The New York legislature approved a $25 million loan to the New York Racing Association as part of an emergency budget appropriation late on Tuesday, according to Morgan Hook, a spokesman for Gov. David Paterson.
The loan, which had earlier in the day been pushed by Paterson, would provide NYRA with the cash it says it needs to pay for operations until early next year. Last week, NYRA sent notices to its 1,400 employees that it was considering closing its tracks on June 9, four days after the Belmont Stakes, because of a shortage of cash.
The bill providing for the loan was attached to legislation that allows the state to continue paying its bills as it negotiates solutions to a $9 billion budget deficit.
Under the structure of the loan, NYRA will receive $25 million of a $250 million loan that the state has already guaranteed to fund the construction of a casino at NYRA's Aqueduct racetrack in Queens "for services and expenses" at the three tracks operated by NYRA, according to a memo prepared for the legislation by Paterson's office.
NYRA would be required to pay the loan back by March 31, 2011, or within 30 days of the state's signing an agreement with the operator of the casino, the memo said. If the loan is not repaid by March 31, then the state's lottery would be required to cover the shortfall using proceeds that NYRA has been promised from the casino's operating revenues, the memo said.
NYRA and its horsemen will receive approximately 13 percent of the casino's net revenues once the casino is up and running, a share that would likely total more than $60 million a year, based on projections for the casino's net revenues.
The state lottery is administering the bidding procedures for the 4,500-slot machine casino, which was first authorized in 2001 and would likely be the highest-grossing casino on the East Coast. Under a request for proposals issued two weeks ago, the lottery will make a recommendation on Aug. 3. Paterson has said that he will accept the lottery's recommendation, but the operator will need the approval of the state's legislative leaders as well.
The state has scuttled two previous deals to select a casino operator because of political and financial considerations.
NYRA is owed $17 million by the New York City Off-Track Betting Corporation, a state-owned entity that filed for bankruptcy earlier this year. The state had also promised in an agreement reached with NYRA in 2008 to provide the association with operating funds if the Aqueduct casino were not open by the end of March 2009.