Claude Solnik
Long Island Business News
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Home > LI Confidential > Stop scratching on holidays
Stop scratching on holidays
Published: June 1, 2012
Off Track Betting in New York State has been racing into a crisis called shrinking revenue. Some people have spitballed a solution: Don’t close on holidays.
New York State Racing Law bars racing on Christmas, Easter and Palm Sunday, and the state has ruled OTBs can’t handle action on those days, even though they could easily broadcast races from out of state.
“You should be able to bet whenever you want,” said Jackson Leeds, a Nassau OTB employee who makes an occasional bet. He added some irrefutable logic: “How is the business going to make money if you’re not open to take people’s bets?”
Elias Tsekerides, president of the Federation of Hellenic Societies of Greater New York, said OTB is open on Greek Orthodox Easter and Palm Sunday.
“I don’t want discrimination,” Tsekerides said. “They close for the Catholics, but open for the Greek Orthodox? It’s either open for all or not open.”
OTB officials have said they lose millions by closing on Palm Sunday alone, with tracks such as Gulfstream, Santa Anita, Turf Paradise and Hawthorne running.
One option: OTBs could just stay open and face the consequences. New York City OTB did just that back in 2003. The handle was about $1.5 million – and OTB was fined $5,000.
Easy money.
IN RE: SUFFOLK REGIONAL OFF-TRACK BETTING CORPORATION
Court of Appeals of New York.
IN RE: SUFFOLK REGIONAL OFF-TRACK BETTING CORPORATION, Appellant-Respondent, v. NEW YORK STATE RACING AND WAGERING BOARD et al., Respondents-Appellants. (And Four Other Related Proceedings.).
Decided: December 17, 2008
OPINION OF THE COURT
At the core of this litigation-with the Off-Track Betting Corporations (OTBs) on one side, and the State Racing and Wagering Board and state harness racing tracks on the other side-are questions of statutory interpretation. We begin with a brief history of the relevant sections of the Racing, Pari-Mutuel Wagering and Breeding Law and the present controversy.
Prior to 1970, New York permitted wagering on horse racing only at its thoroughbred and harness tracks, leaving (as Supreme Court observed) “a lucrative and illegal niche for local bookies, who took bets from those individuals who wished to gamble on horse racing but who were unable or unwilling to travel to the race track to place their wagers.” When off-track betting was thereafter authorized, its popularity depleted attendance at the tracks and threatened their viability. To redress the situation, the Legislature in 1973 created seven regional OTBs 1 to administer off-track wagering and required them to pay a “state tax,” a portion of which went to the regional harness tracks and nonprofit racing associations (L. 1973, ch. 346, § 4, as amended). The intention of the Legislature was:
“to derive from such betting ․ a reasonable revenue for the support of government, and to prevent and curb unlawful bookmaking and illegal wagering on horse races. It is also the intention of this article to ensure that off-track betting is conducted in a manner compatible with the well-being of the horse racing and breeding industries in this state, which industries are and should continue to be major sources of revenue to state and local government and sources of employment for thousands of state residents.” (Racing, Pari-Mutuel Wagering and Breeding Law § 518.)
In 1984, the Legislature authorized the simulcasting, or telecasting, of horse races conducted in the state for the purposes of pari-mutuel wagering (Racing, Pari-Mutuel Wagering and Breeding Law § 1001[a] ). That again was a perceived threat to the financial stability of the regional harness tracks, leading to new legislation requiring OTBs to pay them commissions on the simulcast wagers placed at OTB facilities.
Between 1984 and 2003, simulcasting of thoroughbred races was prohibited between 7:30 p.m. and midnight-evenings were traditionally reserved for harness racing. In 2003, however, the Legislature allowed simulcast licensees to broadcast, and accept bets on, thoroughbred races conducted after 7:30 p.m. from anywhere in the world. Again perceiving an adverse impact on nighttime harness racing, the Legislature provided for “maintenance of effort” payments, requiring OTBs that simulcast nighttime thoroughbred racing, every year after 2002, to guarantee to their regional harness tracks minimum payments based upon the commissions those tracks received before the nighttime thoroughbred simulcasts were permitted.
That requirement engendered two of the statutory questions now before us: first, can the OTBs credit commissions derived from daytime harness racing against the maintenance of effort payments and second, are those payments to be made on a regional, or track-by-track, basis.
