-- Fans entering Belmont Park Saturday for the rematch between Giacomo and Afleet Alex in the final leg of racing's Triple Crown will encounter signs posted throughout the facility providing a 24-hour "Integrity Hotline" number to reach a federal court-appointed monitor in case they see any illegal activity.
The hallowed palace of thoroughbred racing is in its 100th year, but any celebration is tempered by the fact that the New York Racing Association, the not-for-profit franchise that has run the state's racetracks since 1955, is desperately trying to right its reputation.
Its list of misdeeds -- as well as financial losses -- flows like a river: Since December 2003, NYRA has operated under a deferred prosecution agreement with the U.S. Attorney's Office for the Eastern District of New York after a three-year investigation uncovered rampant income tax evasion by NYRA mutuel clerks between 1980 and 1999.
An audit report earlier this year by the state comptroller accused NYRA officials of improperly deducting more than $500,000 from their taxes for travel and entertainment, while reporting nearly $1 million in unsubstantiated expenses. In December, NYRA's three tracks -- Belmont, Aqueduct and Saratoga -- were raided reportedly in an investigation of weight-fixing of jockeys.
After a state investigation in 2003, three mutuel clerks at Saratoga were convicted on multiple counts of money laundering and 16 other NYRA clerks pleaded guilty to federal tax evasion.
During the investigation, state police officers posing as drug dealers laundered more than $300,000 through betting windows, according to the state Office of the Attorney General.
"As important as individual criminal liability is, this culture of criminality within a government-chartered not-for-profit corporation raised larger questions of corporate accountability and transparency," State Attorney General Elliot Spitzer wrote in June 2003. "The evidence shows an organization that is, at best, indifferent to corruption."
The investigation also uncovered evidence of loan-sharking, illegal betting with house money, and the ripping off of patrons through a variety of schemes among mutuel tellers.
From 1993 to 2001, New York tracks only twice made a profit; they lost a record $20 million in 2003 and nearly $10 million in 2004.
"I would say there was what I call an institutional arrogance at NYRA, and I think it had a negative effect on their dealings with regulators and state government which determines a lot of the laws and practices with racing in New York," said Charles Hayward, the former president of the Daily Racing Form who took over as president and CEO of NYRA in November 2004 during a purge and restructuring of management. "This was an organization that ran a superior racing product, but the business practices weren't commensurate with the racing product."
NYRA's franchise to run Belmont, Aqueduct and Saratoga expires in December 2007, and it is hoping to position itself for renewal. Gov. George Pataki and the state legislature are expected to soon put together a panel to begin work on a request for proposal, and the governor's office has valued the franchise rights at $250 million.
While NYRA apparently doesn't have that kind of money, other racetrack operators -- such as Magna Entertainment -- do.
Also, 4,500 slot machines will be installed at Aqueduct sometime next year, generating an estimated $652 million, according to Hayward, making the franchise that much more appetizing.
"We are passionately interested," said Dennis Mills, vice chairman of Magna. "We have an auto manufacturing plant in Syracuse. When you look at these things, you look at a [company's] total package: What does this company bring to New York? Do they have a presence in New York? I'm sure the political culture will examine all facets of the companies that will make proposals."
Recently, NYRA has taken several steps to show business is not as usual anymore: It became the first racetrack operator to mandate all horses spend time in a race-day detention barn to ensure no illegal drugs are administered. It also ended lucrative simulcasting arrangements -- worth an estimated $300 million -- with 10 off-shore betting outlets that offered customers rebates in the wake of a federal indictment in a race-fixing scandal.
The deferred prosecution agreement expires July 1, and NYRA is hopeful it will not be renewed by the court. That would be another step in proving the new NYRA leadership is worthy of running the business of racing in New York.
"What we've done has improved the odds," said Steve Duncker, co-chairman of the NYRA Board of Trustees. "But we've got a lot of work to do."