The New York Racing Association, under investigation for more than three years, was indicted Thursday on fraud and conspiracy charges.
Despite that, NYRA will be able to retain its franchise to run three premier Thoroughbred tracks in New York under a "deferred prosecution'' deal in which it will escape a trial in return for reforming its operations, according to the deal agreed to by federal prosecutors and the NYRA board of trustees.
Besides the indictment of NYRA, the U.S. Attorney's office in Brooklyn was set to unseal indictments against two former department directors as well as four former tellers on conspiracy and tax fraud charges. The names of those individuals were not immediately available this morning. A host of former top NYRA officials, who racing insiders in previous months speculated were subject of the federal probe, were not named in the action.
NYRA managers, prosecutors said, ignored widespread corruption among the ranks of its tellers, 19 of whom whom have already been convicted of various charges ranging from money laundering and tax fraud to tapping into their NYRA cash drawers to run lucrative loan-sharking operations.
NYRA's survival was predicted in the past week by Senate Majority Leader Joseph Bruno, the racing group's chief booster at the state Capitol, and NYRA officials were already moving to re-new its construction of a casino at Aqueduct to hold 4,500 video lottery terminals; the new gambling venture, approved under a 2001 law, was on hold after MGM Mirage, its management partner in the deal, put on hold its participation pending the outcome of the federal probe.
NYRA backers say the federal decision not to bring NYRA to trial will enable it to keep the franchise to run Aqueduct, Belmont and Saratoga at least through 2007, its current franchise deadline.
The head of the NYRA horsemen's group said Wednesday he is "thrilled'' NYRA is moving to settle the federal prosecution. "It's not like NYRA did this on purpose. It's not the worse charge in the world ... It's not like they had Mafia guys in killing people. Let's get it done and over with,'' said Richard Bomze, president of the New York Thoroughbred Horsemen's Association.
Bomze said the probe will force NYRA "to change some of its ways, to run a tighter ship.'' And, most important to Bomze, it should, he said, pave the way for NYRA to re-start its video lottery terminal program, stalled earlier this year when MGM Mirage, NYRA's VLT partner, halted work at Aqueduct because of concerns over the federal probe.
Bomze said the one "frustration'' he has, however, is that horsemen will likely end up shouldering much of the costs of NYRA's problems. He noted that NYRA must, by law, steer the first $2 million of its "profit'' to purses. But he noted that between fines and fees paid by NYRA for lawyers, public relations executives and security consultants the purse account will end up footing much of the bill.
"It's ironic that we'll end up paying the expenses for NYRA to survive,'' Bomze said. "But I do want NYRA to survive.''
For the state, NYRA's immediate survival will mean cash – from the VLT revenue-sharing program – coming in sooner than later. The state's top leaders, from Gov. George Pataki to Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno, have either remained publicly neutral during NYRA's legal battles with prosecutors or aided in its defense. Officials say NYRA's collapse would devastate, at least temporarily, the state's racing industry; NYRA is also a lucrative and steady source of campaign contributions for state officials over the years.
Industry officials are also waiting to see how state Attorney General Eliot Spitzer responds to the federal deal with NYRA. Spitzer issued a scathing report into NYRA's operations earlier this year, and was the first to call for deep reforms, including a review by the state into whether NYRA should lose its franchise. He also called for NYRA President Terry Meyocks' ouster. Meyocks resigned earlier this fall.