S T A T E O F N E W Y O R K ________________________________________________________________________ 4989--A 2013-2014 Regular Sessions I N S E N A T E May 2, 2013 ___________ Introduced by Sen. BOYLE -- read twice and ordered printed, and when printed to be committed to the Committee on Racing, Gaming and Wager- ing -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the racing, pari-mutuel wagering and breeding law and the tax law, in relation to allowing off-track betting corporations in the state to host video lottery terminals THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Section 503 of the racing, pari-mutuel wagering and breed- 2 ing law is amended by adding a new subdivision 10-a to read as follows: 3 10-A. IN A REGION IN WHICH NO PARTICIPATING COUNTY CONTAINS EITHER A 4 THOROUGHBRED OR STANDARDBRED RACETRACK LICENSED TO OPERATE VIDEO LOTTERY 5 GAMING, AT SUCH A CORPORATION'S FACILITY WHICH IS LICENSED PURSUANT TO 6 SECTION ONE THOUSAND EIGHT OR ONE THOUSAND NINE OF THIS CHAPTER OPERATE 7 VIDEO LOTTERY GAMING; 8 S 2. Subparagraph (ii) of paragraph 1 of subdivision b of section 1612 9 of the tax law, as amended by section 6 of part K of chapter 57 of the 10 laws of 2010, clause (F) as amended by section 1 of part T of chapter 59 11 of the laws of 2013, clause (H) as amended by chapter 454 of the laws of 12 2012, clause (I) as added by section 1 of part O of chapter 61 of the 13 laws of 2011, is amended to read as follows: 14 (ii) less a vendor's fee the amount of which is to be paid for serving 15 as a lottery agent to the track operator of a vendor track; AND LESS A 16 VENDOR'S FEE TO BE PAID FOR SERVING AS A LOTTERY AGENT TO THE REGIONAL 17 OFF-TRACK BETTING CORPORATION OPERATOR AT AN AUTHORIZED PARTICIPATING 18 OFF-TRACK BETTING FACILITY LICENSED PURSUANT TO EITHER SECTION ONE THOU- 19 SAND EIGHT OR ONE THOUSAND NINE OF THE RACING, PARI-MUTUEL WAGERING AND 20 BREEDING LAW: 21 (A) having fewer than one thousand one hundred video gaming machines, 22 at a rate of thirty-five percent for the first fifty million dollars EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09719-05-3 S. 4989--A 2 1 annually, twenty-eight percent for the next hundred million dollars 2 annually, and twenty-five percent thereafter of the total revenue 3 wagered at the vendor track after payout for prizes pursuant to this 4 chapter; 5 (B) having one thousand one hundred or more video gaming machines, at 6 a rate of thirty-one percent of the total revenue wagered at the vendor 7 track after payout for prizes pursuant to this chapter, except for such 8 facility located in the county of Westchester, in which case the rate 9 shall be thirty percent until March thirty-first, two thousand twelve. 10 Notwithstanding the foregoing, not later than April first, two thou- 11 sand twelve, the vendor fee AT SUCH TRACK OR VENDOR OFF-TRACK BETTING 12 FACILITY shall become thirty-one percent and remain at that level there- 13 after; and except for Aqueduct racetrack, in which case the vendor fee 14 shall be thirty-eight percent of the total revenue wagered at the vendor 15 track after payout for prizes pursuant to this chapter; 16 (C) notwithstanding clauses (A) and (B) of this subparagraph, when the 17 vendor track OR VENDOR OFF-TRACK BETTING FACILITY is located in an area 18 with a population of less than one million within the forty mile radius 19 around such track, at a rate of thirty-nine percent for the first fifty 20 million dollars annually, twenty-eight percent for the next hundred 21 million dollars annually, and twenty-five percent thereafter of the 22 total revenue wagered at the vendor track OR VENDOR OFF-TRACK BETTING 23 FACILITY after payout for prizes pursuant to this chapter; 24 (D) notwithstanding clauses (A), (B) and (C) of this subparagraph, 25 when the vendor track OR VENDOR OFF-TRACK BETTING FACILITY is located 26 within fifteen miles of a Native American class III gaming facility at a 27 rate of forty-one percent of the total revenue wagered at the vendor 28 track after payout for prizes pursuant to this chapter; 29 (E) notwithstanding clauses (A), (B), (C) and (D) of this subpara- 30 graph, when a Native American class III gaming facility is established, 31 after the effective date of this subparagraph, within fifteen miles of 32 the vendor track OR VENDOR OFF-TRACK BETTING FACILITY, at a rate of 33 forty-one percent of the total revenue wagered after payout for prizes 34 pursuant to this chapter; 35 (E-1) for purposes of this subdivision, the term "class III gaming" 36 shall have the meaning defined in 25 U.S.C. S 2703(8). 