Held virtually by the New York State Assembly Standing Committee on Racing and Wagering, the hearing focused on industry responses to the ongoing COVID-19 pandemic, on the pandemic’s effect on racing and wagering, and on the need to change wagering models to meet changing customer preferences.

Jeffrey Cannizzo, the senior director of government affairs for the New York Racing Association, recapped the steps that the organization took to mitigate the spread of the infection, which included voluntarily shutting down racing on March 19; implementing a rigorous testing program; and establishing quarantine/isolation facilities at Belmont Park, along with a system for delivering food and care to those affected by the virus.

With spectators prohibited when racing resumed in early June through the end of 2020, all wagering shifted to advance deposit wagering platforms, highlighting what Cannizzo characterized as inequitable distribution of revenue, pointing out that 40% of New York’s market origin fee, which is assessed on bets made by New York state residents through out-of-state ADWs, goes to off-track betting facilities, with 24% going to the state’s Thoroughbred racetracks.

He displayed a graphic that illustrated that in 10 states that collect source market fees, New York ranks last in the percentage of money it receives from the tax.

“The way the tax is divided in New York state is inequitable, based on what other states are doing,” he said. “Too much of it leaves the racing industry.”

Joseph Appelbaum, president of New York Thoroughbred Horsemen’s Association, concurred.

“During the pandemic, we learned that the New York Racing Association is the most popular signal in the country, maybe in the world,” he testified. “People want to watch New York racing, and they want to bet on it. We need to look at regulations so that we’re in a position to compete in the digital age.”

He compared the current system to that of Apple’s app store, which has come under fire for unfairly compensating app creators.

“Apple takes 30% of the revenue from app sales, with 70% going back to the creator,” he said. “Even that 30% is too much. In racing, we’re the people putting on the show, and Finger Lakes and NYRA should be getting the vast majority of the revenue. These arrangements were made decades ago.”

As New York state is poised to legalize sports betting, Cannizzo emphasized the importance of including wagering on horse racing on any platforms designed to take the new wagers.

“What’s critical to racing is that our pari-mutuel product is protected in the future laws so that sports books can’t compete with our tracks while taking our content and offering varying or fixed odds,” he said after the hearing. “It’s not necessarily about racing being a sports book; it’s about racing being integrated within a sports book.”

Representing New York Thoroughbred Breeders, executive director Najja Thompson said that financial awards to those horses bred in New York decreased by nearly 40%, particularly as a result of the closing of the Resorts World Casino at Aqueduct Racetrack, a percentage of the revenue which goes to the state’s breeding program. Like Cannizzo and Appelbaum, he called for a revision of the “outdated” ADW model along with an accelerated timetable for casino expansion in the New York metropolitan area.

According to Chris Riegle, New York general manager of Delaware North, which owns Finger Lakes Racing and Gaming, revenue from video lottery terminals accounts for about 70% of purse money at the Ontario County track. The closing of the casinos to prevent the spread of COVID-19 had a devastating impact on its business.

“Our racing days dropped by 60%,” he said, “and that hurt our horsemen. When you’re not racing, overhead doesn’t go away. Horses still have to be fed and exercised.”

And with casinos continuing to operate with reduced hours and capacity, gaming revenue is still far below that of 2019.

“We expect our stable applications to be down 20% for 2021,” he said, “and about a 10% decline in our horse population. We won’t be able to maintain our 2019 field sizes or race days.”

In addition to these topics, committee members also asked witnesses about equine safety; the industry’s reliance on H-2B temporary visas; and the diversity in NYRA management and the state’s breeding farm owners.