By Matt Hegarty
The New York racing industry has dumped its largest problems into the lap of the state legislature at a time when lawmakers are already grappling with how to make billions of dollars in budget cuts and may be suffering from donor fatigue. The strategy has raised concerns among racing officials about whether the legislature will address the industry’s difficulties in a meaningful way.
The racing industry has forwarded its problems to Albany accompanied by dire warnings about a failure to act – two months ago, for example, the New York Racing Association said it may be forced to shut down in June without a cash infusion from the legislature, jeopardizing the Belmont Stakes; and on Monday, the bankrupt New York City Off-Track Betting Corp. said it would close its billion-dollar business as of April 1 unless the legislature approves a sweeping overhaul of the statutes that determine how betting revenues are distributed to the racing industry and local governments.
And yet, racing officials who monitor the legislature have said that they do not know of any movement on bills that would resolve these problems as the clock begins ticking down on the threats. Part of that, officials said, could be related to similar threats over the past several years warning of imminent shutdowns of racetracks and OTB systems, along with the industry’s reliance on subsidies from slot machines.
"I think part of it is the budget," said Joseph Faraldo, president of the Standardbred Owner’s Association of New York. "But some of this is the industry’s attitude. The industry keeps saying, ‘If you don’t help us out, the racetracks are going to do this, this many people are going to lose their jobs, this many farms are going to go out of business,’ etc., over and over again. Frankly, they’re getting sick of it."
Jeffrey Cannizzo, executive director of New York Thoroughbred Breeders Inc., said that if legislators are having discussions about how to solve the racing industry’s problems, the racing industry is not currently involved.
"The honest answer is that no one really knows what’s going on," Cannizzo said. "The only people who would know are the legislators themselves, and that information is not going beyond their offices."
In addition to the threats by NYRA and NYCOTB, the legislature and Gov. David Paterson have not yet decided on an operator for a planned casino at Aqueduct racetrack that could be the highest-grossing gambling property on the East Coast, even though the casino was authorized in 2001. NYRA claims that the casino will provide a long-term solution for its persistent financial problems through subsidies directed toward purses and capital improvements.
And to put more fuel on the fire, a task force examining the financial problems facing the state’s six offtrack betting corporations released a report Monday – four hours after New York City OTB issued its April 1 shutdown date – that details a host of legislative changes that the task force believes are necessary to reverse persistent declines that "threaten the entire offtrack betting system."
The six OTBs currently account for 18 percent of the handle in the United States – meaning its failure could threaten racing circuits in other states as well. New York City OTB alone took in $940 million in bets in 2009, according to the task force.
State Assemblyman Gary Pretlow, chairman of the Assembly’s Committee on Racing and Wagering, and state Sen. Eric Adams, chairman of the Senate’s Racing, Gaming, and Wagering Committee, did not return phone calls Tuesday.
Several racing officials said that they believed the legislature’s delay in selecting an operator for the Aqueduct casino could be influenced by elections scheduled for later this year, citing the campaign contributions that casino and real-estate developers frequently make during election cycles. By delaying a decision, politicians can milk contributors until the election is over.
But delays in acting on racing’s other problems are likely related to the legislature’s higher priorities and racing’s habit of crying wolf in the past. The $134 billion budget must be passed by April 1 – though the legislature has suffered through delays in other years – and the myriad problems facing the racing industry can create a daunting patchwork of solutions that frequently require one racing constituency to suffer in order to help another one. Those aren’t the problems that politicians are looking to embrace, especially when the racing industry is a minor political consideration compared to education and health care.
For example, New York City OTB’s plan to emerge from bankruptcy would require changing the statutory revenue-distribution formulas so that Thoroughbred and Standardbred tracks and horsemen would receive 30 percent less revenue from betting than they currently do, according to officials who have talked with OTB. With racetracks and breeders facing difficult times, it will be hard to gain consensus on any plan that asks groups to take such a significant cut to their revenue.
Cannizzo, however, said that the hardships facing the industry and the need to convince the legislature to act may force racing to unite under one banner.
"The good thing is that we might start talking with the same voice," Cannizzo said. "And the other bright side is that if the state shows some leadership, it could get the [slot machines] up and running at Aqueduct, and it could consolidate the OTBs in a meaningful way. And if they did that, New York would be a very profitable place to operate a Thoroughbred business."