There is a newer version of the New York Consolidated Laws
2006 New York Code - Franchise To Nonprofit Racing Association For Running Races, Steeplechases And Hunt Meetings.
§ 208. Franchise to nonprofit racing association for running races,
steeplechases and hunt meetings. 1. a. Any nonprofit racing association
organized pursuant to section two hundred two of this chapter, proposing
to conduct a race course or race meetings for running races or
steeplechases or hunt meetings, may apply to the state racing and
wagering board for a franchise for a period of not more than twenty-five
years nor more than the period specified by law in any particular case,
whichever is less. If in the judgment of such board the public interest,
convenience or necessity will be served thereby and a proper case for
the issuance of such franchise is shown consistent with the purposes of
this article and the best interest of racing generally, it shall grant
such franchise for a period of not more than twenty-five years nor more
than the period specified by law in any particular case, whichever is
less, which shall specify the minimum number of days in any year on
which, and the places where, such association may operate.
Notwithstanding the provisions of section seven of the general business
law, or any other inconsistent provision of general, special or local
law, the state racing and wagering board shall specify annually the
dates on which, and the hour of the first post time for days during
which, such association may operate at the places and for the full
number of days specified in its franchise. In consideration for any
franchise granted pursuant to this section such association shall pay to
the New York State Thoroughbred Racing Capital Investment Fund in order
to reduce such debt obligations which such non-profit racing association
may have incurred in accordance with article II-A of this chapter or
chapter two hundred eighty-one of the laws of nineteen hundred
ninety-four annually on or before the fifteenth day of the third month
following the close of every calendar year subsequent to nineteen
hundred ninety-seven as a franchise fee for each such calendar year, an
amount equal to the "entire adjusted net income" of such association, as
defined in paragraph b of subdivision one of this section, less two
million dollars, which two million dollars or an amount equal to "entire
adjusted net income" if such "entire adjusted net income" is less than
two million dollars shall be used, in addition to any other amounts
required to be paid by this chapter, exclusively for the purpose of
increasing purses, including stakes, premiums and prizes, awarded to
horses in races conducted by such association. The repayment of such
debt obligations to the New York State Thoroughbred Racing Capital
Investment Fund shall be restructured pursuant to agreement between such
fund and such association. The basis for determining such annual
franchise fee shall be subject to review from time to time as the
legislature may require. Any such franchise granted before January
first, nineteen hundred sixty-eight, and heretofore extended until
December thirty-first, two thousand shall be and hereby is extended and
shall continue in full force and effect to and including December
thirty-first, two thousand seven.
b. "Entire adjusted net income" shall be computed by adding to taxable
income (but not including taxable income imputed to the association by
the extension of debt), as heretofore provided, the amount by which the
operating expenses of such association exceed one hundred six percent of
such expenses during the prior year. Provided, however, that in any year
in which the average consumer price index for urban wage earners and
clerical workers prepared by the United States department of labor is
more than six percent higher than the average for such index during the
prior year, the percentage increase in such index, plus one hundred
percent, shall be used in lieu of one hundred six percent in calculating
such amount. For the purposes of this section, operating expenses shall
include all expenses of such association for such year except: (i)
charges for stakes, purses, interest, real estate taxes, extraordinary
nonrecurring charges, principal debt repayments for capital improvements
including interest thereon and other necessary expenditures directly
related to the construction and operation of a video lottery terminal
facility at Aqueduct racetrack, and depreciation; (ii) promotional costs
incurred in connection with specific events; (iii) costs incurred in the
purchase of advertising services; and (iv), for calendar years nineteen
hundred eighty-six and nineteen hundred eighty-seven, liability
insurance costs. In accordance with the provisions of subdivision four
of this section, the state comptroller shall ensure that such
association reports its expenses on a basis that accurately reflects the
provisions of this subdivision.
