RSS Feed for this Blog

Tuesday, February 07, 2012

The Governor Speaks....Ominously

As mentioned in the last post, I ran into NYRA's Communications Director Dan Silver at Aqueduct on Saturday, and he was one guy there who wasn't particularly happy. "Did you see Cuomo's statement?" No, I hadn't. The governor spoke to the editorial board at Newsday, and had some thoughts on NYRA, and the New York racing industry in general. You can see the video here. If you don't feel like watching, it goes something like this:

"We need a strategy on gaming. We don't know....we just have a hodgepodge. We're in a terrible situation with NYRA that we haven't figured out for years, where we subsidize on an ad hoc basis. This goes all the way back to Spitzer and his investigation of NYRA. We have OTB's that are in treacherous financial situations, all across the state. Where do they fit in? Then tribal casinos, then ruh-cinos, then failing tracks.
There are no bandages here. This is fifteen years of decay! [italics mine, to denote inflections of alarm and consternation] Everywhere you look....there are massive, massive problems!
I think we need a comprehensive, overall gaming strategy. We need to figure out horses and NYRA. What is it worth to this state to have this industry? And how much do we subsidize them? And do we want to?"
We've only speculated about Cuomo's take on horse racing, because he hadn't had much to say on the topic. We figured it was probably indifferent, at best; hostile, at worst. Sounds like it leans towards the latter. But surely, it is ignorant.

Here we have the usual attack on NYRA - one loaded with the same untruths, hyperbole, and campaign-type soundbytes that we've heard from lesser politicians than the wildly-popular governor. As we know, the state is not directly providing any subsidies, ad hoc or otherwise, to NYRA, and financial support in the past has been in the form of loans or compensation for land. I'm not aware of any "terrible situation" at NYRA (nor the proliferation of "massive, massive problems" amongst the state's other racetracks) at the present time. In fact, thanks to slots revenues, things seem to be pretty good. And that investigation and settlement with then-Attorney General Eliot Spitzer is completely irrelevant at this point in time, which I'm sure Cuomo knows perfectly well. That's just Super-PAC negative advertising-type crap.

But this statement goes much further than just NYRA. It's an existential broadside directed at the industry as a whole in New York State. It comes from a governor who the industry certainly does not want to count amongst its enemies. The problem though is that it's just a sad fact that, while the state may not be directly subsidizing NYRA or the other tracks, one could certainly take the view of the sympathetic Newsday editorial which accompanied the video of the governor.
The horse racing industry has been propped up by funds from video lottery terminals, money that would be much better spent on public education.
Indeed, the VLT money certainly could be spun as a subsidy in the sense that it's money that could be going to the state. Chris Christie eliminated subsidies in New Jersey that revert not to education, but to private casino companies; so Cuomo could make an even more potent argument here. Whatsmore, we've seen how the entities that would benefit from a reduction or elimination of slots money paid to tracks are lavishing cash on influential lobbyists and campaign contributions, and there's no underestimating the effect of such largesse on policy.

But maybe Cuomo was just blowing off steam. Oh, not about NYRA of course; we know that the administration has a bug up its ass for the association, for whatever reason. Cuomo can't snap his fingers and make NYRA go away, but his budget director Robert Megna chairs the Franchise Oversight Board that can recommend the revocation of the franchise under certain rather non-specific conditions.

But is a larger fight against the industry something that Cuomo really wants to take on? One might think that the governor has matters pending that are not only higher priority, but more logical and feasible politically as well. The industry may have declined in the state. But it still employs tens of thousands of people - 40,000 is the figure touted by the harness horsemen for the 'horse racing/agriculture' industry. Threatening even a fraction of those jobs isn't the way to go these days, especially from a governor trying to build a resume as a job creator even as he attacks budget deficits. And the industry does have supporters in both legislative well as inside Cuomo's administration - Bennett Liebman is the deputy secretary for Gaming and Racing. You would think that any threat to racing in Saratoga would be would be a non-starter in a legislature a half hour away. Do you think NBC Sports Network would have a weekly series featuring the Saratoga Farmers' Market? (Though that would be fine for the Head Chef.) And this is all besides the revenue generated for the state, both directly to the government, and in the form of peripheral economic activity.

