VLT Vendor Selection
The long-delayed process to award the VLT operator at Aqueduct appears to be nearing resolution. Governor Paterson and legislative leaders have wrapped up their meetings with the half dozen entities vying for the VLT franchise and all indications are that a decision is imminent.
The reason for the new sense of urgency for finalizing the VLT deal is related to the state’s mounting budget deficit. On October 15, Governor Paterson released his plan to reduce the growing budget gap including an estimated $3 billion in combined spending cuts and revenue enhancers. The Governor specifically identified $200 million in new revenues from the Aqueduct VLT project for the current 2009-2010 fiscal year. This $200 million figure represents the upfront payment the state will receive when the contract is awarded. Interestingly enough, in recent weeks each of the remaining bidders has upped the “ante” by increasing the amount of upfront payments they are willing to give to the state in exchange for the rights to run the Aqueduct VLT facility. Aqueduct Gaming Entertainment, for example, originally offered to pay the state $150 million, but later offered an additional one-time payment of $100 million, if the state were to authorize increasing the number of VLTs from 4,500 up to 10,000 machines. Other bidders have likewise revised their financial proposals to increase their upfront payment. Governor Paterson in releasing his budget deficit reduction proposal was careful not to mention any specific VLT bidder, but instead stated that the $200 million figure was an “estimate” based on the bids submitted. While the franchise agreement does not require further legislation, it will require agreement from the Speaker of the Assembly and the leader of the Senate. The Governor is expected to call the leaders together again soon to finalize their decision.
NYTB has remained a vocal and steadfast advocate for finally making the VLT s at Aqueduct a reality. We have continued to push for resolution with legislative leaders and administration officials on behalf of our members and the future viability of the economic engine that is the thoroughbred racing and breeding industry.
NYC OTB Bankruptcy
In the wake of the Governor’s executive order authorizing NYC OTB to file for Chapter Nine bankruptcy protection, the corporation has been grappling with how to restructure the entity and confront its mounting debt, including millions owed to the racing industry. NYC OTB has until November 1 to submit its reorganization plan.
During their recent September Board meeting, NYC OTB Chairman, Sandy Fucher laid out a grim financial picture for the nation’s largest off-track betting entity. In addition to the money owed to the industry, the corporation has $228 million in accrued liabilities in employee retirement, health and other benefits. Fucher who was appointed by Governor Paterson in 2008 following the state’s takeover of the corporation, has warned that unless there is a complete overhaul of the current structure and business model, including the fees required to be paid to the racing and breeding industry, NYC OTB will not be able to survive going forward. The reorganization plan also requires legislative approval and will likely include employee lay-offs, some consolidation or shutdown of parlors and authority to offer bonds to raise capital.
The NYTB has a strong, vested interest in the current and future success of all the state’s OTBs but none more so than NYC OTB which accounts for about 40% of the income to the Breeding Fund. We have been active in the state’s Task Force on the Future of OTB, providing input and recommendations in the best interests of the industry and our members. We will continue to advocate to protect the original intent of the program and guard against pursuing any new policies or proposals that would negatively impact the thoroughbred breeding industry
Special Session
Due to the state’s current fiscal woes, Governor Paterson has said that he will call the Legislature back to Albany for a special session as early as October 27. While legislative leaders have agreed to meet with the Governor and administration officials to discuss options for closing the budget gap, the timing of a special session remains up in the air. The uncertainty is due in large part to the continued turmoil and unrest within the Senate Democrat Conference. With a razor thin majority, and recent legal troubles threatening the status of at least one Senator, the Democrats will be challenged to achieve consensus on legislation.
