S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         1589
                              2015-2016 Regular Sessions
                                 I N  A S S E M B L Y
                                   January 12, 2015
                                      ___________
       Introduced  by M. of A. PRETLOW -- read once and referred to the Commit-
         tee on Racing and Wagering
       AN ACT to amend the racing, pari-mutuel wagering and  breeding  law,  in
         relation to the franchise oversight board
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Subdivisions 3 and 8 of section 212 of the racing, pari-mu-
    2  tuel wagering and breeding law, subdivision 3 as amended and subdivision
    3  8 as added by chapter 18 of the laws of 2008, and  subparagraphs  (viii)
    4  and  (xi)  of  paragraph a of subdivision 8 as amended by chapter 140 of
    5  the laws of 2008, are amended to read as follows:
    6    3. Such members, except as otherwise provided by law,  may  engage  in
    7  private or public employment, or in a profession or business. The board,
    8  its  members,  officers and employees shall be subject to the provisions
    9  of sections seventy-three and seventy-four of the public  officers  law.
   10  No former trustee or officer of a non-profit racing association known as
   11  The  New  York  Racing  Association, Inc. or its predecessor, no current
   12  director or officer of a franchised corporation, NO  FORMER  OR  CURRENT
   13  DIRECTOR  OR  OFFICER OF THE NEW YORK CITY OFF-TRACK BETTING CORPORATION
   14  or any individual registered with the  New  York  commission  on  public
   15  integrity  shall  be  appointed  as  members  to the board nor shall any
   16  member of the  board  have  any  direct  or  indirect  interest  in  any
   17  racehorse,  thoroughbred racing, OFF-TRACK BETTING or pari-mutuel wager-
   18  ing business, video lottery terminal facility or any development at  any
   19  racing facility.
   20    8. a. The duties and responsibilities of the franchise oversight board
   21  shall include, but not be limited to, the following:
   22    (i)  represent  the interests of the state in all real estate develop-
   23  ment proposed for Aqueduct  racetrack  or  real  estate  development  at
   24  Belmont  Park  racetrack. Any such real estate development shall only be
   25  undertaken pursuant to a competitive  process  approved  by  the  board,
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD05505-01-5
       A. 1589                             2
    1  after consultation with the applicable local advisory boards and consid-
    2  eration  of  local  zoning and planning regulation, and in a manner that
    3  will not adversely impact any historic structure that is included in  or
    4  eligible for inclusion in the National or the State Register of Historic
    5  Places,  be  consistent  with  any plan approved for such community, and
    6  shall be subject to unanimous approval of the franchise oversight  board
    7  and  all statutory and regulatory requirements; provided, however, that,
    8  subject to approval of the franchise oversight board and subject to  all
    9  statutory  and regulatory requirements, the franchised corporation shall
   10  have full powers and rights to develop, redevelop,  refurbish,  renovate
   11  or  make  such other improvements, capital expenditures or otherwise, to
   12  the racetracks and the fixtures and improvements thereon consistent with
   13  projects  specifically  identified  in  the   franchised   corporation's
   14  approved track facility improvement plan.
   15    The franchise oversight board shall be guided by the goals of ensuring
   16  the continuation of high quality thoroughbred racing at the thoroughbred
   17  racing  facilities  located  within the state, raising revenue for or in
   18  aid or support of education in this state from video lottery  gaming  at
   19  facilities  of  the  state  racing franchise, and maximizing revenue for
   20  governments from pari-mutuel wagering on racing  at  facilities  of  the
   21  state racing franchise.
   22    (ii)  monitor  and  enforce  compliance with definitive documents that
   23  comprise the franchise agreement between the franchised corporation  and
   24  the  state  of New York governing the franchised corporation's operation
   25  of thoroughbred racing and pari-mutuel wagering at the  racetracks.  The
   26  franchise  agreement  shall contain objective performance standards that
   27  shall allow contract review in a manner consistent  with  this  chapter.