The third statutory issue before us involves so-called “dark day” payments. “Dark days” occur when the State Racing Association is not conducting a thoroughbred race meeting, and no licensed harness track is accepting wagers on or displaying the signal of any thoroughbred track. On dark days, simulcast licensees can broadcast out-of-state thoroughbred races, but they must make payments to the harness tracks (which are not open for business that day) in accordance with a statutory formula (Racing, Pari-Mutuel Wagering and Breeding Law § 1017).2 From 1997 through 2003, all OTBs made dark day payments to their respective regional harness tracks, but in 2004 New York City OTB (NYC OTB) stopped payment on the ground that the statute required the tracks, not OTBs, to make such payments to one another.
Seeking clarification on maintenance of effort and dark day payments, the OTBs brought their claims to the State Racing and Wagering Board, which in February 2005 rejected their arguments. The Board concluded that OTBs cannot credit commissions derived from daytime harness racing against the maintenance of effort payment; that Racing, Pari-Mutuel Wagering and Breeding Law § 1017-a required calculation of the maintenance of effort payment on a track-by-track (not regional) basis; and that Racing, Pari-Mutuel Wagering and Breeding Law § 1017 required OTBs to make dark day payments to their respective regional harness tracks. Five of the State's six regional OTBs (Western did not join) brought CPLR article 78 proceedings challenging the Board's determinations. After consolidating the proceedings, Supreme Court dismissed the petitions, including a new claim that the Board's determinations were rules not properly promulgated under the State Administrative Procedure Act. On appeal, the Appellate Division modified Supreme Court's dismissal: while affirming the separate payment distribution and State Administrative Procedure Act determinations, the court reversed on the maintenance of effort and dark day payments issues (47 A.D.3d 133, 846 N.Y.S.2d 687 [2007] ). The Board and the harness tracks moved for leave to appeal, the OTBs cross-moved, and we granted leave to appeal to all parties (10 N.Y.3d 706, 857 N.Y.S.2d 39, 886 N.E.2d 804 [2008] ). We now conclude that the Board and harness tracks, not the OTBs, were correct in their reading of the relevant statutory sections.
Analysis
Given the growth in codification of the law over recent decades, the principles governing the Court's statutory review have by now been extensively articulated. First and foremost, it is our role to implement the intent of the Legislature (Matter of DaimlerChrysler Corp. v. Spitzer, 7 N.Y.3d 653, 660, 827 N.Y.S.2d 88, 860 N.E.2d 705 [2006] ). Deference to administrative agencies charged with enforcing a statute is not required when an issue is one of pure statutory analysis (Matter of Astoria Gas Turbine Power, LLC v. Tax Commn. of City of N.Y., 7 N.Y.3d 451, 455, 824 N.Y.S.2d 189, 857 N.E.2d 510 [2006] ). Even if no deference is owed to an agency's reading of a statute, a court can nevertheless defer to an agency's definition of a term of art contained within a statute (Matter of Trump-Equitable Fifth Ave. Co. v. Gliedman, 57 N.Y.2d 588, 595, 457 N.Y.S.2d 466, 443 N.E.2d 940 [1982] ). Against this backdrop, we turn to the specific issues in controversy.
Maintenance of Effort Payments. Starting in May 2003, when OTBs were permitted to accept wagers on simulcast nighttime out-of-state thoroughbred races, Racing, Pari-Mutuel Wagering and Breeding Law § 1017-a (2)(a) required them to make maintenance of effort payments to their regional harness tracks, to hold the tracks harmless from the new competition.
Section 1017-a (2)(a) provides:
“Any off track betting corporation which engages in accepting wagers on the simulcasts of thoroughbred races from out-of-state or out-of-country as permitted under subdivision one of this section shall submit to the board, for its approval, a schedule of payments to be made in any year or portion thereof, that such off track corporation engages in nighttime thoroughbred simulcasting. In order to be approved by the board, the payment schedule shall be identical to the actual payments and distributions of such payments to tracks and purses made by such off track corporation pursuant to the provisions of section [1016] of this article during the year [2002], as derived from out-of-state harness races displayed after 6:00 P.M. If approved by the board, such scheduled payments shall be made from revenues derived from any simulcasting conducted pursuant to this section and section [1016] of this article.”
