Suffolk County Regional Off-Track Betting Corporation filed a lawsuit against the Town of Islip in the Supreme Court of the State of New York in Suffolk County in January of this year for full tax …
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Suffolk County Regional Off-Track Betting Corporation filed a lawsuit against the Town of Islip in the Supreme Court of the State of New York in Suffolk County in January of this year for full tax exemption status for Jake’s 58 Casino in Islandia.
The Town of Islip had previously assessed only 25 percent of the Casino was tax exempt, i.e., the casino floor itself.
In a 25-page summons, Suffolk OTB attorneys make the case that the entire property, which they outline as 11 different parcels that make up the casino, are all tax-exempt, according to New York Racing Pari-Mutuel Wagering and Breeding Law Section 513.
N.Y. RAC PARI-M § 513 states that, “moneys and property of each corporation and any property under its jurisdiction, control or supervision, and all of its activities and operations shall be exempt from taxation.”
Suffolk OTB outlined in the summons that the casino hotel, which had profited $4,596,990.04 from casino club members staying at the hotel from June 2022 to October 2023, resulted in an average of 200 to 250 members a week taking advantage of the hotel discount/complimentary stay and that this “demonstrated the innerworkings of the entire Casino Hotel are not merely intertwined but are one singular business operation in support of the State government consistent with N.Y. RAC PARI-M § 513 that cannot be disconnected.”
Similar arguments were made for food and beverage vouchers, with Suffolk OTB claiming that “Any guest who stays on the gaming floor longer than they would if there were no hotel or dining amenities is worth exponentially more in casino revenues than hospitality revenues.”
Currently, the funds derived from the casino’s operations are distributed accordingly:
In addition, Suffolk OTB has paid over $2.4 million per year to the Village of Islandia for allowance to operate Jake’s 58.
In May 2022, the Town of Islip made its ruling of the 25 percent determination that left the remainder of the property and parcels fully taxable.
It was stated in the letter that “there is no case law interpreting the exemption criteria of Racing Law Section 513; it is well settled that tax exclusions are never presumed or preferred, and the exemption claimed to exist through Racing Law Section 513 must not only be plausible, but it must be the only reasonable construction.”
The town asserted that catering spaces and hotel rooms were “rented out” and therefore outside of the pari-mutuel or “off-track” betting purposes of the casino and “similarly not entitled to the exemption.”
Citing commentary from the 2001 legislative budget summary, the Town of Islip stated from the New York State Conference of Mayors and Municipal Officials memorandum in support of the 2001 amendments that “there are a growing number of instances where OTBs are purchasing real property, only using a portion of the property for OTB purposes, leasing the remainder of the property, yet receiving a full exemption from all local real property taxes.”
The town assessor stated in its 2023 determination of a 25 percent exemption that, “a full exemption would shift more than $200,000 in real property taxes annually to non-exempt property owners residing in the impacted taxing jurisdiction.”
The Town of Islip was unable to comment due to the pending litigation.