37 (F) notwithstanding clauses (A), (B), (C), (D) and (E) of this subpar- 38 agraph, when a vendor track, is located in Sullivan county and within 39 sixty miles from any gaming facility in a contiguous state such vendor 40 fee shall, for a period of six years commencing April first, two thou- 41 sand eight, be at a rate of forty-one percent of the total revenue 42 wagered at the vendor track after payout for prizes pursuant to this 43 chapter, after which time such rate shall be as for all tracks in clause 44 (C) of this subparagraph. 45 (G) notwithstanding clauses (A), (B), (C), (D), (E) and (F) of this 46 subparagraph, when no more than one vendor track located in the town of 47 Thompson in Sullivan county at the site of the former Concord Resort at 48 which a qualified capital investment has been made and no fewer than one 49 thousand full-time, permanent employees have been newly hired, is 50 located in Sullivan county and is within sixty miles from any gaming 51 facility in a contiguous state, then for a period of forty years the 52 vendor's fee shall equal the total revenue wagered at the vendor track 53 after payout of prizes pursuant to this subdivision reduced by the 54 greater of (i) twenty-five percent of total revenue after payout for 55 prizes for "video lottery games" or (ii) for the first eight years of 56 operation thirty-eight million dollars, and beginning in the ninth year S. 4989--A 3 1 of operation such amount shall increase annually by the lesser of the 2 increase in the consumer price index or two percent, plus seven percent 3 of total revenue after payout of prizes. In addition, in the event the 4 vendor fee is calculated pursuant to subclause (i) of this clause, the 5 vendor's fee shall be further reduced by 11.11 percent of the amount by 6 which total revenue after payout for prizes exceeds two hundred fifteen 7 million dollars, but in no event shall such reduction exceed five 8 million dollars. 9 Provided, however, that in the case of no more than one vendor track 10 located in the town of Thompson in Sullivan county at the site of the 11 former Concord Resort with a qualified capital investment, and one thou- 12 sand full-time, permanent employees if at any time after three years of 13 opening operations of the licensed video gaming facility or licensed 14 vendor track, the vendor track experiences an employment shortfall, then 15 the recapture amount shall apply, for only such period as the shortfall 16 exists. 17 For the purposes of this section "qualified capital investment" shall 18 mean an investment of a minimum of six hundred million dollars as 19 reflected by audited financial statements of which not less than three 20 hundred million dollars shall be comprised of equity and/or mezzanine 21 financing as an initial investment in a county where twelve percent of 22 the population is below the federal poverty level as measured by the 23 most recent Bureau of Census Statistics prior to the qualified capital 24 investment commencing that results in the construction, development or 25 improvement of at least one eighteen hole golf course, and the 26 construction and issuance of certificates of occupancy for hotels, lodg- 27 ing, spas, dining, retail and entertainment venues, parking garages and 28 other capital improvements at or adjacent to the licensed video gaming 29 facility or licensed vendor track which promote or encourage increased 30 attendance at such facilities. 31 For the purposes of this section, "full-time, permanent employee" 32 shall mean an employee who has worked at the video gaming facility, 33 vendor track or related and adjacent facilities for a minimum of thir- 34 ty-five hours per week for not less than four consecutive weeks and who 35 is entitled to receive the usual and customary fringe benefits extended 36 to other employees with comparable rank and duties; or two part-time 37 employees who have worked at the video gaming facility, vendor track or 38 related and adjacent facilities for a combined minimum of thirty-five 39 hours per week for not less than four consecutive weeks and who are 40 entitled to receive the usual and customary fringe benefits extended to 41 other employees with comparable rank and duties. 42 For the purpose of this section "employment goal" shall mean one thou- 43 sand five hundred full-time permanent employees after three years of 44 opening operations of the licensed video gaming facility or licensed 45 vendor track. 46 For the purpose of this section "employment shortfall" shall mean a 47 level of employment that falls below the employment goal, as certified 48 annually by vendor's certified accountants and the chairman of the 49 empire state development corporation. 