Report Suggests New York Racing Needs Reform

The chairman of the New York Senate Committee on Racing, Gaming, and Wagering has released an annual report that lists the top 10 problems faced by horse racing in New York and offers solutions to each one.

Sen. William Larkin Jr., who chairs the committee, noted the 2006 report shows decreases in pari-mutuel handle and purses coupled with increasing losses.

“The industry needs to immediately refocus its marketing strategies to attract patrons,” Larkin said in a release that accompanied the report. “To remain profitable and continue contributing to the state’s economy, we should implement my top 10 list of ways to revitalize the horse racing industry in New York.”

Release of the report comes as New York Gov. Eliot Spitzer and the state legislature are considering applications by bidders to run the franchise to operate Aqueduct, Belmont Park, and Saratoga. Larkin said the report “contains information on industry trends that should be useful in helping to select a new manager of the state racing franchise,” which his currently held by the New York Racing Association but expires Dec. 31 of this year.

The report reaffirms some recommendations floated by the former Friends of New York Racing, a think-tank and political advocacy group formed in 2005.

Here is Larkin’s top-10 list:

1. Decreasing attendance at racetracks. The solution is to provide incentives to boost racetrack attendance, including a larger number of free passes and night racing at Thoroughbred tracks.

2. Decreasing handle and percentage of revenue derived from handle. The solution is to improve racetrack and off-track betting parlor patronage and increase retention rates by emphasizing the live product and allowing entities to offer rebates.

3. The financial predicament of the state’s racing franchise. The solution is to create an environment in which the new franchisee can generate a profit.

4. The state racing franchise needs to be awarded quickly. The solution is to accelerate the process.

5. The slow implementation of video gaming where allowed. The solution is to expedite installation of video lottery terminals at all authorized racetracks; the only one currently approved for video gaming but without it is Aqueduct.

6. OTB facilities and operations need improvement. The solution is to initiate OTB reform by altering racing times at tracks and aligning OTB corporations with tracks; New York City OTB recently released its own report on recommended changes.

7. Antiquated state racing and wagering laws. The solution is to modernize relevant statutes, something many have said is necessary before the franchise is awarded.

8. Growing incidence of compulsive/problem gambling. The solution is to expand treatment programs.

9. Substandard living conditions for racing employees. The solution is to provide adequate housing and services for such employees.

10. Inadequate and under-utilized horse breeder funds. The solution is to strengthen the funds by allowing them to authorize a broader range of activities and by adding a small percentage of out-of-state wagers on New York harness racing.

The report, which uses 2005 figures, also shows New York’s Thoroughbred purses in totaled $154.4 million that year, second only to California ($169.6 million) and well ahead of Florida in third with $81.5 million. New York’s average purse per race, however, was the highest in the country at $41,229.

For harness racing, New York ranked third in the country with gross purses of $40.7 million behind New Jersey ($73.3 million) and Delaware ($42.4 million). Average purse per race of $5,295, however, was eighth in the nation.

In 2005, total handle in New York was $2,644,523,292. OTB corporations generated 78% of that amount followed by NYRA (16.3%), harness tracks (4.6%), and Finger Lakes Gaming and Racing (1.1%). Though handle at OTB parlors has increased, revenue they generate for local governments has dropped from $96.6 million in 2000 to $50.1 million in 2005, the report shows.