Thursday, January 28, 2010

This Time, Lawmakers Must Not Fail New York Racing

SARATOGA SPRINGS, NY, January 28, 2010--In the long history of the racing industry in New York, never before have the stakes been so high. At issue is the game’s existence, and the stars are beginning to align.

In 2009, eight years after enabling legislation permitted VLTs at the state’s tracks, there were interminable delays in announcing the winner of the VLT franchise race. The Governor’s office announced a handful of dates throughout the year, none of which materialized.

In a closely related development Monday, a state task force released a report recommending how to overhaul the state's six regional off-track betting corporations, including New York City OTB, which has threatened to close its doors permanently following a March 30 deadline.

Among the task force’s many recommendations was a proposal that account-wagering operations outside New York, known as ADWs, be required to pay the same amount to horsemen's organizations and local governments via licensing fees that OTBs do.

The report further suggested that the state's six OTB regions consolidate its business and marketing functions and streamline its management. There also were references to having the New York Racing Association and the OTBs merge under one umbrella. Nothing new there.

Given these machinations, however, the franchise-naming delay by the current sitting Governor, David Paterson, is beginning to make sense. Efforts of conflicting lobbyists notwithstanding, the VLT decision might finally come only after the OTB situation is resolved in some meaningful way. OTBs want into the VLT business, also not a new development.

The interminable VLT-franchise delay doesn’t make sense unless one considers the NYC-OTB situation that necessitated Chapter 9 bankruptcy protection. Given there are 62 counties in New York that depend on OTB revenues, it is no wonder Albany’s eyes haven’t been focused on VLTs.

Whatever is decided relative to these issues, it will have a profound effect on the industry and its customers. And it is those fans, like taxpayers everywhere, who could wind up footing the bill. One involves the ADW scenario. The other, parimutuel takeout.

If the trifecta of legislators, racetracks and OTBs decide that raising takeout and requiring out-of-state ADWs companies to pay licensing fees are the only ways to go, it will hasten racing’s demise in this state. If you don’t believe a revolt is going on in this country, ask Martha Coakley.

There’s a recent example of the debilitating effects of takeout on handle that New Yorkers should heed. Two weeks ago, HorseRaceInsider, backing the play of the Horseplayers Association of North America, implored readers to e-mail the California Horse Racing Board requesting it not raise takeout on races from Los Alamitos.

According to HRI sources, the CHRB received 169 e-mail responses. Apparently horseplayers didn’t take the request or the threat seriously enough, and so neither did the CHRB. By a vote of 6-1, a takeout increase was passed to bail out struggling satellite betting shops in California, the Golden State’s OTB equivalent.

Four days of results is in no way a defining measure, but it is indicative of a trend. The numbers were nothing short of alarming. Comparing handle figures from January 21 through January 24 to Thursday-through-Sunday receipts from the previous week, handle was down $644,240, according to HANA President Jeff Platt.

Platt and fellow board members are unpaid individuals in a grass roots organization dedicated to fighting for horseplayer’s rights. Aware that torrential rains probably were a contributing factor, Platt also compared numbers with corresponding dates from a year ago to gain more perspective. Those figures were worse; the shortfall was $868,171.

A 20.75 percent drop year over year and a 16.27 percent loss suffered the week after a tax increase is enacted is significant. Poor weather is one thing but these numbers are indicative of something else.

Because of the work done by the Horseplayers Association of North America and other Internet sites that post takeout rates from tracks throughout the country, today’s educated horseplayers are aware of the inequities of takeout and have been betting their money at venues where dollars go farther.

It should be clear to those who control New York’s destiny that horseplayers no longer can be taken for granted. The player is voting with his dollars, concentrating on tracks with a good product at a fair price. Still others are voting with their feet and walking away for good. This on top of a demographic that skews older by the minute.

In his e-mail to HorseRaceInsider, Platt recalled that the CHRB promised tracks and the legislature that handle would remain flat. In the long term, a higher takeout NEVER does, although generally it takes time to make an impact. That’s what makes the Los Alamitos numbers so startling.

At whatever price point horseplayers are taxed out of the game, that consequence is a day-to-day reality. Whatever short term fixes worked in the past will destroy what’s left of the industry if repeated today. Past performances are not promising.

