Taxpayers' subsidizing horse racing

New York State Comptroller, NYRA at odds over financial projections
By Matt Hegarty

The New York State Comptroller Thomas DiNapoli said Tuesday that the New York Racing Association was projected to lose $19.7 million on its racing operations in 2012, a contention disputed by the racing association, which said it projected a net income of $1.4 million from racing operations in 2012.

The dispute revolved around a statement by DiNapoli's office that accompanied a follow-up audit conducted by the comptroller. The audit itself, which assessed NYRA's efforts to comply with recommendations made by DiNapoli's office in mid-2010, did not reference NYRA's projected net income for 2012. NYRA officials said that the association's 2012 projections were never discussed with state auditors during the preparation of the audit.

Mark Johnson, a spokesperson for DiNapoli, said the $19.7 million figure was "provided by NYRA during a closing conference" with the office's auditors. He said DiNapoli stood behind the accuracy of the figure.

The disagreement - which may reflect a difference of opinion on what costs should be included in the association's racing operations - reflects a rapidly deteriorating relationship between NYRA and state officials over the past several months, ever since the association began to receive subsidies from a casino at its Aqueduct racetrack.

Since the casino opened late October, NYRA has acknowledged that it had been improperly calculating the takeout on super-exotic bets for the past 18 months, a mistake that was caught by the auditor's office in an examination of the state's breeding fund. Then, just two weeks ago, the association categorically denied an allegation made by a state oversight board that NYRA allowed its account-wagering customers to bet on credit.

While DiNapoli's statement is harshly critical of NYRA, the audit itself credits NYRA for "partially" implementing five of the nine recommendations contained in the 2010 audit, but it also said that NYRA had not made any progress in implementing another four of the recommendations. Among the recommendations were that NYRA examine its agreements with contractors and conduct "surprise" cash counts in its departments.

NYRA said in its statement that it "took very seriously the recommendations" made in the 2010 audit, but that it did not have the time or the resources to implement all of the policies yet.

"We fully understand the importance of this process and remain committed to completing it," the statement said.

As for the dispute over the characterization of the association's 2012 operating results, NYRA took exception to explicit references in DiNapoli's statement that NYRA would use subsidies from a recently opened casino at Aqueduct to "mask ongoing financial problems and inefficiencies." DiNapoli's statement also said that that NYRA "stands to squander significant revenue" from the casino and that "only by gaining new [slot-machine] revenues will NYRA be able to show an overall profit this year."

NYRA, a non-profit that has lost tens of millions of dollars over the past several years, said in its statement that its projection for net income from racing operations did not include any of the subsidies it expected to receive from the casino. It also said that use of the subsidies is restricted by state law.