For five years, taxpayers and horseplayers in New York State have been awaiting a resolution to New Yorkís racing franchise issue. And if you donít believe that top class racing translates into dollars for state run programs, see the record handle figures for the recent Saratoga race meet.
Reasonable people would assume the process is finally in its 11th hour. After all, Gov. Eliot Spitzer recommended on Sept. 4 that the New York Racing Association retain the franchise for 30 years while ceding title of its three racetrack properties to the state.
Spitzerís decision was rubber stamped almost immediately by House Speaker Sheldon Silver, a member of the same political party. But everyone expected that the Memorandum of Understanding would meet strong opposition from the other side of the aisle by powerful members of the State Senate at their meeting, Sept. 12.
There is only one conclusion that can be drawn after the State Senate hearing: The hijacking of our system of government is almost complete.
And horseplayers are not the only losers here.
There may be only one man capable of solving racingís problems fairly for all involved parties and for the citizens of New York State; Bennett Liebman. A former racing commissioner, Liebman lost that job years ago because at the time he was perched on the wrong side of the aisle. He is now acting director of the Albany Law School racing and wagering program.
Speaking before the Senate panel, Liebman said that NYRA was a reasonable choice to run the franchise, but that provisions in the Memorandum of Understanding returns less video lottery money to horsemen than under previous accords, and that there were no safeguards requiring that NYRA officials and its board operate transparently.
Liebman said that the governorís decision was based on a final inspector generalís report that was ďextraordinarily sloppyĒ and a ďparticularly bad product. The fact that NYRA had pleaded guilty to felony charges and had not paid its taxes didnít appear to be part of the decision- making process.
The professor also was critical of the controversial findings of the state monitoring firm Getnick & Getnick declaring the existence of a ďnewĒ NYRA when, in Liebmanís view, it is ďnot enough to proclaim reform at NYRAĒ but to ďachieve reform at NYRA. If you believe NYRA is transparent, you have blinders on,Ē Liebman concluded.
Liebmanís remarks that the original intent of a VLT operation at Aqueduct--to provide money for education and to insure New York racingís preeminence in the industry--fell short of the mark especially rang true.
Under the terms of the MOU, 7% percent would go to NYRA for operating expenses and capital improvements, and 6.5% for purses. Originally NYRA had agreed to distribute more, on a sliding scale 7.5% of gross gaming revenues to purses for the first three years, 7.75% in years four and five, and 10 percent in year six and beyond. The share to the breeders was constant at 1.25%.
Along with the reduction to 6.5% for purses, the breedersí share would be lowered to 1%. Considering that Spitzerís proposal would forgive NYRA $130 million in existing debt to the state and give them $75 million more so that NYRA can clear bankruptcy and pass clear title of the land on to the state, the governorís proposal certainly seems exceedingly generous. Which raises a question.
One of the four franchise bidders, Excelsior Racing, was awarded the rights by the Ad Hoc Committee on Racing appointed by previous Governor George Pataki. Did Spitzerís advisors and the inspector general ever bother to check the proposal made by the original awardees?
Excelsiorís proposal not only promised the same higher purse distributions from VLT revenue as the original NYRA accord, but it proposed to raise the percentage of the gross gaming revenue to the New York Breeding and Development Fund from 1.25% to 2% which, based on projections, meant $11 million more for the breeders.
Under the Excelsior plan, it was proposed the breeders would also receive 5% of out-of-state simulcast revenue, worth another $3 million annually. How did that get by everybody before Spitzer declared NYRA the winner of the franchise derby?
Worse, the fine print in the MOU indicates that the 6.5% figure allotted for purses is a capped maximum, as is 1% for the breeders. The real numbers starting out are more like 4.7% for purses and .7% for the breeders, begging a third question.
Why did the Spitzer administration proclaim this a great deal for racing when it allowed less to purses and breeders? It hadnít even equaled the original NYRA agreement, and was demonstrably less than what was proposed by Excelsior in the original Request for Proposal process. The truth is we may never know how this happened.
As Liebman suggested, there is no transparency. NYRA is not in the habit of disclosing the minutes of its board meetings nor its attendees. For instance, was board member Barry Ostrager, president of the New York Thoroughbred Breeders Assn., in attendance when the board agreed to distribute a lesser share to the breeders? Was he indeed a lone voice crying in the wilderness? And isnít his presence on the NYRA board a potential conflict of interest in the first place?
Of course, the other side is no better. Does the thoroughbred-loving Senate Majority Leader Joseph Bruno truly believe itís in New York racingís best interests to be run by more than one racetrack operator? Does he see no conflicting agenda there? In the 1970s, off-track betting was created which essentially competed with the tracks for the same customers. Now powerful out of state for-profit companies would come here to run this circuitís other tracks? And this is a good thing?
Bruno knows better and eventually his agenda will be made known. In the meantime, however, he has promised ďthere will be a lot of changesĒ and the MOU ďis not going to be the final product.Ē Until then, Brunoís solution is no solution and heíll wait for a shoe to drop.
Finally, after the MOU and the Senate Committee hearing in the past 10 days, we are no closer to knowing what will happen to New York racingís future than we were in 2001 when, by the way, NYRA did not join the VLT coalition, help in the legislative efforts and tried to prevent Saratoga Harness from getting its VLT machines.
And what now? Bring Australia-based Capital Play to the table, a group that proposed raising parimutuel takeout by a devastatingly destructive five percent?
Or maybe invite Empire Racing to come in, replete with its proposed two percent takeout increase and with a casino partner, Delaware North, that gave Saratoga harness horsemen the lowest share of the gross gaming revenue possible, refused to fix horrendous backstretch conditions unless it came from the horsemenís pockets and, seemingly on purpose, failed to integrate VLT and racing operations. And, of course, the improvements yet to be made at Finger Lakes from its VLT operations.
Liebman, one of the best legal minds on racing anywhere in this country and a man of integrity, passion and fortitude, said it best: ďI have to wonder if state government can get anything right."