New York Budget Proposal Includes Tax Break for Racetracks

New York horse race tracks might be entitled to a major tax break legislation in the state’s budget proposal, hence potentially saving a grant of $5 million from tax. The proposal, which has been approved by the New York Racing Association (NYRA), aims at the revision of the pari-mutuel tax break structure, thus allowing local tracks to keep more money, and at the same time market share of the horse racing industry will not be affected.

This proposed adjustment to the tax break laws is part of Governor Kathy Hochul’s broader budget proposal plan and is aimed at being revenue-neutral. In other words, the change is not expected to impact the state’s overall tax income but will make important modifications in how tax breaks are applied to various sectors within the horse racing business, benefiting both New York horse race tracks and advance-deposit wagering (ADW) operators.

The core of the new proposal revolves around shifting the tax break burden between out-of-state ADWs and New York horse race tracks. The tax break rate of out-of-state ADWs, however, will increase from 5% to 6.45%. The New York horse race tracks’ tax break rate, in contrast, will decrease from 7.45% to 6.91%, decreasing by 0.54 percentage points.

This change is made to balance the tax system between New York horse race tracks and out-of-state operators so they can compete on a level field. Currently, ADWs, which allow people to bet on horse races over the Internet, pay taxes at a lower rate than New York horse race tracks pay. Raising the tax rate for ADWs and lowering the tax rate for NYRA’s tracks is to bring a more balanced ratio between these two institutions.

For some time now, the NYRA has been pushing for this change. The proposal would simplify operations in the horse racing industry to create a more equitable environment for both New York horse race tracks and ADW operators, according to NYRA spokesperson Patrick McKenna.

In an announcement to BloodHorse, McKenna stated, “The proposed changes to New York State’s pari-mutuel taxes and fees will simplify the horse-racing business and level the playing field between New York horse race tracks and ADW operators and their out-of-state competitors.”

NYRA’s pleas to cut taxes come on the back of their own and other local tracks’ battle against rival ADW platforms, which are increasingly popular because of their convenience and access, two things currently demanded by any gambling consumer. Said McKenna, “A tax like this would be a shot in the arm to the commonwealth’s New York horse race tracks and would allow them to try to keep up with out-of-state operators based on tax rates.

The proposed tax reforms have attracted both praise and criticism. The proponents are of the view that the reforms are necessary in a bid to preserve horse racing in New York for the future, a vital part of the state’s economy. Reducing the tax break burden from New York horse race tracks is expected to get the industry back on track, especially as it competes with online gaming websites.

Opponents, however, have raised concerns about the potential impact on ADWs, particularly those that only operate in New York. They argue that such sites could find it difficult to compete with out-of-state operators, who will be subject to the new, higher tax break rates.

Further, some analysts question whether the proposed tax break will go far enough to rectify the issues plaguing New York’s horse racing industry. The industry has been beset by declining attendance at live races, increasing competition from gambling based on the Internet, and the high cost of racetrack upkeep.

Governor Hochul’s budget proposal, with these modifications to the pari-mutuel tax break statutes, seeks to address several issues of New York’s racing and casino industries. While the tax relief for New York horse race tracks would be a rollback of the state policy for taxation of horse racing, the overall effect on the state’s fiscal condition will be negligible.

The proposal remains pending approval by the New York State Legislature, and whether it will be included in the final budget proposal remains uncertain. NYRA and some lawmakers have publicly expressed their endorsement, though, so it’s probable that the proposal will start to pick up steam in the weeks ahead.

Through the legislative process, the budget proposal will find its way, with all parties involved in both the horse racing and online betting industries holding their breath to learn what form the state’s tax policies take. Sanctioned, these reforms would completely reshape New York’s horse racing industry’s fiscal landscape, offering new possibilities for growth and stability.

The proposed tax reform in the state budget proposal of New York aims to level the financial playing field between New York horse race tracks and online wagering operators. By lessening the tax break burden on local tracks and imposing higher taxes on out-of-state ADWs, the state wishes to balance the playing field so that the local New York horse race tracks can have a better chance of competing against their out-of-state competitors. As the legislative process continues, those with stakes in the horse racing industry will be monitoring the outcome closely to determine what the ultimate benefit of the proposal may be.