50 For the purposes of this section "recapture amount" shall mean the 51 difference between the amount of the vendor's fee paid to a vendor track 52 with a qualified capital investment, and the vendor fee otherwise paya- 53 ble to a vendor track pursuant to clause (F) of this subparagraph, that 54 is reimbursable by the vendor track to the division for payment into the 55 state treasury, to the credit of the state lottery fund created by 56 section ninety-two-c of the state finance law, due to an employment S. 4989--A 4 1 shortfall pursuant to the following schedule only for the period of the 2 employment shortfall: 3 (i) one hundred percent of the recapture amount if the employment 4 shortfall is greater than sixty-six and two-thirds percent of the 5 employment goal; 6 (ii) seventy-five percent of the recapture amount if the employment 7 shortfall is greater than thirty-three and one-third percent of the 8 employment goal; 9 (iii) forty-nine and one-half percent of the recapture amount if the 10 employment shortfall is greater than thirty percent of the employment 11 goal; 12 (iv) twenty-two percent of the recapture amount if the employment 13 shortfall is greater than twenty percent of the employment goal; 14 (v) eleven percent of the recapture amount if the employment shortfall 15 is greater than ten percent of the employment goal. 16 (H) notwithstanding clauses (A), (B), (C), (D), (E), (F) and (G) of 17 this subparagraph, the track operator of a vendor track OR OFF-TRACK 18 BETTING OPERATOR OF A VENDOR OFF-TRACK BETTING CORPORATION shall be 19 eligible for a vendor's capital award of up to four percent of the total 20 revenue wagered at the vendor track OR VENDOR OFF-TRACK BETTING FACILITY 21 after payout for prizes pursuant to this chapter, which shall be used 22 exclusively for capital project investments to improve the facilities of 23 the vendor track which promote or encourage increased attendance at the 24 video lottery gaming facility including, but not limited to hotels, 25 other lodging facilities, entertainment facilities, retail facilities, 26 dining facilities, events arenas, parking garages and other improvements 27 that enhance facility amenities; provided that such capital investments 28 shall be approved by the division, in consultation with the state 29 [racing and wagering board] GAMING COMMISSION, and that such vendor 30 track OR VENDOR OFF-TRACK BETTING FACILITY demonstrates that such capi- 31 tal expenditures will increase patronage at such vendor track's OR 32 VENDOR'S OFF-TRACK BETTING facilities and increase the amount of revenue 33 generated to support state education programs. The annual amount of such 34 vendor's capital awards that a vendor track shall be eligible to receive 35 shall be limited to two million five hundred thousand dollars, except 36 for Aqueduct racetrack, for which there shall be no vendor's capital 37 awards. Except for tracks OR OFF-TRACK BETTING FACILITIES having less 38 than one thousand one hundred video gaming machines, each track operator 39 OR OFF-TRACK BETTING FACILITY OPERATOR shall be required to co-invest an 40 amount of capital expenditure equal to its cumulative vendor's capital 41 award. For all tracks OR OFF-TRACK BETTING FACILITIES, except for Aque- 42 duct racetrack, the amount of any vendor's capital award that is not 43 used during any one year period may be carried over into subsequent 44 years ending before April first, two thousand fourteen. Any amount 45 attributable to a capital expenditure approved prior to April first, two 46 thousand fourteen and completed before April first, two thousand sixteen 47 shall be eligible to receive the vendor's capital award. In the event 48 that a vendor track's capital expenditures, approved by the division 49 prior to April first, two thousand fourteen and completed prior to April 50 first, two thousand sixteen, exceed the vendor track's cumulative capi- 51 tal award during the five year period ending April first, two thousand 52 fourteen, the vendor shall continue to receive the capital award after 53 April first, two thousand fourteen until such approved capital expendi- 54 tures are paid to the vendor track subject to any required co-invest- 55 ment. In no event shall any vendor track OR VENDOR OFF-TRACK BETTING 56 FACILITY that receives a vendor fee pursuant to clause (F) or (G) of S. 4989--A 5 1 this subparagraph be eligible for a vendor's capital award under this 2 section. Any operator of a vendor track OR VENDOR OFF-TRACK BETTING 3 FACILITY which has received a vendor's capital award, choosing to divest 4 the capital improvement toward which the award was applied, prior to the 5 full depreciation of the capital improvement in accordance with general- 6 ly accepted accounting principles, shall reimburse the state in