   28  The  franchise  oversight  board shall notify the franchised corporation
   29  authorized by this chapter in writing of  any  material  breach  of  the
   30  performance  standards or repeated non-material breaches which the fran-
   31  chise oversight board may determine collectively constitute  a  material
   32  breach  of the performance standards. Prior to taking any action against
   33  such franchised corporation, the franchise oversight board shall provide
   34  the franchised corporation with the reasonable opportunity to  cure  any
   35  material  breach  of  the performance standards or repeated non-material
   36  breaches which the franchise oversight board may determine  collectively
   37  constitute a material breach of the performance standards.  Upon a writ-
   38  ten  finding  of  a  material  breach  of  the  performance standards or
   39  repeated non-material breaches which the franchise oversight  board  may
   40  determine  collectively  constitute a material breach of the performance
   41  standards, the franchise oversight board may recommend  that  the  fran-
   42  chise agreement be terminated. The franchise oversight board shall refer
   43  such  recommendation  to  the  racing  and  wagering board for a hearing
   44  conducted pursuant to section two hundred forty-five of this article for
   45  a determination of whether to terminate the franchise agreement with the
   46  franchised corporation;
   47    (iii) oversee, monitor and review  all  significant  transactions  and
   48  operations of the franchised corporation AND THE NEW YORK CITY OFF-TRACK
   49  BETTING  CORPORATION authorized by this chapter; provided, however, that
   50  nothing in this section shall be deemed to reduce,  diminish  or  impede
   51  the  authority  of  the  state racing and wagering board to, pursuant to
   52  article one of this chapter, determine and  enforce  compliance  by  the
   53  franchised  corporation  OR  THE  NEW YORK CITY OFF-TRACK BETTING CORPO-
   54  RATION with terms of racing laws and regulations. Such  oversight  shall
   55  include, but not be limited to:
       A. 1589                             3
    1    (A)  review  and  make recommendations concerning the annual operating
    2  budgets of such franchised corporation AND THE NEW YORK  CITY  OFF-TRACK
    3  BETTING CORPORATION;
    4    (B)  review and make recommendations concerning operating revenues and
    5  the establishment of a financial plan;
    6    (C) review and make recommendations  concerning  accounting,  internal
    7  control systems and security procedures;
    8    (D)  review  such  franchised  corporation's  AND  THE  NEW  YORK CITY
    9  OFF-TRACK BETTING CORPORATION'S revenue and expenditure [polices]  POLI-
   10  CIES which shall include collective bargaining agreements management and
   11  employee  compensation  plans,  vendor contracts and capital improvement
   12  plans;
   13    (E)  review  such  franchise  corporation's  AND  THE  NEW  YORK  CITY
   14  OFF-TRACK  BETTING  CORPORATION'S  compliance  with  the laws, rules and
   15  regulations applicable to its activities;
   16    (F) make recommendations for establishing model governance  principles
   17  to improve accountability and transparency; and
   18    (G)  receive,  review,  approve  or  disapprove  capital expense plans
   19  submitted annually by the franchised corporation AND THE NEW  YORK  CITY
   20  OFF-TRACK BETTING CORPORATION.
   21    (iv)  evaluate, review and approve the racing franchisee's AND THE NEW
   22  YORK CITY OFF-TRACK BETTING  CORPORATION'S  selection  of  a  vendor  or
   23  vendors  to  contract  with  the franchised corporation AND THE NEW YORK
   24  CITY  OFF-TRACK  BETTING  CORPORATION  for  provision   of   totalizator
   25  services, and manage, subject to the franchised corporation's unilateral
   26  right  to  opt  out,  directly or indirectly, integration of any offered
   27  internet wagering platform. The franchise oversight board shall consider
   28  in its evaluation of any such proposed vendor their  ability  to  reduce
   29  the totalizator expenses and general development and production costs of
   30  any internet wagering platform of an authorized off-track betting corpo-
   31  ration and the state racing franchise holder.
