§ 318. Disposition of on-track pari-mutuel pools; harness races. 1.
Except as otherwise provided by law, every association or corporation
authorized under this article to conduct pari-mutuel betting at a
harness horse race meeting on races run thereat shall distribute all
sums deposited in any pari-mutuel pool to the holders of winning tickets
therein, provided such tickets be presented for payment prior to April
first of the year following the year of their purchase, less an amount
that shall be established and retained by such racing association or
corporation of between fourteen and twenty percent of the total deposits
in pools resulting from regular bets, less sixteen to twenty-two percent
of the total deposits in pools resulting from multiple bets, less twenty
to thirty percent of the total deposits in pools resulting from exotic
bets, and less twenty to thirty-six percent of the total betting
deposits in pools resulting from super exotic bets, plus the breaks. The
retention rate to be established is subject to the prior approval of the
commission. Such rate may not be changed more than once per calendar
quarter to be effective on the first day of the calendar quarter.

"Exotic bets" and "multiple bets" shall have the meanings set forth in
section five hundred nineteen of this chapter, "super exotic bets" shall
have the meaning set forth in subdivision four of section three hundred
one of this article and "the breaks" are hereby defined as the odd cents
over any multiple of ten for regular and multiple bets, or for exotic
bets, over any multiple of fifty, or for super exotic bets, over any
multiple of one hundred calculated on the basis of one dollar and
otherwise payable to a patron, provided however, that effective after
October fifteenth, nineteen hundred ninety-four breaks are hereby
defined as the odd cents over any multiple of five for payoffs greater
than one dollar five cents but less than five dollars, over any multiple
of ten for payoffs greater than five dollars but less than twenty-five
dollars, over any multiple of twenty-five for payoffs greater than
twenty-five dollars but less than two hundred fifty dollars, or over any
multiple of fifty for payoffs over two hundred fifty dollars.

a. Of the sum so retained from on-track pari-mutuel betting pools,
such association or corporation authorized to operate in Westchester or
Nassau county: (i) shall pay to the commissioner of taxation and finance
as a reasonable tax for the privilege of conducting pari-mutuel betting
at races run at race meetings held by such corporation or association, a
tax, which is hereby levied, at the rate of one-half of one percent of
all wagers from total daily on-track pools. Such association or
corporation shall receive credit as a reduction of the daily tax by the
state for the privilege of conducting pari-mutuel betting of amounts
equal to four-tenths percent of total daily pools resulting from the
simulcast of such association's or corporation's races to licensed
facilities operated by regional off-track betting corporations in
accordance with section one thousand eight of this chapter; provided,
however, that in no event shall total daily credit exceed four-tenths
percent of the total daily pool of such association or corporation. An
amount equal to fifty percent of such credit shall be used to increase
purses; provided, however, that for any twelve-month period beginning on
April first in nineteen hundred ninety and any year thereafter, each of
the applicable rates set forth above shall be increased by one-half of
one percent on all on-track bets of any such racing association or
corporation that did not expend an amount equal to at least one-half of
one percent of its on-track bets during the immediately preceding
calendar year for enhancements consisting of capital improvements as
defined by section three hundred nineteen of this article, repairs to
its physical plant, structures, and equipment used in its racing or
wagering operations, as certified by the commission to the commissioner
of taxation and finance no later than eighty days after the close of
such calendar year, and five special events at each track in each
calendar year, not otherwise conducted in the ordinary course of
business, the purpose of which shall be to encourage, attract and
promote track attendance and encourage new and continued patronage,
which events shall be subject to the approval of the commission for
purposes of this subdivision. In the determination of the amounts
expended for such enhancements, the commission shall consider the
average of the two immediately preceding twelve-month calendar periods.
Notwithstanding the foregoing no increase shall be imposed unless such
corporation or association has been afforded notice and opportunity to
be heard. The commission shall promulgate rules and regulations to
implement the provisions relating to notice and hearing.