amounts 7 equal to the total of any such awards. Any capital award not approved 8 for a capital expenditure at a video lottery gaming facility by April 9 first, two thousand fourteen shall be deposited into the state lottery 10 fund for education aid; and 11 (I) Notwithstanding any provision of law to the contrary, free play 12 allowance credits authorized by the division pursuant to subdivision f 13 of section sixteen hundred seventeen-a of this article shall not be 14 included in the calculation of the total amount wagered on video lottery 15 games, the total amount wagered after payout of prizes, the vendor fees 16 payable to the operators of video lottery facilities, vendor's capital 17 awards, fees payable to the division's video lottery gaming equipment 18 contractors, or racing support payments. 19 S 3. Subparagraph (iii) of paragraph 1 and the opening paragraph of 20 paragraph 2 of subdivision b of section 1612 of the tax law, subpara- 21 graph (iii) of paragraph 1 as amended by section 1 of part O-1 of chap- 22 ter 57 of the laws of 2009, and the opening paragraph of paragraph 2 as 23 amended by section 1 of part J of chapter 55 of the laws of 2013, are 24 amended to read as follows: 25 (iii) less an additional vendor's marketing allowance at a rate of ten 26 percent for the first one hundred million dollars annually and eight 27 percent thereafter of the total revenue wagered at the vendor track OR 28 VENDOR OFF-TRACK BETTING FACILITY after payout for prizes to be used by 29 the vendor track OR VENDOR OFF-TRACK BETTING FACILITY for the marketing 30 and promotion and associated costs of its video lottery gaming oper- 31 ations and pari-mutuel horse racing operations, as long as any such 32 costs associated with pari-mutuel horse racing operations simultaneously 33 encourage increased attendance at such vendor's video lottery gaming 34 facilities, consistent with the customary manner of marketing comparable 35 operations in the industry and subject to the overall supervision of the 36 division; provided, however, that the additional vendor's marketing 37 allowance shall not exceed eight percent in any year for any operator of 38 a racetrack located in the county of Westchester or Queens; provided, 39 however, a vendor track OR VENDOR OFF-TRACK BETTING FACILITY that 40 receives a vendor fee pursuant to clause (G) of subparagraph (ii) of 41 this paragraph shall not receive the additional vendor's marketing 42 allowance. In establishing the vendor fee, the division shall ensure the 43 maximum lottery support for education while also ensuring the effective 44 implementation of section sixteen hundred seventeen-a of this article 45 through the provision of reasonable reimbursements and compensation to 46 vendor tracks OR VENDOR OFF-TRACK BETTING FACILITIES for participation 47 in such program. Within twenty days after any award of lottery prizes, 48 the division shall pay into the state treasury, to the credit of the 49 state lottery fund, the balance of all moneys received from the sale of 50 all tickets for the lottery in which such prizes were awarded remaining 51 after provision for the payment of prizes as herein provided. Any reven- 52 ues derived from the sale of advertising on lottery tickets shall be 53 deposited in the state lottery fund. 54 As consideration for the operation of a video lottery gaming facility, 55 the division, shall cause the investment in the racing industry of a 56 portion of the vendor fee received pursuant to paragraph one of this S. 4989--A 6 1 subdivision in the manner set forth in this subdivision. With the 2 exception of ANY VENDOR OFF-TRACK BETTING FACILITY AND Aqueduct race- 3 track, each such track shall dedicate a portion of its vendor fees, 4 received pursuant to clause (A), (B), (C), (D), (E), (F), or (G) of 5 subparagraph (ii) of paragraph one of this subdivision, solely for the 6 purpose of enhancing purses at such track, in an amount equal to eight 7 and three-quarters percent of the total revenue wagered at the vendor 8 track after pay out for prizes. One percent of such purse enhancement 9 amount shall be paid to the gaming commission to be used exclusively to 10 promote and ensure equine health and safety in New York. Any portion of 11 such funding to the gaming commission unused during a fiscal year shall 12 be returned to the video lottery gaming operators on a pro rata basis in 13 accordance with the amounts originally contributed by each operator and 14 shall be used for the purpose of enhancing purses at such track. In 15 addition, with the exception of Aqueduct racetrack, one and one-quarter 16 percent of total revenue wagered at the vendor track after pay out for 17 prizes, received pursuant to clause (A), (B), (C), (D), (E), (F), or (G) 18 of subparagraph (ii) of paragraph one of this subdivision, shall be 19 distributed to the appropriate breeding fund for the manner of racing 20 conducted by such track. 