In fact, if thoroughbred racing in New York would cease to be, it would have unpleasant repercussions nationwide. A guy with presidential ambitions might want to think about that. Still, it's hard to say what Cuomo is really up to. We all might be holding our breaths until we find out for sure.


PTP said...

Hey AM,

I think what you're seeing here is what you're seeing elsewhere. It's not an R or D thing, nor is it a concerted effort to squeeze horse racing for the sake of hurting horse racing.

States have no money, as we all know, and have been shedding services and jobs left and right. In PA, 16.7% (I think that's the number) was already taken from the breeding fund from VLT cash. Indiana has proposed similar, all with the "we have no money for schools, so why should horse racing have it" narrative.

Horse racing and its fractured nature has never professionally built a group with lobby power, like casinos, teachers and others have, so many of the cries from the industry about "lost jobs" don't resonate. It's first on the chopping block.

It's why a lot of us who've followed the slots cash windfall since the 1990's have screamed for racing to do something with the money: More than stuff it into a $66,000 MSW. Lower rakes, more organization for lobby power, slush funds to promote the sport nationally, changing witholding for players and on and on.

Jeff Gural in about 2003 said (paraphrasing) 'One day the government is going to come and ask what we did with slot money, and we better have an answer'.

I think that day is here (all around North America), and we don't have an answer.


Anonymous said...

Probably nothing sinister in Cuomo's contemplation, just discussing some unfinished business.

In the early 1990's, then Governor Mario Cuomo established the Commission on Racing in the 21st Century in order to evaluate the future direction of NY's horse industry. In his words, "We want to make racing better. Although, we are not going to change the face of racing overnight." The areas of the Commission's focus were: the OTB's, winter racing and the fate of the Aqueduct race track, private for profit ownership of the business versus non-profit, pari-mutuel takeout, revenue to the state, fiscal responsibility and corporate integrity.

20 some years later, have we really fine tuned the way we function? Throw in integrating VLT's and potential casino gaming with racing, and the complications are multiplied. My guess is a long overdue comprehensive strategic "Master Plan" is where Governor Andrew Cuomo's horse industry examination and remarks are headed.

jk said...

I agree with Cuomo, a top to bottom review is in order. He mentions the OTB's so hopefully there are no sacred cows.

Slot money is being used to subsidize purses. It is reasonable to ask if there is a return on this investment. Has there been an increase in NYRA handle since the purses were increased?

Cuomo wants a convention center in Queens and Resorts World has implied there is no room for Big A racing with a convention center.

The dots are very easy to connect.

Indulto said...

PTP has it right.

Lower the take before the Governor lowers the boom.

Figless said...

Did you notice that the PA governor has proposed raiding the PA Racing Fund, or whatever it is called, for $72M per annum which he claims will fund schools.

I have been writing for years that I hope the horsemen's contract is iron clad, these theives posing as public servants will do anything to get their hands on this money.

And yes, NYRA and the Horsemen need to increase their lobbying, it is not beneath them to pay to play, everyone has to do so in Albany.

Dan said...

I agree NYRA & the horsemen need to hire some good people to lobby for them. It will be hard to fight that the schools need the $ more than the "rich" horse owners. We know this is not true but the truth isn't always said in Albany.

Anonymous said...

Hey horsemen in NY, PA and elsewhere under the microscope; stop doping your horses, stop running them when they need time off, stop making up races and outcomes ahead of time, stop acting like you are legitimate when you are not, and start behaving yourselves. This is what all politicos and the public are expecting from our industry stewards and partcipants, so just do it.

Otherwise, the pot of gold will dry up, quickly, as evidenced by today's PA announcement and Cuomo's hunt for the "horse truth" in NY.

Anonymous said...

Notics Cuomo didn't say anything about an investigation into the Aqueduct Entertainment Group (AEG) and prosecution of Democratic politicians, who tried to scam and manipulate the so-called "honest bidding process" for VLT licensing to run the Aqueduct casino. It's time the public started holding public hearings by themselves, forget about the government, with the right to indict any and all politicians, and to expose them for what they really are. Do you think Cuomo would enjoy the publicity surrounding his failing to follow up on the investigation and prosecution of his political cronies?

Figless said...

