Can a New York off-track betting corporation also hold a harness racing meeting at a track it owns?

Plain-English summary

The Chairman of the New York Racing and Wagering Board asked the AG a question with real money behind it. The Western Regional Off-Track Betting Corporation ("Western OTB") had bought the assets of the former operator of Batavia Downs harness track, including the racetrack itself. Western OTB then applied for a license to hold harness race meetings at the track and to conduct pari-mutuel betting at those meetings. The question: can an OTB do that?

The AG said no.

The argument Western OTB made. Racing Law § 304 grants the right to conduct harness races to "any corporation formed under the provisions of sections two hundred twenty-two through seven hundred five of this chapter" (and certain other entities like fair associations). Western OTB was created by Racing Law § 502 in 1973. Section 502 is within sections 222-705. So, Western OTB argued, it qualifies under § 304's broad "any corporation" language.

The AG's response. Reading § 304 in isolation could support that view. But the OTB-specific statutes (Articles V and V-a) tell a different story. Racing Law § 503(10) describes the OTB's purpose as establishing and conducting "off-track" pari-mutuel betting on horse races. § 518 says OTBs were created to raise revenue for government and to prevent illegal bookmaking. Neither statute says anything about conducting races. The AG cited NY State Public Employees Federation v City of Albany, 72 NY2d 96 (1988), for the principle that a broad statutory catch-all does not authorize action outside the statutory scheme. § 503(3), (4), and (12) give OTBs property and incidental-action powers, but those are tied to "carrying out [their] corporate purpose" of off-track betting, not race conducting.

Legislative history seals it. The AG walked through 100+ years of statutory history. Chapter 570 of the Laws of 1895 was the original New York racing law, authorizing corporations to hold races. Successive enactments (L 1909, Ch 40; L 1926, Ch 440; L 1940, Ch 254) preserved that scheme. The Pari-Mutuel Revenue Law of 1940 (article II) authorized corporations specifically for harness racing under § 37 and grandfathered older entities and fair associations into § 38. The 1973 enactment of regional OTBs (L 1973, Ch 346) did not give OTBs racing authority. Then in 1982, the current Racing Law was enacted to consolidate existing statutes (L 1982, Ch 865). The consolidation moved harness-racing authority to Article III, and § 304 changed the cross-reference from "this act" (which had a narrow meaning) to "sections two hundred twenty-two through seven hundred five of this chapter" (a broader-sounding phrase). The legislative history of the 1982 consolidation makes clear it was not intended to make substantive changes; the new cross-reference was just a renumbering update.

So the "any corporation" language in § 304 refers only to corporations within sections 222-705 that were previously specifically authorized to conduct harness racing. OTBs are not in that category. The Legislature has authorized the NYS Thoroughbred Racing Capital Investment Fund (§ 254(13)(a)) to conduct races in limited circumstances; the absence of similar language for OTBs is telling.

The AG also addressed institutional differences. Section 302 corporations are private corporations with general corporation powers, can declare dividends, and retain profits (§ 318(b)). OTBs are public benefit corporations with circumscribed powers and must distribute net revenue to participating counties (§ 516(2)). Those structural differences match the policy difference: OTBs are not in the racing business, they are in the off-track wagering business.

Since the OTB cannot hold harness races, the AG did not need to reach the secondary question of whether the OTB could be licensed for pari-mutuel wagering under § 307.

Currency note

This opinion was issued in 1999. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is an OTB and why is it different from a track operator?

An off-track betting corporation is a public benefit corporation chartered to accept pari-mutuel bets on horse races held at New York racetracks. The OTB does not run the races; it runs the betting parlors. The OTB collects bets, distributes payouts, takes a percentage for state and county revenue, and returns the rest to the racing industry through a statutory formula. A track operator is a private corporation that holds the races. The legislative scheme keeps these roles separate.

Did the Legislature ever consider letting OTBs hold races?

The opinion does not address this directly, but the statutory history shows that whenever the Legislature wanted to authorize a non-traditional entity to hold races, it did so explicitly (the NYS Thoroughbred Racing Capital Investment Fund under § 254(13)(a) is the example). The absence of similar language for OTBs is evidence the Legislature did not want OTBs in the racing business.

What happened to Batavia Downs after this opinion?

The opinion declines to predict outcomes. Western OTB had already purchased the track assets. The opinion concludes Western OTB cannot conduct the harness racing itself, but does not preclude Western OTB from leasing the track to another corporation formed under § 302 to operate the races. A track-operator/OTB-owner separation could in principle be set up after this opinion, but the opinion is silent on the operational details.

Could the State Legislature amend the law to let OTBs run races?

