New York State has a long history of thoroughbred horse racing with its three famous horse tracks.  The Saratoga Springs track was built in 1863, Aqueduct in 1894, and Belmont in 1905.  The New York Racing Association (NYRA), a non-profit corporation, has run the tracks since 1955.  Their contract expired December 31, 2007.  

Throughout 2007, there were numerous discussions about whether or not to renew the franchise.  NYRA was found to be a very corrupt corporation, with many of its officials going to prison.  It did not pay its bills to the IRS or to New York State, and had filed for bankruptcy.  NYRA owed the federal government over $2 million, and New York State and local governments several hundred million dollars.  Thus, the dilemma was whether or not to renew the contract with NYRA.

Since Governor Spitzer and the legislature could not come to an agreement on who should run the thoroughbred tracks and who should be in charge of the video lottery terminals at the tracks, NYRA was given an extension at the end of 2007, to continue running the tracks in 2008.  Other corporations offered bids to take over, but NYRA won out in the end.  Their contract was renewed for 25 years.

The reason NYRA was even allowed to re-bid was because they claimed to own the land and facilities at the three tracks.  The state felt they owned the land, and they probably did.  Beginning in 1955, NYRA paid taxes on the property as if they owned it, acquiring squatters’ rights, and the state had not protested them paying the taxes.  Rather than have a long, drawn-out court case in which the state might lose, they finally decided to give NYRA a contract for 25 years, but with the requirement of some reorganization and some oversight.  Title of all land and facilities transferred to the State of New York.

The state now owns the three tracks, but they authorized the Urban Development Corporation to borrow $105 million to pay to the bankruptcy court, to claim the clear title to the properties and to get NYRA out of the bankruptcy proceeding.  The 103-page bill also authorizes the state to borrow an additional $250 million to properly house and install video lottery terminals at the Aqueduct track.

NYRA will no longer run the video lottery operations at the tracks.  The amount of money the state has been getting from video lotteries will be reduced in order to give more money to the horsemen and the breeders, hoping to expand horse racing in New York State as a result.  Thoroughbred racing in New York creates 17,000 jobs and has a $1.4 billion impact on the state’s economy.  The state claims there are 400 horse farms, occupying 44,000 acres, spread over 39 of New York’s counties.  In other words, thoroughbred horse racing is a large economic engine in New York State that the Governor and the legislature feel must be protected, no matter the cost.

Under this legislation, New York State will provide property taxes on the properties of the tracks in the same manner as if they were a private entity.  The legislation does require restructuring of the Board of Directors of NYRA, which will include 25 members.  Fourteen of those members will be appointed by NYRA itself, 7 will be appointed by the Governor, 2 by the Senate, and 2 by the Assembly.  Of the Governor’s seven appointees, one will be a recommendation by the horsemen, one will be a recommendation by the breeders, one will be a recommendation by the AFL-CIO, and one will be a representative of OTB (Off Track Betting).

The legislation calls for a franchise oversight board, with five members:  3 appointed by the Governor, one each by the Senate and Assembly.  The purpose of the oversight board is to ensure quality racing and growth of the industry, raise revenue for education, and ensure integrity and public confidence in the actions of NYRA.

Senator Bruno (R-C) sponsored the legislation, S6950, in the Senate and Assemblyman Pretlow (D) sponsored A9998 in the Assembly. 

The Assembly passed this legislation by a vote of 92 to 40. 

The Senate voted on the Assembly version, A9998, and passed it by a vote of 39 to 17.