(ii) except as otherwise provided in this paragraph an amount equal to
six and eight-tenths percent of the total pool resulting from on-track
regular bets, an amount equal to seven and ninety-five one hundredths
percent of the total pool resulting from on-track multiple bets, an
amount equal to ten and one-half percent of the total pool resulting
from on-track exotic bets, an amount equal to fifteen and one-half
percent of the total daily pool resulting from on-track super exotic
bets shall be used exclusively for purses, of which an amount of not
less than ninety percent shall be used exclusively for purses for
overnight races conducted by such association or corporation. Such
amounts may be reduced upon an application approved by the commission
and an agreement between the licensed harness racing corporation or
association and the representative horsemen's organization as a
condition to reduce the amounts of retained percentages as provided for
in this section. However, of the total amount available for purses, an
amount as determined by contractual obligations between an organization
representing at least fifty-one percent of the owners and trainers using
the facilities of such association or corporation for racing, training
or stabling purposes and the association or corporation, shall be used
for the administrative purposes of said organization and for such
welfare and medical plans for regularly employed backstretch employees
principally employed at the facilities of such corporation or
association as provided by said organization, provided, however, that
eligibility for benefits in such plans shall not be conditioned upon
membership in such organization by any employee or employer thereof, and
any denial of eligibility for benefits in such plans which, upon
investigation and review by the commission, is determined to have
resulted from a person, firm, association, corporation or organization
knowingly aiding in or permitting eligibility for benefits being
conditioned upon membership in such organization shall subject such
organization to the penalties imposed under sections three hundred ten
and three hundred twenty-one of this article but the ratio between the
amounts actually expended for such welfare and medical plans and the
cost actually incurred in administering such welfare and medical plans
for fiscal years of such corporation or association, on or after July
twenty-fourth, nineteen hundred eighty-one, shall not be less than the
ratio between such amounts actually expended and such costs actually
incurred for the fiscal year immediately prior to such date. Such
organization shall annually on or before July first certify to the
commission that it represents at least fifty-one percent of such owners
and trainers and provide copies of such certification to such
association or corporation. Any other organization claiming to represent
at least fifty-one percent of such owners and trainers may file a
challenge with the commission within fifteen days of such original
certification. The commission shall examine such claim and may undertake
studies and conduct hearings to determine the validity of such claim.
Within sixty days of receiving such challenge and based upon the
findings of such studies and hearings, the commission shall render a
decision on the validity of such claim and advise such organizations and
association or corporation of its determination. Upon receipt of such
original certification by such organization, the association or
corporation shall make such payments to said organization and, in the
event of a challenge brought to any other organization, such payments
shall continue to be made until such time as the commission renders its
decision on such challenge; and

(iii) the balance of the retained percentage of such pools and the
balance of the breaks may be held by such association or corporation for
its own use and purposes except as provided in paragraph c of this
subdivision and in subdivision four of section three hundred one of this
article, provided, however, that the commission shall report annually,
on or before July first, to the director of the budget, the chair of the
senate finance committee and the chair of the assembly ways and means
committee the extent to which such corporations and associations used
such retained percentages and breakage for operations, maintenance,
capital improvements, advertising and promotion, administration and
general overhead and evaluate the effectiveness and make recommendations
with respect to the application of the reduced rates of taxation as
provided for in subparagraph (i) of this paragraph in accomplishing the
objectives stated therein. Such report shall also specify the amounts of
such retained percentages and breakage used for investments not directly
related to racing activities and such amounts used to declare dividends
or other profit distributions, additions to capital stock, its sale and
transfer and additions to retained earnings. Such reports shall also
include an analysis of any such agreements or proposals to conduct or
otherwise expand wagers authorized under article ten of this chapter and
present its conclusions with respect to the conduct of such wagering,
the nature of such proposals and agreements, and recommendations to
ensure the future maintenance of the intent of this article and article
ten of this chapter.

b. (i) Of the sums retained by any other licensed harness racing
association or corporation other than those described in paragraph a of
this subdivision, the applicable tax rates for regular bets shall be
six-tenths of one percent; for multiple bets shall be one and one-tenth
percent; for exotic bets shall be five and six-tenths percent and for
super exotic bets shall be seven percent, plus fifty percent of the
breaks. Effective September first, nineteen hundred ninety-four, for all
licensed harness racing associations and corporations that have entered
into a contract with their representative horsemen's association on and
after such date, such tax shall be one-half of one percent of all
wagers, plus fifty percent of the breaks.

