New York racing being dealt a body blow

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TwinSpires Staff

January 19th, 2017

by Dick Powell

New York racing is taking some body blows and you never know which one will turn out to be a knockout punch.

Finger Lakes Race Track has always been an important part of the New York breeding program and their racing has produced trainers like Charlton Baker, Chris and Jeremiah Englehart and Dave Cannizzo that regularly ship horses from upstate to downstate.

A couple of years ago, the New York State government decided to site up to four casino licenses in three different regions upstate. There are whole swaths of the state where these casinos were not allowed since they are the exclusive domain of the Seneca and Oneida Native American tribes.

The casino in the Capital region went to Schenectady, about 30 minutes from historic Saratoga Racecourse and Saratoga Harness Track now known as Saratoga Casino and Hotel. The Catskill region went to a site near Monticello on route 17 and the Southern Tier casino license went to Del Lago in Tyre, New York. This left one license open and after complaining bitterly, a casino license was granted to Tioga Downs in the Southern Tier, which already has VLTs and now will have table games.

The location of a casino in Tyre is the one that is problematic to Finger Lakes for two main reasons. First, Tyre is a 28-minute ride from Finger Lakes being 26.8 miles to the east right off the New York State Thurway (I-90). Second, since Finger Lakes racetrack is located within the Seneca exclusive region, the casino in Tyre will not be subject to any hold harmless provisions in the law where “make good” money goes to horsemen’s purses and breeder’s awards if the casino hurts business at the track in that region. Finger Lakes is in a different region.

The negative effect on Finger Lakes’ business is expected to be devastating, which in turn will have a negative effect on purses and breeder’s awards. The New York State legislature is currently in session and it might be addressed but don’t count on it. After all, this is New York.

On top of this, New York State granted Nassau and Suffolk OTBs the ability to host 1,000 video lottery machines in their respective counties. Originally, there was language in the legislation that would negate any negative effect they would have on NYRA so the OTBs would have to make good on any damage using 2013 as the base year.

For a couple of years, every time Nassau OTB tried to site VLTs, the neighborhood opposition would stop it in its tracks. Desperate for money with a big deficit in the county’s budget, Nassau County used its political clout and their OTB was then granted the ability to use 1,000 VLTs at Aqueduct as their own.

Instead of expanding and adding 1,000 machines to what was already at Genting’s “Resorts World Casino” at Aqueduct, they were allowed to use existing machines. So far, 460 of the existing 5,500 VLTs have been designated for Nassau County OTB.

But not even the street-wise “Proposition Joe” in the brilliant HBO series “The Wire” could see what was coming. First, the percentage that Genting clears on each VLT at Aqueduct is 30% if it is a Nassau OTB VLT and 22.5% if it is a NYRA VLT.

Then, to make it worse, Genting is allowed to choose the VLTs. So, they picked the best performing VLTs for Nassau OTB leaving NYRA with the others. Think about it this way: Nassau OTB gets the VLTs by the buffet line and NYRA gets the ones by the restrooms.

After three months, we now have results and they ain’t pretty.

In the month of October 2016, the Nassau OTB VLTs did $770 per VLT per day and the NYRA ones did $388.

In November 2016, the Nassau OTB VLTs did an incredible $861 per VLT per day while the NYRA ones did $358.

And in December 2016, the Nassau OTB VLTs did $854 per VLT per day while the NYRA ones did $366.

All the constituents of New York racing work off a percentage of the gross gaming revenue, which has now dropped precipitously due to fewer VLTs and the best-performing ones going to Nassau OTB. So the percentage allocated to NYRA administration, Capital Expenses at the three NYRA tracks, purse money and breeders’ awards have all dropped.

2017 figures to be even worse since there are another 540 VLTs that will be designated to Nassau OTB (to complete their 1,000), which reduces the gross gaming revenue available to racing and, based on past performances, the next 540 best-performing VLTs will be the ones designated to Nassau OTB.

So we are looking at, for the foreseeable future with no end in sight, lower purses and breeders’ awards, less money for NYRA operations and less money for capital improvements. We have seen the proven results from the first 460 VLTs that were switched to Nassau OTB and the next 540 will only continue the downward trend.

Suffolk OTB has to be licking their chops for their 1,000 VLTs that the legislation enables them to operate and don’t forget that in the next year or two, the next casino siting process will involve up to three full-blown casinos in the New York City/Long Island regions. Not a pretty picture for the racing and breeding businesses in New York with little reason for future optimism.