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Thursday, February 03, 2011

Tough Spot for Horsemen

Here's the section from Governor Cuomo's Budget Briefing Book on the "surcharge" - not a tax - on all horse racing purses in New York:

Racing Purse Surcharge. Currently, the Racing and Wagering Board’s Regulation of Racing Account operates at a deficit, necessitating loans from the State’s taxpayer financed General Fund in order to maintain the Board’s regulatory activities that are directly related to the conduct of horse racing. The Executive Budget includes legislation to establish a two and three quarters percent surcharge on purses for all horse races conducted within the State. Moneys from this surcharge will be directly deposited in the Regulation of Racing account, which, when combined with cost containment actions undertaken by the Racing Board, will eliminate the account’s deficit and will ensure that the cost for the Board’s regulatory activities are fully borne by the Racing Industry rather than by taxpayers.
The surcharge is expected to raise some $7.6 million in the fiscal year which starts in April, and $8.4 million a year down the line, when the NYRA purses are presumably fattened by Resorts World money. The argument is framed so as to put the burden of argument on those trying to convince lawmakers that the "Industry," and not the taxpayers, should bear the burden. That of course is despite the sums that the industry contributes annually to the entire state economy, not just for track degenerates and backstretch Medicine Eds.
The New York Racing Association, which operates the Aqueduct, Saratoga and Belmont race tracks....says it contributes more than $2 billion annually in the state’s economy. Horse racing is estimated to account for some 35,000 jobs across the state. [NY Times]
That's NYRA alone, so, I dunno, seems like it may be worth a few million dollars to help out.

The brief section devoted to 'Revenue Actions' also contains a provision for free play credits at racinos. The last time we saw that proposal, it had somehow been slipped into the last NYC OTB reorganization plan. Now it pops up in the governor's budget. Damn! These racino guys are good! Who are their lobbyists? Good to see that the governor is not subject to any special interests as he says.

Look, one can make convincing arguments against the surcharge; NYTHA president Richard Violette and Assemblyman James Tedisco talk about the potential impact on jobs here; Steve Zorn puts forth an eloquent argument on fairness here.

But the truth is, in this budget year, it's a losing argument, one hardly worth making. Cuomo is proposing massive cuts in healthcare - effectively nearly $6 billion - education cuts which would have profound implications for poorer school districts; possibly up to 10,000 layoffs in state agencies, 10% cuts at public colleges, and significant cuts in the areas of human services (including those to the disabled and to family services), public safety, criminal justice services, the parks, environment and energy, and the arts. Among other things. The relatively small percentage and sums being levied on the horsemen is surely not going to make for a resonant argument. Horse racing is an easy and convenient target as we know.

The horsemen are in a tough spot, and total avoidance of the surcharge would appear unlikely. Best shot might be an appeal for some partial relief. The harness horsemen, usually more extreme in their stances, discuss with what seems like a realistic approach given the situation.
"This money to cover drug testing needs to be taken from the horsemen and the tracks equally," said [SOA president Joe] Faraldo. "It seems that when it comes to costs, we have evolved to the meaning that costs are only the horsemen's costs. I guess the surcharge would even apply to stakes when the horsemen are racing for mostly their own money. We're hopeful that we can get this changed." []


Anonymous said...

Can't find any record of a W-2 form for a Medicine Ed.

Figless said...

How do these "free play credits" work?

Is NYRA allowed to grant the same on parimutual wagers?

Figless said...

Oh yeah, agree horsemen have a more than decent argument, especially thoroughbred horsemen who appear to be subsidizing the harness guys under this formula, but it probably makes sense to bite the bullet and concede in this environment.

Wait for things to rebound and revisit it in the future.

Would like to know why the NYSRWB needs all this money.

They also regualate Indian Gaming, were they asked to contribute?

Anonymous said...

patronage. the $$$ from the tax will be used to pay political
hacks for the favors of the past.
in other words, the owners get screwed again.
the boycott in cal. is a huge success. a boycott of n.y.r.a. might be a good idea.

Anonymous said...

As an owner in NY I would like to thank Steve Zorn for so eloquently putting this issue into perspective.
I would like to add an additional comment. Owners fortunate enough to win purse monies in NY are already subject to an additional 4%takeout rate compared to purse monies earned in surrounding states. For example, in NJ or PA the only deduction is for jockey fee (generally 5-10%), in NY the deductions are 5-10% jockey fee with an additional 4% added on top (including a $10 per start fee going to the NYSWRB.
The additional 4% may not appear to be much but its less money for me to pay bills.
Given the generous purse structures in surrounding states coupled with lower purse money deductions in those states, NY may not be the state owners wish to run horses.
If the Governor believes the industry should fund the NYSRWB why then does he not believe teachers should fund the Dept. of Education or policemen the Dept. of Corrections or...

Anonymous said...

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10 cent superfecta said...

what a great resource...

Figless said...

Additional fees already in place in NY (from my most recent statement) follow, as far as I know most of these are not charged in competing states.

Fixed Fees:

Backstretch Insurance - $12.50
Jockey Club Foundation - $2.50
Lasix Fee - $20 (in lieu of private vet cost)

Variable Fees:

Backstretch Pension - 1%
NYTHA - 2%
NY Jockey Injury Comp - .9%

The Jockey Workers Comp is on top of a 2011 Base Fee of $792 per owner, paid equally if you have one horse, like myself, or 100.

This on top of the $90-100 per day rate for an average NYRA trainer and the vet bills that always seem 50% higher at NYRA tracks.

Figless said...

And the pony to post fee of $20 per race and the farrier fees that are 50% higher than other tracks.

So yeah, lets just add another 3% to that, after all our purses are just so much higher than the surrounding states that no one would move their horses out of town :-)

This will be the final straw for some.

A 15k maiden claimer in philly park runs for a 21k purse, as compared to 15k here and the day rate is much less.

Simple economics.

Figless said...

Do you think the trainers and jockeys will share the pain by billing the owners only on the NET purse?