The apparent tension between the final two sentences of this subdivision gives rise to the present dispute. The Board and the tracks rely on the penultimate sentence in urging that OTBs cannot credit commissions from daytime harness racing against their maintenance of effort payments, and that payment must be identical to actual payments during 2002 as derived from out-of-state harness races displayed after 6:00 p.m. The OTBs, in urging that they can credit commissions from daytime racing, rely on the last sentence, directing that scheduled payments be made from revenues derived from any simulcasting conducted pursuant to this section and section 1016 of this article.
Here, the trial court and Appellate Division understandably divided, each pointing to the plain language of the statute.3 Reading the provision as a whole, however, and taking into account the Legislature's purpose in requiring maintenance of effort payments, we conclude that the correct interpretation of this less-than-perfectly-clear subdivision is that given by the trial court.
The penultimate sentence establishes the baseline, or minimum, amounts that OTBs must pay to harness tracks for the privilege of simulcasting evening thoroughbred racing: at least the same level of payments received in 2002 from evening simulcasting. The final sentence must then be read to concern only the total pool of dollars from which the mandated amounts can be paid. The amount of daytime harness racing commissions OTBs pay to a harness track is irrelevant to determine whether the OTB met its promised nighttime revenues threshold; allowing OTBs to credit daytime harness racing commissions against the mandated maintenance of effort payments would satisfy neither the words nor the objective of the statute.
“Separate Payment” Distribution. The OTBs urge that the maintenance of effort payments are to be made on a regional, rather than track-by-track, basis. They argue that Racing, Pari-Mutuel Wagering and Breeding Law § 1017-a (2)(a) incorporates the payment scheme of section 1016, which distributes commissions from harness racing simulcasting on a regional basis. The Board and the tracks, by contrast, contend that the maintenance of effort payment should be on a track-by-track basis because section 1017-a requires that the payment be “identical to the actual payments and distributions of such payments to tracks and purses made by such off track corporation” (emphasis supplied).
We agree with the Board and the tracks that the plain text requires that the maintenance of effort payments be distributed on a track-by-track basis. As the Appellate Division noted, had the Legislature intended that the maintenance of effort payment be made on a regional basis, it could have used the same language as that used in the very next paragraph:
“During each calendar year, to the extent, and at such time in the event, that aggregate statewide wagering handle after 7:30 P.M. on out-of-state and out-of-country thoroughbred races exceeds [$100,000,000], each off track betting corporation conducting such simulcasting shall pay to its regional harness track or tracks, an amount equal to [2%] of its proportionate share of such excess handle. In any region where there are two or more regional harness tracks, such [2%] shall be divided between or among the tracks in a proportion equal to the proportion of handle on live harness races conducted at such tracks during the preceding calendar year” (Racing, Pari-Mutuel Wagering and Breeding Law § 1017-a [2][b] ).
Track-by-track payments thus are required by the explicit language of the statute. That conclusion is underscored by the contrasting language of the immediately ensuing paragraph and indeed by the very purpose of the statute-to hold each track harmless from the potentially negative impact of permitting OTBs to simulcast nighttime out-of-state thoroughbred races.
Dark Day Payments. As the foregoing discussion demonstrates, the Racing, Pari-Mutuel Wagering and Breeding Law remains “an imbroglio, being born out of the union of diverse racing industry interests and legislative compromise” (Finger Lakes Racing Assn. v. New York State Racing & Wagering Bd., 45 N.Y.2d 471, 476, 410 N.Y.S.2d 268, 382 N.E.2d 1131 [1978] ). That observation is nowhere more evident than in Racing, Pari-Mutuel Wagering and Breeding Law § 1017, which governs distribution of wagers placed on dark days at facilities that simulcast out-of-state races.
Section 1017 itself contains one subdivision, two paragraphs, six subparagraphs, 22 clauses, six subclauses, and six tables listing percentages due for state payments (with varying percentages depending on the type of bet, race and facility). Racing, Pari-Mutuel Wagering and Breeding Law § 1017(1)(b)(5)(E) and (6)(F) provide in relevant part:
“On days when a non-profit racing association is not conducting a race meeting and when a licensed harness track is neither accepting wagers nor displaying the signal from an in-state thoroughbred corporation or association or an out-of-state thoroughbred track:
“(i) Such licensed regional harness track shall receive in lieu of any other payments on wagers placed at off-track betting facilities outside the special betting district on races conducted by an instate thoroughbred racing corporation, two and eight-tenths percent on regular and multiple bets during a regional meeting and one and nine-tenths percent of such bets if there is no regional meeting and four and eight-tenths percent on exotic bets on days on which there is a regional meeting and three and four-tenths percent of such bets if there is no regional meeting.