21 S 4. Subdivision a of section 1617-a of the tax law, as amended by 22 section 2 of part O-1 of chapter 57 of the laws of 2009, is amended to 23 read as follows: 24 a. The division of the lottery is hereby authorized to license, pursu- 25 ant to rules and regulations to be promulgated by the division of the 26 lottery, the operation of video lottery gaming at (1) Aqueduct, Monti- 27 cello, Yonkers, Finger Lakes, and Vernon Downs racetracks, or at any 28 other racetrack licensed pursuant to article three of the racing, pari- 29 mutuel wagering and breeding law that are located in a county or coun- 30 ties in which video lottery gaming has been authorized pursuant to local 31 law, excluding the licensed racetrack commonly referred to in article 32 three of the racing, pari-mutuel wagering and breeding law as the "New 33 York state exposition" held in Onondaga county and the racetracks of the 34 non-profit racing association known as Belmont Park racetrack and the 35 Saratoga thoroughbred racetrack; AND (2) AT ONE REGIONAL OFF-TRACK 36 BETTING CORPORATION FACILITY LICENSED PURSUANT TO SECTION ONE THOUSAND 37 EIGHT OR ONE THOUSAND NINE OF THE RACING, PARI-MUTUEL WAGERING AND 38 BREEDING LAW WITHIN ANY REGION IN WHICH NO PARTICIPATING COUNTY CONTAINS 39 EITHER A THOROUGHBRED OR STANDARDBRED RACETRACK LICENSED TO OPERATE 40 VIDEO LOTTERY GAMING BY THE STATE GAMING COMMISSION ON THE EFFECTIVE 41 DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND THIRTEEN WHICH ADDED 42 THIS PARAGRAPH. Such rules and regulations shall provide, as a condi- 43 tion of licensure, that racetracks OR REGIONAL OFF-TRACK BETTING CORPO- 44 RATIONS, AS CREATED BY SECTION FIVE HUNDRED TWO OF THE RACING, PARI-MU- 45 TUEL WAGERING AND BREEDING LAW, to be licensed are certified to be in 46 compliance with all state and local fire and safety codes, that the 47 division is afforded adequate space, infrastructure, and amenities 48 consistent with industry standards for such video gaming operations as 49 found at racetracks in other states, that racetrack OR REGIONAL 50 OFF-TRACK BETTING CORPORATION employees involved in the operation of 51 video lottery gaming pursuant to this section are licensed by the racing 52 and wagering board, and such other terms and conditions of licensure as 53 the division may establish. Notwithstanding any inconsistent provision 54 of law, video lottery gaming at a racetrack OR REGIONAL OFF-TRACK 55 BETTING CORPORATION pursuant to this section shall be deemed an approved 56 activity for such racetrack OR REGIONAL OFF-TRACK BETTING CORPORATION S. 4989--A 7 1 under the relevant city, county, town, or village land use or zoning 2 ordinances, rules, or regulations. No entity licensed by the division 3 operating video lottery gaming pursuant to this section may house such 4 gaming activity in a structure deemed or approved by the division as 5 "temporary" for a duration of longer than eighteen-months. Nothing in 6 this section shall prohibit the division from licensing an entity to 7 operate video lottery gaming at an existing racetrack as authorized in 8 this subdivision whether or not a different entity is licensed to 9 conduct horse racing and pari-mutuel wagering at such racetrack pursuant 10 to article two or three of the racing, pari-mutuel wagering and breeding 11 law. 12 The division, in consultation with the [racing and wagering board] 13 STATE GAMING COMMISSION, shall establish standards for approval of the 14 temporary and permanent physical layout and construction of any facility 15 or building devoted to a video lottery gaming operation. In reviewing 16 such application for the construction or reconstruction of facilities 17 related or devoted to the operation or housing of video lottery gaming 18 operations, the division, in consultation with the racing and wagering 19 board, shall ensure that such facility: 20 (1) possesses superior consumer amenities and conveniences to encour- 21 age and attract the patronage of tourists and other visitors from across 22 the region, state, and nation. 23 (2) has adequate motor vehicle parking facilities to satisfy patron 24 requirements. 25 (3) has a physical layout and location that facilitates access to and 26 from the horse racing track portion of such facility to encourage patro- 27 nage of live horse racing events that are conducted at such track. 28 S 5. This act shall take effect the first of January next succeeding 29 the date on which it shall have become a law.