2. a. On or before November fifteenth of each year, such association
shall file an estimate of each state franchise fee payable for the next
succeeding calendar year with the director of the budget, the state tax
commission, the chairman of the senate finance committee, and the
chairman of the assembly ways and means committee. Such estimate shall
be accompanied by a report containing such information as the tax
commission may prescribe. On or before December fifteenth of each year,
the tax commission shall issue a schedule for the periodic payment of
the estimated franchise fee during the next succeeding year. Such
payments shall be made at the same time and in the same manner as the
pari-mutuel tax payments due under the provisions of subdivision two of
section two hundred twenty-nine of this chapter and in amounts
sufficient to ensure that eighty per centum of such franchise fee is
collected during the calendar year to which it is applicable.
b. Such franchise fee shall be paid to the state tax commission and
shall be accompanied by a report containing such information as said
commission may prescribe. If such fee is not paid when due, a penalty of
five per centum and interest at the rate of one per centum per month
from the due date to the date of payment of the fee shall be payable. If
any such report is not filed when due, or if in the opinion of the state
tax commission any such report is incorrect, such commission is
authorized to issue an assessment fixing the correct amount of such fee.
Such assessments may be issued within three years from the filing of any
report and may be issued at any time if no report is filed. Any such
assessment shall be final and conclusive unless an application for a
hearing is filed by such association within one year of the date of the
assessment. If the taxable income of any such association as returned to
the United States treasury department is changed or corrected by the
commissioner of internal revenue, or if an amended federal return is
filed, such association shall notify the state tax commission within
ninety days thereafter of such change, correction or amended return and
within one year thereafter, the tax commission may issue an assessment
of any additional tax due. The state tax commission or its duly
authorized representatives shall at all reasonable times have access to
the books and records of such association for the purpose of examining
and checking the same and ascertaining whether or not the proper amount
due the state is being paid by it. All moneys received under this
section shall be paid by the state tax commission into the general fund
of the state treasury.
3. Notwithstanding any other requirement of this article, for years
beginning on or after January first, nineteen hundred seventy-seven, the
capital expenditure plans of any such nonprofit racing association shall
be subject to the approval of the non-profit racing association
oversight board. To facilitate the exercise of this authority, the
non-profit racing association oversight board may require the annual
submission of the capital expenditure plans of such association on or
before November fifteenth of the year preceding the year for which the
plans are drawn. Such plans shall contain both the intended objects of
expenditure and the proposed sources of financing. Approval of the plans
by the non-profit racing association oversight board shall be based
solely on a finding that any borrowings contemplated to finance such
plans can reasonably be expected to be repaid by such association within
the term of its franchise and the provisions of existing law. Such
association may, with the approval of the non-profit racing association
oversight board, file amended plans subsequent to November fifteenth.
Copies of the non-profit racing association oversight board's approval
or rejection of all original and amended plans shall be filed with the
chairperson of the senate finance committee and the chairperson of the
assembly ways and means committee, within five days of their issuance.
4. Notwithstanding any other provision of this article, the state
comptroller shall, from time to time but not less than once in each year
examine the books and accounts of such association, including its
receipts, disbursements, contracts, leases, loans, investments and any
other matters relating to its financial operations and report the
results of each audit including his certification of the amount of net
income of the association for the preceding calendar year found by him
to be in excess of one million eight hundred fifty thousand dollars to
the governor and the legislature.
5. In considering an application for a franchise under this section,
the state racing and wagering board may give consideration to the number
of franchises or licenses already granted and to the location of tracks
covered by such franchises or licenses. By acceptance of any such
franchise and as a condition thereof the association to which it is
granted shall agree that it will conduct running races, steeplechases
and race meetings in accordance with the provisions thereof and that all
running races, steeplechases or race meetings conducted thereunder shall
be subject to such reasonable rules and regulations from time to time
prescribed by the state racing and wagering board.
6. Any franchise granted pursuant to this section may be revoked and
cancelled by the state racing and wagering board only for the reasons
and in the manner prescribed under the provisions of section two hundred
ten of this chapter. The action of the state racing and wagering board
in revoking a franchise and any determination by the state tax
commission of the franchise fee shall be reviewable in the supreme court
in the manner provided by and subject to the provisions of article
seventy-eight of the civil practice law and rules.
