04/12/2005 11:00PM

Pataki signs N.Y. slots bill


New York Gov. George Pataki signed a budget bill on Tuesday night that includes provisions to increase racetracks' share of revenue from slot machines and to protect Aqueduct's partner in its long-stalled slot-machine operation.

The bill, which Pataki signed despite some reservations over the slot-machine provisions, could lead to a slots casino at Aqueduct by April 2006, according to officials of the New York Racing Association, which operates Aqueduct. Because it is located in New York City, Aqueduct is expected to be the most lucrative slot-machine casino in the state.

Slot machines were legalized at eight racetracks in the state in late 2001. Only four have opened - Fairgrounds Gaming & Raceway in Buffalo, Finger Lakes Gaming and Racetrack, Monticello Raceway, and Saratoga Gaming and Raceway - in part because of concerns over the amount of money tracks were allowed to retain and because of licensing issues at several struggling harness tracks. NYRA, which receives its franchise from the state, was unable to guarantee that its business partner, MGM Grand, would be protected if NYRA were to lose its franchise, which expires at the end of 2007.

The budget bill will allow tracks to retain 32 percent of the first $50 million in slot-machine revenue; 29 percent of the next $100 million in revenue; and 26 percent of any revenue above $150 million.

With the exception of Aqueduct and Yonkers, the tracks will be able to use an additional 8 percent of the first $100 million in revenue for marketing and advertising, a share that decreases to 5 percent for any revenue above $100 million. For Aqueduct and Yonkers, marketing and advertising revenue will be derived from 4 percent of all slot-machine money.

The current law allows tracks to retain 29 percent of slots revenue. From that money, the tracks were required to give about a third to horsemen and breeders, a percentage that has been eliminated under the new budget.

The guaranteed subsidy for horsemen was eliminated in part because of a ruling last year in New York Supreme Court that the state constitution requires gambling revenue to go to education. The ruling has been appealed.

The budget bill requires that tracks reach an agreement with horsemen on purse revenues before they can be licensed as racetracks. Pataki favored a plan that would have awarded subsidies from the state budget, a plan also favored by New York horsemen. Dennis Brida, the executive director of the New York Thoroughbred Breeders, said that his organization could live with the bill that was passed.

Pataki had few options regarding the language in the budget bill because the governor does not have a line-item veto.

With issues surrounding the Aqueduct casino clearing up, the battle for NYRA's franchise is expected to intensify. State officials have estimated that Aqueduct will likely generate $1 billion a year in slots revenue. NYRA has been operating under a federal monitor as a result of a deferred prosecution agreement revolving around the convictions of 20 mutuel employees for tax and fraud crimes.