Anyone with sense agrees that the OTBs and tracks need to streamline operations and eliminate redundancies in bet-taking and marketing. Time has come to eliminate measures such as “dark-day payments” that reward tracks for not opening their doors. Unrestricted in-home simulcasts are long overdue.

There should be no restrictions on Internet video streaming, and counties should provide public access cable stations for horse racing broadcasts. Again, none of this qualifies as new ground but the time to act is now.

Harness tracks should compete for market share, just like flat tracks do, and they no longer should enjoy protectionist status to the further economic detriment of the OTBs and taxpayers. OTBs and tracks must, of course, reduce overhead and market creatively in tandem.

The current simulcast-rates model is broken and an attempt must be made to fix it. But ADWs shouldn’t be confused with the majority of rebate shops. Racing and Gaming Services is an example of a rebate shop that gives back to the industry, big-time.

And how were their contributions to NYRA purses in the form of simulcast fees rewarded in the past? NYRA responded by cutting its signal to RGS when putting on its dog and pony show while efforting to retain its own franchise. That’s not the kind of transparency anyone needs.

If the state demands licensing fees from out-of-state ADWs that take bets on New York racing, propping up OTBs by restraining trade, the tack is odds-on to backfire. Don’t legislators read newspapers?

Don’t they know that if fees are increased significantly many tracks and ADWs might not want to pay for New York’s races? Don’t they realize that interstate wagering is where the money is? Has anyone seen the New York product recently? Would you pay a premium for it?

Does the New York trifecta think protectionism will help corner the betting market within the state? Are they not aware that’s what New Jersey did when it enacted off-track betting, but recently reversed course after realizing it was a handle killer?

But what if you did this and made New Yorkers criminals by forcing them to bet illegally with their preferred ADW should that company fail to pay New York State a licensing fee? Don’t they realize that bettors will better-deal them, possibly betting offshore or leave the game completely?

There was a word for this early in the last century. It was an impetus for criminals to organize and syndicate their activities. It failed and eventually was repealed because it proved impractical and ineffectual, turning citizens into resentful “criminals.” Prohibition didn‘t work. Neither will protectionism and higher taxes in the new order of world class racing.

Written by John Pricci

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Friday, January 22, 2010

While Racing Fiddles, Rome Is Burning

SARATOGA SPRINGS, NY, January 22, 2010--I received a personal e mail from a friend of a friend, a faithful HRI contributor, on Tuesday. It read:

"I watch Sports Center two times a day. An hour in the morning when I am on my treadmill or stationary bike and an hour at night when I go bed.

“Yesterday was one of the racing industry’s biggest days as far as the press is concerned. It was horse racing's Oscars, its Golden Globes, horse racing's awards night.

“In the 60 minutes this morning it received eight seconds of time when they announced in passing the Horse of the Year.

“That was it – less than 10 seconds. A snowboarder scheduled to be in the Olympics had more air time because he crashed his three wheeler and was now out of the games."

The note went on about lost opportunities for racing, about how the sport doesn’t promote itself properly, etc., nothing anyone hasn’t heard before. And, of course, racing has gotten used to receiving short shrift from television. Pick a network.

I have a wonderful idea for the good folks at NTRA, no charge. Of course, it likely won’t be given serious consideration for two reasons; it wasn’t proposed in-house, and the source of the suggestion.

I don’t know how much NTRA has in its promotional budget anymore. Tough times for everyone, obviously. But if they have the wherewithal, I’d like to relate a story that should compel NTRA to seriously consider the proposal.

During Derby Week two years ago, I was pulling into the driveway when I heard an interview on nationally syndicated sports talk radio program out of Los Angeles.

When I heard that the host would be interviewing John and Brad Hennegan, who I watched grow up summers in the Saratoga press box, I knew I wouldn’t be exiting the car anytime soon.

The brothers had recently completed a documentary on horse racing, following the exploits of six horsemen who tried to win what eventually became Barbaro's Kentucky Derby.

The documentary, in limited release in various smaller markets around the country, was getting good word of mouth and print. They had made excellent use of their full-access backstretch pass.

