03/07/2013 12:42PM

NYRA's attempt to enforce house rules raises legal questions


The new, state-controlled board of the New York Racing Association has talked the talk during its first two open board meetings about cracking down on trainers who violate medication rules. But it’s going to have a tough time walking the walk.

In the last week, since the chairman of NYRA’s new safety committee openly broached the idea of putting in place house rules designed to punish rule violators beyond state regulations, racing officials inside and outside NYRA have said that the association is proceeding into risky legal territory that could cost the association millions of dollars in legal fees and set up a false level of expectations among the public.

The concern is that legislation passed last year reorganizing the NYRA board has turned the association into a true state agency, which would limit its ability to enforce house rules or exclude bad actors from its property. Under a raft of judicial precedents, private property owners are given wide latitude in excluding individuals from their businesses, but those rights are extremely limited in the case of state actors.

Under the reorganization legislation passed last year, the state was given the right to appoint 12 of the 17 members of the NYRA board. The legislation also specifically says NYRA will be “re-privatized” three years after the board first sits, a term that, to legal officials, says NYRA is no longer a private entity, if it ever was.

“If you look at that legislation, and the fact that there’s a [Franchise Oversight Board] controlled by the state, and the makeup of its board now, NYRA would have a hard time making the case that they are independent of the state,” said Chris Scherf, executive vice president of the Thoroughbred Racing Associations, a racetrack trade group that urges its members to tread cautiously when ruling off individuals in order to protect the judicial precedents concerning the right to exclude.

During NYRA’s last board meeting, which was live-streamed on the Internet under the board’s new “open meetings” policy, Scherf had tweeted, in part, that the “discussion of house rules begs question of whether [NYRA] is state agent now.”

As a franchisee of the state, NYRA has always occupied a murky legal position between private entity and state agency. As a result, in the past, NYRA has been highly cautious about enforcing house rules or excluding individuals, under fears that any actions would face a high bar if the target of the rule went to court. Under rules governing cases such as those, if the plaintiff wins, the defendant is responsible for attorneys’ fees, generally in the range of a million dollars, according to officials.

The authority on the rights of racetracks to exclude is Bennett Liebman, who in 2011 was appointed the deputy secretary of gaming and racing for New York Gov. Andrew Cuomo. Liebman has sat in on the last two NYRA board meetings, but he did not address the board during the discussion of NYRA implementing house rules that would allow the association to levy penalties above and beyond existing state regulations.

Liebman did not respond to messages left with the governor’s office. But in 2010, he addressed a joint conference of the TRA and the Harness Tracks of America on the rights of exclusion, and during the speech he said that “NYRA has a unique history and has, at times, been held not to be private,” according to a transcript. He also warned racetracks not to discuss any plans to enforce unilateral actions with any official who had even tenuous connections to the state, including association stewards.

“If you involve the state in any shape or manner, you are asking for huge problems,” Liebman said, according to the transcript.
The effort to enforce additional rules against licensees is being led by Anthony Bonomo, a NYRA horse owner and lawyer who is the chairman of the safety committee. During the meeting, Bonomo said, “We at NYRA do have certain things we can do, which is come up with a code of house rules. When we’re told of a violation, we can do certain things. It’s our obligation to do certain things.”

In an interview March 4, Bonomo said he “might have used the wrong word or term with ‘house rules,’ ” and he said he was looking to set up a system in which “independent panels” would have the ability to enforce penalties quickly when violations occur.

“We have to avoid any allegations that NYRA is treating anyone on our grounds arbitrarily, and you do that by having clear and enunciated protocols for violations,” Bonomo said. “We’re not trying to replace or usurp the state.”

But that may be missing the point, officials said. NYRA now appears to be the state, and under precedent, it has to limit itself to the rules passed and approved by state regulators or risk running up against strict due-process protections, even if that means being unable to act quickly and harshly against the worst of offenders.

“Some of it might be appealing, but a horseman, like any other citizen, has basic rights,” said Rick Violette, president of the New York Thoroughbred Horsemen’s Association and a non-voting member of the NYRA board. “It’s a worthwhile initiative going forward, but it’s delicate. They have to be very, very careful. The law complicates things.”