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Monday, February 18, 2008

Harness Industry Gets Perfect Trip

- If you don't mind me patting myself on the back a bit, I'd like to point out that I studiously followed the plight of the NY harness tracks here on this site; specifically the negotiations over VLT splits and the plight of Jeff Gural and Vernon Downs. May have seemed a bit off our main topic, but it just seemed inevitable that the situations would somehow converge since they were both fast approaching the crisis stage. In fact, for the 300 employees at Vernon Downs, it had already reached that point. However, it seemed as if something was up when Joe Faraldo issued a muted statement in response to the closing, saying that “There are many people in the state legislature who are trying to work out a number of intricate problems within the harness racing industry involving other racetracks other than Tioga and Vernon." And that was for sure.

Vernon Downs re-opened immediately, and the track will now retain 42% of VLT revenues, up from 32%; that by virtue of a special carve-out for tracks within 15 miles of an Indian gaming facility (which also applies to Buffalo Raceway aka Fairgrounds Gaming and Raceway).

Yonkers, which had helped to kill Gary Pretlow's bill, gets 34%, up from 32% in that prior legislation, for two years, with the extra percentage points dedicated to paying off its debt; and its marketing allowance goes from 4% to 8% (as does the Big A). So they made out pretty well, and did so over the opposition of Representative Pretlow, who said he had had enough when his bill died in committee.

The other harness tracks will get percentages ranging from a flat 32% with no decreasing sliding scale (Saratoga), 36% of the first $50 million annually (Batavia) or 40% of the first $50 million (Tioga and Monticello). Those percentages drop off to 29% for the subsequent $100 million and 26% thereafter (except for Yonkers, which, like Saratoga, flatlines at 32%).

In addition, all of the racinos except for Yonkers and Aqueduct get a bump-up in its marketing allowance from 8% to 10% (for the first $100 million annually), and an additional 4% for capital improvements (which tracks with more than 1,100 machines have to match dollar-for-dollar).The Standardbred Owners Association of NY details how all the tracks fare under the new legislation on the US Trotting Association site. Bottom line is that the Albany pols have had to concede that their tax structure was simply too high in the multi-state competitive environment for the establishments to succeed.

There's one weird brand new clause in the bill that provides the 42% rate for a track if a gaming facility of any nature in a “contiguous state” is established “within a midpoint of 30 miles” from a racino.

This curious language would appear to potentially affect only Monticello and Tioga, as these tracks are within close proximity to the northern border of Pennsylvania. [SOA]
Bottom line is that the harness tracks and the horsemen have reason to be ebullient over the turn of events, and may have NYRA to thank. Who knows if they would have gotten the attention they did had the legislature not been so focused on racing. The horsemen also got their 8.75% of VLT money for purses, and 1.25% for breeders; as well as minimum racing dates, and a requirement that racino construction “encourage patronage of live horse racing events that are conducted at such track.” The horsemen conclude:
Rather than pass a haphazardly drawn bill meant to benefit only certain individuals from a selected segment of the state’s harness industry, the state’s legislators repeatedly encouraged the various stakeholders to agree on an all-inclusive package of video gaming and racing reform. The result of the Albany lawmakers’ patient cajoling is nothing short of the most significant and beneficial legislative passage harness racing has seen since the original promulgation of video lottery gaming in 2001.

It is hoped that with these new mandates, guideposts and economic incentives and opportunities that harness racing will continue to flourish as not only a significant and lucrative aspect of the state’s economy, but also as an extremely important player on the international harness scene. No stakeholder can say that we haven’t been given the tools to do it.


Anonymous said...

Alan, good points about the benefits of the racing bill to the long beleaguered harness racing tracks. Still await an in depth analysis of the business model created for NYRA by this new bill, and the obvious need to fold the OTB's into the NYRA franchise. thereby eliminating a costly layer of administration. I think I hear you saying that the new bill appears to finally recognize the hard realities of the intense competition for the gambling dollar, including the growing leisure gambling market, and that NY must be positioned competitively to give thoroughbred racing a chance to not only survive but to generate the excess capital, i.e., profit, needed to maintain and improve the 3 tracks and properly market the product. Once the racing industry sees NYRA with the financial capability to operate the business on a profit-making basis, it will do wonders for renewed optimism and enthusiasm from all corners of the racing industry.
/S/Green Mtn Punter

Anonymous said...

Does that 30 mile limit apply only to harness?

If Meadowlands gets VLT's it could effect Monty, Yonkers (maybe) and our Beloved Big A if the rule includes thoroughbred operations.

Alan Mann said...

>>f Meadowlands gets VLT's it could effect Monty, Yonkers (maybe) and our Beloved Big A if the rule includes thoroughbred operations.

Not Monti, but that's an excellent question regarding the other two. To be perfectly honest, I have no idea what " “within a midpoint of 30 miles” from a racino even means. And I don't see any realistic chance of the Big M getting slots anytime soon.