(CHICAGO, IL – February 8, 2010) The newspapers saved space in their weekend editions to criticize the appointment of Aqueduct Entertainment Group as the operator of New York’s next VLT casino. The unflattering press began in Friday’s New York Times with a 500-word desk-written essay accusing Gov. David Paterson of putting personal gain ahead of public considerations. By Sunday, Glenn Blain of the Albany Bureau of the New York Daily News gave heft to the point by getting Peter Kiernan, the governor’s top lawyer, to concede that the selection was influenced by politics.

“I’m surprised that the bidders who weren’t named are not screaming more than they are,” said Assemblyman Gary Pretlow, chairman of the Racing and Wagering Board, according to Blain. Angry losers in the bidding process claimed the process required them to continuously adjust their proposals and raise the ante. It was only when Paterson had gotten all that he could from the exercise that he called an end to it. Perhaps this is what has been going on for the nine years that horse racing in the State has been dangling.

The winning AEG team has ties to a Mercedes-driving clergyman from Queens, NY, the borough in which “Aqueduct Raceway,” which is how both papers referred to the racetrack in numerous articles, resides. Rev. Floyd Flake’s Darman Group joins the Navigante Group, led by Larry J. Woolf, former Chairman, CEO and President of MGM Grand Hotels in Las Vegas, and a bevy of local construction companies. There are no people in horse racing involved.

On the record, the New York Racing Association has been non-committal about which group of bidders it preferred. All it really wanted was to get a decision. The VLT casino at Aqueduct is projected to take in $6 billion annually and NYRA’s cut of that amount is seven percent. The windfall should create plenty for purses, upkeep, marketing and much needed renovations at Saratoga and Belmont Park. Note, however, the key word in that statement is “should.”

On Wednesday, multiple New York State Senate Committees, engaged in studying horse racing, heard from trainer Rick Violette, Jr., the President of the New York Thoroughbred Horsemen’s Association, that horse racing in the state accounted for $2.2 billion of the national handle or 18 percent of all money wagered on the sport in the United States, a figure that is disproportionate by a factor of 350 percent to the percentage of races New York holds when compared to the whole. Violette furthered explained that the horsemen’s cut of this astonishing amount wasn’t enough to enable 90 percent of horse owners to make ends meet. In other words, he said horse racing in New York is as good as it gets anywhere while saying that “as good as it gets” in New York gets you nowhere. Consequently, do you wonder where all the money goes to leave horsemen in such a predicament or, for that matter, why NYRA can’t operate profitably despite its success?

Well, the sport’s various interests maneuvered within a faulty legislative structure to grow the State’s horse racing industry to a size that is simply unaffordable. The entire horse racing industry is dealing with reduced revenues, a shortage of horses and increased competition in the gambling sector. But all other jurisdictions serve as manufacturer and retailer of their products and NYRA does not. Moreover, few people involved in the operations of racetracks have been promised so much and granted so little by governments required by the people to serve them.

National Thoroughbred Racing Association president Alex Waldrop was among the officials who testified along with Violette. Like Violette, Waldrop praised NYRA’s lofty status. He reported that New York’s tracks contributed $112 million to government in 2007. He noted that California horse racing, in comparison, contributed just $45 million to the State, suggesting that New York taxes are crippling to profitability. He is right, of course, but that still doesn’t explain how to fix things.

Begin with the understanding that New York State is not about to reduce taxes during its current economic crisis. As a matter of fact, it was the State’s need for more revenue that prompted the long-awaited decision. In perspective, the $112 million is just half of the revenue from the VLT casino at Yonkers, a business that generates slightly less than what’s projected for the new Aqueduct parlor.

Furthermore, a more pressing issue now is what’s to be done with off-track betting including the bankrupt NYCOTB operation; that’s the problem at which all energies are being directed. It seems as though each time one problem is addressed, another needs attention. You’d expect someone with some sense of causation would start from the beginning and remedy the effects of the commingled mess simultaneously.

Toward that end, NYRA has proactively responded. The franchise has prepared a proposal to put itself on a self-sustaining basis that makes use of some current State subsidies consistent with the size it has grown to in expectation of legislation and offered to organize off-sight betting activity under its supervision. Reconstruction of the operating model is what should have taken place three years ago when the NYRA franchise was put up for grabs. Instead, there was talk only.

New York’s method of conducting the sport since the day it was put into practice 40 years ago is a dysfunctional amalgamation steeped in waste and corruption. There are flaws in the State’s archaic approach that won’t accommodate crisis, and it appears crisis is what has befallen the industry now. The competition for bettors is suicidal; the expenditures for similar functions like tote systems, account wagering platforms and marketing are wastefully redundant.

As talks resume between the State and New York’s racing interests, a foolish bet would be to predict that even a seemingly resolved issue such as the appointment of the VLT casino operator will have the casino up and running in six months – a goal mentioned. Woolf was able to meet such an ambitious schedule with Casino Niagara, but that was Canada. New York on the other hand, has its problems. They are Sheldon Silver, jealous bidders and a history of deal-making, procrastination and recalcitrance. Progress in Queens from AEG won’t come as fast as the criticism of it did.

Opinions about horse racing from Vic Zast can be accessed throughout the week at Facebook.com/viczast and Twitter.com/viczast.