Anon 212, I couldn't agree more. If only we could ever elect an Attorney General that would actually do his job the State would be a much better place.

Goverment, all branches, is filled with criminals, flat out thugs.

Anonymous said...

The sad fact is that there is to much racing and a limited amount of handle.

The harness industry in NYS is a joke but how do you eliminate the subsity without losing thousands of jobs.

The Pennsylvania and Indiana subsities have been a joke as they nearly have crippled Kentucky and New York racing.

It is time for serious consolidation and a lot of jobs will be lost and race tracks will close. Only the strong will survive.

I certainly hope NYRA can withstand the political grandstanding and certainly agree with previous posters that it is time to start spending money on lobbying.

Anonymous said...

Spending money on lobbyists is no solution to horse racing's conundrum. Giving a legislator money today has nothing to do with contary issues that may occur tomorrow, unless the designated representative has real passion for the cause. The horse world is so shallow if it belives that money cures all evils. It doesn't get the ball across the goal line.

Figless said...

anon 838, no, spending money on lobbyists is not the solution to the entire industry's issues, but spending money IS a necessary evil for NY Racing's survival.

NY Racing, after all these years, finally has a competitive advantage over the other States.

They must pay to maintain that status.

Like all parasites, politicians will do what is necessary to get that initial meal, but will then demand more and more from the host until they kill it.

Since there is no other short term solution, NY Racing must continue to feed them while trying to survive long enough to be the last host standing.

Figless said...

To clarify, NY Racing's must realize it is in a battle for survival with all the other racing jurisidictions. There is no united front.

With the declining slice of the pie and soon to come extremely declining horse population (smaller 2010 foal crop hits the races this year)tracks will be battling for horses.

Right now NYRA has the competitive advantage to survive, Pennsylvania's "temporary" theft of the Horsemen's "subsidy" will help NY even further and will be the death knell for PA's breeding industy, a few short years after they were lauded for being proactive.

As I type horse vans are carrying mares accross the border to NY to foal this year, breeders are fleeing the state.

Once the cuts hit the purses race horses will be doing the same.

Combined with NJ's struggles and MD's continued ineptitude NYRA is positioned for a banner year of racing.

But if they do not pay to play and thereby keep the money flowing they will lose it all.

They MUST lobby and then lobby more and thankfully they seem to realize this by forming the new Statewide consortium, although I question the wisdom of joining forces with the Harness folks who as far as I can tell are leaches themselves feeding on NYRA Saratoga success while draining VLT money for their own benefit.

Anonymous said...

Who cares about Penn. racing?Have you seen the takeout?
You would have to be an idiot to bet at those tracks.

jk said...

NYRA should do more lobbying....with its customers!

In the last few years I have put up with takeout increases and overcharges, aging and crumbling facilities, cancellation of LIRR service to Belmont (now restored), a watered down condition book and subsidies for horseman with zero for the bettors.

NYRA, take care of your customers and you will not be at the whim of politicians and lobbyists.

Figless said...

jk, they should do both.

The LIRR thing was out of their control and has been fixed, NYRA rewards with home streaming is "fan" tastic, the on track concessions are improved, thanks to Genting, and the product has improved this winter and will greatly improve this spring.

The overcharge was inexcusable of course as is the the failure to improve the facilities, they have work to do clearly and yes I would like to see them push harder for a takeout reduction.

But it all is for naught if they dont defend their deserved piece of the pie by lobbying. Ultimately it all comes down field size and quality, and if they purses decreases the horses will go elsewhere.

Anonymous said...

In 1962 at Aqueduct the takeout was 15%(10% to the state and 5% to the assoc). Twenty years later the on track takeout was 15%( 3% to the state, 8.5% to the assoc, 3% for purses and .5% for a breeders fund). The OTB had it's own takeout but I'm not sure where that money went.

The horseplayer has been constantly squeezed with increasing takeouts. The state gets less money. Where's the money going? My guess is the horsemen.

Slot money comes out of the communities and a greater share should be returned to the communites.

Figless said...

I view the VLT money dedicated to NYRA as essentially rent for he use of the facilities, probably below market when you do the math.

The money dedicated to purses and breeders is negotiated in good faith in exchange for the Horsemen's cooperation in allowing direct competition to racing in their protected market.