7. Except as otherwise provided in paragraph b of subdivision five of
section two hundred thirteen of this article, all concession contracts
entered into by any nonprofit racing association on and after January
first, nineteen hundred seventy-seven, shall be awarded only by a
process of competitive bidding approved by the non-profit racing
association oversight board.
8. If a non-profit racing association, which is franchised pursuant to
this section, and which (a) has entered into an approved capital
improvement plan as provided in section two hundred fifty-eight of this
chapter; (b) holds title to the racing facilities, as such term is
defined in subdivision ten of section two hundred fifty-two of this
chapter, whereat such association is franchised to conduct race meetings
for running races or steeplechases or hunt meetings and pari-mutuel
betting on the races run at such race meetings; and (c) voluntarily
relinquishes such franchises prior to their expiration, or voluntarily
declines to continue conducting race meetings and pari-mutuel betting on
the races run at such race meetings as required by its franchises unless
such declination is the result of strikes, acts of God, or other
unavoidable causes not under the control of such association, or
voluntarily affects corporate dissolution in the manner provided for by
article ten or eleven of the business corporation law and other
applicable provisions of law, or if such franchise or license is revoked
by the racing and wagering board, then, notwithstanding any other
provision of law to the contrary, such association shall transfer to the
non-profit racing association oversight board at the time of such
relinquishment, declination, revocation or dissolution all right, title
and interest held by such association in all such facilities, and all
capital improvements made to the real property and such facilities
except that if such relinquishment, declination, revocation or
dissolution is made pursuant to any provision of law enacted after the
effective date of the chapter of the laws which added this subdivision
then any provisions of such subsequent enactment of law which are
inconsistent with the provisions of this subdivision shall supersede the
provisions of this subdivision.
9. A non-profit racing association:
(a) which is franchised pursuant to this section and which holds title
to the racing facilities, as such term is defined in subdivision ten of
section two hundred fifty-two of this chapter, whereat it is franchised
to conduct race meetings;
(b) which acquired title to such facilities pursuant to the provisions
of section seven-b of chapter four hundred forty of the laws of nineteen
hundred twenty-six as added by section three of chapter eight hundred
twelve of the laws of nineteen hundred fifty-five;
(c) which acquired title to such facilities and provided for their
improvement with monies borrowed pursuant to a long term credit
agreement contracted by such association for such purposes with the
approval of the state racing commission pursuant to the provisions of
section nine-a of chapter two hundred fifty-four of the laws of nineteen
hundred forty as added by section three of chapter eight hundred
thirteen of the laws of nineteen hundred fifty-five; and
(d) which, (i) in accordance with the provisions of section nine-a of
chapter two hundred fifty-four of the laws of nineteen hundred forty as
added by section three of chapter eight hundred thirteen of the laws of
nineteen hundred fifty-five and (ii) with the approval of the state
racing commission, provided for the amortization of the debt incurred
pursuant to such long term credit agreement with revenues resulting from
the conduct of race meetings and pari-mutuel betting pursuant to
franchises issued pursuant to section seven-a of chapter four hundred
forty of the laws of nineteen hundred twenty-six as added by section two
of chapter eight hundred twelve of the laws of nineteen hundred
fifty-five and section four-a of chapter two hundred fifty-four of the
laws of nineteen hundred forty as added by section one of chapter eight
hundred thirteen of the laws of nineteen hundred fifty-five,
respectively, as continued in this section and in section two hundred
twenty-nine of this chapter respectively by chapter eight hundred
sixty-five of the laws of nineteen hundred eighty-two, shall not
utilize:
(i) such facilities;
(ii) any other assets acquired pursuant to the provisions of section
seven-b of chapter four hundred forty of the laws of nineteen hundred
twenty-six; or
(iii) the proceeds from any sale, pursuant to the provisions of
section two hundred nine-a of this article, of any such facilities or of
any such other assets or of any portion of any such facilities or other
assets for any purposes other than:
(1) conducting running and steeplechases and hunt meetings in New York
pursuant to a franchise issued by the state racing commission or the
state racing and wagering board for such purposes;
(2) conducting pari-mutuel betting at such race meetings pursuant to
franchises issued by the state racing commission or the state racing and
wagering board for such purposes;
(3) encouraging the raising, breeding and racing of thoroughbred
horses in New York state;
(4) establishing thoroughbred racing and pari-mutuel betting on such
racing in New York state on such a footing that it will command the
interest as well as the confidence and favorable opinion of the public
and so that these activities will provide reasonable revenue for the
support of government in accordance with the provisions of section nine
of article one of the state constitution;
(5) increasing the attendance at, and pari-mutuel wagering on,
thoroughbred races conducted by such association in New York state;
(6) conducting other activities not inconsistent with such non-profit
racing association's certificate of incorporation or its franchises or
with applicable laws and regulations, provided that the revenues derived
from such activities are utilized for the purpose of furthering the
accomplishment of any of the purposes listed in subparagraphs (1)
through (5) of this paragraph.
