NYRA faces big week as Cuomo takes over board
ALBANY, N.Y. (AP) — After a nearly 60-year run of controlling the state's thoroughbred racing that featured historic champions and classic races — as well as countless scandals and bankruptcy — the New York Racing Association is at a crossroad.
NYRA will soon be reconstituted under the temporary control of Gov. Andrew Cuomo, a move that will likely remake the future of racing and gambling in New York.
A bill that passed earlier this year and is expected to be signed soon by Cuomo gives the governor majority control of the NYRA board for three years to reorganize the private entity. State officials say one of the first issues will be whether to hire a for-profit corporation to run racing at the Belmont, Aqueduct and Saratoga tracks.
A company could be hired to handle some or all facets of racing, from track operations to marketing. Long-term contracts could cement a new business model even after NYRA regains control of the board in three years.
NYRA, a not-for-profit, has had the thoroughbred racing franchise at the three tracks since 1955. It has rejected past attempts to hire for-profits to run some of its operations.
But mismanagement, high compensation of top officers, bankruptcy, and a recent issue about withholding winnings from bettors all dogged NYRA.
The survival of the organization has long confounded politicians, regulators and its competitors in the gambling industry.
"This could be the end of NYRA," said Karl Sleight, a racing law expert and blogger. "It's certainly one of the potential outcomes. That's not far-fetched now."
For New Yorkers, a new business model could mean better racing, which could lead to more revenues and jobs in New York's longstanding breeding industry, more revenues for the state, and better promoted, glitzier offerings at the old tracks with better maintenance.
Likely contenders for contracts could include Churchill Downs and other for-profit firms running racetracks.
NYRA declined comment on its immediate future and the governor's takeover.
In 2008, it persuaded the administrations of Gov. Eliot Spitzer and his Democratic successor, David Paterson, that for-profit companies vying against it for an extension of the franchise were too beholden to shareholders to effectively run racing. Ultimately, NYRA won the franchise again, along with a state bailout from bankruptcy, while agreeing to end its claim to ownership of the track properties.
Legally, the course isn't clear. Cuomo can appoint eight members, including a chairman, to the board. Legislative leaders will appoint four board members. NYRA will have five. But Sleight said those appointees will have a legal responsibility to act in the best interest of NYRA.
"How that plays into what appears to be the goals of the administration will be interesting to watch develop," Sleight said.
Cuomo is also planning an expansion of casinos in the state, pending approval of a constitutional amendment. The new NYRA board could give the Cuomo administration some freedom in how it expands gambling and locates Las Vegas-type casinos that wouldn't have to be operated by Indian tribes or located at racetracks. If NYRA were operated differently, the state could also benefit from payments by new for-profit operators, as well as possibly divert revenues from lucrative video slot machines at Aqueduct to other state purposes.
State Director of Operations Howard Glaser said NYRA's present 25-year franchise agreement that runs until 2033 doesn't stop the new board from forcing changes, such as hiring an operator or operators.
"The governor will ask the new board to look at all the options for improving the operations of NYRA, but no decisions have been made and none will be until a new board is in place," Glaser said in an interview Wednesday. "The guiding principle is strengthening the tradition of horse racing in New York for the benefit of the fans, employees, and the wellbeing of the animals."
The next days will be important for NYRA. On Friday, the Cuomo administration says a state report is expected to be released about an apparent increase in horse deaths at Aqueduct during the year since the track became more reliant on video slot machine revenue, taking more attention away running racing. But the report is expected to detail concerns about running the video slot machines at Aqueduct. It could be used to further question NYRA's operations, just as a scathing state investigation of $8.5 million in winnings not paid to bettors led to the firing of two top NYRA executives earlier this year.
Cuomo is expected to have signed the law creating a new board run by his chairman and his majority by Monday. The appointments will follow.
"We are looking at a number of reforms to NYRA," Cuomo said Monday. "We are going to be putting a new board in place basically to take control."
Meanwhile, the Times Union of Albany reports that NYRA is getting set to unveil a $250,000 mural at Belmont that depicts 100 racing industry figures, including Charles Hayward, the NYRA president who was fired in May. Artist Pierre Bellocq tells the newspaper he received the contract for the artwork in early 2011 after talks with Hayward, a friend and former boss when both worked at the Daily Racing Form.
Hayward was ousted when state investigators accused him of knowingly overcharging bettors by more than $8 million over a 15-month period.