The Rivers Casino & Resort Schenectady hasn’t made any of its required purse payments this year to the Saratoga Harness Horseman’s Association (SHHA).
Purse support payments were negotiated in 2013. Author of the provision, Bennett Liebman, the government lawyer-in-residence at the Government Law Center of Albany Law School, told Capital Tonight that the purpose of the provision was to protect the harness horsemen in a region where the casino license was not awarded to a harness track.
"Since it could reasonably be assumed that the entrance of a new casino into a region might affect the video lottery earnings of a nearby racino/harness track, there was some potential for purse payments from VLT’s to fall," he explained.
"The idea was to hold the harness horsemen harmless from the effect of a new casino operating," Liebman continued. "So, if a casino in Schenectady caused the Saratoga Harness VLT purse payments to horsemen at Saratoga Harness to drop, the casino would make up the difference, plus any CPI changes. It was intended to protect the horsemen from a shortfall in a racetrack’s VLT support payments caused by the entrance of a new casino into a local market."
The money in question goes into a purse account, which is used for the benefit of the SHHA. It pays for purses – the money that owners race for – as well as operational expenses like track maintenance. The money from the fund also pays for members’ health insurance, drivers, and groomers. Anyone who is a member of SHHA can participate in the association’s health insurance plan.
But Justin Moore, general manager at Rivers, told Capital Tonight that there are multiple reasons the casino hasn’t paid up. For example, COVID has created a liquidity crunch for Rivers. Currently, cash reserves are being used for wages, healthcare benefit and property taxes.
Plus, Rivers is the only casino in the state that doesn’t operate a harness track.
"The main thing here is that we shouldn’t be making payments to a harness track that we have zero affiliation for," Moore said.
Finally, Rivers claims that the “subsidy” isn’t needed because the casino hasn’t hurt harness racing in Saratoga.
More than that, according to Rivers, while overall revenues may have dropped, the overall profits to the owners of the Saratoga Casino and Raceway have increased dramatically, they say, therefore the payment is no longer needed.
"It’s absolutely needed," said SHHA’s Attorney Sarah Burger of the Burger Law Group. "Without the purse support payment from Rivers we are in the red, by nearly the equivalent amount of their annual purse support payment."
According to Burger, in 2019, SHHA’s bottom line or net income without Rivers’ support, would have been negative $3,789,226.
The support payment from Rivers for the same year was $3,921,721, which represented 27% of purse support payments to SHHA.
Because Rivers doesn’t operate a harness track, it’s payment is a fraction of the payment that the Saratoga Casino Hotel pays, which, for 2019, amounted to 73% of SHHA’s total purse support payments.
The argument over purse payments could be decided by the state budget due on April 1.
While the issue has no bearing on state revenues, the governor proposed a moratorium on purse support payments in his executive budget until six months after the last COVID restrictions are lifted. The proposal is also included in the Senate’s one-house budget with slightly different language. The Assembly did not address the issue.
"The (governor’s) budget proposal is under attack," according to Rivers’ Moore. "It’s under fire from people that would prefer to see the horsemen get paid immediately."
Burger is one of those doing the attacking.
"They shouldn’t be trying to balance their budgets on our backs. If they’ve made bad deals, it’s not the Association’s fault. That has nothing to do with us," she told Capital Tonight.
Notably, Bennett Liebman, comes down on the side of the casinos.
"First thing to know is there is no economic reason for harness racing to exist in Saratoga. Adjusting for inflation, per diem on track handle in 2019 was 1.6% of what it was in 1969," he explained via email to Capital Tonight. "There is no on-track attendance. The sport survives only because the track owners were able to use the continuations of racing as an excuse to get VLT's."
Burger takes exception to Liebman’s characterization of harness racing.
"Harness racing is generations old and remains how thousands of middle-class New Yorkers earn a living and continue to support the inter-related equine and agricultural businesses. If that’s not economic reason enough, I’m not sure what is," she stated.