Nassau-Resorts World deal called serious threat to NYRA purses

Posted: Dec. 14, 2016

Legislation that allowed Nassau County Off-Track Betting to have 1,000 video lottery terminals at Resorts World Casino at Aqueduct Racetrack could result in a loss of $10 million to $12 million in purse revenue for New York Racing Association tracks.

The situation was discussed Dec. 14 during a NYRA board of directors meeting. Nassau County OTB won the approval earlier this year after it was unable to establish a VLT casino in its own county; Resorts World is located in Queens, a borough of New York City.

The 1,000 machines dedicated to Nassau OTB—less than 500 are operating thus far—aren’t required to return a percentage of revenue to Thoroughbred racing as are the bulk of the machines at Resorts World. But New York Thoroughbred Horsemen’s Association President Rick Violette Jr., a member of the NYRA board, said the issue goes deeper.

In mid-October, when the Nassau OTB deal began, Resorts World operator Genting designated about 460 machines that direct revenue to the off-track betting operator. Violette said at one time the average win per machine for all 5,500 devices at Resorts World was well over $400; the Nassau OTB VLTs are producing a win per machine of $700, and the average for the remaining 5,000 that generate purse revenue is now about $350.

“The effects are devastating,” Violette said. “We never envisioned side-by-side machines taking money from one pocket and putting it into another pocket. We could lose $10 million to $12 million in (purse) revenue next year. The biggest question for us is, ‘Why would anyone want to cripple racing in New York?’ We’re in harm’s way if this continues.”

The discussion came just before the NYRA board approved what it called a “conservation” operating budget for 2017. NYRA projects total purse payments of about $105 million next year, down from the projection of $106 million for 2016.

Using those figures and the anticipated hit from the Nassau County OTB-dedicated VLTs, purses would decline about 10%.

NYRA President and Chief Executive Officer Christopher Kay said the organization is “looking for more clarity on how to proceed” given the revenue diversion. NYRA Vice Chairman Michael Del Giudice said the association “is going to obviously try to be as aggressive as we can to get as much money as we can out of this.”

Under the deal approved by the state legislature, Genting must pay Nassau County OTB $9 million in each of the first two years and $25 million a year thereafter. Under previous legislation, had Nassau County OTB located the VLTs in its own jurisdiction, 2.3% of the revenue would have gone to racing only if gaming at Resorts World took a hit because of the competition.

According to the NYRA budget document, total VLT revenue for 2017 is projected at $118.5 million, with $61 million for purses, $32.8 million for capital improvements and $24.6 million for operations. The projection is based on 5,000 machines at Resorts World with a daily average of $450 win per machine.