A report by a New York state legislative panel is issuing a warning signal to the state's racing industry to embrace deep, structural reforms or face a continuing erosion of its fan base."The industry must chart a new course if it is going to become profitable and retain a significant presence in the national gaming market. The status quo is no longer acceptable. If current trends continue, horse racing in New York will continue to slide into oblivion," states an annual report published by the New York State Senate Committee on Racing, Gaming and Wagering.The report, issued by committee chairman Sen. William Larkin, also warned the industry not to count too heavily on video lottery terminals for financial salvation. In a break from hopeful signs about the impact of VLTs made just three years ago by the same committee, the 2006 report insists that "video lottery revenue can no longer be considered the sole savior of racing.""Current market conditions call for new ideas to improve racing so that it can at lease maintain its current market share and make a profit on its own operations. It is important for the long-term financial health of horse racing that it be able to sustain itself without being subsidized by video gaming," the report states.The report noted the continuing decline of overall handle on horse racing in the state. Among the bright spots, it said, is the state's breeding industry, in which state breeding awards programs have helped increase the number of foals bred in New York from 1,202 in 1994 to 2,209 in 2004.The report painted a bleak financial portrait of the New York Racing Association, which it said continues to see revenue declining over time accompanied by a rise in expenses that has required state bailouts over the years.The report outlined the top 10 problems facing the industry, and possible remedies. It cited, for instance, continuing declining racetrack attendance, which the report said could be curbed at least somewhat by offering more free passes to bettors and better integrating racetrack VLT casinos with live racing. It said thoroughbred tracks should also consider moving to nighttime racing schedules to bring fans to the facilities.Among the other major problems facing the industry in New York are antiquated state racing laws, underutilized horse breeding funds, declining OTB operations, growing gambling addiction by bettors, substandard living conditions for racetrack workers and what it called "NYRA's predicament."The report called for a number of previously proposed ideas to make the future franchise to operate Aqueduct, Belmont and Saratoga more financially successful, including looking at ending the current not-for-profit status for the franchise holder.