NYRA Bailout A Bad Bet

The New York Racing Association (NYRA) is a not-for-profit association that is franchised to operate Thoroughbred horse racing at Aqueduct, Belmont and Saratoga. But the NYRA can’t seem to turn a profit. NYRA has operated at a loss in each year since 2001 — including losses of $22 million in 2003 and $15 million in 2004.
NYRA’s poor financial performance is generally agreed to be the result of management mistakes and the antiquated and dysfunctional structure of New York racing. For example, New York is one of few jurisdictions in the country where racetracks and off-track wagering are conducted by separate, competitive businesses.
NYRA should be generating funds to pay for public education. Despite handling $3 billion each year, NYRA is $100 million in debt — and is looking to borrow more. By the way, the $20 million loan will be coming from the Division of Lottery, money ultimately promised for education of our state’s children.
NYRA’s financial problems have been compounded by poor management. In 2003, NYRA narrowly avoided federal prosecution for a complex income tax evasion scheme after it agreed to pay a $3 million fine and submit to a court-appointed monitor.
Now, NYRA says it will pay off this new $20 million loan with proceeds taken from the Video Lottery Terminals (VLTs) to be installed at Aqueduct. But some of NYRA’s expected proceeds have already been spoken for. About one-third of NYRA’s take from the VLT operation is slated, by statute, to go back into racing through track improvement, better purses and aid to other New York racing interests like our state’s breeders.
I agreed with Senate Republican Leader Joseph L. Bruno last October when he called for the state to move quickly to replace NYRA and award a new Thoroughbred racing franchise. The current system simply does not work. We need to overhaul the state’s racing laws, and put the franchise up for competitive bidding as soon as is practicable.
For the sake of the horse racing industry, the taxpayers who are subsidizing NYRA, and the children who are supposed to benefit from the proceeds of NYRA’s new VLT operation, New York State needs to privatize the operation of its Thoroughbred racetracks. If New York’s Thoroughbred race courses are unshackled from politics — and from the public dime — they will be free to be innovative in an effort to win new customers. New York can once again be the premier location for the nation’s Thoroughbred racing industry.
— Senator John D. Sabini is Ranking Member of the Committee on Racing, Gaming and Wagering