Video lottery games at New York State racetracks are illegal, a panel of state judges ruled on Wednesday, dealing a setback to Gov. George Pataki, who is counting on revenue from the terminals to help fund education.
The judges' ruling found that a part of the law authorizing the terminals was unconstitutional because it earmarks a portion of revenues to horsebreeders and for larger racetrack purses. The law requires that the money be allocated exclusively for education, the court said.
However, another part of the ruling upheld the constitutionality of a 2001 law that authorized expanded American Indian casino gaming in the state.
The decision by the Appellate Division of the New York State Supreme Court is not likely to have any immediate effect on existing racetrack slot facilities, since the state is likely to appeal and request a stay in the meantime, said Neil O'Connell, a lawyer who argued the case against the state.
"While we are still reviewing the decision we do expect that the ruling will be appealed," Pataki spokesman Kevin Quinn said.
If the terminals are also declared unconstitutional by the state's highest court, the Court of Appeals, "We'll say it's time to shut down," O'Connell said.
The Republican governor is betting on more than $325 million more school aid from new video lottery terminals this year, part of a total $14.6 billion included in his fiscal year 2005 budget proposal for education.
After the state's top court ruled that its funding of New York City's schools was inadequate, it gave the state until July 30 to come up with a solution in response to the lawsuit filed by the Campaign For Fiscal Equity (CFE).
A spokesman for Democratic Assembly Speaker Sheldon Silver said that "Speaker Silver has always said the revenue is unreliable and we should not gamble with our children's education. It is imperative the state meet its moral and legal obligations and immediately enact a plan that responds to the CFE decision before the courts July 30 deadline."
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