Provided, however, that for any twelve-month period beginning on April
first in nineteen hundred ninety and any year thereafter, each of the
applicable rates set forth above shall be increased by one-quarter of
one percent on all on-track bets of any such racing association or
corporation that did not expend an amount equal to at least one-half of
one percent of its on-track bets during the immediately preceding
calendar year for enhancements consisting of capital improvements as
defined by section three hundred nineteen of this article, repairs to
its physical plant, structures, and equipment used in its racing or
wagering operations, as certified by the commission to the commissioner
of taxation and finance no later than eighty days after the close of
such calendar year, and five special events at each track in each
calendar year, not otherwise conducted in the ordinary course of
business, the purpose of which shall be to encourage, attract and
promote track attendance and encourage new and continued patronage,
which events shall be subject to the approval of the commission for
purposes of this subdivision. In this regard, expenditures by a county
agricultural society pursuant to section three hundred nineteen of this
article shall be credited to the applicable harness racing association
or corporation for this purpose. In the determination of the amounts
expended for such enhancements, the commission may consider the
immediately preceding twelve-month calendar period or the average of the
two immediately preceding twelve-month calendar periods. Notwithstanding
the foregoing no increase shall be imposed unless such corporation or
association has been afforded a notice and opportunity to be heard. The
commission shall promulgate rules and regulations to implement the
provisions relating to notice and hearing.

Such associations or corporations shall receive credit as a reduction
of the daily tax by the state for the privilege of conducting
pari-mutuel betting of amounts equal to four-tenths percent of total
daily pools resulting from the simulcast of such association's or
corporation's races to licensed facilities operated by regional
off-track betting corporations in accordance with section one thousand
eight of this chapter, provided however, that in no event shall the
total daily credit exceed four-tenths percent of the total daily pool of
such association or corporation which tax is hereby levied and shall be
paid to the commissioner of taxation and finance as a reasonable tax
imposed by the state for the privilege of conducting pari-mutuel betting
at races run at race meetings held by such association or corporation.
The commission shall report annually, before July first, to the director
of the budget, the chair of the senate finance committee and the chair
of the assembly ways and means committee the extent to which such
corporations and associations used such retained percentages and
breakage for operations, maintenance, capital improvements, advertising
and promotion, administration and general overhead and evaluate the
effectiveness and make recommendations with respect to the application
of the reduced rates of taxation as provided for in this subparagraph in
accomplishing the objectives stated therein. Such report shall also
specify the amounts of such retained percentages and breakage used for
investments not directly related to racing activities and such amounts
used to declare dividends or other profit distributions, additions to
capital stock, its sale and transfer and additions to retained earnings.
Such reports shall also include an analysis of any such agreements or
proposals to conduct or otherwise expand wagers authorized under article
ten of this chapter and present its conclusions with respect to the
conduct of such wagering, the nature of such proposals and agreements,
and recommendations to ensure the future maintenance of the intent of
this article.

(ii) Of the sums retained by such association or corporation, an
amount equal to one and three-quarters percent of the total pool
resulting from on-track regular, multiple and exotic bets shall be used
exclusively for the purpose of increasing purses awarded in overnight
races conducted by such association or corporation. Such amounts shall
be in addition to purse moneys otherwise provided pursuant to existing
contractual obligations. In this regard an amount equal to twelve
percent of the total bets in super exotic pools shall be used for purses
in lieu of any such contractual obligations that might otherwise apply
to purses to be awarded on super exotic bets. Any portion of such amount
not so used during any year shall be so used during the following year,
failing which such portion shall be payable to the commissioner of
taxation and finance as additional tax. In addition to the amounts
required in this paragraph, fifty percent of all additional sums
retained, as a result of tax reductions provided in this section after
September first, nineteen hundred ninety-four to qualified licensed
harness racing associations, shall be used exclusively for purposes of
increasing purses awarded in overnight races conducted by such
association or corporation, provided that such association or
corporation has entered into a written agreement with its representative
horsemen's organization on and after September first, nineteen hundred
ninety-four. Notwithstanding anything contained herein to the contrary,
in a harness special betting district the amount to be used for purses
or the methodology for calculating the amount to be used for purses may
be specified in a written contract between a harness racing association
or corporation and its representative horsemen's association. The
balance of the retained percentage of such pool may be held by such
corporation or association for its own use and purposes.

(iii) Of the amount of the breaks from on-track regular, multiple,
exotic and super exotic bets such association or corporation shall pay
fifty percent to the commissioner of taxation and finance. The balance
of such breaks may be held by such association or corporation for its
own use and purposes.

(iv) The commission shall as a condition of racing require an
association authorized to operate in areas other than Westchester or
Nassau county to withhold one percent of all purses and to pay such sum
to the horsemen's organization representing the owners and trainers
using the facilities of such association which had a contract with the
association governing the conditions of racing on January first,
nineteen hundred ninety-two, as determined by the commission.

