Updated on 09/15/2011 12:39PM

Can 4 rotters spoil Big Apple?


NEW YORK - Should the future control of New York racing be affected by allegations that four mutuel clerks at Belmont and Saratoga accepted bribes totaling $12,000 to change small bills into large ones for undercover police officers posing as cocaine dealers?

The mayor of New York City seems to think it should, and it is likely that a significant number of politicians will agree. Years of political wrangling for the franchise to conduct racing and the ownership of offtrack betting in the nation's leading market may have reached a turning point in recent days with the handing down of a 46-count money-laundering indictment at the same time an announcement is expected of a winning bidder in the sale of New York City Off-Track Betting.

The New York Racing Association had once been the odds-on favorite to gain control of OTB, as it should have at OTB's inception 30 years ago. Now, a low-level sting operation may facilitate the sale of OTB to another bidder, ultimately jeopardizing the NYRA franchise.

For several weeks, politicians and racing officials had been expecting an announcement from City Hall that the partnership of Magna Entertainment and Greenwood Racing, rather than NYRA, would be named the winner of the auction to own and operate NYC-OTB. The conventional wisdom, however, was that this would be a hollow victory because major legislative changes are required to facilitate the sale, and that there were enough powerful Albany politicians in NYRA's corner to block the legislation and thus the transaction. The smart money said nothing would happen and everyone would gear up for a new battle for control of New York racing when the NYRA franchise comes up for renewal in a few years.

The indictment handed down Thursday, however, has quickly changed the tone of the discussion. The mayor's office, not wanting to see its designated auction-winner, Magna, vetoed in Albany, and seeing an opportunity to thwart NYRA's allies, is now whispering that the money-laundering allegations have a bearing on the OTB auction. The New York Times reported Friday that "City officials say the association [NYRA] almost certainly will not be the winning bidder, because others have bid more and because legal troubles at the association have concerned the mayor."

NYRA has belittled the allegations, saying that even if true, they were the independent actions of four out of 2,700 employees rather than a failure of management. Even if they are right, the question remains: How much loyalty can NYRA expect from its sale-blocking allies now that it will be painted by its many enemies as a place where drug lords do their banking?

The indictment was the culmination of an investigation begun 17 months ago into whether criminals might use NYRA track mutuel windows to change their small bills into hundreds, as they routinely attempt to do at banks, casinos, and any other business that has massive sums of cash on hand. Targeted in an undercover sting operation by state police officers posing as cocaine dealers last summer at Belmont and Saratoga, the four clerks allegedly changed up a total of $240,000 in nine separate transactions, pocketing a total of $12,000 in commissions. The indictment reads like a rejected "Sopranos" script, with clandestine meetings in diners and parking lots, clerks wrangling for higher kickbacks, and in one instance apparently trying to scam the scammers by pocketing an extra $400 out of a stack of big bills.

There are incidents around the country every year of racetrack mutuel clerks being fired or criminally charged for betting out of the till, falsifying W-2G tax-reporting forms or changing up cash for criminals. It's not terribly shocking in a $16 billion cash business and probably occurs at no higher incidence than similar perfidy in other financial industries.

The only relevant question is whether this sting worked at NYRA because of some failing on the organization's part that reflects on its fitness to operate OTB. Nothing in the indictment suggests that is the case, and it is difficult to believe that you couldn't just as easily seduce a teller at a Magna-owned track, a Greenwood-run OTB parlor, or anywhere else. (Perhaps the only place it couldn't happen is at New York City OTB itself, only because its shops routinely do not have enough big bills on hand to pay off their customers, much less to change up bills for undercover cops.)

The fact that a 17-month investigation has yet to uncover an actual incident of an actual drug lord changing up actual drug-related money will quickly be lost amid the political rhetoric. Magna and Greenwood may or may not be the most qualified bidder, but the city was going to have a tough job selling the idea that two out-of-state businesses were a better candidate to run OTB than the people who have put on the races for the last 46 years. Now, consistent with its entire closed-door approach to this sale, which has included no public hearings and no good-faith pursuit of what might be best for the sport or its customers, the city is whispering that NYRA is an unfit candidate.

This is the same city with such heartfelt concern for racing that it slaps a 5 percent surtax on patrons' winnings, wouldn't budge from paying 2 percent to a still-below-market 2.25 percent for a signal so that its customers could bet on the best racing in the country from Del Mar last week, and initially opposed the NYRA-proposed takeout reduction that will go into effect at Saratoga next week.

At least the alleged bribe-takers didn't steal any horseplayers' money, which the city has been doing for 30 years.