12/15/2007 1:00AM

N.Y. Senate passes casino bill

EmailAs representatives of the New York legislature and Gov. Eliot Spitzer continued to negotiate the fate of the New York Racing Association franchise, the state Senate passed a bill late Thursday that gives racetrack-casino owners a larger share of the revenues from slot machines at the expense of the state's education funding.

The bill, which was supported by racetracks and their casino vendors, increases the casino owners' share of slot-machine revenues by as much as 10 percentage points in some locations, with an additional increase of 2 percentage points for use as marketing expenses and the establishment of another 4 percentage point carve-out for capital improvements.

The bill was sent to the Assembly after passage, but the Assembly has not been called back into session. The legislation will likely play a role in the ongoing negotiations over the franchise currently held by NYRA, by making a planned casino at Aqueduct more attractive to potential casino operators.

Legislative officials would not comment on the negotiations over the franchise Friday, other than to confirm that talks were ongoing. The current deal centers on a 30-year extension of NYRA's franchise to run Aqueduct, Belmont, and Saratoga, in exchange for the state taking title to the tracks. Under that agreement, the state would build the casino at Aqueduct but select an outside company to operate it.

The deal is supported by Spitzer and the state Assembly, which is led by Sheldon Silver, a Democrat. However, Senate Republicans, led by Sen. Joseph Bruno, have balked at the length of the extension. In addition, Bruno wants to create a state oversight agency that would manage certain aspects of NYRA's business, including its simulcasting rights and its contracts with bet-processing companies and other vendors. He also has stated that he wants NYRA's entire board to resign.

Bruno is openly feuding with both Silver and Spitzer, and on Friday, the Senate complicated those relationships by passing a bill granting judges' pay raises. Silver has been campaigning for pay raises for legislators, and the Senate bill broke with tradition by decoupling judicial raises from legislative raises. The move would force Silver to add legislative raises to a bill at his direction, a politically embarrassing move that also may have implications on the willingness of each side to negotiate on the franchise agreement.

The sides also are split on the issue of slot machines at Belmont Park. The Senate, NYRA, and Spitzer have said that they support the legalization of the machines at Belmont, but Silver has said he is opposed to any expansion of gambling. The legislation passed Thursday did not include a reference to Belmont or its location, despite Senate Republican support.

Racetrack-casino revenues have played an important role in the franchise process so far, but the issue has lately been moved to the background by the focus on the negotiations over NYRA's extension. So far, revenues from slot machines at New York racetracks have fallen well short of expectations, and legislators are eager to attract deep-pocketed casino owners who have said they could revive the disappointing figures if given enough money to build attractive facilities.

The legislation passed Thursday night includes several carve-outs designed to specifically benefit one track or casino. For example, the bill increases from 32 percent to 42 percent the share of casino revenues for any track located within 15 miles of an existing Native American casino. The only racetrack that fits that definition is Vernon Downs, a harness track that reopened six miles away from the Oneida Tribe's Turning Stone Casino several years after the machines were legalized. Vernon Down's owner, Jeff Gural, has threatened to close the track if the state does not give casino owners a larger share of the slot-machine revenues.

The legislation sets a statutory mark of 8.5 percent of the revenues as a carve-out for purse subsidies, but the legislation also states that horsemen's groups and racetracks can negotiate for a lower or higher figure in a joint agreement. The subsidies are subtracted from the casino owner's share of the revenues.