Any other horsemen's organization may apply to the commission to be
approved as the qualified organization to receive payment of the one
percent of all purses by submitting to the commission proof of both,
that (i) such organization represents more than fifty-one percent of all
the owners and trainers using the same facilities and (ii) the
horsemen's organization previously approved as qualified by the
commission does not represent fifty-one percent of all the owners and
trainers using the same facilities. If the commission is satisfied that
the documentation submitted with the application of any other horsemen's
organization is conclusive with respect to subparagraphs (i) and (ii) of
this paragraph, the commission may approve the applicant as the
qualified recipient organization.

In the best interests of racing, upon receipt of such an application,
the commission may direct the payments to the previously qualified
horsemen's organization to continue uninterrupted, or it may direct the
payments to be withheld and placed in interest-bearing accounts for a
period not to exceed ninety days, during which time the commission shall
review and approve or disapprove the application. Funds held in such
manner shall be paid to the organization approved by the commission. In
no event shall the commission accept more than one such application in
any calendar year from the same horsemen's organization.

The funds authorized to be paid by the commission are to be used
exclusively for the benefit of those horsemen racing in New York state
through the administrative purposes of such qualified organization,
benevolent activities on behalf of backstretch employees, and for the
promotion of equine research.

c. Of the sums retained by any harness racing association or
corporation, an amount equal to one percent of the total pools resulting
from on-track regular, multiple and exotic bets and an amount equal to
three percent of the total pools resulting from on-track super exotic
bets shall be paid to the agriculture and New York state horse breeding
development fund.

d. Every harness racing association or corporation shall pay to the
commission as a regulatory fee, which fee is hereby levied, six-tenths
of one percent of the total daily on-track pari-mutuel pools of such
association or corporation.

2. The state tax levied adjusted for any credits in this section shall
be paid to the commissioner of taxation and finance, on the last
business day of each month and shall cover taxes due for the period from
the sixteenth day of the preceding month through the fifteenth day of
the current month provided, however, that such payments required to be
made on March thirty-first shall include all taxes due and accruing
through the last full week of racing in March of the current year or as
otherwise determined by the commissioner, and shall be accompanied by a
report under oath showing the total of all such contributions together
with such other information as the commissioner may require. A penalty
of five percent and interest at the rate of one percent per month from
the date the report is required to be filed to the date of payment of
the tax shall be payable in case any tax imposed by this section is not
paid when due. If the commissioner determines that any moneys received
under this section were paid in error, the commissioner may cause the
same to be refunded without interest out of any moneys collected
thereunder, provided an application therefor is filed with it within one
year from the time the erroneous payment was made. Such taxes, interest
and penalties when collected, after the deduction of refunds of taxes
erroneously paid, shall be paid by the commissioner into the general
fund of the state treasury.

3. Except as otherwise provided by law no county, city, town, village
or other political subdivision of the state may impose, levy or collect
a tax on admission fees or tax on admission, on bets made by patrons in
the form of purchases of pari-mutuel tickets or upon such tickets, on
pari-mutuel pools, on breaks, on dividends or payments made to winning
bettors, or on that part of the pari-mutuel pools or breaks to be
retained by harness horse racing associations or corporations under this
section.

4. Notwithstanding any other provisions of this chapter, there shall
be no pari-mutuel tax imposed upon the compensation received by any
harness racing association or corporation in consideration for (a)
permission to have wagering conducted outside this state on races run by
such association or corporation, and (b) the simulcasting outside this
state of races run by such association or corporation, except for such
permission or such simulcasting as may be granted to an off-track
betting operator in the state of Connecticut by a harness racing
association or corporation located in Nassau or Westchester county. Any
such association or corporation so simulcasting to an off-track betting
operator in the state of Connecticut shall pay to the New York
commissioner of taxation and finance a reasonable tax for such
permission and privilege for such simulcasting, which is hereby levied,
at the following rates: one and one-tenth per centum of total daily
regular and multiple bets; three and one-tenth per centum of total daily
exotic bets; and three and one-half per centum of total daily super
exotic bets.

5. Tax rates in event of failure to maintain pari-mutuel racing
activity. a. Notwithstanding any other provision of this section to the
contrary, for any calendar year commencing on or after January first,
nineteen hundred eighty-nine, in which a harness racing association or
corporation does not conduct a minimum number of pari-mutuel programs
and pari-mutuel races at its facilities equal to at least ninety percent
of the programs and races so conducted during nineteen hundred
eighty-five or during nineteen hundred eighty-six, whichever is less, in
lieu of the tax rates set forth in subdivision one of this section the
applicable pari-mutuel tax rates for such association or corporation
with respect to on-track pari-mutuel betting pools during such year
shall be as follows:

