by Tom LaMarra, USTA Web Newsroom Correspondent

Lexington, KY — The pros and cons of full-scale casinos in New York, and the impact they could have on the horse racing industry, were debated Aug. 13 during the Saratoga Institute on Racing and Gaming Law in Saratoga Springs, N.Y.

At issue is New York’s legalization of full casinos that will be awarded by region. The state has seven Standardbred racetracks and two Thoroughbred tracks with video lottery terminals that are taxed at a rate higher than that of the proposed casinos.

Joe Faraldo, president of the Standardbred Owners Association of New York, said he believes the new casinos will jeopardize the harness racing industry. He noted the enabling casino legislation caps purse contributions from gaming at 2013 levels, meaning there are no provisions for increased costs for horsemen going forward.

Faraldo noted a June 2014 economic impact study that shows purses for harness racing grew 230% from 2001, the year VLTs were approved, to 2013. The study indicates jobs in the Standardbred industry grew 204% during the same period, and total sales of New York-bred yearlings increased 300%.

“Any time you have another form of gambling it’s going to divert funds from racing,” Faraldo said. “You freeze purses, you freeze growth in this business. I predict racing may be out of business if the law doesn’t change.”

Jeff Gural, who owns Tioga Downs and Vernon Downs in New York, said he believes more casinos won’t impact racetracks with VLTs because business already is declining at those facilities. He said VLT play at his two tracks is down 8% this year versus 2013.

Tioga Downs currently is the only racetrack gaming facility in New York eligible for a full casino on site after Saratoga Springs rejected plans by Saratoga Casino & Racing to expand to full casino gambling. Gural plans to spend $150 million on the expansion on top of the $60 million spent to renovate the track to accommodate video lottery terminals.

Gural is competing with another proposal for a casino between Buffalo and Rochester. He said his biggest advantage is being able to have a full casino operating in about six months because of the existing infrastructure.

“I’d be disappointed if I don’t win (the license), but anything is possible,” Gural said.

The casino law, officials said, does offer some protections for racing. Marvin Newberg, an attorney for Monticello Raceway, said if a casino is built in the zone that includes the harness track, the casino must pay purses at 2013 levels.

“The law was crafted to protect horsemen,” he said. “It’s not perfect but it’s a beginning. (Casinos and racetracks with VLTs) can co-exist. VLTs took money away from horse race betting. It was a subsidy for racing, and it helped racing.”

Gural said if he wins the license, the VLTs would be replaced by slot machines. Tioga Downs would still have to pay purses at 2013 levels.

“I don’t think (casinos) will have any effect on racinos,” Gural said. “If there was no casino legislation, purses would decline by 3% to 4% a year anyway. Yonkers Raceway would be hurt in the short run if Orange County is awarded a casino, but I think Yonkers will (eventually) get a casino.”

Faraldo isn’t convinced. He cited the study that shows the economic growth for harness racing is tied to an increase in purses in New York from $36.5 million in 2001 to $120.3 million in 2013. He also said every $5 million increase in purses adds $33 million in economic impact.

The SOANY has proposed that full casinos pay money to the horse industry based on revenue percentages that would provide money for purses and breed development funds.

“There is an opportunity for us to address this impact,” Faraldo said. “Don’t let the competition destroy us. We have to do something to protect ourselves.”