A majority decision (5-2) at New York’s highest court, the Court of Appeals, rules that all aspects of the state law of October 2001 are upheld. Previously, the mid-level Appellate Division of the state’s Supreme Court had decided that much of the 2001 law was legal, but the lower court had excluded splitting revenues from Video Lottery Terminals with horse breeders and owners at the racetracks. The decree is seen as a major victory for the racing industry, which will be able to find investors for VLT operations now that there is no longer any uncertainty.

The high court decided that VLTs are not slot machines as they meet the mandatory requirements for being considered a lottery game. In its written ruling the court stated, “if the video lottery is a lottery, the statute providing for it is constitutional regardless of whether the terminals used to play the lottery also look like, or even meet the penal law definition, of slot machines.” It went on, “It is of no constitutional significance that the tickets are electronic instead of paper. The particular methods of conducting the lottery are subject to change with time.”

Yesterday’s ruling also makes clear that money from VLT revenue can be awarded for racing purses and breeding development, something that had been disputed as being unconstitutional. The racetracks will now get 32% of the first $50 million in annual revenue, 29% of the next $100 million and 26% of anything above. There is also entitlement for marketing and promotions expenses. At present there are VLY parlours at Finger Lakes Gaming & Racetrack and three harness tracks at Buffalo Raceway, Monticello Raceway and Saratoga Raceway. Operations at Yonkers Raceway in Westchester County and the Aqueduct thoroughbred track in Queens are now expected to be established.

The Court of Appeals, in declaring legal all aspects of the gambling expansion in New York State, has upheld the state’s authorization of up to six new tribal casinos and its participation in the Mega Millions multi-state lottery. In the case of the Mega Millions, the court determined that the state retains sufficient control over tickets to make it constitutional. In the case of the Indian casinos the judges stated that the federal Indian Gaming Regulatory Act supersedes state constitutional prohibitions, as long as the casinos are on tribal lands.

It is estimated that when the additional gambling venues are up and running the state will collect in the region of $1 billion in annual revenues. The original October 2001 law was passed in the climate of economic recession brought about by the destruction of the World Trade Center. (E-05.04.05)

© Copyright 2005 CasinoCompendium



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