06/23/2005 11:00PM

NYRA oversight bill clears Senate


The New York Senate passed a bill on Friday that will establish an oversight board for the politically and financially embattled New York Racing Association and accelerate the bidding process for NYRA's franchise to conduct racing, which expires at the end of 2007. The Assembly was expected to pass the bill on Friday night, when the legislative session was scheduled to end.

The legislation was announced after Gov. George Pataki and legislative leaders reached an agreement on the main provisions of the bill late Thursday in a closed-door meeting.

Under the legislation, a five-member oversight board will be given broad powers to review NYRA's financial practices, approve capital spending, and make recommendations on budgets. The board would have the power to revoke the association's license if a compelling reason were found. Pataki will appoint three members of the board, and the Senate and Assembly will each appoint a member.

In addition, the bill speeds up the time frame for the state to issue a request for proposals to run the three NYRA tracks, including a slot-machine operation at Aqueduct that is expected to start next summer. The change will ramp up efforts by lobbyists and NYRA to form strategies designed to win the franchise, whose value would soar once slot machines are up and running.

"They could put this panel in place tomorrow, which is good," said Steve Casscles, an aide to Sen. William Larkin, the chairman of the Senate's Racing, Wagering and Gaming Committee. "And that's good because [NYRA is] losing its shirt, they are incompetent, and they are under indictment. People are tired of all this."

NYRA chief executive officer Charlie Hayward, asked to respond to Casscles's comments, said: "I respectfully disagree."

NYRA is operating under a deferred-prosecution agreement to avoid an indictment accusing the association of facilitating tax fraud among employees of its mutuel department. The agreement, reached in late 2003, put in place a federal monitoring firm at NYRA that is scheduled to wrap up its work on July 1.

The monitoring firm, Getnick and Getnick, is working on a report outlining NYRA's response over the last 18 months to the terms of the agreement, which included a $3 million fine and pledges by NYRA to overhaul its management and operations. The monitor's report will be submitted to the office of the U.S. attorney for the Eastern District of New York, which reached the deferred-prosecution agreement with NYRA.

The U.S. attorney's office will have 30 days to review the report before appearing in U.S. District Court in New York to argue whether NYRA complied with the terms of the agreement. If the court finds that NYRA has satisfied the terms, the indictment will be dropped. If not, the court could authorize the U.S. attorney to prosecute NYRA or to extend the monitoring firm's mandate.

Hayward said that NYRA supported the legislation passed Friday, although he said that NYRA will have to be more aggressive to present its own case to retain the franchise because of the apparent acceleration of the process.

"I think the oversight panel is actually very good for us," Hayward said, "because if the Senate, the Assembly, and the governor have direct conduits into this organization, and have interaction with us, I think that they can help do what the monitor has done, which is help us look at things and improve our business practices, and also reach a better understanding of all the things impacting the racing industry."

Last week, New York Comptroller Alan Hevesi released the second of four NYRA audits that the state has performed over the past four years. While the audit itself largely praised NYRA's current management for making changes under the guidance of the monitor, Hevesi, in personal remarks at a news conference in Albany, was highly critical of the association, calling it "the worst agency of all" in the state.

The bidding for NYRA's franchise is complicated by a seemingly endless number of contingencies, including any changes to the structure of New York racing that the legislature or bidders might propose. Technically, companies will not be bidding on the NYRA franchise as it exists, but rather the operations at Belmont Park, Saratoga Race Course, and Aqueduct racetrack within a hypothetical regulatory framework.

A racing industry advocacy group, Friends of New York Racing, on Monday is scheduled to release its own report outlining recommendations on how to structure racing in the state. The report is expected to argue for a complete overhaul of racing law and to allow the franchise holder to have more control over offtrack betting, which is currently controlled by six publicly owned and politically powerful companies spread throughout the state.