NYRA could 'squander' casino revenues without financial strengthening

Auditor: NYRA could 'squander' casino revenues without financial strengthening
by Paulick Report Staff

The state's top auditor warned the New York Racing Association to get its financial affairs in order or risk losing expected revenues from the new casino at Aqueduct Racetrack.

The Albany Times-Union says comptroller Thomas DiNapoli released a report Tuesday declaring that NYRA had failed to shore up its financial operations following two previous audits since NYRA emerged from bankruptcy in 2008:

"NYRA still has not conducted a top-to-bottom review of its financial operations and taken necessary steps to curb costs, particularly for staffing and consulting contracts," DiNapoli said. "NYRA stands to squander significant revenue from the recently opened VLT franchise at Aqueduct."

Below is a press release from NYRA responding to DiNapoli's report.

The New York Racing Association, Inc. (NYRA) took very seriously the recommendations that were made in the two 2010 audit reports from the Office of the New York State Comptroller.

NYRA has and will continue to maintain financial discipline. To implement all of the recommendations made in the 2010 audit reports inside of a year would have required more money and resources than NYRA could prudently spend at that time, but we fully understand the importance of this process and remain committed to completing it.

However, as the actual audit report notes, NYRA has made strides in implementing the 2010 recommendations, including plans to enhance revenues, staffing analysis and cuts in overall staffing, the termination of our former integrity counsel and the awarding of a more cost-effective integrity counsel, cost savings on the transportation of horses between NYRA tracks, and several other cost-cutting initiatives.

In the statement, the comptroller’s office references that the audit found that NYRA expects a $19.7 million loss from racing operations in 2012. This figure is misleading. It should be noted that the 2012 budget was not within the scope of nor was it referenced in the audit, and was never discussed with NYRA management. Furthermore, NYRA’s 2012 budget contemplates approximately $19 million of net income, not a net loss. Additionally, operating income solely from current racing operations, and without giving effect to Video Lottery Terminal (VLT) proceeds for operations and capital expenditures, is projected to be $1.4 million.

The comptroller’s statement expresses concern regarding how NYRA will use the money from VLTs. As a reminder, the use of VLT proceeds is regulated by statute and primarily allocated to purse money and capital expenditures. NYRA conducts a rigorous annual budget review and approval process and NYRA’s budget is reviewed by the Franchise Oversight Board. Furthermore, NYRA’s financial results and internal controls are routinely audited. NYRA is committed to the highest standards of corporate governance, integrity and management.