Sunday, February 8, 2009

NYRA's Slots Debacle

Just when we thought Albany couldn't screw things up any more in New York racing, we've learned (thanks to Tom Precious's excellent reporting in the Blood-Horse) that the on-again, off-again deal for slot machines at Aqueduct is once more off again.

To be sure, the parties say that there are just a few little hitches before the contract between New York State and the designated casino operator, Delaware North, can be signed. And, after all, it's only been four months since New York Governor David Paterson anointed Delaware North as the operator, mainly on the strength of its promise of $370 million in up-front payments to the state.  So what are these little hitches? Well, first, the $370 million seems to have vanished. Or, as Delaware North preferred to phrase it, they need to "restructure the financing package" and find new lenders. Since, as Alan Mann points out, the original source of the money was the soon to be extinct Merrill Lynch, it's not exactly a shocker that the funds have evaporated.

Oh, and if by some miracle Delaware North could round up the $370 million, there's still the little matter of the company's asking for protection against the presumed ill effects on its business of the casino that's now in the works for Belmont. Since nobody could possiby figure out, in the current economic environment, what that effect will be, the protection issue alone is certainly enough to stall negotiations forever and allow Delaware North, if it's so inclined, to walk away.

We (NYRA and the horsemen) have now waited eight years since the state legislature first approved slot machines for Aqueduct.  Every other flat and harness track in the state that was authorized to have the machines already has them installed and operating.  We, and the state, which is losing up to $1 million a day as a result of the delay, are still waiting for the Aqueduct farce to play out. And it'll be at least another 14 months after a contract is signed before the first machine is actually online at the Big A.

In a rational world, none of this would make sense.  The state would solicit bids from companies that have the money to get the job done, contracts would be awarded, and the job would be done. Those of us who are now paying $100 a day or so in training fees for each horse we keep at New York tracks would be grateful for the extra money in the purse account, NYRA would have a bit more to help out with maintaining and improving the facilities and attracting new fans, and the state would be getting its million a day. But none of this is rational.  The folks in Albany have been on the take for so long that they don't know any other way of doing business, and the slots disaster is just what that kind of business as usual mentality leads to.

Just to be clear, "on the take" doesn't have to mean actually taking cash or kickbacks personally, though that certainly happens.  Much more frequent is the "pay to play" ethos, which means that, if you want a politician to even consider your proposal, you'd better be one of their campaign fund contributors.

To see just how pervasive the perceived need for sending money to Albany is in the racing world, look at the very useful list compiled by the estimable Ben Liebman and posted on his Albany Law School web site. Here's what he said about some of the largest contributors:

the State’s thoroughbred breeders donated over $80,000 to political candidates and political committees. Richard Fields, formerly of Excelsior Racing, donated $60,000. Delaware North contributed over $40,000, Saratoga Harness over $80,000, Jeff Gural’s [he's a harness track operator] interests over $90,000, and NYRA’s PAC over $85,000. Donald Trump – without any gaming interests in New York but with significant interests in New Jersey - gave over $165,000 in contributions.

In addition,going through the lists, one finds a number of thoroughbred owners and trainers, from the Phippses ($500 to Republican State Senator Bill Larkin and another $1,000 to the State Senate Republican Campaign Committee) to my very own New York Thoroughbred Horsemen's Association ($1,000 to State. Sen. Bill Stachowski and another $2,000 to the Senate Republicans). NYRA, to its credit, seems much more even-handed, with a lot of money from the NYRA PAC and individually from Charlie Hayward and Steve Duncker going to Democrats. Apparently, as we in the NYTHA have been told repeatedly by our lobbyist, you can't even get your issue considered in Albany unless you're part of this corrupt system. Perhaps it's time for all of us to opt out.

The right thing to do, now that slot machines are inevitable, is to let Delaware North back out, find an operator who is ready, willing and able to manage casinos at both Aqueduct and Belmont, and get on with the job. The chances of that happening in a reasonable time frame are, I fear, infinitesimal.

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