   32    (v)  facilitate discussions and voluntary agreements between the fran-
   33  chised corporation and  off-track  betting  corporations  to  streamline
   34  operations, decrease operating costs and maximize opportunities pertain-
   35  ing  to costs and revenues, and encourage an exchange of views and expe-
   36  riences from the franchised corporation and the off-track betting corpo-
   37  rations to improve the  racing  product  in  New  York  and  to  realize
   38  efficiencies,  EXCEPT  THE  NEW  YORK CITY OFF-TRACK BETTING CORPORATION
   39  SHALL TRANSFER  ALL  WAGERING  ACCOUNTS,  INCLUDING  INDIVIDUAL  ACCOUNT
   40  BALANCES HELD FOR TELEPHONE AND INTERNET WAGERING TO THE FRANCHISE OVER-
   41  SIGHT  BOARD.  THE  NEW  YORK  CITY  OFF-TRACK BETTING CORPORATION SHALL
   42  PROVIDE A REPORT FROM ITS TOTALIZATOR PROVIDER OF ALL WAGERING  ACCOUNTS
   43  INCLUDING  INDIVIDUAL CUSTOMER ACCOUNT BALANCES. THE FRANCHISE OVERSIGHT
   44  BOARD SHALL ENTER INTO A MANAGEMENT SERVICES AGREEMENT ON BEHALF OF  THE
   45  NEW  YORK  CITY  OFF-TRACK BETTING CORPORATION WITH THE FRANCHISE CORPO-
   46  RATION FOR THE OPERATION OF THE ACCOUNT DEPOSIT WAGERING  FOR  TELEPHONE
   47  AND INTERNET WAGERING;
   48    (vi)  review and approve all purchasing policies pursuant to paragraph
   49  (a) of subdivision six of section two hundred eight of this article  AND
   50  USED BY THE NEW YORK CITY OFF-TRACK BETTING CORPORATION;
   51    (vii)  THE  NEW  YORK CITY OFF-TRACK BETTING CORPORATION AND THE FRAN-
   52  CHISED CORPORATION SHALL JOINTLY NEGOTIATE  ALL  SIMULCASTING  CONTRACTS
   53  WITH  OUT  OF  STATE  ENTITIES  AND  THE FRANCHISE OVERSIGHT BOARD SHALL
   54  review and provide any recommendations  on  all  simulcasting  contracts
   55  (buy and sell) that are also subject to prior approval of the racing and
   56  wagering board;
       A. 1589                             4
    1    (viii)  act  on behalf of the People of the State of New York to enter
    2  into any real property transactions in furtherance of the  purposes  and
    3  intent  of  this  statute,  including,  without  limitation, one or more
    4  ground leases, for one dollar in consideration  annually,  for  each  of
    5  Aqueduct  racetrack,  Belmont  Park and Saratoga racecourse to the fran-
    6  chised corporation, for a term that will extend until the  racing  fran-
    7  chise  expires,  is  revoked,  terminated  or  ends  by  any other means
    8  provided by law. Such leases shall be  executed  contemporaneously  with
    9  the  conveyance of the racetracks by the franchised corporation's prede-
   10  cessor to the state;
   11    (ix) enter into on behalf of  the  state  as  licensor,  a  long  term
   12  license  agreement  with  the  franchised corporation for the use of the
   13  simulcast  signal  and  associated  intellectual  property  rights,  for
   14  consideration  of  one  dollar  annually and for a term that will extend
   15  until the racing franchise expires, is revoked, terminated  or  ends  by
   16  any  other  means  provided  by  law.  Such  license  agreement shall be
   17  executed contemporaneously with the conveyance of the franchised  corpo-
   18  ration's assets associated with the franchise agreement[.];
   19    (x)  conduct  running  races or steeplechases at racing facilities and
   20  conduct pari-mutuel betting on the outcome of the same when necessary to
   21  assure the continuation of the racing and pari-mutuel betting activities
   22  at such racing facilities (A) in the event that the racing and/or  pari-
   23  mutuel  betting  franchises  of the franchised corporation authorized by
   24  this chapter then holding such franchises have either been terminated in
   25  the manner provided by law or have  been  relinquished  by  such  corpo-
   26  ration,  or  such corporation declines to continue conducting race meet-
   27  ings and pari-mutuel betting on the outcome of the same as  required  by
   28  such  franchises  unless such declination is the result of strikes, acts
   29  of God, or other unavoidable causes not under the control of such corpo-
   30  ration,  or  the  corporate  existence  of  such  corporation  has  been
   31  dissolved  in the manner provided by law prior to the end of the term of
   32  any such franchise and (B)  until  such  time  as  a  new  franchise  is
   33  granted,  AND  TO  CONDUCT  ALL  OPERATIONS  AND PARI-MUTUEL WAGERING AS
   34  AUTHORIZED PURSUANT TO THIS CHAPTER FOR  THE  NEW  YORK  CITY  OFF-TRACK
   35  BETTING CORPORATION IN THE EVENT THAT THE SYSTEM OF OFF-TRACK PARI-MUTU-
   36  EL  BETTING  IN  THE  CITY  OF  NEW  YORK  OPERATED BY THE NEW YORK CITY
   37  OFF-TRACK BETTING CORPORATION HAS EITHER BEEN TERMINATED OR RELINQUISHED
   38  BY SUCH CORPORATION, OR SUCH CORPORATION DECLINES TO CONTINUE TO OPERATE
