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Most NY racinos' profits have declined

A woman plays a video lottery terminal at

A woman plays a video lottery terminal at Saratoga Casino and Raceway in Saratoga Springs, N.Y. on Jan. 14, 2015. New York has nine horse tracks that feature rows of flashing lottery terminals that look like standard video slot machines. Credit: AP / Mike Groll

Video gambling parlors of the type proposed in Nassau and Suffolk counties operate in nine locations across New York State.

All the existing video-lottery-terminal parlors, unlike the two VLT casinos proposed on Long Island, are at state-run racetracks. There are seven upstate and two downstate -- in Queens and Yonkers.

There is another key difference. The state makes annual payments, determined by formula, to the municipalities where the casinos are located to compensate for services such as public safety. There is no state formula guaranteeing payments to communities that will host the Nassau and Suffolk casinos, although Suffolk OTB, which is in bankruptcy, has agreed in a settlement to pay the county $2 million in the first year of VLT operations and $3 million the second year.

Nassau and Suffolk Regional Off-Track Betting Corps., which will run the proposed local parlors, will make annual payments to the counties only if the VLT operations turn profits. OTB officials predict the parlors will be popular, and profitable enough to provide Nassau and Suffolk with annual payments of $20 million each or more.

New York State's VLT casinos, also known as racinos -- are at Aqueduct Racetrack in Queens and Yonkers Raceway, and in Saratoga, Monticello, Hamburg, Vernon, Nichols, Batavia and Farmington. While there is no publicly available data on the casinos' profits, most showed significant revenue increases in the first few years after opening, according to state Gaming Commission data.

Net VLT revenue after paying gamblers grew at eight of the nine racinos by an average 38 percent in the first five years of operation. Resorts World at Aqueduct did not open until 2012. Seven of the eight VLT casinos continued to post gains until 2011-12. (Monticello Casino and Raceway showed revenue declines from 2006-07 until 2009-10).

Since 2011-12, net revenue at the eight has declined by 7.1 percent, from $1.17 billion in 2011-12 to $1.09 billion in 2014-15, state data show.

Factoring in Resorts World, revenue dipped 0.3 percent or a total of $7 million at all nine racinos in 2014-15 -- the first year-to-year decline in VLT revenue in the program's 11-year history. Only two of the nine parlors -- Resorts World and Batavia Downs Gaming in Batavia -- saw upticks in revenue last year.

Resorts World, the largest racino in New York with 5,000 VLTs, had a 2.9 percent increase in revenue between 2013-14 and 2014-15, to $816 million.

Like the proposed Long Island parlors, the nine VLT facilities also must distribute a significant portion of their revenue to the state Education Fund. The shares vary depending on the number of machines and increase as revenue rises.

For example, Empire City Casino at Yonkers Raceway sends 47 percent of its first $62.5 million in annual net revenue and 51 percent of anything over that amount.

The racinos also are required by law to distribute 10 percent of their revenue to the state Gaming Commission to administer the VLT program, and 10 percent goes to the New York Racing Association and to horse breeders.

Almost all the New York municipalities that host VLTs receive set annual revenue-sharing payments they can use to cover costs for law enforcement, roadway repairs and other services associated with the VLT parlors.

The payments, calculated using formulas set by the state Division of the Budget, come from the state Aid to Municipalities program, the primary vehicle for providing direct aid to local governments.

In 2007-08, the first year payments were made, host municipalities were promised funding equal to 2 percent of a gambling facility's net revenue, state Budget Division spokesman Morris Peters said. That amounted to a total of $34 million.

But lawmakers reduced shares dramatically after the 2008 stock market meltdown and municipalities have been playing catch-up ever since. Payments have fluctuated as the rates are bargained every year in the state budget.

In the 2009-10 fiscal year, some host communities saw their share unchanged, while some were halved and Saratoga Springs received nothing. Collectively, they received $26.4 million. The next year, communities received $25.8 million.

Lawmakers have adjusted the formula upward a bit since then. In the 2011-12 and 2012-13 fiscal years, communities received 0.9 percent of net revenue; in 2013-14, they received 1.1 percent, and 1.4 percent this year. That formula is set to continue for 2015-16.

Resorts World does not make payments to New York City due to a 2007 change to the state finance law that allows compensation payments only for municipalities with populations of fewer than 1 million. Payments to the City of Yonkers are set by statute and have remained largely unchanged every year.

Upstate Tioga County, home to the Tioga Downs & Casino, received an average $255,000 in each of the past eight years.

Martha Sauerbrey, chair of the Tioga County Legislature, said the payments have been adequate. The VLT casino expenses are "insignificant," and the payments go into county coffers to pay for general expenses, Sauerbrey said. "From a government standpoint, having the casino has been no problem," she said. "It's been a very positive experience."

The Town of Vernon, in Oneida County in the foothills of the Adirondack Mountains, has received an average $251,000 annually over the past eight years. Anthony Carvelli, the Oneida County finance commissioner, said the funding isn't nearly enough to cover costs that include snow removal on roadways leading to the casino and law enforcement.

"Vernon Downs made more than $40 million last year and we got $200,000," he said. "I am not sure that is adequate." With Yancey Roy

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