05/28/2003 11:00PM

NYRA, state horsemen reach agreement on slots


NEW YORK - Officials with the New York Racing Association and the New York Thoroughbred Horsemen's Association said after a meeting on Thursday that they had reached a broad agreement on splitting revenues from slot machines.

Barry Schwartz, the chairman of NYRA, met on Thursday afternoon with Alan Foreman, the legal counsel for the horsemen, and Richard Bomze, the horsemen's association's president, to address concerns that the tracks and horsemen were in disagreement over how the revenues should be divided.

"NYRA and the horsemen are in agreement on things we need to do to go forward," Schwartz said. "There are no problems. We should be up and running by Jan. 1."

NYRA initially received the go-ahead to install slot machines at its Aqueduct Racetrack in Queens under legislation passed in late 2001. However, NYRA and other racetracks balked at going forward because of what the tracks called insufficient splits of the revenues from the machines, which were to be administered under the state lottery commission.

This year, legislators drafted new slots bills that weighted the splits more heavily toward the tracks and horsemen. The bills also expanded the hours of operation for tracks and pushed back the date when the legislation would expire, from five years after the first operation of the machines to 10 years.

The legislation has been challenged in court by groups contending that slot-machine gaming is unconstitutional. Oral arguments were held on March 25 and May 6 in the lawsuit, but the New York State Court of Appeals has yet to render a decision on the case, according to Cornelius Murray, an Albany lawyer who filed the suit.

The constitutional challenge will not delay any plans to renovate Aqueduct, Schwartz said. NYRA officials are scheduled to meet with executives from MGM Grand, the casino company that NYRA selected to run the slots operation, on Friday morning, and will fly to Las Vegas on June 9 for more meetings, Schwartz said.

Under the new legislation, tracks will receive 20.24 percent of the revenues from the machines in the first three years, and horsemen will receive 7.5 percent. In years four and five, tracks would get 20 percent and horsemen would get 7.7 percent. In years six through 10, tracks would have their share reduced to 17.5 percent, while horsemen would get 10 percent.

Schwartz had publicly said that tracks might need a higher percentage of the revenues in later years to protect their investment and satisfy the terms of any bank loans to finance renovations. Schwartz's comments had angered some horsemen who thought the splits had already been worked out with the agreement of all the parties.

Foreman, the horsemen's counsel, called the situation a "tempest in a teapot" that had been resolved at Thursday's meeting.

"No one knows what the levels of revenue are going to be in those later years, so NYRA was seeking assurances from the horsemen that if they ran into a problem in years six or seven meeting their debt obligations, they could work something out," said Foreman. "There are no issues for the horsemen. We have no problem with that. Everyone wants to see this go forward."

The slot-machine provisions were contained in budget bills passed by the legislature last week to override vetoes by Gov. George Pataki, who objected to tax increases in the bills. The bills also contained several other changes to New York racing law.

The legislation gives New York racetracks the ability to set the levels of takeout, a measure supported by Schwartz, as long as the new levels are approved by the New York State Racing and Wagering Board.

The law also eliminated a $450 minimum balance for a NYRA telephone-wagering account. NYRA officials have said the minimum-balance rule unfairly put the operation at a competitive disadvantage with account-wagering operations owned by OTB companies in the state. Upstate OTB companies continue to have a $300 minimum balance, while New York City OTB customers do not have to maintain a minimum balance.

The bill also eliminated any restrictions on full-card simulcasting for New York OTB companies, despite the criticism of NYRA officials. OTB's were previously prohibited from importing more than two full cards while NYRA was conducting live races, and the shops had to cut off all Thoroughbred signals at 7:30 p.m. in order to protect the harness industry.