12/16/2004 12:00AM

Outsiders look to shape New York racing

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Tim Smith, the former president of the National Thoroughbred Racing Association, will head a group next year that will issue recommendations to legislators on how to best structure racing in New York.

In a release announcing the formation of a not-for-profit corporation called Friends of New York Racing, Smith stated that the group, which will be will be funded largely by racing organizations outside of New York, "will look at ways to modernize and improve the racing business to help ensure that New York racing remains the best in the world and to generate added economic benefits to the state,"

Smith declined on Thursday to comment beyond the release.

The group, which will conduct interviews with racing officials and legislators over the next several months using the consulting firm SDS, plans to release a preliminary report on its findings in the spring of 2005 and issue a final report sometime before the end of that year. The report is expected to provide a blueprint for the ideal structure for racing in New York - from the group's point of view - and will include how best to deal with offtrack betting, slot machines at racetracks, and account wagering.

Smith resigned from the NTRA earlier this year to pursue a job with the New York Racing Association, the operator of Aqueduct, Belmont, and Saratoga racetracks. Negotiations to take a top position at NYRA were unsuccessful however, and Smith later said that his top priority was to ensure the future viability of racing in New York.

Contributors to Friends of New York include Churchill Downs, Magna Entertainment, Woodbine, Keeneland, Oak Tree, Breeders' Cup Ltd., Scientific Games Racing Inc., and The Jockey Club, according to the release. The budget for the group is expected to be approximately $1 million a year.

NYRA has not yet agreed to contribute funding to the project, apparently because of concerns over the appearance of any conflicts of interest, but the association is expected to help the group in the development of the report.

A board of directors will be formed in January that includes a "large and diverse group of industry stakeholders," Smith said in the release.

The effort is being undertaken in advance of what is expected to be a highly politicized fight over the status of NYRA's current franchise to operate racing at its tracks. The franchise expires at the end of 2007, but New York's statutes require that the state issue a request for proposals to operate the tracks by Dec. 1, 2005, at the earliest, and July 1, 2006, at the latest. The franchise is awarded by the legislature.

NYRA is currently operating under a federal monitor, which was appointed by the government after the association accepted a deferred prosecution agreement last year. The agreement was related to charges of tax fraud at the association. On Wednesday, officials from the state police and attorney general's office raided Aqueduct and confiscated records related to entries and weights carried by jockeys.

NYRA's status as a quasi-governmental agency is unique. As a franchisee of the state, the association must pay all its profits to horsemen in the form of purses or contribute them to the state's Capital Investment Fund, which loans money to NYRA for capital improvements.

Many politicians have been reluctant to change the structure, in part because of entrenched political interests in the state. In addition to NYRA's dependency on the legislature to renew its franchise, counties in New York own and operate six regional offtrack betting corporations that provide hundreds of millions of dollars annually to local governments.

Several of the companies contributing to Friends of New York have made attempts to enter the racing business in New York, but so far, they have been unsuccessful. Churchill Downs and Magna Entertainment both made bids to buy New York City Offtrack Betting Corporation in 2001, along with NYRA. Magna's winning bid was eventually nullified after legislators failed to pass any legislation that would have made the sale possible.