New York racing’s imminent takeover by the state is cause for worry
By Andrew Beyer,
SARATOGA SPRINGS, N.Y. — This is the Saratoga season that should have elated everyone in the racing industry.
The track looks as grand as ever; the crowds are large and enthusiastic; the quality of the stakes competition is unmatched in the United States. And now, after a decade of hopes and delays, revenue from slot machines downstate at Aqueduct is infusing the sport, pushing prize money to unprecedented levels. Maidens at Saratoga are competing for purses as high as $85,000. The changed economics could revitalize the sport by encouraging more owners to buy and breed thoroughbreds.
Yet at Saratoga this summer you will hear little optimistic talk about the future — not when the equivalent of a nuclear bomb is about to drop. Gov. Andrew Cuomo is set to take control of the New York Racing Association by reconstituting its board of directors and packing it with political appointees. The New York Post’s statehouse correspondent Fredric Dicker — whose sources are considered authoritative — wrote that Cuomo would fire NYRA’s CEO Ellen McClain “as soon as the meet ends on Sept. 3.” Almost everyone expects that Cuomo will take for the state some or all of the slot-machine revenue that has been earmarked for horse racing.
People who don’t follow racing closely, and know about NYRA what they read in the New York newspapers, might think that any change would be an improvement. For years, NYRA has been a whipping boy for politicians and the press, portrayed as incompetent and corrupt. But the supposed misdeeds of the organization were regularly overblown, and much of the hostility toward NYRA was driven by factors other than its record. Plenty of people in New York disliked the fact that the upper crust of the horsey set, the wealthy dynasties like the Phippses and the Vanderbilts, dominated NYRA and exerted so much control over New York racing. Former governor Mario Cuomo, father of Andrew, had a visceral dislike of the bluebloods.
The criticism about the rule of the bluebloods had some foundation. I stopped going to Saratoga in the late 1990s because the track had become customer-unfriendly and the people running it appeared not to notice or care. The sport appeared to be exist mostly for the benefit of wealthy owners. But after Charlie Hayward was named president and CEO in 2004, NYRA conducted its operations much more skillfully than the nation’s other major owners of racetracks, Frank Stronach and Churchill Downs, Inc.
NYRA operates the most successful race meeting in America, though its critics will rarely give it credit for that achievement. At Saratoga it has managed to accommodate big crowds while retaining the charm that makes the Spa a must-see destination for racing fans throughout the country.
NYRA did things that the politicians would never notice but that core fans recognized and appreciated: Its in-house television presentation is the most informative in the industry. Its Web site is packed with useful information. It changed the rules governing the Pick Six and Pick Four to protect bettors when races were shifted from turf to dirt.
And then NYRA made the mistake that triggered a cataclysm. With the expiration of a state law, the takeout from certain wagers in New York was supposed to be reduced from 26 percent to 25 percent, but nobody in NYRA (nor any of the tracks’ state overseers) spotted the error until bettors had been short-changed by $8.5 million. This surely wasn’t deliberate — most of the money went not to NYRA but to the various outlets around the country that handle wager on New York races.
But the event confirmed, to its long-time critics, what a corrupt and incompetent entity NYRA was, and it turned into a full-fledged, headline-making scandal. NYRA’s board fired Hayward and general counsel Patrick Kehoe, perhaps hoping that these sacrifices would appease the governor.
He was not appeased; this was Cuomo’s opportunity to execute a coup. The governor is a staunch supporter of the casino industry, which can generate significant revenue for the state, not to mention large political contributions. Because of the law giving racetracks a subsidy from slot-machine funds, horse racing siphons away money that politicians want for their own aims. Cuomo sought to take control by changing the composition of the NYRA board, reducing it to 17 members, eight of whom will be appointed by the governor and two each by the Senate and Assembly.
Blogger Tom Noonan (www.tenoonan.com), an attorney and small-scale horse owner, has written more incisively about the NYRA situation than almost anyone in the mainstream media, and he declared that the governor and his staff “engineered a coup . . . [and engaged] in . . . assaults on the integrity and character of NYRA Board members without citing any evidence justifying the attacks.”
Without Hayward to fight back, NYRA quickly folded under Cuomo’s pressure. The New York Post editorial page cheered: “The long-disgraced NewYork Racing Association is about to be put out of business.” And it applauded the governor for “tackling a culture that has been a breeding ground for corruption.”
The suggestion that New York politicians will clean up horse racing corruption ought to sound like a joke to anyone familiar with the state’s history. When off-track betting in the state was legalized in the 1970s and placed under the control of various regional political entities, it became a cesspool of political patronage and mismanagement. New York City Off-Track Betting accomplished the feat of going broke running a business in which losing money was almost impossible. When the state legislature passed the law authorizing a casino at Aqueduct, the process of awarding the franchise took 10 years and was marred by so much influence-peddling that the Inspector General described it as “a veritable case study in dysfunctional and politically driven government.”
People involved in New York racing have ample reason to be worried about what will happen when the state takes control. And because New York is the center of the sport in the United States, the nation’s thoroughbred industry ought to be worried, too.