01/29/2003 12:00AM

Budget proposal would lower N.Y. horsemen's cut from slots

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New York Gov. George Pataki has recommended in his proposal for a 2003 budget that horsemen and breeders be cut out of the initial proceeds from slot machines at New York racetracks while allowing the tracks to keep their slots facilities open up to 18 hours a day.

The recommendations, which would have to be approved the New York legislature, are intended to address concerns raised by racetracks that current legislation gives too large a share of slots revenue to the state, leaving the tracks with an unprofitable investment. The legislation was passed late in 2001, legalizing video-lottery terminals, or slot machines, which would be administered by the state lottery.

Under Pataki's proposal, the racetracks would share slots proceeds with horsemen under the following formula: nothing for the first two years of operation, 10 percent of the proceeds for the next three years, 15 percent for the three years after that, and 20 percent after 10 years. Current legislation would give horsemen 35 percent of the racetrack's proceeds in the first year and 45 percent in subsequent years.

Also, the proposal would delay by two years a share of slots revenue for breeders. Under the proposal, state breeding funds would receive no slots revenue in the first two years and a maximum of 5 percent after 10 years. Under current legislation, breeders would receive 5 percent of the proceeds immediately. Representatives of breeders' and horsemen's groups in New York did not immediately return phone calls Wednesday afternoon.

The Pataki proposal would also lift a sunset provision in the current legislation, which ends the slots program in 2007. Racetrack officials have said the sunset provision prevents them from arranging long-term financing for construction and other costs.

The proposal put officials of the New York Racing Association, a quasi-public agency that operates Aqueduct, Belmont, and Saratoga, in an awkward position.

"This doesn't work for the horsemen," said Barry Schwartz, the chairman of NYRA.

"It might work for NYRA, but NYRA's purpose is to support horsemen. This is too much for the tracks and not enough for them."

Schwartz said he would lobby for changes to any bill.

The proposal contains a number of other clauses that would affect the racing industry. It would legalize nighttime Thoroughbred simulcasting in the state's offtrack betting parlors, impose a 0.5 percent fee on handle to pay for state employees such as stewards and racing judges, and allow racetracks to set their own takeout levels, within limits.