Yes. Article III of the Racing Law and § 304 are statutory, and the Legislature can amend either. The AG's analysis is about what current law authorizes, not about what the Legislature is structurally barred from doing.

Does this opinion apply to all six regional OTBs?

Yes. § 502 created six regional OTBs (Western, plus five others), all with the same statutory structure. The reasoning extends to all of them. Only the NYS Thoroughbred Racing Capital Investment Fund has its own explicit race-conducting authority in narrow circumstances.

Background and statutory framework

Racing Law Article III. Harness racing. § 302 authorizes the formation of corporations specifically for harness race meetings. § 303 governs ownership disclosures. § 304 lists the categories of entities authorized to hold harness races (§ 302 corporations, grandfathered pre-1940 corporations, fair associations).

Racing Law Article V and V-a. OTBs. § 502 establishes regional OTBs. § 503 sets out OTB powers, all directed at off-track wagering. § 516 governs revenue distribution. § 518 states the statutory purpose: revenue generation and curbing illegal bookmaking.

Legislative history. L 1895, Ch 570 (original racing law); L 1909, Ch 40 (revision); L 1926, Ch 440 (further revision); L 1940, Ch 254 (Pari-Mutuel Revenue Law with §§ 37 and 38 on harness racing); L 1973, Ch 346 (creation of regional OTBs); L 1982, Ch 865 (Racing Law consolidation).

Case law. NY State Public Employees Federation, AFL-CIO v City of Albany, 72 NY2d 96 (1988), holds that catch-all statutory language does not authorize action outside the statutory scheme.

Citations

• Racing, Pari-Mutuel Wagering and Breeding Law Articles II, III, V, V-a (overall framework).
• Racing Law § 302 (harness racing corporations); § 303 (ownership disclosure); § 304 (entities authorized to hold harness races).
• Racing Law § 254(13)(a) (NYS Thoroughbred Racing Capital Investment Fund race authority).
• Racing Law § 502 (regional OTBs); § 503(3), (4), (10), (12) (OTB powers); § 516 (revenue distribution); § 518 (purpose).
• Racing Law § 318 (track operator powers); § 307 (licensing for pari-mutuel wagering).
• Racing Law § 37, § 38 (1940 statutes preserved through Article III).
• L 1982, Ch 865 (Racing Law consolidation); L 1973, Ch 346 (regional OTBs); L 1940, Ch 254 (Pari-Mutuel Revenue Law); L 1926, Ch 440; L 1909, Ch 40; L 1895, Ch 570.
• NY State Public Employees Federation, AFL-CIO v City of Albany, 72 NY2d 96 (1988) (catch-all statute does not override specific scheme).
• Op St Compt No. 81-74; Op St Compt No. 82-64 (OTB powers narrowly construed).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/99-F1_pw.pdf

Original opinion text

RACING, PARI-MUTUEL WAGERING AND BREEDING LAW ART II, ART III,
ART V, ART V-a, §§ 37, 38, 245, 253, 254, 302, 303, 304, 307,
318, 330, 502, 503, 516, 518, 603; L 1982, CH 865; L 1973,
CH 346; L 1940, CH 254; L 1926, CH 440, §§ 1-3; L 1909, CH 40,
§§ 280-82; L 1895, CH 570.
An off-track betting corporation may not conduct a harness
race meeting.

June 8, 1999
Hon. Michael J. Hoblock, Jr.
Chairman
Racing and Wagering Board
1 Watervliet Avenue Ext, Suite 2
Albany, NY 12206-1668

