New York's Horseracing Industry Protected Amid Casino Tax Dispute

Albany Leaders Step In to Protect Horseracing Amid Resorts World Casino Tax Dispute

Albany leaders are wading into the tax fight between state regulators and New York City’s brand-new casino — not to resolve it, but to protect the state’s horseracing industry while the dispute plays out.

Resorts World, which in April became the first downstate casino to open its doors, has been locked in a disagreement with the state Gaming Commission over whether it needs to pay upward of $150 million a year to the state’s horseracing industry on top of its regular taxes. 

On Monday, state Senate and Assembly leaders introduced a bill that would not determine who ultimately owes the money, but is meant to protect racetracks against any potential loss of funding.

New York Governor Blessed The Deal

Governor Kathy Hochul, who controls the Gaming Commission, indicated through a spokesperson that she blessed the deal.

“Given the ongoing dispute between the Gaming Commission and Resorts World regarding racing support payments, this legislation is designed to ensure that the racing industry — which has long relied on similar funding — does not suffer adverse consequences,” Hochul spokesperson Sean Butler said in a statement.

The legislation, tucked into a broader funding bill, states that the Gaming Commission “may forward” tax payments it receives from a New York City casino to the nonprofit New York Racing Association, which runs the state’s three largest racetracks. Current law puts that obligation on casino operators themselves. The shift would take effect immediately but expire after only one year.

But the legislation omits another change pushed by Resorts World that would have forced the Gaming Commission to make the payments out of the state fund that holds casino tax revenues. Resorts World had wanted to preserve that arrangement until another casino opens in New York City — which is not expected to happen until 2030. Well over half a billion dollars is at stake, since Resorts World must cover the costs alone until the two other casinos open and split the payments.

The resulting deal leaves some uncertainty about who will ultimately cover a potential budget hole exceeding $150 million over the next year. It avoids resolving the underlying legal dispute about whether Resorts World can count the racing support payments as part of its total 56 percent tax rate — or whether, as the Gaming Commission believes, the payments must be made separately.

Two sources told New York Focus that state leaders have been concerned that the fight could jeopardize funding for horseracing — a declining industry that the state nonetheless props up with hundreds of millions of dollars per year. A Resorts World spokesperson previously told New York Focus that the casino has made weekly racing payments since it opened.

Resorts World spokesperson Stefan Friedman declined to comment on the new bill but pointed to a previous statement, in which he described the company’s 15-year history of tax payments from its smaller-scale video lottery facility and pledged to “strictly abid[e] by the payments we agreed to in our winning bid for a commercial license.”

The bill sets lawmakers up to revisit the issue in one year. If Resorts World’s interpretation of its tax rate ultimately wins out, it could cut into tax revenue that the state expected to flow to public schools and the Metropolitan Transportation Authority. The Gaming Commission has not given any indication of whether it would pursue an enforcement action against Resorts World to resolve the dispute.

Hochul’s office did not address whether MTA or education funding will be affected by the dispute. The New York Racing Association declined to comment.

Resorts World’s owner, the Malaysian conglomerate Genting, has seven different firms lobbying for its interests in Albany this year — including the prominent firms Patrick B. Jenkins & Associates, Bolton-St. Johns, and Cordo & Company.

With lawmakers scheduled to leave Albany after this week, the bill must pass both houses of the legislature by Thursday, unless the legislative session is extended.

The fight is the latest twist in a complex, yearslong push by state leaders to authorize casinos in New York City — a process that began with a 2013 voter referendum backed by then-Governor Andrew Cuomo in the name of economic development.

Bennett Liebman, a gaming expert and government lawyer in residence at Albany Law School, called the whole fight confounding, given the time and money that went into last year’s grueling approval process.

“Whether or not Resorts World is correct in its interpretation that the racing support payments are included in the tax rate, this whole episode makes little substantive sense,” Liebman said. “How do you plan to build a $5.5 billion casino without knowing for certain whether millions of dollars in required racing support payments are included in your tax payments? How do you make financial plans for a casino bid with this huge uncertainty?”