PRESS RELEASE FROM THE OFFICE OF THE NEW YORK STATE COMPTROLLER ALAN G. HEVESI

"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." Alan Hevesi, New York State Comptroller."

Reform at NYRA Means Racing Franchise Should be Worth Much More to State When it is Put Out to Bid

NYRA Now Leader in Providing Fair Betting to Honest Bettors Thanks to Controls on "Milkshaking" and Doping Horses and Ban on Off-Shore "Rebate Shops"

Comptroller Calls on State Regulatory Authorities and Officials to Ensure Fair Competition for Future of Racing Franchise

"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 today, 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 today 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. NYRA is now an industry leade
  • 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 December 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:

1. 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.
2. Continue the operation of the pre-race monitoring barns at each of the tracks to prevent horse-doping cheating.
3. 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.
4. Continue to maintain a fully funded segregated trust account for the Horsemen's funds.
5. Maintain a comprehensive Code of Ethics that applies to all track employees, officers and board members, and that is fully enforced.
6. 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.
7. Develop and maintain serious enforcement measures to prevent money laundering, tax evasion and other criminal activities.
8. 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."

The Comptroller's Office will continue to conduct regular audits of NYRA, as it has for many years.

Click here for a copy of the report.

Read the Press Release from the United States Attorney's Office for the Eastern District of New York: http://www.usdoj.gov/usao/nye/pr/2005sep13.htm

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