The youthful host, an excellent broadcaster with a strong journalistic sense and the kind of audience demographics racing has coveted for decades, is smart and hip, almost to a fault, say his critics.

Well, he just loved the Hennegan brothers’ documentary. So did the industry, awarding the production the 2008 Media Eclipse in the national television feature category.

The host was fascinated with the notion that two brothers would travel 150,000 miles for a year and half to provide an inside look at six trainers who were following their dream. He was effusive in his praise of “The First Saturday in May.”

The host related his own background, explaining that he wasn’t a gambler, didn’t know much about horse racing, nor did he care all that much about it.

Then a friend introduced him to Billy Koch, grandson of successful Hollywood producer Howard W. Koch, who, in 2001, formed a racing partnership group known as Little Red Feather Racing.

Three years later, Little Red Feather Racing won the Breeders’ Cup Mile with Singletary at Lone Star Park.

The host explained to the boys that he and his wife went to the races, took a backstretch tour, the full treatment, and both fell in love with all of it, the horses, the sport, the ambience, everything.

He had no idea how exciting and fascinating the world of horse racing could be. He spoke about how his wife fell in love with the animals. His excitement was palpable and infectious.

The first time I became aware of the broadcaster, he was co-hosting a television talk show On SportsChannel with a friend and former Newsday colleague, Wallace Matthews, who later became a star as the Olympics boxing reporter for NBC Sports.

I liked Matthews, of course, but the other guy, not so much. He was incessantly hip and far too acerbic and argumentative, even if that was the purpose of this new sports-talk still in its infancy.

Now, it’s two decades later. He’s matured but is still young and hip, and seems genuinely loved by not only his audience but the sports figures he interviews from every corner of the sports world. The respect shown on both sides of the microphone seems genuine.

Twenty years ago, I was old school, and haven’t gotten any younger in terms of values or appreciation for media. The host has mellowed but has never lost his edge, and I find myself agreeing with his takes far more often than not.

I’ve come to respect his ethos, allowing for better understanding of his generation and where his audience is coming from. I might not talk the talk, but I get it now. It no longer offends my sensibilities.

Busy with my HRI duties, I don’t listen to his show very often. But whenever I’m running midday errands he is a companion, even if his audience bends toward tedium.

He’s a lot more involved in Little Red Feather Racing now than he was when he interviewed the Hennegans. When talking his horses, win or lose, he never fails to convey his love of the game and the horses. He often shares their performances via Trevor Denman race calls. Not even the mighty Francesa does that.

This host talks straight, his takes are credible, even when he's in someone’s face, earning the respect of guests and audiences alike, given the dialogue I‘ve heard. He even has a show on ESPN’s television network.

He talks street and he talks smack. He probably knows the lyrics to “Pants on the Ground.” As much as I love Rip Torn, this guy won’t be listening for Secretariat by holding clumps of turf up to his ear, nor is he the kind of hip that Lori Petty was supposed to be in the failed “Go Baby Go” campaign.

I’ve never met Jim Rome, nor appeared on his show, but he’s the kind of spokesperson who can cross-over. At least think about that. Talk to him, gauge his interest and, if it makes sense, do everything you can to get him.

And if you think you can muzzle him, then don‘t bother. Let him write his own material, say what he wants about the game, all of it, from the heart. He gets it. He puts his passion for racing on the line. If he’s becomes a lightning rod, so much the better.

Jim Rome automatically makes an often staid pastime cool. When was the last time younger generations thought horse racing was, you know, dope?

Who knows? He might even be able to breathe some life into the Eclipse ceremonies.

Written by John Pricci

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Friday, January 15, 2010

Racing’s Problems Effecting Quality of Life in New York State

SARATOGA SPRINGS, NY, January 15, 2010--The thoroughbred industry downstate from here is now in its ninth year of waiting for the state to approve a licensed franchisee for a Video Lottery Terminal operation at Aqueduct Racetrack .

Since racetracks were granted approval for VLTs, Finger Lakes, a thoroughbred track in upstate Canandaigua, and Saratoga Gaming and Raceway and Empire Gaming and Raceway at Yonkers Raceway, have done very well. Purses are up in all locations.

