N.Y. Racing, Pari-Mutuel Wagering and Breeding Law § 208: Conditions of franchise award

§ 208. Conditions of franchise award. 1. In consideration of the

franchise and in accordance with its franchise agreement, the franchised

corporation shall remit to the state, each year, no later than April

fifth, a franchise fee payment. The franchise fee shall be calculated

and equal to the lesser of paragraph (a) or (b) of this subdivision as

follows: (a) adjusted net income, including all sources of audited

generally accepted accounting principles net income as of December

thirty-first (i) plus the amount of depreciation and amortization for

such year as set forth on the statement of cash flows (ii) less the

amount received by the franchised corporation for capital expenditures

and (iii) less principal payments made for the repayment of debt; or (b)

operating cash which is defined as cash available on December

thirty-first (i) which excludes all restricted cash accounts, segregated

accounts as per audited financial statements and cash on hand needed to

fund the on-track pari-mutuel operations through the vault, (ii) less

ninety days of operating expenses pursuant to generally accepted

accounting principles which shall be an average calculated by dividing

the current year's annual budget by the number of days in such year and

multiplying that number by ninety.

2. As a condition of franchise acceptance, the franchised corporation

and its predecessor shall irrevocably relinquish any present or future

rights that it might have, or might claim, with respect to thoroughbred

racing facilities and associated assets located in Queens county,

Saratoga county and jointly located in Nassau and Queens counties

whereat running races, steeplechases or race meetings and pari-mutuel

betting on the outcome of the same have been conducted, including (a)

all the land underlying the racetracks, (b) all improvements thereon and

all physical assets thereon, and (c) all assets associated with the

franchise and the operation of the racetracks, including, without

limitation all rights to intellectual property and simulcasting now

existing or hereafter created, and any and all franchise rights or

interests in such assets including but not limited to leasehold

improvements and interests. The franchised corporation shall take all

appropriate action on the date of substantial consummation, as defined

by the federal bankruptcy code, of the confirmed chapter eleven plan of

reorganization of the non-profit racing association known as The New

York Racing Association, Inc. in the pending bankruptcy case in the

Southern District of New York to ensure that the People of the State of

New York are vested with unencumbered ownership in the real estate for

the three racetracks, including all improvements thereon.

3. As a condition of franchise acceptance, the franchised corporation

shall make application with the commission for live thoroughbred racing

dates at thoroughbred racing facilities located in Queens county,

Saratoga county and jointly located in Nassau and Queens counties in a

manner substantially similar to the racing dates presently undertaken.

4. As a condition of franchise acceptance, the franchised corporation

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 gaming commission.

4-a. As a condition of franchise acceptance, the franchised

corporation shall enter into a franchise agreement that shall require

such franchised corporation to use its best efforts to satisfy

performance standards, measured every four years by the franchise

oversight board. Such performance standards shall relate to racing

dates, New York bred horse races, horse stalls, jockey and equine

safety, state concentrated animal feeding operation, backstretch

conditions, the Saratoga training facility, handle and attendance,

purses, expenses of the franchised corporation, and the communities

surrounding Aqueduct racetrack, Belmont Park racetrack and the Saratoga

race course. As a condition of franchise acceptance, the franchised

corporation shall continue to lease for nominal consideration the

ballfield property near the Aqueduct racetrack that includes lots 62,

118, 119, 127, 133, 135, 136 and 138 of block 11535; lots 73, 110 and

113 of block 11536; lots 5, 9, 10, 12, 14 and 110 of block 11551; and

lot 204 of block 11562 in Queens County, as a ballfield for the

appropriate community organization, and convey the parcel near the

Aqueduct racetrack that includes lot 1 of blocks 11558 and 11560 in

Queens county to the New York city public school construction authority

should such authority desire and commit to purchase such parcel at fair

market value.

5. A franchise may be revoked and cancelled by the commission only for

the reasons and in the manner prescribed under the provisions of

sections two hundred twelve and two hundred forty-four of this article.

The action of the commission in revoking a franchise 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.

6. (a) All contracts entered into by the franchised corporation for

the procurement of goods or services shall be pursuant to a competitive

bidding purchasing policy approved by the franchise oversight board.

