014 Regular Sessions IN SENATE January 17, 2013 ___________
Introduced by Sen. ADAMS -- read twice and ordered printed, and when printed to be committed to the Committee on Racing, Gaming and Wager- ing 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 reven- ue THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 2 of section 1017 of the racing, pari-mutuel wagering and breeding law, as amended by chapter 18 of the laws of 2008, is amended to read as follows: 2. [a. Maintenance of effort. Any off-track betting corporation which engages in accepting wagers on the simulcasts of thoroughbred races from out-of-state or out-of-country as permitted under subdivision one of this section shall submit to the board, for its approval, a schedule of payments to be made in any year or portion thereof, that such off-track corporation engages in nighttime thoroughbred simulcasting. In order to be approved by the board, the payment schedule shall be identical to the actual payments and distributions of such payments to tracks and purses made by such off-track corporation pursuant to the provisions of section one thousand fifteen of this article during the year two thousand two, 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 reven- ues derived from any simulcasting conducted pursuant to this section and section one thousand fifteen of this article. b. Additional payments] PAYMENTS. During each calendar year, to the extent, and at such time in the event, that aggregate statewide wagering handle after 7Labor P.M. on out-of-state and out-of-country thoroughbred races exceeds one hundred million dollars, each off-track betting corpo- ration conducting such simulcasting shall pay to its regional harness
track or tracks, an amount equal to [two percent] THE FOLLOWING PERCENT- AGE of its proportionate share of such excess handle: FOR CALENDAR YEARS THROUGH TWO THOUSAND THIRTEEN, TWO PERCENT; FOR CALENDAR YEAR TWO THOUSAND FOURTEEN, ONE AND ONE-HALF PERCENT; FOR CALENDAR YEAR TWO THOU- SAND FIFTEEN, ONE PERCENT; AND FOR CALENDAR YEAR TWO THOUSAND SIXTEEN, ONE-HALF OF ONE PERCENT. THERE SHALL BE NO FURTHER ADDITIONAL PAYMENT OBLIGATION PURSUANT TO THIS SUBDIVISION FOR CALENDAR YEARS COMMENCING ON OR AFTER JANUARY FIRST, TWO THOUSAND SEVENTEEN. In any region where there are two or more regional harness tracks, such [two percent] PAYMENT AMOUNT shall be divided between or among the tracks in a propor- tion equal to the proportion of handle on live harness races conducted at such tracks during the preceding calendar year. Fifty percent of the sum received by each track pursuant to this [paragraph] SUBDIVISION shall be used exclusively for increasing purses, stakes and prizes at that regional harness track. S 2. This act shall take effect immediately.

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