08/12/2014 2:58PM

Panel on NYRA reorganization yields few answers

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SARATOGA SPRINGS, N.Y. – What is the future of the New York Racing Association, the state-controlled entity that operates New York’s three biggest tracks?

No one knows. Or if they do, they’re not telling.

Participants on a panel entitled “NYRA Reorganization: Rounding the Far Turn,” held at the annual Saratoga Institute on Racing and Gaming Law Conference on Tuesday in Saratoga Springs, had few answers for what is in store for New York racing next year, when NYRA is set to “revert back to private majority control,” as New York Gov. Andrew Cuomo’s office said when the state took control of the association’s board back in 2012 by legislative fiat.

The question is complicated by myriad factors, according to the panelists. For one, no one knows what the phrase “revert back to private majority control” means, according to Chris Wittstruck, a racing law specialist who moderated the panel. And no one knows if that’s the plan anyway, since NYRA’s board also must issue recommendations by late April next year on the long-term plan for the association, which most observers believe will include an option to bid out NYRA to private companies.

Wittstruck, an attorney who is a director of the Standardbred Owners Association of New York, confirmed during the panel that NYRA’s chief executive, Chris Kay, was invited to be on the panel but declined to appear, and that his office declined to send a NYRA representative. In addition, a state-appointed member of the NYRA board initially accepted an invitation to appear but backed out, Wittstruck said, declining to name the director.

Even the possibility of bidding NYRA out is clouded by uncertainty. NYRA directors and state officials have trial-ballooned shuttering Aqueduct, but no one has committed to that plan. NYRA is widely believed to want to open OTBs in New York City, but it’s unclear how that plan would go forward. Is Saratoga’s frequently expanded meet going to be expanded further? Is a renovated or torn-down-and-rebuilt Belmont Park going to be the home of winter racing i n New York?

All of those unresolved issues would have a major impact on the value of NYRA and, more importantly, the willingness of private entities to make a bid on the association. Private bidders also would be wary of the state’s potential future involvement in NYRA’s operations, considering the history of the relationship between the two entities and the state’s claim on NYRA’s deeds and its franchise to operate the three tracks, Wittstruck said.

“Who would want to bid on [NYRA] knowing that the state giveth, and the state, in a fit of pique, can take away?” Wittstruck said.

Richard Violette, the head of the New York Thoroughbred Horsemen’s Association and the organization’s representative on the NYRA board, said on the panel that whatever happens with New York’s tracks, horsemen will be opposed to any plan that does away with winter racing, citing the reliance of year-round trainers and state breeders on the purses and awards available during the season.

“Aqueduct has as much vital importance to racing in New York as Saratoga,” Violette said.

But it’s also not clear that horsemen will have much of a say in the matter. Since the state authorized casinos in 2001, New York’s legislators have shown far more deference to the needs of casinos than the racing industry’s. That’s another factor complicating the calculus of the future of NYRA, which receives approximately 7.5 percent of the revenues from a casino adjacent to Aqueduct for operations and capital expenditures.

Horsemen and breeders receive another 7 percent of those revenues from the casino as subsidies. But those subsidies, like NYRA’s, are contained in a law, and laws can be changed. Even now, the casino lobby is pressing for a higher cut of the revenues from gambling, either through lower tax rates or a reduction in the revenues flowing to other parties, including racing.

Violette said the current activity over the licensing of new casinos in New York, which will not be required to provide subsidies for racing, has made horsemen nervous about supporting any plan “absent some kind of iron-clad promise that racing revenue will be protected.”