The New York Racing Association demand that FanDuel pay a percentage of its handle from New York state residents has led to an impasse that wreaked havoc on handle figures from the July 4 week.

Belmont at Aqueduct handled 50.4 percent less money for the week ended July 7 than the week ended July 9, 2023. Each week included July 4 plus the Belmont Derby and supporting stakes on the following Saturday.

That kind of drop on the most popular signal in North America led to an 8.3 percent decline in overall handle for July 1-7 versus July 3-9 last year. Removing Belmont at Aqueduct, however, left all other tracks with a robust 10.1 percent increase.

“We’ve seen a negative impact for sure, but due to our overall volume, not nearly as bad as NYRA has,” FanDuel Racing general manager Andrew Moore said in an email. “This situation is bad for almost everyone, us, NYRA and fans.

“In an era when people have more content than ever to bet on, it’s not optimal that the largest distributor of horse-racing content and sports betting isn’t able to offer NYRA’s content to its customer base. No one is winning here, and hopefully we can have this content back available to TVG and FanDuel Sportsbook customers very soon. But the business terms have to make sense, or else we put at risk our ability to continue our significant investment in marketing, promoting and televising racing.”

NYRA and FanDuel are involved in a contract dispute as of July 4, with NYRA’s content being unavailable for watching and wagering via FanDuel. That affected Belmont at Aqueduct last week but will include Saratoga when it opens Thursday.

In addition to a traditional host fee, in which third-party bet takers pay a percentage of handle to the host track, FanDuel said NYRA wants an additional percentage paid on all handle from New York residents, which would include bets made on races in other jurisdictions.

“NYRA agreements have traditionally been host-fee agreements for content only, but recently they also want a share of New York residents’ play from us regardless of what content those residents bet on,” Moore said. “They’ve basically said that if we don’t pay that, then we don’t get access to NYRA content. This sort of local market access is a common fee in ADW wagering, but the issue here is that we already pay it. We pay a 5 percent state origin tax to New York state based on New York residents’ play on horse racing, around $18 million a year. NYRA management has told us that they don’t feel they get a fair cut of that tax, and I don’t disagree. But the state handles that distribution, not us. We have already been paying NYRA an additional percentage of New York residents’ play, but they want to increase that and that’s the crux of the impasse.”

NYRA was forthcoming about said impasse, releasing a statement on July 4 noting that its content would be unavailable on FanDuel.

“NYRA provides the racing content that fuels the profits of out-of-state ADWs like TVG/FanDuel,” said Tony Allevato, NYRA chief revenue officer and former TVG executive producer. “NYRA must prioritize the overall health of the sport and broader industry here in New York and we will continue negotiations to seek an equitable resolution so that our racing is widely available nationally.”

“We were paying generous host fees, the state tax and an extra fee to NYRA on handle by NY residents,” Moore said. “Like everyone, we have the operational expenditures of running a business. While we’re sympathetic to NYRA’s funding issues, we do not agree that double-taxing distributors is the right solution. In an era where consumers have easy access to multiple sports to bet on legally via multiple channels, making racing a lower-margin, more expensive product is ultimately counterproductive to growth.”

For those keeping score at home, round 1 did appear to go to FanDuel. Of the top nine signals by total handle last week, only Belmont at Aqueduct declined on a per-race basis. This suggests that money shifted to other tracks.

FanDuel would not share its handle or marketshare numbers, but on a total handle basis the shift is stark. NYRA handled 30.5 percent of every dollar July 3-9 last year but only 16.5 percent this year, and the next eight tracks went from 39.2 percent last year to 51.2 percent this year.

“It’s very likely that some of what we would usually handle on the NYRA signal found its way to other content,” Moore said. “The real danger for racing here is not the players who will move to other content or other ADW platforms; it is the people that will stop or cut back play in frustration with the content not being available. That latter cohort is the harder to get back and one the sport cannot afford to alienate. In addition, we had over a half-million people play racing via our sports book during this year’s Triple Crown, a younger audience than your typical racing fan. We should be cultivating that audience, not putting it at risk.”

Of course, there is a huge difference between Belmont at Aqueudct and Saratoga. Saratoga’s market share during its opening week last year, July 10-16, was 36 percent. Colonial Downs also opens on Thursday, and Ellis Park returns for its second week of racing after being up 56 percent last week and up 17 percent on a per-race basis. Both Colonial and Ellis are available on FanDuel, as are the other seven of the top nine signals last week.

“As always, we will endeavor to give our customers the best possible experience with the content that we have,” Moore said. “Not having Saratoga will be very disruptive to their experience. That said, we are fully prepared for the eventuality that we will not have the Saratoga content. That was our expectation when we didn’t agree to the new terms NYRA is proposing. We’re not seeking better terms than our prior agreement.”

Horsemen groups in New York support NYRA.

“New York’s horse owners are deeply invested in making the NYRA racing product the best in the country,” New York Thoroughbred Horsemen’s Association president Tina Bond said. “We staunchly agree that fair compensation for that investment is absolutely imperative. If the New York Thoroughbred industry thrives, we all benefit.”

“NYRA is working to broaden the economic benefits flowing to New York’s horse-racing industry, and our membership supports these efforts in every way,” New York Thoroughbred Breeders executive director Najja Thompson said. “The funds generated by ADWs carrying NYRA support breeding farms throughout the state, and we stand shoulder to shoulder with NYRA.”

“There are multiple components to all of our race track agreements, and they are sometimes hard to solve. But for more than 20 years, we’ve been able to discuss, exchange points of view and reach agreements,” Moore said. “That has been the case with our agreements with NYRA over many years, but over the last decade they have increased the cost of their content at each negotiation cycle. We are at a point now where what they are proposing would compromise our ability to continue to invest in our racing and wagering business and our television network that promotes dozens of other tracks to the overall benefit of the sport.”

NYRA negotiates signal contracts on a fiscal year basis from July 1 to June 30. In a letter to account-wagering providers of this year’s renewal, NYRA sought similar terms from all major ADWs. It is unknown what Churchill Downs Inc. and 1/ST Racing agreed to, but NYRA content was available on both companies’ platforms last week and scheduled to be available this week at Saratoga.

NYRA operates its own account-wagering provider, NYRABets, and has marketing agreements in place with Caesars and BetMGM as well as an agreement with Fox Sports for exclusive coverage of its races.