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“The
franchise to operate Saratoga, Belmont and Aqueduct race tracks will be
worth much more when it is put up for bid if the reforms achieved at
the New York Racing Association over the last two years are preserved
and sustained,” said New York State Comptroller Alan G.
Hevesi as the U.S. Attorney for the Eastern District moved to dismiss
the deferred indictment against the Association and the court-appointed
monitor issued its report.
“Through
its franchise, NYRA controls what should be very valuable
assets—three race tracks and soon video lottery terminal
revenues. If NYRA is discredited and destroyed, those assets will be
seen as less valuable and bidders will offer less for them. That would
be bad for taxpayers and bad for New York’s racing
industry,” Hevesi said. “Our goal is to reform NYRA
not for its own sake, but to increase the amount taxpayers receive from
whatever firm wins the franchise next. That’s why the reforms
we have achieved must be included as standards in the competitive RFP
seeking bids for the franchise.”
Following an indictment brought by the U.S. Attorney for the Eastern
District in December 2003, the U.S. Attorney agreed to defer
prosecution in return for NYRA’s agreement to the imposition
of a court-appointed monitor to ensure reforms. In March 2004, Getnick
and Getnick was appointed as monitor and filed a report with Judge
Spatt on the results achieved.
The firm reported that substantial progress has been made in reforming
the New York Racing Association, including the following:
New
leadership. There is a new president and new co-chairs of the board, a
new code of ethics and new rules for controlling cash handled by
pari-mutuel clerks.
Safeguards
against horse drugging. Before races, horses are kept under
strict
observation in monitoring barns to prevent
improper drugging.
Tests
are now administered to expose “milkshaking,” a
process by which an alkalizing agent is administered to horses to
artificially reduce fatigue and enhance performance.
Ending
ties to rebate shops. NYRA cut its business with offshore boiler room
operations associated with tax evasion, money laundering and cheating
on races. Again, NYRA is a leader in banning these operations.
Preventing
money laundering. Training for staff and new policies will prevent
money laundering and tax evasion.
Improved
financial reporting. NYRA’s financial statements provide more
and more easily understood information about its financial conditions.
A
new TVG contract. A new contract for broadcasting NYRA races brought in
additional funds for NYRA.
Funding
the Horsemen’s account. NYRA had used for its own purposes
millions of dollars it was supposed to be holding for horse owners.
That money has been restored and is now kept separately and securely.
“When
some people cheat and a select few in the know benefit, the average
bettor loses. Thanks to these reforms, honest bettors now stand a
better chance at NYRA’s tracks than at many others. But in
this case doing the right thing, cutting off the rebate shops, has cost
NYRA money. NYRA management wants to institute a frequent bettor
program to bring back some of the bettors it has lost, but the Racing
and Wagering Board has failed to respond to this request made last May.
NYRA is not out of the woods. It still has very serious financial
problems. I urge Racing and Wagering to support NYRA’s
reforms and take this and other actions necessary to keep NYRA
operating profitably in order to preserve the value of the
franchise,” Hevesi said.
“Not
every problem discovered by the monitor relating to NYRA and the racing
industry has been dealt with completely. Some of those issues are
analyzed in the separate sealed report submitted to the federal court.
It is my hope that the appropriate criminal justice agencies will
investigate those findings,” Hevesi said.
NYRA’s
franchise to operate the three tracks ends on Dec. 31, 2007. The state
plans to put the franchise up for bid. To preserve the reforms achieved
and to ensure that the State gets the best possible price, the RFP
should include the following reform standards:
Continue
a strict drug-testing program with severe sanction for violators to
guarantee that all races at Aqueduct, Belmont and Saratoga are fairly
run and to ensure that bettors are not disadvantaged.
Continue
the operation of the pre-race monitoring barns at each of the tracks to
prevent horse-doping cheating.
Continue
to refuse to send the simulcast signal to those offshore and other
rebate shops and betting locations that do not provide full and
complete information to satisfy New York
State that they are operating
in a lawful manner.
Continue
to maintain a fully funded segregated trust account for the
Horsemen’s funds.
Maintain
a comprehensive Code of Ethics that applies to all track employees,
officers and board members, and that is fully enforced.
File
audited financial statements on a yearly basis that are transparent,
accurately portray the financial condition of NYRA, are prepared
according to generally accepted accounting principles, and are made
available to the appropriate State regulatory agencies for review and
inspection.
Develop
and maintain serious enforcement measures to prevent money laundering,
tax evasion and other criminal activities.
Provide
a safe, healthy living conditions for backstretch employees and their
families.
“Properly
configured to attract many bids, the racing franchise could be worth as
much as a billion dollars or more. The primary duty of all state
officials is to ensure we receive as much as possible for this valuable
asset,” Hevesi said.
“Two years ago, the New York Racing Association was the
poster child for mismanagement and corruption. I am gratified that the
Office of the United States Attorney for the Eastern District agreed
with our recommendation for the imposition of an outside monitor in the
context of its criminal prosecution of NYRA, because I believed it was
the only way to ensure reform at NYRA, support the New York horse
racing industry, and preserve this important asset for taxpayers. While
much still remains to be done, the result has proven that reform of
even a very poorly managed and corrupt agency is possible,”
Hevesi said. “I thank the Office of the U.S. Attorney for the
Eastern District, and the new leadership of NYRA for their important
and effective efforts. In particular, I would like to extend my
appreciation and thanks to the monitor, Neil Getnick, Margaret Finerty
and their team for their unfailing integrity, expertise, dedication and
business acumen during the course of this monitorship. I also thank
Attorney General Eliot Spitzer whose own investigations of the industry
have proven invaluable in uncovering corruption and recommending
necessary reforms.”
Click here for a copy of the report.
9-14-05
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