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Nassau OTB misses $3 million payment to county

A man uses a video lottery terminal on

A man uses a video lottery terminal on Saturday at Resorts World Casino at Aqueduct Racetrack. Credit: Danielle Silverman

Nassau Regional Off-Track Betting Corp. missed a deadline to pay $3 million to Nassau County under a revenue-sharing agreement for video lottery terminals at Aqueduct Racetrack, generating concern about whether OTB will be able to make a $20 million payment due next year.

Disclosure of the missed payment comes as Nassau County Executive Laura Curran, a Democrat who took office Jan. 1, is looking for new revenue and cuts to balance the $3 billion county budget for 2018. NIFA already has identified $104.7 million in uncertain revenue in the budget.

OTB was scheduled to pay $3 million to the county by March 31, the end of the state’s fiscal year, according to Nassau County officials and the state board that controls county finances.

OTB and Nassau County officials say the betting agency will make the $3 million payment soon.

But officials of the Nassau Interim Finance Authority, the county’s financial control board, say the delay in the $3 million payment has increased their concern about whether OTB can make another payment of $20 million due by next March 31.

NIFA chairman Adam Barsky also said the control board has long been concerned that the OTB agreement to make the annual payments to Nassau isn’t “as ironclad as we would like it.”

Nassau OTB gets revenue from more than 500 dedicated VLTs at Aqueduct as a result of language in the 2016 state budget.

Nassau was entitled to $3 million from the Aqueduct VLTs in calendar year 2016, $3 million in the 2017 state fiscal year and $20 million in subsequent fiscal years, according to letters OTB sent in 2016 to Barsky and then-County Executive Edward Mangano.

Nassau OTB officials say they expect to pay the county by May 15 and that they believe such a payment would be “timely.”

Joseph Cairo, OTB president, said in an interview that the March 31 deadline for paying the county wasn’t firm.

Cairo, also first vice chairman of the Nassau Republican Committee, said, “If we said [OTB would make payment] during the fiscal year, we meant that at the end of the fiscal year, we would review our books, do our filings and then after seeing that everything was in order, we would then also remit to the county the money they were due within a reasonable period of time at the conclusion of the fiscal year.”

Conal Denion, special counsel in the Nassau County Attorney’s office, said, “The main thing is we’re expecting it. It is late, but we’re still counting on getting it. We’re still expecting the $20 million to come in future years.”

Curran spokesman Michael Martino said the administration did not contact OTB ahead of the March 31 deadline, but that “it was understood that the situation would be addressed.”

The revenue-sharing agreement between OTB and Nassau grew out of a long-running battle over building a casino with video lottery terminals in Nassau.

Community groups in Westbury fought a proposal to locate the casino at the old Fortunoff site on Old Country Road in Westbury. Nassau OTB was deeply in debt, and agency officials argued they needed new VLT revenue to stay afloat. Nassau OTB also looked to put a VLT gambling parlor at Belmont Park, but local groups opposed it.

In 2016, language in the state budget allowed Nassau OTB to transfer its right to host up to 1,000 VLTs at a casino to Genting New York LLC, which operates Resorts World Casino at Aqueduct. There are 505 VLT terminals assigned to Nassau OTB at Aqueduct.

NIFA executive director Evan Cohen said at a recent NIFA meeting that the control board had expected OTB to make the $3 million payment by March 31.

The county hasn’t “received that money, and we’ve always been concerned that the commitment from OTB through the county wasn’t as ironclad as we would like it, and it left a lot of room for OTB to withhold the money,” Barsky said in an interview.

“So, we’ve been highlighting that as an issue,” Barsky said. “And this year, they’re expecting to get $20 million, so it’s a more significant number this year.”

There are exceptions to the March 31 payment deadline, including if Genting is late with payments to OTB or if a “material adverse event” occurs. That would include the opening of a similar “full-service” casino within a 65-mile radius of Aqueduct or if Resorts World’s gambling revenue drops by 10 percent or more.

In the 2017 state fiscal year, more than $6.1 billion was wagered at Nassau OTB’s machines at Aqueduct, according to the state Gaming Commission. Net revenue for Nassau OTB after players’ winnings were paid was $147.75 million. Daily net revenue for OTB averaged $881 per machine, the highest among New York State’s 11 video gambling sites. Net revenue per machine averaged $310 statewide.

Resorts World Casino operated an average 5,100 VLTs at Aqueduct last year.

Suffolk OTB has made the guaranteed payment of $2 million to Suffolk County from first-year VLT operations at Jake’s 58 Hotel & Casino in Islandia, county spokesman Jason Elan said.

Under a plan that emerged from Suffolk OTB’s bankruptcy, Suffolk County is guaranteed a total of $13 million for the casino’s first 10 years of operation, including $2 million the first year and $3 million the second.

The county is to receive $1 million a year from the third through 10th years. Otherwise, profits go to creditors until they’re paid off.

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