A state appeals court upheld a 2001 law expanding gambling in New York, but the court struck down the way some gambling proceeds are divided up from video lottery terminals at racetracks.
The casino gambling industry got a major boost Wednesday from an appellate court decision upholding much of the spread of new betting in New York.
Having Indian tribes, such as the Seneca Nation, running casinos in New York is legal, the court ruled.
So are the interstate mega-lotteries.
Also legal, the court ruled, are the video lottery terminals now operating at four racetracks, including Fairgrounds Gaming & Racing in Hamburg.
"Overall, it's a big win for the pro-gambling people," said Bennett Liebman, who runs a racing and gambling think tank at Albany Law School.
But the 5-0 appellate court ruling, which was being closely watched by casino supporters and opponents alike, left some state officials scrambling when it struck down the way gambling proceeds from the video lottery terminals are divided up.
The more than 5,000 VLTs operating at four racetracks generated about $70 million in revenue for the state and racing industry so far this year. The VLTs are the equivalent of electronic lottery cards, and proceeds from them must be treated the same way as routine lottery tickets, the court ruled.
That means a portion is given away as winnings, and a portion goes to the operator, in this case the racetrack. The rest, the court ruled, must all go back to the state to be used for education.
Instead, the mid-level court said in its 51-page decision, the Legislature and Gov. George E. Pataki illegally diverted some of the proceeds that should have gone toward the education fund to racetrack purses and breeding funds.
The gambling expansion challenged in court was passed in 2001 as a way to help the state get through rising deficits. Besides the VLTs and lottery game expansions, the law permitted the Senecas to open up to three casinos in Western New York and for Indian tribes to open up to three casinos in the Catskills.
The lawsuit was brought by civic, religious and business groups and two state lawmakers, including Assemblyman William Parment, D-Jamestown.
"Gambling is not a legitimate way to support a state government," said the Rev. Stan Bratton, one of the lawsuit's plaintiffs. Bratton is a Buffalo religious leader and an organizer with the Western New York Coalition Against Casino Gambling.
But even in rejecting the revenue-sharing provision for racetrack casinos, the court gave a key victory to gambling companies and the state by declaring that the VLT devices are not slot machines.
"Because VLTs are devices used in playing phases of a lottery, they cannot be considered slot machines as a matter of law, regardless of their outward resemblance to such machines," and are therefore legal, the court wrote.
The appeals court said the Indian gambling provision is legal because state law is preempted by a federal law allowing states to enter into gambling compacts with tribes.
The Pataki administration expects to appeal the court's VLT revenue sharing ruling, said Kevin Quinn, a Pataki spokesman. Meanwhile, gambling critics said they will appeal the decision on a number of fronts to the Court of Appeals, the state's highest court.
Given the court ruling, casinos, such as the two now operated in Western New York by the Seneca Nation, will remain open since the court approved the Indian gambling provisions. It also will keep the push on by tribes to open three casinos in the Catskills, also permitted by the 2001 law.
The four racetrack "racinos" currently operating will also remain open since the decision is being appealed by the governor, kicking in an automatic stay of Wednesday's ruling. A decision in the high court could be a year away.
Meanwhile,the ruling gives a major boost to Pataki's plan to expand gambling even more. In his 2004 budget plan, Pataki proposed selling licenses to private firms to open another eight VLT casinos around the state.
But the ruling could give Assembly Speaker Sheldon Silver, D-Manhattan, some ammunition in his bid to block Pataki's plan. "I'm not inclined to go along with that, so it won't happen," Silver said.
Silver said the court's ruling proves what he has said from the outset. "VLT revenues are speculative at best," he said.
Republicans insisted the ruling will, in the end, fuel more gambling opportunities.
"VLTs are here to stay," Senate Majority Leader Joseph Bruno said Wednesday.
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The casino gambling industry got a major boost Wednesday from an appellate court decision upholding much of the spread of new betting in New York.
Having Indian tribes, such as the Seneca Nation, running casinos in New York is legal, the court ruled.
So are the interstate mega-lotteries.
Also legal, the court ruled, are the video lottery terminals now operating at four racetracks, including Fairgrounds Gaming & Racing in Hamburg.
"Overall, it's a big win for the pro-gambling people," said Bennett Liebman, who runs a racing and gambling think tank at Albany Law School.
But the 5-0 appellate court ruling, which was being closely watched by casino supporters and opponents alike, left some state officials scrambling when it struck down the way gambling proceeds from the video lottery terminals are divided up.
The more than 5,000 VLTs operating at four racetracks generated about $70 million in revenue for the state and racing industry so far this year. The VLTs are the equivalent of electronic lottery cards, and proceeds from them must be treated the same way as routine lottery tickets, the court ruled.
That means a portion is given away as winnings, and a portion goes to the operator, in this case the racetrack. The rest, the court ruled, must all go back to the state to be used for education.
Instead, the mid-level court said in its 51-page decision, the Legislature and Gov. George E. Pataki illegally diverted some of the proceeds that should have gone toward the education fund to racetrack purses and breeding funds.
The gambling expansion challenged in court was passed in 2001 as a way to help the state get through rising deficits. Besides the VLTs and lottery game expansions, the law permitted the Senecas to open up to three casinos in Western New York and for Indian tribes to open up to three casinos in the Catskills.
The lawsuit was brought by civic, religious and business groups and two state lawmakers, including Assemblyman William Parment, D-Jamestown.
"Gambling is not a legitimate way to support a state government," said the Rev. Stan Bratton, one of the lawsuit's plaintiffs. Bratton is a Buffalo religious leader and an organizer with the Western New York Coalition Against Casino Gambling.
But even in rejecting the revenue-sharing provision for racetrack casinos, the court gave a key victory to gambling companies and the state by declaring that the VLT devices are not slot machines.
"Because VLTs are devices used in playing phases of a lottery, they cannot be considered slot machines as a matter of law, regardless of their outward resemblance to such machines," and are therefore legal, the court wrote.
The appeals court said the Indian gambling provision is legal because state law is preempted by a federal law allowing states to enter into gambling compacts with tribes.
The Pataki administration expects to appeal the court's VLT revenue sharing ruling, said Kevin Quinn, a Pataki spokesman. Meanwhile, gambling critics said they will appeal the decision on a number of fronts to the Court of Appeals, the state's highest court.
Given the court ruling, casinos, such as the two now operated in Western New York by the Seneca Nation, will remain open since the court approved the Indian gambling provisions. It also will keep the push on by tribes to open three casinos in the Catskills, also permitted by the 2001 law.
The four racetrack "racinos" currently operating will also remain open since the decision is being appealed by the governor, kicking in an automatic stay of Wednesday's ruling. A decision in the high court could be a year away.
Meanwhile,the ruling gives a major boost to Pataki's plan to expand gambling even more. In his 2004 budget plan, Pataki proposed selling licenses to private firms to open another eight VLT casinos around the state.
But the ruling could give Assembly Speaker Sheldon Silver, D-Manhattan, some ammunition in his bid to block Pataki's plan. "I'm not inclined to go along with that, so it won't happen," Silver said.
Silver said the court's ruling proves what he has said from the outset. "VLT revenues are speculative at best," he said.
Republicans insisted the ruling will, in the end, fuel more gambling opportunities.
"VLTs are here to stay," Senate Majority Leader Joseph Bruno said Wednesday.
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