March 25, 2016
Tom Precious, Blood-Horse

Racing and gambling matters are still in play in New York as the governor and lawmakers try in the coming week to put the finishing touches on a new state budget.

Gov. Andrew Cuomo and lawmakers will be deciding everything from whether a special tax break will be given to the operators of Finger Lakes Gaming & Racetrack to whether the state’s equine drug-testing lab will find a new home.

The budget will determine, for now anyway, the fate of a plan to legalize daily fantasy sports and Internet poker, two items being pushed hardest by the Senate. As of March 25, the Internet gambling idea was facing an uphill climb in negotiations, while an army of daily fantasy sports lobbyists were still pressing to get the contests legalized.

The major DFS operators the week of March 20 agreed to halt doing business with New York residents while the legislative and legal wrangling is debated.

The governor, Assembly, and Senate already agreed on the easy matters: extending a number of racing-related laws for another year, such as existing simulcast provisions. But the Assembly has, at least so far, rejected Cuomo’s proposal to competitively bid the equine drug-testing program, which is now exclusively run at Morrisville College, the only qualified equine lab in New York.

The Assembly, in its recent one-house budget proposal, also scrapped Cuomo’s plan to raise a fee imposed on total daily pools for on-track, off-track, and simulcast wagers from 0.5% to 0.6%; the tax was established to have the racing industry help pay for the operations of the New York State Gaming Commission, which regulates all gambling ventures in New York.

The Assembly, which is run by Democrats, also punted on a plan by Cuomo to have the New York Thoroughbred Horsemen’s Association direct 0.5% of the 2% of purse money it receives for equine drug-testing research and equipment.

All sides in the budget talks back some level of a bailout for Finger Lakes, which officials said could face closure in the next year or so following the planned opening next year of a major, full-blown casino just 25 miles from the track. How much of the state’s help might go to the owners of the track, and whether the horsemen will see any bump in decreasing purse levels, is still uncertain.

A Senate plan seeks to have Finger Lakes maintain its race dates at 2015 levels if the financial help does come from the state. A plan floated in the governor’s budget in January would lower the tax levels on Finger Lakes’ video lottery terminal revenue from about 69% to 59%.

The Assembly is also proposing to establish a Jockeys’ Health Trust, which would be run by the New York Racing Association and be used for jockeys to obtain health insurance benefits through a multi-state plan; one of the ideas behind the provision is to help smooth the way for jockeys who race in multiple states.

In a curious bit of timing not lost on some industry insiders, the Senate is also proposing a study the impact of commercial casinos on horse racing and the VLT casinos that nine of them now run across the state. The call for a study comes three years after the state approved up to seven commercial casinos with slot machines and table games. Three of those casinos are now under construction.

The Senate also wants in the budget the statutory creation of a racing fan advisory council. There already is such a group, which was created by the old New York State Racing and Wagering Board.

The Senate wants to put more legal standing into the panel’s existence, with specific duties and restrictions on who can serve on the group’s board. It would also put into law the power of the panel’s members to have greater access to racetrack facilities and grounds during race days and workout periods.

The Senate is pitching the legalization and regulation of the DFS industry. DraftKings and FanDuel have stopped doing business with New Yorkers following a settlement with Attorney General Eric Schneiderman, who calls DFS contests illegal under state law.

The settlement provides a legal cooling-off period, giving the industry until the end of June to try to get lawmakers and Cuomo to enact legislation making the contests explicitly legal in New York and adding new consumer protections. If that doesn’t happen, Schneiderman said the legal case against the two DFS giants, which is now pending in a mid-level appeals court, will resume.

Sen. John Bonacic, chairman of the Senate Racing, Gaming and Wagering Committee, said there is a “strong possibility” DFS will make it into the budget. “Because it’s revenue,” he said of the licensing fees and annual tax that would be imposed on DFS companies.

If not part of the budget, Bonacic said he believes DFS legalization will occur before the 2016 session ends in June. Asked why, he said: “I think it’s a no brainer.”

Bonacic is also the senator who got a provision inserted to the Senate’s recent one-house budget plan that calls for legalizing Internet poker. The bill states that the “the Internet has become an integral part of society and Internet poker a major form of entertainment for many consumers.”

The deadline for the new state budget, and the various racing and gambling measures to be decided, is March 31.