By Nathan Mayberg
MONTICELLO — July 9, 2004 – Horsemen and breeders in New York State took a blow after a decision by the New York State Appellate Court on Wednesday that said they could not receive a percentage of the video lottery terminal takeout, according to New York State Constitutional limits.
However, the law calls for no direct action against the horsemen, essentially leaving the matter up to the New York State Court of Appeals.
The same decision turned out to be a victory, however, for those in favor of the video lottery terminals, Native American casinos and the Mega Millions lottery. All of them were upheld by the court as constitutional.
Video lottery terminals were deemed equal to lottery machines, not slot machines, thus exempting them from a New York State Constitutional ban.
Native American gaming was upheld in New York State, as long as the governor signs a compact with the tribes involved.
Although the court agreed with the state in that the VLTs are lottery machines, they ruled that only the New York State Lottery could receive such revenue. The horsemen, or any other party, cannot gain any takeout, according to the New York State Constitution.
Takeouts vary amongst each raceway but generally run between 6 percent in the first year to up to 10 percent after several years for the horsemen – which was what the state had in mind when it passed legislation allowing such terminals at raceways.
The Monticello horsemen are guaranteed 7.5 percent initially and would take out 10 percent after several years, per the agreement.
Sixty-one percent of all VLT revenue in the state is currently earmarked for education through the lottery.
Kevin Quinn, spokesman for Governor George Pataki, said, “While we are still reviewing the decision, we do expect that the ruling will be appealed.”
The suit that sparked the ruling was brought by a large anti-gambling coalition, including state legislators, not-for profit groups, individuals and originally the Saratoga Chamber of Commerce. However, the chamber was eliminated from the proceedings. So its president, Joseph Dalton Jr., became a plaintiff himself.
Dalton said he planned to appeal the decision. But he said the coalition is not seeking a stay. Therefore, the racinos will be able to operate and continue reimbursing the horsemen and breeders, as they have been doing.
It will now be up to the New York State Court of Appeals to make a judgment and, if necessary, determine how to enforce it.
Dalton said his group was taking the state to court because “we think that casino-type gambling is unconstitutional. We don’t think it is a form of economic development. It is another form of taxation.”
He took the VLTs to task for not giving “local governments anything to cover their costs,” including traffic control, police and roads.
“[Casino operators] are not interested in sending you out to the community,” he said.
Richard Fulfree, the attorney representing the Monticello Harness Horsemen’s Association, said of the ruling, “They always seem to find a way to give the short end of the stick to the horsemen.”
Without a law to ensure the horsemen received a share of the VLT takeout, “you can be sure that the horsemen would get nothing,” said Fulfree.
New York State Senator John Bonacic said he would support a separate fund for the horsemen and breeders to replace the current system, in case the New York State Court of Appeals concurred with the recent decision.
He also expects the governor to rework the law distributing profits to the horsemen and breeders, and limit the funds to the New York State Lottery for education, as a contingency plan in case the Court of Appeals rules against the state or if he does not follow through on an appeal. Pataki is currently consulting with Attorney General Eliot Spitzer on the matter.
Bonacic was pleased with the rest of the decision.
“If you are a casino advocate, there is more positive than negative,” he said.
The state expects to receive $240 million from the video lottery terminals this year. There are currently four racinos open: Buffalo Raceway, Finger Lakes, Monticello Raceway and Saratoga Raceway. After all eight racinos open, including two of the largest ones at Aqueduct Raceway and Yonkers Raceway, the governor has estimated $2 billion in annual revenue, said Bonacic.
The video lottery terminals have been a huge boost to the raceways so far. The Monticello Raceway has seen daily attendance push past 20,000 more than once since it opened last week, raking in millions of dollars. Saratoga Raceway reports an average weekly attendance of between 50,000 and 60,000.