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Monday, March 29, 2010
Will NY politicians, OTB kill racing?

By Bill Finley
Special to ESPN.com

The New York Racing Association operates America's flagship racetracks, runs Saratoga, the sport's most important racing meet, and is home to the Belmont Stakes. But there's every chance that it will be forced to shut down some time this year because it is quickly running out of money. This is a real and scary situation, and it is completely unnecessary.

NYRA has done nothing wrong. Rather, it is the victim of the state's pathetic political leaders, who are incompetent, selfish and don't seem to care one bit about their constituents. They are Enemy No. 1. Enemy No. 2 is New York City OTB, which has declared bankruptcy, owes NYRA $15 million and has forever been run by politically connected hacks who care only about perpetuating their fat paychecks.

Some background:

The horse racing business isn't good anywhere right now and a lot of racetracks are losing money. To maintain its status as the best of the best in North American racing, NYRA had, until recently, resisted making major purse cuts or doing anything else too dramatic. The reason was that it believed its problems would be solved by slot machines.

Slot machines were approved for every pari-mutuel facility in the state nine years ago, but the NYRA tracks still do not have them. With Aqueduct the only racetrack inside the city limits of New York, a proposed racino at the Big A figured to be a gold mine for all involved, NYRA included.

That the state's political leaders could not settle on who would run the slots operation or that they once picked a company that didn't have the money to pull it off became an on-going joke. Not only was it bad for horse racing, it was bad for the state. An Aqueduct racino is expected to be so successful and rake in so much money that the profits to the state are supposed to be $1 million a day. That $1 million is supposed to go to education. The state is starving for money and there are millions and millions of dollars just sitting there for the taking, but still they can't get anything right.

"You want to grab some of these guys and say, 'There's $1 million a day out there for education, what doesn't compute here? What's the problem?'" said Rick Violette, president of the New York Thoroughbred Horsemen's Association. "This is beyond belief."

It only got worse earlier this year when the accidental governor, David Paterson, picked something called the Aqueduct Entertainment Group to operate the slots at Aqueduct. Once the local papers started to dig into AEG, it was discovered that the group was completely unacceptable. It was no doubt chosen because of its political connections to Paterson and not because it was the best choice. One AEG partner, Darryl Greene, was, according to the New York Daily News "disbarred after pleading guilty in 1999 to charging the city and state $500,000 for work never done as an 'affirmative action entrepreneur.'" Under state law, anyone with a criminal record cannot work in a gaming enterprise.

With the heat turned up on Paterson and his cronies, AEG was disqualified. At this point, the next step seemed obvious. Several reputable companies with plenty of money, including Penn National Gaming, have put in substantial bids to run the Aqueduct casino. All Paterson and the leaders of the state senate and assembly had to do was pick one and let them get started … immediately.

"The VLT (a fancy name for slot machines) situation is unbelievably simple and somehow we still can't get it done," Violette said. "There've been nine years of broken promises and now the governor is talking about rebidding, something that could take the rest of 2010. That's beyond irresponsible. There's no good reason why they can't pick one of the remaining players."

But Paterson can't seem to get anything right. It very well could be back to the drawing board and still more delays.

Under normal circumstances, that wouldn't have been the worst scenario for NYRA. When it completed its deal to extend its franchise and eventually turn the racetracks over to the state, it got the state to agree to provide NYRA with the operating capital necessary to keep going in the event of any further delays in getting the slots up and going. But the state promising the money and actually delivering the money are two different things. New York is broke and it's been made pretty clear that the political leaders have no intention of sending any money NYRA's way, no matter what was agreed upon.

The mix becomes even more toxic when you factor in New York City OTB. It didn't go bankrupt for any other reason other than it is perhaps the worst-run corporation in America. It exists not to help horse racing, the state or the city of New York, but as a haven for political patronage jobs. That it could somehow go bankrupt when it has a monopoly on running off-track betting in the largest city in America is beyond belief.

NYRA obviously needs the $15 million it is owed by OTB. It also needs the off-track betting system to continue to contribute to racing by putting a fair share of its handle back into the sport. But OTB head Sandy Frucher thinks he has a better idea. He wants OTB to pay racing only from its profits and not from its revenue. One problem: there are no profits. OTB handles far more money than NYRA does. If OTB is allowed to stop contributing to New York racing, then New York racing will be finished.

Will it happen? OTB usually gets whatever it wants, so this may work out terribly for New York racing and good for OTB's many, many vice presidents of absolutely nothing.

One can always hope that some sanity will return to the situation, that Paterson, et. al. will pick a slots operator without any further delay and that someone will finally fix the OTB fiasco or at least put a stop to Frucher's madness. But this is New York, where, when it comes to politics, OTB and horse racing, there is no such thing as sanity.

Should things stay the same over the next several months, NYRA will have to close down. They will get through Saratoga because that's the one place they make money. The profits from Saratoga may give them enough money to get through the Belmont fall meet. But then what? A shutdown is inevitable.

To have racing cease at what remains the most important racing circuit in North America seems unimaginable, but it's not. In New York, where the politicians are beyond contempt and the off-track betting system is a bad joke, it can happen. What a shame.

Bill Finley is an award-winning racing writer whose work has appeared in The New York Times, USA Today and Sports Illustrated. Contact him at wnfinley@aol.com.