One of the New York Racing Association’s former worst enemies suddenly became an ally when N.Y. State Comptroller Alan Hevesi sent a blistering letter, dated last Friday, to Nancy Palumbo, director of the state Lottery Division, urging in no uncertain terms that the Lottery finally approve NYRA’s management agreement with MGM Mirage to begin construction of the long-delayed video-lottery-terminal (VLT) casino at Aqueduct.
Noting that the delay of the approval of the revised agreement between NYRA and MGM, sent to the Lottery in June, has now reached four months, Hevesi said the lack of movement “raises significant fiscal concerns for the State” and urged Palumbo to “make a decision about the proposal or offer guidance for any needed revisions.” He went on to say that “the state’s 2006-07 Financial Plan includes an assumption that the VLT facility at Aqueduct would open in October 2007” and “projects revenue of $600 million per year.”
Several years ago, when NYRA was rocked by the scandal involving corrupt mutuel clerks that led to the association being indicted, pleading guilty and operating under the supervision of a federal monitor as part of a deferred prosecution agreement, Hevesi was one of NYRA’s most vocal critics, labeling it “the poster child for mismanagement and corruption.” Since then, however, he has acknowledged that NYRA has reformed its operations.
In the letter, Hevesi also stated that NYRA’s “financial health in the short term and its ability to repay loans already made to the State is reliant upon the promise of revenues from … a VLT facility at Aqueduct. It is not in the best interests of the state’s taxpayers or the future of thoroughbred racing in New York, or the State’s finances, to create the appearance that the State is deliberately forcing the current franchise to fail.”
Last December, NYRA was hours away from filing for bankruptcy when the state agreed to loan the association $30 million, to be paid back from future VLT earnings. So far, NYRA has received $11 million of that loan, but the state’s Racing Oversight Board has refused to free up the remaining $19 million because construction of the Aqueduct casino, lacking the Lottery’s approval, has stalled. Last week, NYRA officials said that if they don’t receive the remainder of the loan, NYRA will be soon be insolvent and once again forced to file for bankruptcy, possibly within 30 days.
NYRA’s franchise to run racing at Aqueduct, Belmont Park and Saratoga expires at the end of 2007. NYRA is seeking to have that franchise extended, but faces competition from three other bidders.