   39  UNLESS SUCH DECLINATION IS THE RESULT OF STRIKES, ACTS OF GOD  OR  OTHER
   40  UNAVOIDABLE CAUSES NOT UNDER CONTROL OF SUCH CORPORATION UNTIL SUCH TIME
   41  AS OTHERWISE PROVIDED FOR IN STATUTE;
   42    (xi)  on behalf of the People of the State of New York, and, acting in
   43  such capacity as lessor of the racing facilities  and  real  estate,  be
   44  responsible  for  payment  of  all property taxes related to such racing
   45  facilities and real estate;
   46    (xii) report annually to the governor and the  legislature,  beginning
   47  no  later  than  December  thirty-first, two thousand eight, stating its
   48  findings and recommendations to implement policy and legislative changes
   49  necessary to encourage the continuation  of  high  quality  thoroughbred
   50  racing  in New York state and to protect the legitimate interests of the
   51  state and the thoroughbred racing industry;
   52    (xiii) require the  franchised  corporation  AND  THE  NEW  YORK  CITY
   53  OFF-TRACK BETTING CORPORATION to make all records and documents pertain-
   54  ing  to  its financial practices, and other documents and records neces-
   55  sary to carry out its duties, available to the franchise oversight board
   56  within thirty days of a written request;
       A. 1589                             5
    1    (xiv) examine or cause to be examined by a  third  party,  the  books,
    2  papers,  records  and accounts of the franchised corporation AND THE NEW
    3  YORK CITY OFF-TRACK BETTING CORPORATION;
    4    (xv) sue and be sued;
    5    (xvi)  make  and execute contracts and all other instruments necessary
    6  or convenient for the exercise of its powers and  functions  under  this
    7  article;
    8    (xvii)  request and accept the assistance of any state agency, includ-
    9  ing but not limited to, the racing and wagering board, the  division  of
   10  the  lottery, office of parks, recreation and historic preservation, the
   11  department of environmental conservation, THE OFFICE OF GENERAL SERVICES
   12  and the department of taxation and  finance,  in  obtaining  information
   13  related to the franchised corporation's compliance with the terms of the
   14  franchise agreement; and
   15    (xviii)  do all things necessary, convenient or desirable to carry out
   16  its purposes and for the exercise of the powers granted in this article.
   17    b. Notwithstanding any other provision of this article, the franchised
   18  corporation shall be entitled to make capital expenditures, except those
   19  capital expenditures for the Saratoga Racecourse that may, on the advice
   20  of the New York state historic preservation office, adversely impact any
   21  historic structure that is included in or is eligible for  inclusion  in
   22  the national or state register of historic places, to the physical plant
   23  of the racetracks, grandstand, backstretch, parking and public areas set
   24  forth  in  the  New  York  Racing Association's capital expenditure plan
   25  ("capital plan") filed with the racing and wagering board in  two  thou-
   26  sand  seven. Any material modification to the capital plan as determined
   27  by the franchise oversight board and each future capital investment plan
   28  for the tracks, grandstand, backstretch, parking and public areas of the
   29  racetracks operated by the franchised corporation involving the expendi-
   30  ture of more than five million dollars in the  aggregate  shall  require
   31  the  prior  approval of the franchise oversight board. Within five years
   32  from the date of commencement of the video lottery  terminal  operations
   33  at Aqueduct, and every five years thereafter, the franchised corporation
   34  shall  submit  to  the  oversight board a capital plan for the five year
   35  period commencing on January first of the  following  year.  Such  plans
   36  shall  contain  both the intended object of expenditure and the proposed
   37  sources of financing. The franchised corporation  shall  report  to  the
   38  franchise  oversight  board within ninety days following the end of each
   39  fiscal year as to the amount spent pursuant to the capital plan.
   40    S 2. This act shall take effect immediately; provided,  however,  that
   41  the  amendments  to  section 212 of the racing, pari-mutuel wagering and
   42  breeding law made by section one of this act shall take effect upon  the
   43  confirmation  of  the New York Racing Association plan of reorganization
   44  pursuant to section 16 of chapter 18 of the laws of  2008,  as  amended;
   45  provided  further,  that  the  amendments  to section 212 of the racing,
   46  pari-mutuel wagering and breeding law made by section one  of  this  act
   47  shall be deemed repealed as provided by chapter 354 of the laws of 2005,
   48  as amended.