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Gambling Has
Its Price

By Matt Youngfrau
MONTICELLO — April 19, 2002 – On Halloween of last year, New York State Governor Pataki signed legislation that changed the future of Sullivan County.
The legislation calls for six Indian Gaming casinos (three in the Buffalo/Niagara Falls area and three in Sullivan and Ulster counties), Video Lottery Terminals (VLTs) at five racetracks (Finger Lakes, Yonkers, Vernon Downs, Aqueduct, and Monticello Raceways), and the state’s inclusion in the Powerball lottery.
To most, the key was the casinos coming to the Catskills. However, two lawsuits were filed to challenge the constitutionality of the Legislation. More than likely, it will be tied up in the court system for years.Until it is settled, no construction will even begin on any casino.
What has been overlooked however is VLTs. The New York State Lottery Commission has decided, despite the pending litigation to move forward with the VLTs and the Powerball Lottery. In November, VLTs will be at eight New York State racetracks. Besides the five named, three more additional racetracks were added with local approval: Batavia, Buffalo, and Saratoga.
With a little over six months before the VLTs arrive, Monticello Raceway is preparing for the 1,800 VLTs that will be there.
In may, after the Sullivan County Legislature passes a law on the boundary amendment of the Empire Zone, it is expected that the Raceway will be added to the Zone. The reasoning is that within the next seven or eight months, the racetrack will be adding 294 jobs. Some of those jobs will be in food and beverages, cage and count, administration, marketing, security, housekeeping, and valet.
“We definitely meet the criteria for job creation,” commented Monticello Raceway President Cliff Ehrlich. “While the Empire Zone will help facilitate, we are in a holding pattern.”
That is because the racetracks and the horsemen are at odds with state officials over how much money they will receive from the VLTs. Out of every ten dollars spent, nine dollars goes back to the customer. Out of the dollar the VLTs get, 12.5 percent goes to the tracks and another 12.5 percent goes to the horsemen. That leaves 75 percent that goes to the state. That does not sit will with the racetracks.
“Monticello is one of many tracks that doesn’t know how to make the plan work,” Ehrlich remarked. “I am hoping that legislators and the Lottery Commission can put their heads together with the tracks and the horsemen to make the VLTs a reality.”
A decision on this is expected soon. According to Ehrlich, if the percentage is not raised, there are other ways to ease the racetracks’ burdens. One idea is to remove the three-year sunset provision. As it stands now, the VLTs will only be allowed for three years. The racetracks would like to see that changed to five years or longer.
Another change could be adjusting the hours the machines are allowed to be operated. As it stands now, the machines will only be allowed 12 hours a day (Sunday-Thursday, 10 a.m. to 10 p.m. and Friday and Saturday from noon to midnight). The tracks would like to see those hours changed to 10 a.m. to 3 a.m. seven days a week.
The other big problem is operating costs and capital expenses. The way the plan stands now, all tracks assume 100 percent of operational costs and capital expenditures. The racetracks feel the state can help with this.
“How can we go forward and lose money?” Ehrlich asked. “New York State anticipates $600 million in revenue [from the VLTs] for state education. It is very modest what we are asking for.”
Other states have made VLTs work for all involved, West Virginia, Delaware, New Mexico, and Louisiana. In fact, the average amount the other tracks in other states gets is 52.93%. Also, the other states’ tracks only assume 12-15 percent of the operating costs.
“Those other models have been very successful,” Ehrlich said. “I would like to meet with local legislators, specifically State Senators William Larkin and John Bonacic and State Assemblyman Jake Gunter, and discuss some solutions.”
Besides the VLTs, it is hoped that renovations will take place at the Raceway. In the original business plan, they were looking at $20 million in renovations. Ehrlich admits that it probably will not be feasible and will have to be scaled down.
The renovations they hope to include upgrading the entrance roadway, resurfacing the parking lot, a new HVAC (heating and air conditioning) system, electrical upgrades, roofing, construction of gaming floor, a new racebook, a buffet dining room, and surveillance equipment. No time table has been set for when or if the renovations would take place.
“My concern is that with such a potential upside to Sullivan County and to the horsemen and to the ancillary businesses that the state can’t afford to not let this happen,” remarked Ehrlich. “Even with no renovations at all, the business wouldn’t work. the operations couldn’t make it work [in it’s current form].”
While many questions still linger, the state is going forward with the VLTs. Next week a decision is expected on who the central systems supplier will be. Two weeks after that, Requests for Proposals (RFPs) will go out on who will manufacture the machines.

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