10. Any non-profit racing association which is franchised pursuant to
this section shall take such steps as are necessary to ensure that it
operates in a sound, economical, efficient and effective manner so as to
produce a reasonable revenue for the support of government. In carrying
out these responsibilities, the non-profit racing association oversight
board shall require the appropriate officers of the association to
present to such board for its approval prior to the beginning of each
fiscal year an operating budget covering all of the expenses planned to
be incurred during such year and a plan of operation. The form of such
plan of operation shall be prescribed by such board.
If at any time, the total expenses of such association, except
principal debt repayments with interest thereon for capital improvements
and other necessary expenditures directly related to the construction
and operation of a video lottery terminal facility at Aqueduct
racetrack, taxes, fees or special assessments levied by the state of New
York or by any agency or instrumentality of the state or by any
political subdivision of the state or any agency or instrumentality
thereof, exceed or are anticipated during the ensuing year to exceed
ninety per centum of the revenues available to such association for its
operations, pursuant to section two hundred twenty-nine of this article,
then such board shall thereafter disapprove any proposed operating
budgets which provide for operating expenses in excess of a percentage
of such expenses during the prior year with such percentage to be equal
to the percentage which total revenue from the conduct of such
facilities, race meetings, races and pari-mutuel betting in the current
year is projected to bear to such revenue during the previous year
provided that such latter percentage may be modified to reflect unusual
or nonrecurring circumstances occurring during either such year.
Calculations of such percentages, including a clear specification of any
unusual or nonrecurring circumstances being taken into consideration in
the calculation of such latter percentage, shall be included in the
accompanying reports submitted by such association in accordance with
the provisions of paragraph a of subdivision two of section two hundred
thirty-one-a of this article and subdivision one of section two hundred
fifty-eight of this chapter. In any year in which actual operating
expenses are greater than the operating expenses allowed pursuant to the
provisions of this subdivision, the amount by which such actual expenses
exceed such allowed expenses shall be added to taxable income in
computing "entire adjusted net income" for use in calculating the
franchise fees due to the state in accordance with the provisions of
paragraph a of subdivision one of this section.
