Saturday, September 29, 2012

NYRA Situation Sounds All Too Familiar

--by Kelsey Riley

While ­reading Bill Finley’s Op/Ed titled “NYRA Is For Sale. But Who Would Want It?” In Friday’s TDN, I admittedly felt chills run down my spine when I read the following excerpt:

   “There’s every reason to believe that this anti-racing governor who keeps hoovering cash from casino companies will find a way to cut racing out of the equation, whether that means taking VLT revenue away from the track operator or from purses or from both. State Comptroller Thomas DiNapoli issued what was a scary threat back in August when releasing an audit of VLT racino revenues. ‘We are unable to determine whether the millions of dollars that pay for increased purses (prize money), rather than for education, are having their intended effect.’”

   (for the full Op/Ed column, click here).

   For anyone who has kept a close eye on the racing business over the last few months, and years, there are some keys phrases here that are all too familiar.

   Last year while interning at the TDN, I wrote a magazine feature on what was then the future of New York racing: the Aqueduct racino (click here to read). I have to admit upon starting the project I wasn’t fully convinced that a racino would solve all the State’s woes. Therefore, I asked administrators the hard questions: what would stop the government from tweaking the agreement and encroaching on NYRA’s share of the VLT revenues, such as we had already seen in Pennsylvania and Indiana at the time? I was assured by a number of parties that the NYRA racetracks were different from most others, because NYRA is a not-for-profit organization, and its arrangement with the State created “layers of legislation” that would make it difficult for the government to alter the agreed upon distribution of the VLT revenues. So long as Aqueduct, Belmont, and Saratoga were being run by NYRA, the VLT revenues would be safe. I was told that NYRA and Genting had modeled the racino after Woodbine’s (also run by a not-for-profit), so what could go wrong?

   As we have learned this year from Woodbine, a lot can go wrong, and very quickly. In early March, the Ontario government announced they were considering pulling racing’s 20% share of the revenues from the Slots at Racetracks agreement, which had fuelled purses and breeders awards at the province’s Thoroughbred and Standardbred tracks for more than 15 years. Just a few weeks later, the government officially ended the Slots at Racetracks program, throwing the industry (and particularly the breeding sector) into turmoil. Stallion nominations were cancelled left, right and center, a handful of stallions have since been exported from the province, and the Ontario-bred yearling sale earlier this month experienced significant declines. What is more, it has been truly disheartening how the government has fabricated outright lies to justify its behavior to the public: they have described the racetracks’ cut of the slots revenues ($345 million a year) as a “subsidy” to rich racetrack owners, and they have depicted these “rich racetrack owners” as taking money away from education for school children and healthcare for the elderly. The truth is that the racetracks’ 20% was used to fuel purses and breeders awards, which stimulated growth in the breeding industry and therefore had positive reverberations across the province’s agricultural industry. Growth of the racing and breeding industries also allowed them to spend nearly $2 billion annually within the province. Furthermore, these “subsidies” were in fact a revenue-sharing agreement, because Ontario’s racetracks provided the government existing infrastructures in which to build its casinos. The racing industry’s share of the revenue also offered some compensation for the risk that casino players would take away from racing’s wagering customers.  

   While the distribution of revenues from the Aqueduct racino have yet to be altered, my point is that recent developments show that it may not be all that difficult for it to happen. Look how easy it was for Cuomo to demand that NYRA be sold, when it was under contract to run racing in New York for 25 years. At this point nothing is set in stone, and we can only guess what future operation of the NYRA tracks will look like, but to me, the situation (as well as wording in recent reports, like Finley’s) are eerily similar to what we have seen in Ontario. I certainly hope I am wrong.   

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