Formal Opinion
No. 99-F1

Dear Chairman Hoblock:
Your counsel has asked whether an off-track betting
corporation ("OTB") may hold a harness race meeting and, if so,
whether it may apply for licensure to conduct pari-mutuel
wagering at the track. He has advised us that the Western
Regional Off-Track Betting Corporation ("Western OTB") has
applied to the Racing and Wagering Board ("Board") for a license
to conduct harness race meetings with pari-mutuel wagering at the
harness track known as Batavia Downs. Western OTB purchased the
assets of the former track operator, including the racetrack
site. Specifically, your counsel asks whether an OTB is an
entity qualified to conduct harness races under the Racing, Pari-Mutuel Wagering and Breeding Law ("Racing Law") and whether the
Board may license it to conduct pari-mutuel wagering.
Harness racing is governed by article III of the Racing Law
and is regulated comprehensively by the Board. As you have
noted, pari-mutuel harness racing in New York State historically
has been conducted by racing corporations or associations formed
pursuant to Racing Law § 302 or predecessor statutes; regional
OTBs have conducted off-track pari-mutuel betting on horse races
conducted by racetrack operators formed pursuant to section 302.
Section 302 of the Racing Law authorizes the creation of
corporations "for the purpose of conducting harness horse race
meetings at which pari-mutuel betting will be conducted."
These corporations are subject to oversight by the Board. The statute
requires that certain information be contained in their
certificates of incorporation and states that no certificate may
be filed "without the approval of the state racing and wagering
board indorsed thereon or annexed thereto." Id., § 302(1)-(8).
The locations at which such corporations may conduct harness
racing is restricted. Id. A corporation formed for the purpose
of conducting harness horse race meetings must file notice of any
stock transfers or changes in the interests of stockholders with
the Board. Id., § 303(1)-(3). Stockholders are required to file
affidavits with the Board setting forth any criminal histories.
The Board may, after a hearing, direct any stockholder to dispose
of stock in such a corporation if it determines that continued
ownership is inconsistent with the public interest, convenience
or necessity or with the best interests of racing generally.
Id., § 303(5), (6).
Corporations formed under section 302 are not the only
entities authorized to conduct harness racing. Section 304 of
the Racing Law confers the right to hold harness races upon
corporations formed under section 302 as well as on certain other
entities. It provides in relevant part:
Any corporation formed under the
provisions of sections two hundred twenty-two
through seven hundred five of this
chapter and any corporation or association
which shall have conducted harness horse race
meetings during two years prior to March
thirty-first, nineteen hundred forty, and any
town or county fair association or other fair
association shall have the power and the
right to hold one or more harness horse race
meetings in each year and to hold, maintain
and conduct harness races at such meetings
. . .. Such power and right, however, shall
not include the right to conduct pari-mutuel
betting at such harness horse race meetings
except pursuant to license granted by the
state racing and wagering board pursuant to
sections two hundred twenty-two through seven
hundred five of this chapter (emphasis
supplied).
Western OTB was established by Racing Law § 502, which was
enacted in 1973. Western OTB asserts that, even though it is not
a corporation formed for the purpose of conducting harness racing
pursuant to section 302, it is a corporation formed under
sections 222 through 705 of the Racing Law and thus qualifies
under section 304. Therefore, section 304 is the basis for the
claim by Western OTB that it is authorized to hold harness race
meetings and apply for a license to conduct pari-mutuel wagering
at such meetings. We note that resolution of this claim also
will affect other OTBs.