(b) In its review of the contracts pursuant to this section in any

contract in excess of one hundred thousand dollars, the franchise

oversight board may review the character and fitness of the entity or

its principals entering into contracts with a franchised corporation and

provided further the oversight board may require such information as it

deems necessary including the power to subpoena such books, records, and

other pertinent information related to the contracts from the contractor

or vendor of any contract.

7. Notwithstanding the provisions of section seven of the general

business law, or any other inconsistent provision of general, special or

local law, the commission shall specify annually the dates on which, and

the hour of the first post time for days during which, such franchised

corporation may operate at the places and for the full number of days

specified in its franchise.

8. The commission shall permit the franchised corporation to conduct

pari-mutuel betting in the manner and subject to the conditions

prescribed by this chapter, at the racetracks described in such racing

franchise for the duration of such racing franchise.

9. (a) The franchised corporation shall maintain a separate account

for all funds held on deposit in trust by the corporation for individual

horsemen's accounts. Purse funds shall be paid by the corporation as

required to meet its purse payment obligations. Funds held in horsemen's

accounts shall only be released or applied as requested and directed by

the individual horseman. Through calendar year two thousand twenty-seven

the New York Jockey Injury Compensation Fund, Inc. may use up to two

million dollars from the account established pursuant to this

subdivision to pay the annual costs required by section two hundred

twenty-one of this article.

(b) Unless otherwise permitted by written agreement with the

horsemen's organization recognized pursuant to section two hundred

twenty-eight of this article the franchised corporation shall fund

purses in an amount (on an annual basis and not a per-race basis) in

excess of that required by this chapter, so as to reduce the purse

cushion at the end of each calendar year by the amount set forth below:

Year Reduction of Purse Maximum Purse Cushion at

Cushion for Calendar Year Year End Not to Exceed

2008 $0 $20.0 million

2009 $1.0 million $19.0 million

2010 $1.0 million $18.0 million

2011 $2.0 million $16.0 million

2012 $2.0 million $14.0 million

2013 $3.0 million $11.0 million

2014 $3.0 million $8.0 million

2015 $2.0 million $6.0 million

Thereafter the maximum purse cushion at year end shall not exceed $6.0

million.

(c) The franchised corporation shall establish and maintain a separate

account for funds to be held on deposit in trust by the franchised

corporation for the horsemen's organization recognized pursuant to

section two hundred twenty-eight of this article. Starting in two

thousand eighteen and annually thereafter, funds from the account

established pursuant to this subdivision shall be deposited in the

separate account established under this paragraph in an amount to be

agreed upon by the franchised corporation and the horsemen's

organization recognized pursuant to section two hundred twenty-eight of

this article. Funds held in this account shall be used by such

recognized horsemen's organization solely as collateral to secure

workers' compensation insurance coverage, including through the New York

Jockey Injury Compensation Fund, Inc. Such coverage shall include high

deductible programs and forms of self-insurance.

(d) In the event the horsemen's organization recognized pursuant to

section two hundred twenty-eight of this article determines that the

funds are no longer needed as collateral to secure workers' compensation

insurance coverage, then, upon agreement by the franchised corporation

and such appropriately recognized horsemen's organization, funds in the

separate account established under paragraph (c) of this subdivision

shall be returned to the account established pursuant to paragraph (a)

of this subdivision.

(e) The account shall be subject to annual audit by a certified public

accountant approved and paid by the appropriately recognized horsemen's

organization.

* 10. It is incumbent upon the franchised corporation to ensure the

health and safety of its equine participants. To accomplish that goal,

the franchised corporation shall, by September first, two thousand

twenty-five, make a one-time contribution of two million dollars to the

Harry M. Zweig memorial fund, established under section seven hundred

one of this chapter, for the sole purpose of off-setting the cost of

purchasing screening and imaging equipment for the research project as

specified in subdivision seven of section seven hundred four of this

chapter. The Harry M. Zweig memorial fund shall hold such money in an

escrow account until such time as it is necessary to purchase the

equipment required to conduct the research. The money in the escrow

account shall not be used for any purposes other than purchasing

equipment to be used for such research.

* NB Repealed September 1, 2028