11. a. On and after June twenty-sixth, nineteen hundred eighty-three,
no franchise shall be granted by the racing and wagering board in
accordance with the provisions of subdivision one of this section unless
such grant is made in accordance with the provisions of this
subdivision. On or before December first, two thousand five; on or
before December first of the year prior to the franchise expiration date
thereafter; and, immediately upon receiving notification, in accordance
with the provisions of section two hundred eight-a of this article, from
any non-profit racing association or corporation franchised pursuant to
this section to conduct race meetings at the thoroughbred racing
facilities located in Queens county, Saratoga county or jointly located
in Nassau and Queens counties whereat running races, steeplechases or
hunt meetings and pari-mutuel betting on the outcome of the same have
been conducted prior to the effective date of this section by a
non-profit racing association known as the New York Racing Association,
Inc. and which facilities are known as Belmont Park racetrack, Aqueduct
racetrack and Saratoga thoroughbred racetrack, that it intends to
relinquish such franchise prior to the expiration date of such
franchise, or that such association intends to end its corporate
existence prior to such expiration date, or upon the revocation of such
franchise or exclusive right to operate and maintain such franchise the
governor shall take such action as is necessary to create a special ad
hoc committee for the purpose of soliciting proposals from all
corporations and associations interested in securing the exclusive right
to operate and maintain such facilities, including, but not limited to,
conducting race meetings, pari-mutuel betting on the races to be run at
such race meetings at those facilities, and operating a video lottery
gaming facility at Aqueduct racetrack during the period beginning on
January first, two thousand eight or on January first of each franchise
period thereafter, as the case may be; or, in the case of a franchise
which is being relinquished, or revoked due to corporate dissolution or
otherwise, proposals from all corporations and associations interested
in carrying out the franchisee's responsibilities during the remainder
of the franchise being relinquished or revoked.
b. Such special committee shall consist of nine members to be
appointed by the governor, three members of whom shall be appointed upon
the recommendation of the temporary president of the senate, and three
of whom shall be appointed upon the recommendation of the speaker of the
assembly, and shall have full power and authority to hold and conduct
public hearings.
c. Within one month of being established, each such special ad hoc
committee shall give public notice of the fact that it will issue a
formal request for proposals in accordance with the provisions of this
section. Such notice shall indicate that any parties interested in
submitting proposals in response to such request for proposals that are
not at that time incorporated pursuant to section two hundred one or two
hundred two-a of this chapter, should take such action as is necessary
to become incorporated under section two hundred one or two hundred
two-a. No certificate of incorporation under section two hundred one or
two hundred two-a wherein the right to conduct running or steeplechase
race meetings or hunt meetings is claimed, shall be filed unless; (i) it
meets all of the requirements of the section of law involved; and (ii)
the approval of the state racing and wagering board is indorsed thereon
or annexed thereto, stating that, in its opinion, the purposes of this
chapter and the public interest will be promoted by such incorporation,
and that such incorporation will be conducive to the interests of
legitimate racing.
d. Within one year of being established, or within such shortened
period as may be necessary to continue the conduct of thoroughbred
racing and pari-mutuel betting at the facilities described in paragraph
a of this subdivision, each such special ad hoc committee shall issue a
formal request for proposals for the exclusive right to operate and
maintain those facilities as described in this subdivision. Each such
committee may prescribe the form in which proposals shall be made and
the information to be furnished by each corporation or association
making such a proposal.
e. On the basis of the proposals submitted and its examination of
those proposals and of any and all other evidence and information which
it considers relevant, each such ad hoc committee shall determine which
of the associations or corporations submitting proposals can be
reasonably expected to best provide over the franchise period, or as the
case may be, during the remainder of the term of a franchise being
relinquished, for the operation and maintenance of the racing facilities
involved, the conduct of race meetings at such facilities, the
pari-mutuel betting on the races to be run at such race meetings and the
video lottery gaming facility at Aqueduct racetrack in a sound and
economical manner which is consistent with the traditions of
thoroughbred racing in this state, which will ensure the long-run
viability of thoroughbred racing in this state, and which will produce
reasonable revenue for the support of government.
f. The committee shall report its findings to the legislature, the
governor and the racing and wagering board with recommendations for such
actions as it deems necessary to implement its determinations regarding
the corporation or corporations, association or associations to which
such grants of authority and/or franchises should be made or granted,
the legislation which should be enacted governing such grants of
authority or franchises, and the responsibilities related thereto which
should be assigned to the racing and wagering board and to such other
state agencies or officers as it deems appropriate.
g. In order for the committee to effectively discharge these
enumerated duties, the committee shall be authorized to request and
accept the assistance of any state agency.
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