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Monday, June 18, 2012
Times changing for NYRA

By Paul Moran

His father liked to tell stories about how the hard-working, depression-era people of Queens would invariably find themselves indebted to the neighborhood bookie, having lost money better used to feed their families on slow horses, the errant results of sporting events or numbers games that predated the state-sponsored lottery in a time when behavior was often too dictated by desperation. His father was not a champion of gambling in any form and, in particular, had a pronounced disdain for horse racing. Andrew Cuomo, the governor of New York, has no frame of reference born of want, as did his father, Mario, a former occupant of the statehouse and avowed enemy of racing. Cuomo II sees no end to the possibilities of gambling as savior of the Empire State, supports an economy built on the backs of losing constituents and champions an amendment to the state’s constitution that would permit full-scale casino gaming where only video lottery terminals are now legal.

Cuomo II sees no end to the possibilities of gambling as savior of the Empire State …

Where Cuomo I was openly hostile to the leadership of the New York Racing Association, which he viewed not mistakenly as a fraternity of wealthy, elite horse owners, Cuomo II, though he neither understands nor is concerned about its future, has engineered a state takeover of the world’s most important racing organization at a time when, at long last, the future of the sport and the industry at large finally appears, or appeared, bright. Cuomo proposes, and the Legislature will approve, a three-year seizure of control by the government, a move only a Democrat and a legion of bureaucrats could embrace.

NYRA made it easy. Deposed president Charlie Hayward, who was generally well liked if ineffective as a manager, is responsible for having knowingly short-changed the customers by some $8.5 million, ignoring a mandated rollback in the takeout for reasons not quite clear. Stealing from the patrons is never a sound business practice and NYRA’s error in judgment also cost its head legal counsel, Patrick Kehoe, his job. Yet, Cuomo has chosen to ignore the state’s abdication of regulatory responsibility during the period of transgression and his failure to dismiss John Sabini, the incumbent, incompetent chairman of the State Racing and Wagering Board, is telling. The state, including the office of the Inspector General, which in conducting an investigation, some time ago eliminated on-track oversight of the daily pari-mutuel operations in a cost-cutting measure, is at least partially culpable but in this case the accomplice appears to have received ad hoc absolution in the interest of a larger agenda. Chances are, neither state agency at least partially responsible in the grand scheme, will voluntarily take blame.

NYRA has faced potential federal indictment, loss of the franchise and bankruptcy in recent years. It also made a monumental error in abdicating its claim to ownership of the real estate attached to Aqueduct, Belmont Park and Saratoga Race Course during the process of negations that resulted in the award of a 25-year franchise, but its problems appeared to have dissolved with the opening of a large, elaborate video-lottery terminal casino at Aqueduct late last year. Purses are generous. Horsemen based in other states are flocking to New York. Stallions and mares have been relocated and the state’s breeding industry, flagging and facing extinction only a few years ago, is at the threshold of unprecedented prosperity. Yet, there is a queasy uneasiness at the prospect of the government taking hold of the reins.

No government has ever operated successfully a business in the private sector and those looking to the future in New York are suddenly seeing not Camelot but New Jersey.

Cuomo’s original proposal for full-scale casino gaming limited the expansion to the state’s nine racetracks, at which “racinos” are in operation. That plan has mysteriously disappeared.

Despite simple managerial ignorance being the obvious root, Cuomo decided that the solution to the repair of New York racing is more state involvement and announced, with NYRA agreeing, that the board will be restructured to reduced membership from 25 to 17, with the governor and legislative leaders picking 12 of the 17. Among that dozen, it is unlikely that even a shred or racing expertise will be required.

There appears to be a larger, hidden agenda that may be behind Cuomo’s power play, one that may well involve feathering the nest for the governor’s future political strategy and the expansion plans of the Genting organization, a Singapore-based company that operates the flourishing Aqueduct gaming enterprise. Cuomo aspires to be president of the United States. Genting aspires to secure a casino monopoly in New York City complete with hotels and a convention center. One hand washes the other. This is the bedrock of politics.

The relationship between Cuomo and Genting appears to many in racing to be a bit too cozy and control of NYRA by the state puts the future of racing at Aqueduct in jeopardy.

The New York Times reported last week that the gaming trade association representing Genting in December of last year contributed $2 million to the Committee to Save New York, a nonprofit advocacy group closely aligned with Cuomo, his version of a Super-PAC. Genting kicked in another $400,000 to CSNY last year. When Genting proposed an advertising campaign to promote casinos in New York, the Times reported, the Cuomo administration encouraged Genting to contribute instead to CSNY. The paper also reported that Genting advocated for a convention center and casino complex at Aqueduct during a Cuomo fundraiser in October. That proposal, while shelved at the moment in the interest of perceived political impropriety, is not necessarily dead.

The relationship between Cuomo and Genting appears to many in racing to be a bit too cozy and control of NYRA by the state puts the future of racing at Aqueduct in jeopardy. A simpatico NYRA board under the governor’s direct control could put an end to winter racing in Queens.

NYRA conducts racing at Aqueduct for half the year and offers what is among the nation’s most popular simulcast products. The track is also the financial anchor of the state’s breeding industry. While Genting plays a vital role in the production of revenue that goes to purses, breeder awards, operational expenses and capital improvements at Belmont and Saratoga as well as the state, its interests should not be accommodated at the expense of racing. The industry cannot afford the loss of six months of product and survive in any recognizable form.

The legislation that will result in the state’s bloodless coup of the NYRA board will be approved by week’s end. It, according to proponents, all appointed by the governor, will “ensure the viability and continuity” of the racing industry.

And, if you believe that …