What has happened in regard to the Aqueduct scenario has been well documented. The situation has been described as, in the most charitable terms possible, highly irresponsible. In the vernacular, it’s unethical, criminal.

In the same week Gov. David Paterson gave a State of the State address calling for stricter ethics rules, the president of the New York City Off-Track Betting Corporation announced plans for a new business model--if only it were given an opportunity to pay its bills based on net receipts, not gross revenues.

Before thinking “yeah, that’ll work and who do they think they‘re kidding,” never underestimate what can happen when one government agency works with another to solve a mutual problem.

After NYC OTB made its pitch before a joint Senate and Assembly hearing board, the president of the New York Racing Association called for an NYC-OTB-NYRA merger, under the track’s control.

Downstate, where I was born and lived most of my life, they have a word for both proposals. That word is chutzpah, which the dictionary defines as impudent rudeness or lack of respect. Either way, the odds that this parlay would work as presently constructed are extremely high.

The New York legislature’s unconscionable foot-dragging borders on the criminal for the harm it has caused the state’s taxpayers. The lawmakers are, by definition, a “citizen legislature,” part-time lawmakers entitled to have other sources of income.

Talk about a model rife with temptation for conflict.

Anyway, members of both houses were on local network news Wednesday night proudly announcing how they had passed ethics reform legislation, the first step in a long process. On the long process part I would bet.

Gov. Paterson didn’t necessarily agree, calling it “window dressing in an election year,” because it didn’t address two significant issues: campaign finance reform and term limits.

The logjam that is Albany politics would benefit from the imposition of term limits, an excellent idea on a national level, come to think of it.

It certainly would have been a good idea in the matter of recently convicted Senate Majority Leader Joseph Bruno, R-Saratoga, once the most powerful figure in state politics. Ironically, the VLT issue just might have been settled by now if he were still in power.

Term limits would have worked nicely in the case of House Leader Sheldon Silver, too, a Democrat who has played obstructionist-in-chief during the VLT discussions.

The inefficiency which is the current NYC OTB model has been so well documented as to become legendary. The NYRA, which volunteered to take over their operations, has been only slightly less so, and far less transparent.

Only recently did it grudgingly surrender its books to the state comptroller’s office. Until then, the association wasn’t doing a very good job of living up to the spirit of the agreement it made with state government.

New York State extended the NYRA franchise and gave it $105 million to emerge from bankruptcy protection. In return it gave title of its three racetrack properties to the State. But the state never did make it possible for VLTs to be up and running in 2009, as was part of the agreement.

There’s no shortage of black hats here.

But the VLT impasse is more than about dollars and cents. As with all gambling revenue, declines have a negative effect on education funding. Moreover, declining gaming revenues adversely impacts the quality of life and topographical character of the state itself.

VLTs is also about the preservation of the green space made possible by New York State breeding program.

There are approximately 400 breeding farms in the state but, as a result of falling purse revenues from declining handle and NYC-OTB’s inefficiency, the NYS Breeding Fund is owed $1.8 million by NYC OTB, and the figure keeps growing.

Resultantly, 21 breeding farms have been closed, including two of the state’s three largest commercial breeders, Sequel and Sez Who Farms. The estimate of farms that have moved breeding operations to VLT-enriched Pennsylvania ranges from 12 to 15 percent.

Foal size, which reached its zenith in 2004, has been reduced by 21 percent. Last year, there were 3,302 mares bred, producing 2,209 foals.

A crop reduced by one in every five horses foaled just five years ago will have a dramatic effect on field size this year and beyond, continuing racing’s downward handle spiral. The situation might not be as dire as Kentucky’s, but wait five minutes.

Even if overall simulcast handle on New York racing grows, and online wagering suddenly goes through the roof, it will not provide relief for the current situation. The New York breeders’ share of simulcast revenue is zero.

All these machinations that make up the state of the game in 2010 begins and ends in Albany. And the issue is greater than only the state of the industry. The entire population of New York has a vested interest in VLTs.

It’s way past time for the Governor and Legislature to agree on a slots operator for Aqueduct so that building can begin immediately. There’s just too much riding on the outcome.

Written by John Pricci

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