“(ii) Such licensed regional harness track shall receive one and one-half per centum on total regional handle on races conducted at out-of-state or out-of-country thoroughbred tracks.”
From 1997 through 2003, without apparent problem, OTBs made payments to tracks in their region that did not open for business on dark days. Then in 2004, NYC OTB stopped making such payments. It claimed that the headings of section 1017(1)(b)(5) and (6) required dark day payments only of “facilities licensed in accordance with section [1007] of this article,” and OTBs do not operate facilities under section 1007. Racing, Pari-Mutuel Wagering and Breeding Law § 1007 indeed does provide for simulcast licenses from track to track, not off-track branch offices or simulcast theaters.
Those headings, however, stand in marked contrast to the headings of section 1017(1)(b)(3) and (4) that govern the distribution of wagers placed at “facilities licensed in accordance with sections [1008] and [1009]”-meaning OTB branch offices and simulcast theaters. According to the OTBs, the statutory headers of subparagraphs (5) and (6) dictate that the tracks must simply pay one another. The Board and tracks claim that the body of the text, not the statutory headings, determines the meaning. Again, we agree with the Board and the tracks because the text's unambiguous language requires OTBs to make the dark day payments, as they apparently also believed for several years.
While a statute's heading may help in ascertaining the intent of an otherwise ambiguous statute, a heading cannot trump the clear language of the statute (see McKinney's Cons. Laws of N.Y., Book 1, Statutes § 123[b] ). Here, section 1017 specifies that dark day payments are a percentage of “total regional handle”-a term of art which the Board explained is used in the Racing, Pari-Mutuel Wagering and Breeding Law in relation to the concept of payments by off-track betting corporations to tracks; harness tracks do not have regions but rather are located for defined purposes within established off-track betting regions. Under the OTBs' reading, if a region has only one track and it remains closed on the dark day, it will not receive any commissions because only tracks can contribute to regional handle. We conclude that, applying the Board's definition of regional handle (meaning an OTB's commissions), the statute makes sense: if a track remains closed on a dark day, then it will receive 1.5% of the total regional handle made by the OTB.
Additionally, the statute directs “off-track betting facilities”-a term used elsewhere in the Racing, Pari-Mutuel Wagering and Breeding Law to apply only to OTBs (see Racing, Pari-Mutuel Wagering and Breeding Law § 520[1]; § 532[1], [3-a]; § 901[2][b]; § 907[1][e]; § 1016[3][b] )-to make dark day payments to regional harness tracks. Finally, the purpose of dark day payments is to compensate harness tracks when the OTBs-competitors to harness tracks-simulcast out-of-state thoroughbred races. Requiring OTBs to pay the 1.5% of regional handle to harness tracks in their region that remain closed on the dark day implements that statutory purpose.
State Administrative Procedure Act. The State Constitution, as well as the State Administrative Procedure Act, mandates the procedures that must be followed for promulgation of rules and regulations. Excluded from these requirements are “interpretive statements and statements of general policy which in themselves have no legal effect but are merely explanatory” (State Administrative Procedure Act § 102[2][b][iv] ). A rule or regulation, by contrast, is “a fixed, general principle to be applied by an administrative agency without regard to other facts and circumstances relevant to the regulatory scheme of the statute it administers” (Matter of Roman Catholic Diocese of Albany v. New York State Dept. of Health, 66 N.Y.2d 948, 951, 498 N.Y.S.2d 780, 489 N.E.2d 749 [1985] ).
The OTBs argue that the Board's maintenance of effort, separate payment distribution and dark day payment determinations were fixed, general principles to be applied without regard to other facts and circumstances relevant to the regulatory scheme of the Racing, Pari-Mutuel Wagering and Breeding Law by imposing financial obligations upon the OTBs. We agree with both Supreme Court and the Appellate Division that the Board here promulgated no rules or regulations, but rather interpreted the requirements of the statutes in issue, which we have now independently construed.