(i) For such an association or corporation authorized to operate in
Westchester or Nassau county: of total daily on-track pools resulting
from regular bets, three and seventy-five hundredths percent of the
first five hundred thousand dollars comprising such pools and five and
twenty-five hundredths percent of the amount in excess of five hundred
thousand dollars, plus fifty percent of the breaks; of total daily
on-track pools resulting from multiple bets, four and seventy-five
hundredths percent of the first three hundred thousand dollars
comprising such pools and six and twenty-five hundredths percent of the
amount in excess of three hundred thousand dollars, plus fifty percent
of the breaks; of total daily on-track pools resulting from exotic bets,
eight and seventy-five hundredths percent of the first two hundred
thousand dollars comprising such pools, and ten and twenty-five
hundredths percent of the amount in excess of two hundred thousand
dollars, plus fifty percent of the breaks; and of total daily on-track
pools resulting from super exotic bets, seven percent, plus fifty
percent of the breaks; and

(ii) For any harness racing association or corporation other than one
described in subparagraph (i) of this paragraph: of total daily on-track
pools resulting from regular bets, one and one-half percent, plus fifty
percent of the breaks; of total daily on-track pools resulting from
multiple bets, two percent, plus fifty percent of the breaks; of total
daily on-track pools resulting from exotic bets, six and one-half
percent, plus fifty percent of the breaks; and of total daily on-track
pools resulting from super exotic bets, seven percent, plus fifty
percent of the breaks.

b. The provisions of this subdivision shall not apply to an
association or corporation for any calendar year for which the
commission certifies to the commissioner of taxation and finance:

(i) by December fifteenth of the year immediately preceding such year,
that such association or corporation has been assigned for such year,
from the programs and races it requested, at least the minimum number of
programs and races prescribed in paragraph a of this subdivision, or, if
fewer than such number were assigned for such year, that the assignment
of such lesser number was for good cause due to factors beyond the
control of such association or corporation or because the commission
found that it would be uneconomical or impractical for such association
or corporation to be assigned the prescribed number; and

(ii) by January thirty-first of the year immediately subsequent to
such year, that such association or corporation did conduct such number
of programs and races as were certified pursuant to subparagraph (i) of
this paragraph, or if it failed to conduct such number that such failure
was for good cause due to factors beyond its control or because the
commission found it uneconomical or impractical for such association or
corporation to conduct such a number.

c. For any calendar year for which the commission does not certify
pursuant to the provisions of subparagraph (i) of paragraph b of this
subdivision with respect to an association or corporation, the tax
imposed by this section shall be computed by substituting the provisions
of paragraph a of this subdivision for the provisions of paragraph a or
b, whichever is applicable, of subdivision one of this section and shall
pay the tax so computed to the commissioner of taxation and finance. In
such computation and payment, all other provisions of this section shall
apply as if the provisions of this paragraph and of paragraph a of this
subdivision had been incorporated in whole in paragraph a or b,
whichever is applicable, of subdivision one of this section.

d. For any calendar year for which the commission does not certify
pursuant to the provisions of subparagraph (ii) of paragraph b of this
subdivision with respect to an association or corporation, the tax
required to be paid hereunder for such year shall be equal to the
difference between the tax imposed pursuant to the provisions of
paragraph a of this subdivision and the tax imposed pursuant to the
provisions of paragraph a or b, whichever is applicable, of subdivision
one of this section, less one-half of such difference in recognition of
purses that were required to be paid, plus an additional amount equal to
ten percent of such tax in the event of a willful failure to comply with
the provisions of subparagraph (ii) of paragraph b of this subdivision
and such association or corporation shall pay the tax so computed to the
commissioner of taxation and finance on or before March fifteenth of the
following year. Notwithstanding the provisions of this subdivision, in
the event that upon appeal from the determination of the commission that
the certification provided in paragraph b of this subdivision will not
be made, it is finally determined that the commission erred in failing
to so certify and that any moneys received by the commissioner of
taxation and finance under paragraph c of this subdivision were paid in
error, the same shall be refunded at the rate of interest of six percent
per annum. Payment of such tax due, or the anticipation of such payment,
shall not affect the determination of purses in the year in which such
tax arises or in the year in which such payment is made nor shall such
payment in any other manner be considered in any statutory or
contractual calculation of purse obligations.

e. Written notice of the certification of the commission pursuant to
the provisions of paragraph b of this subdivision shall be given by the
commission to the applicable association or corporation by the dates
therein specified. In like manner, written notice that such
certification will not be made shall be given by the commission to the
commissioner of taxation and finance and the applicable association or
corporation by such dates.