The miracle of the Belmont Stakes last weekend was not Drosselmeyer’s win in foxtrot time, but that the race was even staged.
In the months leading up to it, the New York Racing Association was on life support — battered, broke and bankrupt, threatening to lay off 1,300 employees and talking of shutting the game down.
It’s chief creditor, the City Off-Track Betting Corp., which owes it $17 million, was in even worse shape, a fiscal wreck, with its chairman shown the exit.
Talk about tapped out horseplayers. Brother, can you spare a dime!
Surveying this bleak landscape, you may conclude the racing and gambling business in New York is a basket case, a dead-beat sponging off taxpayers.
In fact, it is awash in money.
The big question is: Who’s getting it? We’ll tell you, thanks to John Van Lindt’s government task force, set up last year to examine the future of off-track betting in New York State. Its report is an exhaustive study of the structure and financial underpinning of the racing business in this state. The money trail is mesmerizing.
New York has eight racetracks with video lottery terminals (slot machines), seven harness and one thoroughbred (Finger Lakes).
Between them, in 2008, their machines took in $11.4 billion and paid out $10.5 billion. Net profit: $947 million. Of that sum, $446 million went to education, $77 million to marketing, $94 million to lottery administration, $12 million for capital improvements at the tracks, $54 million for purses, $262 million to the tracks.
Imagine, nearly half a billion dollars, or half of all the profits, was sucked out by the state for “education.” You can’t track that money. It went into the Education Fund in the Albany swamp, never to be seen again.
The tracks got $262 million, most of it going to the Empire City Casino and Yonkers Raceway, which handles a staggering $6 billion in slot bets a year. Tim Rooney and his boys up at Yonkers are in clover.
“With the video lotteries, these tracks are highly profitable,” Van Lindt said. What does the lottery have to do with racetrack slots? “The lottery is, in effect, the overall manager of these facilities because it provides the vendors and the machines and has all the machines tied into a central computer in Schenectady.”
NYRA’s three tracks — Aqueduct, Belmont and Saratoga — should be drowning in cash. NYRA got the go-ahead nine years ago to install slots at Aqueduct, but the project has been strangled in legal, financial and political scandals through three different governors.
The bidding process for the Aqueduct racino has reopened (for the fourth time) with six contenders, including Delaware North Companies, which owns the Buffalo raceway and Finger Lakes racinos, and Empire City, which operates Yonkers.
Van Lindt estimates the Aqueduct casino will spin off a minimum of $10 billion a year.
“Yonkers is doing $7 billion a year with a population base of 2.3 million, but Aqueduct will draw from a population of 7 million, so it should do $10 billion a year without blinking an eye,” Van Lindt said. “Last year, New Yorkers bet close to $13 billion through all these track machines, and that’s mind-boggling. When Aqueduct goes on line, that figure will jump to more than $20 billion.
“The companies bidding on Aqueduct are extremely knowledgeable about the gambling industry, they know what the profit margins are, and they’re going to make a fortune.”
They sure are. And billions more will flow into the education sink. Let’s hope racing will get its share of the prosperity.