Accordingly, the order of the Appellate Division should be modified, with costs to respondents-appellants, by reinstating the judgment of Supreme Court, and, as so modified, affirmed.
Order modified, etc.
FOOTNOTES
1. Currently, there are six regional OTBs: New York City, Suffolk, Nassau, Capital District, Catskill and Western.
2. While the Legislature recently renumbered relevant sections of the Racing, Pari-Mutuel Wagering and Breeding Law, to maintain consistency we adhere to the statutory numbering used by Supreme Court and the Appellate Division in this case.
3. The trial court additionally accorded deference to the Board's reading of the statute it is empowered to oversee. What is at issue, however, is a matter of statutory interpretation, not deference to the operational expertise of the administrative agency.
KAYE, Chief Judge.
Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES concur.
A view of the New York state Capitol. A panel will hold hearings next week on pay raises for lawmakers, the governor and other officials. PHOTO: HANS PENNINK/ASSOCIATED PRESS
Anthony Annucci has run New York’s prison system since 2013, longer than the state’s commissioners for transportation, health or motor vehicles.
But Mr. Annucci, for nearly six years, has been “acting commissioner” of the state’s Department of Corrections and Community Supervision. The commissioner’s salary is set in state law, so taking the full title would require a 30% pay cut for Mr. Annucci, who is now paid $195,443 a year. He’s one of several “acting” state agency leaders who are certainly not temporary, but holding off on applying for the top slots at least in part because of this issue.
A state commission will hold hearings next week about increasing the salaries for agency commissioners, the 213 members of the state Legislature as well as the governor, lieutenant governor, attorney general and comptroller. The salaries were last set in 1998.
“No one should go for 20 years without a pay raise, but it’s more complicated than that,” said Blair Horner, executive director of the New York Public Interest Research Group.
The last raises were part of a trade with then-Gov. George Pataki to authorize creation of the state’s first charter schools. Lawmakers also agreed that their salaries would be withheld every year if a state budget isn’t enacted by the April 1 deadline. The raises were approved in a lame-duck session, and took effect in 1999.
The current pay rates are $179,000 for the governor, $151,500 for other statewide officials, $136,000 for many agency commissioners and $79,500 for legislators, whose posts are considered part time. Many of the 213 lawmakers receive more money in stipends—from $9,000 to $41,000—for chairing committees or holding leadership posts.
Some lawmakers, particularly lawyers, receive money for outside legal work that critics like Mr. Horner have said causes a conflict. Former Assembly Speaker Sheldon Silver was convicted in 2015 and 2018 of taking payments from major real-estate firms that were disguised as legal fees, but proven by prosecutors to be bribes.
Assembly Speaker Carl Heastie, a Democrat from the Bronx, and many members of his conference have said that their salaries haven't kept pace with the cost of living. Many Assembly members in recent years have decamped to run for the New York City Council, where the base pay is $148,500.
The current commission is an upgraded version of a body that recommended pay hikes for the state’s judges and, in 2016, considered a salary increase for legislators and executive branch employees. Legislators believed a raise was a fait accompli, but appointees of Gov. Andrew Cuomo adjourned the commission without acting.
Mr. Cuomo then began bargaining with lawmakers in a deal that would have raised their pay in exchange for limits on outside income and the legalization of ride-hailing services, but negotiations petered out.
A law passed this year says the new commission—a quartet of current and former state and city comptrollers—must consider factors like the overall economic climate, a lawmaker’s performance and the compensation of comparable government employees. New York’s legislators have a higher base pay than counterparts in every state except California and Pennsylvania. The median household income in New York state in 2016 was $62,909.
The commission will issue salary recommendations by Dec. 10, which will become law unless the Legislature reconvenes at the Capitol and votes to block them.
Mr. Cuomo is also feeling the bite as he embarks on a third term and is recruiting officials for cabinet positions—including new commissioners of parks and environmental conservation.
“You want quality in government and you want to be able to attract people,” Mr. Cuomo said during a radio interview last week. He also softened his tone on pay raises for legislators.
“They’re away from their family for days on end—they make tremendous sacrifices,” Mr. Cuomo said. “I know it’s not popular to say, but I believe they deserve a raise.”
Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com
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