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Letter from the President: Spring, 2017

April 10, 2017

It didn’t come without a lot of hard work and dozens of meetings, but the horsemen’s issues included in the New York Budget bill give us a lot to celebrate. We are thrilled to have our voting rights on the NYRA Board back, that’s as it should be. Even more important, the bill mandates a written agreement between NYRA and the breeders and the horsemen on winter racing dates. This is historic - NYRA has never before been required to have any kind of contractual agreement with the horsemen on racing dates. It is a big win.

There has been significant interest in augmenting the funding available for equine drug testing and research, and it has long been our contention that the cost needs to be shared equitably between the Standardbred and Thoroughbred industries. Albany listened. The assessment for the testing lab will be based on the real cost to the industry. Standardbred owners and racetracks will be responsible for paying 75% of any assessment. It’s a good start. Going forward, we will be pushing for equitable cost sharing for the entire drug testing program.

The biggest success story of the 2017 budget process was our unprecedented access to the decision makers in Albany. The horsemen and the breeders were materially involved in discussions on all of our issues with all parties, including the Governor’s Office, until the door was closed on everybody during final deliberations. Our presence in Albany is growing, and we are going to build on this.

Our work is far from done, however. The VLT deal between Genting and Nassau County OTB needs to be fixed, and we will pursue a stand-alone bill to address this. For too long, Genting has been a favored son. They win at every turn.

Genting gets an 8-point raise under the deal with Nassau County OTB. They receive 30% of revenue from the Nassau County OTB machines as opposed to 22% from the rest of the Aqueduct machines. Where does that money come from? Racing.

Genting gets funding for capital investment under the agreement. They pocket 1% of revenue from the VLTs when hosting 499-999 Nassau County OTB machines, and 4% when they reach the magic number of 1,000. Where does that money come from? Education.

Genting gets to eliminate a competitor in their backyard by taking over the Nassau County OTB VLT operation. They eliminate the possibility of a new competitor who might have secured a foot in the door in the expanding New York Casino market. That new competitor could have been in the mix for the Catskills, Kennedy Airport, LaGuardia or any other casino expansion. Did they pay for this “non-competitive” advantage? Of course not. They were paid more for it.

What was alarming throughout this whole process was how much leverage Genting had and how much protection they enjoy because of it. Every time you peel back another layer of the Nassau County OTB deal, you expose another benefit to Genting  - at the cost of racing, and now education. There is even a protectionist clause in the MOU between Genting and Nassau County OTB that gives Genting the option to terminate the agreement if any shift in revenue share costs them more than $1 million. It’s called a poison pill, and it’s hard to swallow.

All along, this has been described to us as short-term pain for long-term gain, without any definition applied to short or long term, or quantifying pain versus gain. All we know for sure is that horse racing has footed the bill for these material gains while Genting has seemingly reaped endless rewards. If Genting’s customers were granted the same good fortune, they’d be winning on every spin of the wheel.

We don’t think the legislators anticipated the full economic impact of this deal on racing. The reality of the losses has indeed been startling. Now that the numbers are the numbers, and there are millions of racing dollars in jeopardy, it’s time to take corrective action so this incredible imbalance does not continue.

 

NYTHA President Rick Violette Jr.

 

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