Cuomo is Not Good for NYRA

The New York Racing Association has gotten a raw deal from New York’s Governor Andrew Cuomo, as it did under his father, former NY Gov. Mario Cuomo. If sports betting is approved by the state legislature this year, NYRA’s tracks will not be able to offer it. The procedure to do so requires a three-year process before a pro-NYRA bill can be introduced to the state legislature.

By Mark Berner
New York Governor Andrew Cuomo announced that he will seek a fourth term in that office and that is not welcome news for the New York Racing Association–or its horsemen, its players, racing fans or anyone associated with horses in the Empire State.

The Governor inherited his disdain for horseracing and gambling from his father, former New York Gov. Mario Cuomo. However, the younger Cuomo does have a great appetite for the gambling revenue that helps make his state go.

Whenever had had the upper hand, Cuomo stepped in and took advantage of NYRA’s plight. Though many of NYRA’s wounds were self-inflicted, Cuomo was always there with a sizable heaping of salt.

NYRA will not get to participate in legalized sports betting in this state now because Cuomo, with the help of some politicians, who should be friends of horseracing without whose help there was no place for other forms of gambling to go, passed a law in 2013 which allows sports betting at four upstate casinos only.

The Assembly’s chair of the Racing, Gaming and Wagering Committee, J. Gary Pretlow, sponsored the 2013 law that excluded the racetracks from conducting sports betting. His counterpart in the Senate, Joseph Addabbo, Jr., explained that his 2019 bill would exclude racetracks again, but plans are to include them at some point in the future. 

What Addabbo did not state is that later is at least three years away. It requires a change in the state’s constitution and that requires passage in two consecutive sessions in the state legislature and also a statewide ballot referendum. Currently, only those four upstate casinos can offer sports betting if the legislature approves the bill by June 19.

The only way to subvert this occurrence is through a loophole that may allow Resorts World New York City Casino to place a sports betting kiosk in its casino at Aqueduct because its Resorts World Catskill casino is one of the four casinos given approval in 2013.

The 2013 law also capped Resorts contributions to NYRA at 2013 levels, something that never was nailed down in the original deal that enabled Resorts to open a casino at The Big A in the first place.

How could this happen? Well, it’s a long story and not a pretty one, either.

From December 2003 through September 2005, NYRA operated under a deferred prosecution agreement following a 2003 federal indictment. The related charges alleged income tax evasion and money laundering by mutuel clerks between 1980 and 1999–with the knowledge of NYRA middle managers.

Under the agreement, NYRA paid $3 million to the government and implemented new cash-handling procedures designed to eliminate corruption. A New York law firm monitored the mismanagement. 

After receiving a report from the monitor, which concluded that NYRA complied with the new guidelines, the Justice Department moved to dismiss the indictment and its motion was allowed by a federal judge.

NYRA, claiming that the state lottery division’s failure to approve the installation of video-lottery terminal (VLT) machines at Aqueduct Racetrack pushed it to insolvency, filed for Chapter 11 bankruptcy protection on November 2, 2006.

Ultimately, NYRA was reorganized and its franchise to operate the three racetracks was extended through 2033 with the approval the New York State legislature on February 13, 2008. The new authorization provided $105 million in direct state aid and forgave millions more in state loans to NYRA. 

But the Association had to give up its claim to ownership of the land on which the three racetracks stand. In return, the state gained expanded oversight responsibility and the State Comptroller won the power to audit NYRA’s books.

The association emerged from bankruptcy protection September 12, 2008 with incorporation of a successor corporation, New York Racing Association Inc. But by 2012, NYRA was again facing bankruptcy and a scandal over the payouts of bets. 

Cuomo, Senate Majority Leader Dean Skelos, and Assembly Speaker Sheldon Silver were on hand to announce an agreement to establish the NYRA Reorganization Board. Of those three politicians, only Cuomo has not been convicted of any crime.

NYRA President Charles Hayward was fired after the state discovered a takeout betting scandal that cost bettors millions and Ellen McClain took over from Hayward. In just over a year, she was gone and Cuomo found Chris Kay in 2013. It was a tumultuous time at NYRA’s helm and was easy pickings for Cuomo to advance his agenda.

When the state returned NYRA to its own control in 2017, it was a shell of the former organization that once ruled the industry. A year earlier, NYRA launched an online advance-deposit wagering platform under the NYRA Bets brand which offers live bets and live simulcasts from multiple states. It also expanded its simulcast programming nationally, racing coverage that remains unparalleled.

Newly installed NYRA President David O’Rourke, who previously executed the extremely successful NYRA Bets platform, spoke at a New York State Senate hearing last month urging that NYRA be allowed to play a role if, and when, the state approves wagering on all sports. 

In the end, Cuomo got NYRA to give up the racetracks and the land upon which they reside, cap revenues promised by the deal with Resorts Casino and arranged for the state to prohibit sports betting even though NYRA has the most experience in that particular gambling space.

The last time Cuomo was at Belmont Park was for the announcement that the New York Islanders would build an Arena at Belmont. He told a story of how he liked to go to the Nassau Coliseum, former home of the Islanders, to watch the New York Nets play basketball. It struck me as odd that Cuomo would be so out of touch. 

Clearly, NYRA is not getting any favors from this Governor, a second-generation anti-racing politician and should it expect to. What are the chances NYRA would sue New York State for all that lost revenue and damages?

© Mark Berner, HorseRaceInsider.com, June 4, 2019, All Rights Reserved.

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