Western OTB relies on the broad reference in section 304 of
the Racing Law to "any corporation" formed under the provisions
of sections 222-705 for its authority to conduct racing. We
recognize that, read in isolation, section 304 could be construed
to support this view. Such a reading would be inconsistent,
however, with the narrow statutory purpose of OTBs and the
specific powers granted to them by law.
Notwithstanding the general provision of section 304, the
specific and comprehensive provisions of law establishing and
governing OTBs demonstrate that OTBs are not authorized to
conduct harness races. See, Racing Law articles V and V-a. OTBs
are authorized to "establish and conduct within the region a
system of off-track pari-mutuel betting on horse races" subject
to any limitations contained in the Racing Law and to the
authority of the Board. Id., § 503(10). OTBs were created "to
derive from such betting, as authorized by this article, a
reasonable revenue for the support of government, and to prevent
and curb unlawful bookmaking and illegal wagering on horse
races." Id., § 518. Conducting races is not within the stated
purpose or authorized activities of OTBs.
OTBs also are empowered to acquire, hold, lease, rent and
dispose of personal property for their corporate purpose and to
acquire and use real property "which is necessary or convenient
for carrying out" their corporate purpose. Id., § 503(3), (4).
They are granted authority to "perform such other acts and engage
in such other activities as may be necessary and proper for
exercising [their] powers and performing [their] duties under
this article." Id., § 503(12). These general grants of
corporate powers, as is evident in their express language, are
intended to permit OTBs to carry out a system of off-track pari-mutuel betting. They cannot be read to grant OTBs the additional
power to conduct harness races. See, New York State Public
Employees Federation, AFL-CIO v City of Albany, 72 NY2d 96, 103-104 (1988) (catchall statute authorizing all "reasonable" local
regulation of highways did not grant city authority to limit
nonresidents' access to on-street parking; statutory scheme
protected public access and provided municipalities with limited
regulatory powers).
If the Legislature had intended to authorize OTBs to conduct
races, it could have done so expressly, as it did in the enabling
legislation of the New York State Thoroughbred Racing Capital
Investment Fund. See, Racing Law § 254(13)(a). The Fund is
permitted to "conduct running races, steeplechases or hunt
meetings at racing facilities and to conduct pari-mutuel betting
on the outcome of the same when necessary to assure the
continuation of the racing and pari-mutuel betting activities at
such racing facilities" in specific circumstances. Id.
In addition, we note the statutory powers of OTBs have been
narrowly construed. See, Op St Compt No. 81-74 (predecessor to
§ 503 did not authorize an OTB to purchase real property for
resale to a private association because OTBs' powers were limited
to those necessary or convenient for carrying out corporate
purposes); Op St Compt No. 82-64 (statutes governing OTBs and
distribution of their earnings were intended to be comprehensive;
absence of express authorization to create a reserve fund for
capital projects left OTBs without authority to set up such
funds).
We also note that corporations formed to conduct harness
races are vested with "all the general powers of corporations
created under the laws of this state." Racing Law § 302. They
may use the portions of wagering proceeds retained by them to
declare dividends or other profit distributions and may make
investments not directly related to racing activities. Id.,
§ 318(b)(i). They are entitled to retain profits for their own
use and purposes. Id., § 318(b)(ii). Regional OTBs, by
contrast, are public benefit corporations. They are not vested
with all the general powers of corporations; their powers are
circumscribed by the legislation creating them. OTBs are not
authorized to retain profits. After payment of their costs, OTBs
must divide their net revenue among participating counties
according to a specific formula. Id., § 516(2).
Legislative history of section 304 of the Racing Law further
underscores the conclusion that it was not intended to expand the
limited powers of OTBs. The reference to "any corporation"
formed pursuant to sections 222-705 was placed in section 304
when the law was consolidated in 1982 and was not meant to grant
any new authority to OTBs.
Section 304 derives from provisions dating back at least to
chapter 570 of the Laws of 1895. That statute authorized
formation of corporations "for the purpose of raising and
breeding and improving the breed of horses" and empowered "any
[such] corporation formed under the provisions of this act" to
hold trotting or running race meetings. L 1895, ch 570, § 3.
Subsequent statutes provided for the creation of corporations to
conduct races and preserved other provisions of law authorizing
corporations to run races. See, e.g., L 1909, ch 40, §§ 280-82;
L 1926, ch 440, §§ 1-3.
In 1940, the Pari-Mutuel Revenue Law was enacted. L 1940,
ch 254. Article II of the Pari-Mutuel Revenue Law governed
harness racing. Section 37 authorized formation of a corporation
for the purpose of conducting harness race meetings with pari-mutuel wagering. Section 38 provided that any corporation formed
under the provisions of "this act" (a reference to section 37),
any corporation or association that had conducted harness racing
in the previous two years, and any fair association "shall have
the power and right" to conduct harness race meetings. Thus, the
governing statute specifically authorized three classes of
entities to conduct harness race meetings and excluded all
others. 1954 Op Atty Gen 208. The same language granting
authority to run races only to (1) corporations formed under
"this act" (specifically for harness racing); (2) corporations
grandfathered in; and (3) fair associations remained in the
Pari-Mutuel Revenue Law when provisions creating six regional
OTBs were added in 1973. L 1973, ch 346. Therefore, at that
time there was no basis for a claim that OTBs could conduct
harness racing and apply for licensure to conduct pari-mutuel
wagering.
In 1982, the current Racing Law was enacted to consolidate
existing statutory provisions governing racing. See, Memorandum
of Assembly Sponsors Finneran, Sears and Hinchey, Bill Jacket,
L 1982, ch 865. The provisions governing harness racing were
placed in article III of the new law. Section 304, granting
authority to conduct harness races to "any corporation formed
under the provisions of sections two hundred twenty-two through
seven hundred five of this chapter," was enacted. The 1982
consolidation was not intended to make any substantive change in
the law governing racing. See, Remarks of Senate sponsor Senator
Dunne, transcript of Senate Debate, July 1, 1982; July 14, 1982
Letter from Assembly sponsor Finneran to John G. McGoldrick, Bill
Jacket L 1982, ch 865. Rather, the Legislature sought to
continue existing authority of corporations in effecting the
consolidation. Thus, the interpretation of section 304 urged by
Western OTB would grant power to OTBs not intended by the
Legislature in the 1982 statutory consolidation.
In light of this legislative history and the limited powers
of OTBs, the reference to sections 222-705 in section 304 applies
only to corporations within those sections that were previously
specifically authorized to conduct harness racing. Sections 222-705 encompass all or part of eight separate articles of the
Racing Law, which govern topics ranging from thoroughbred racing
to equine research. We conclude that the reference to sections
222-705 was intended to ensure that corporations authorized to
conduct harness racing under provisions of law consolidated into
the Racing Law did not by implication lose that authority.
You also have asked whether, if an OTB can hold harness
races, it may be licensed to conduct pari-mutuel wagering under
section 307 of the Racing Law. In light of our conclusion that
an OTB may not hold harness races, we need not reach this
question.
We conclude that an off-track betting corporation may not
conduct a harness race meeting.
Very truly yours,

ELIOT SPITZER
Attorney General