Friends of New York Racing, a nonprofit entity formed to devise a new economic model for New York racing, has proposed a profitable public/private structure for the New York Racing Association and installation of video lottery terminals at Belmont Park.
FNYR, which includes major racetrack representatives from outside the state and is headed by former National Thoroughbred Racing Association commissioner Tim Smith, released its 76-page preliminary report June 27. The report says New York racing "is at a critical crossroads, facing serious problems," and that the goal should be to "balance the diverse, legitimate interests and policy objectives" that currently exist rather than look at short-term profits.
The FNYR report says the current NYRA and off-track betting models are "broken" and must be fixed. It proposes a public/private structure made up of government, racing nonprofits, and investors to form a for-profit enterprise, but takes no position on the policy approach.
The proposed model would attract $500 million to $1 billion in capital investment and ultimately increase purses and breed development awards by 60%, the report says.
About $3 billion is bet each year on New York racing, or about 20% of the North American total, according to the report. But it also says NYRA lost $6.8 million in 2002, and almost $20 million in 2003. The last year NYRA showed an operating profit was 2000 ($1.66 million).
Off-track betting corporations in 2003 accounted for the largest percentage of in-state handle with 74%. NYRA was second at 18%, followed by all the harness tracks (7%) and Finger Lakes Gaming and Racing (1%). The FNYR report calls the relationship between NYRA and OTB corporations "uniquely dysfunctional" and "competitive and antagonistic."
To correct the system, FNYR suggests each of the six regional OTB corporations be permitted but not compelled to merge operations and assets with the proposed for-profit entity. Thus, a combination of racetrack, OTB, and VLT operations would provide "improved facilities and increased efficiency almost immediately," the report says.
Currently, the only NYRA track approved for VLTs is Aqueduct. FNYR says "serious consideration" should be given to authorizing the devices at Belmont Park to produce "substantial revenue" for the state and the racing and breeding industry. Capital generated by Belmont VLTs could be used to upgrade all facilities operated by the proposed for-profit entity.
The preliminary report is subject to a 60- to 90-day public comment period during which FNYR will complete other research projects. A final report could be out by early October.
The founding contributors of FNYR each kicked in at least $100,000. They are The Jockey Club, Breeders' Cup, Capital & Technology Advisors, Churchill Downs Inc., Keeneland, Magna Entertainment Corp., Oak Tree Racing Association, Scientific Games Corp., Woodbine Entertainment Group, and Youbet.com. The lone charter member (at least $50,000) is the New York Thoroughbred Horsemen's Association. Sustaining members (at least $25,000) are Delaware North Cos. and Thoroughbred owner John Oxley.Link to Preliminary Report from Friends of New York Racing