New York Horseman Advocate Legalized Online Wagering

Leading horsemen in New York testified at a joint legislative hearing on Tuesday in favor of amending state laws to allow online race wagering.

The hearing, conducted by New York Senator Bill Larkin, R-Hudson, and Assemblyman J. Gary Pretlow, D-Mt. Vernon, focused on the future of the New York Racing Association and possible new models for regulating the industry.

The NYRA operates the Saratoga, Belmont and Aqueduct race tracks under a franchise agreement with the state that expires in December 2007, but the association has asked that a committee be formed to decide the future of the tracks if the franchise isn't renewed by December of this year

New York Governor George Pataki plans to create a nine-member ad-hoc committee to solicit requests for proposals for a 10-year franchise to operate the three tracks beginning January 1, 2008 if the franchise isn't extended to the NYRA. In effect, the franchise to operate racing at the three tracks would be open to public bidding for the first time since the NYRA was created in 1955.

The NYRA's chances for a franchise extension seem to hinge on a decision (expected in June) by a court-approved federal monitor on whether the association has successfully completed an 18-month deferred prosecution agreement for its indictment as a corporation in December 2003 for its involvement in the conviction of pari-mutuel tellers on counts of money laundering and tax evasion. The indictment will be dismissed if the monitor rules that the association has complied.

The joint committee also heard testimony on how the state could do better to compete in the changing world of pari-mutuel betting. Racing law expert Bennett Liebman called sections of New York's existing racing and wagering law "incomprehensible."

The association lost $20 million in 2003, $21.7 million in 2002 and $12 million in 2001, according to financial records, and Liebman, a former member of the New York State Racing and Wagering Board and now the coordinator of the Albany Law School Racing and Wagering Program, said the state needs to seriously reevaluate its approach to the horseracing industry.

"NYRA's financial framework has never worked," Liebman said. "We have sunset laws that have never seen the sunset. Nobody knows what takeout should be, what decisions should be made by the Legislature and what decisions should be made by the tracks, horsemen, and the OTBs themselves. This is a unique opportunity to change the racing law."

Horse owner Jack Knowlton said changes could include the introduction of interactive wagering.

Knowlton, who owned 2003 Kentucky Derby and Preakness winner Funny Cide, testified before the committee on behalf of the not-for-profit group, Friends of New York Racing Inc., which is seeking to create a business model for horseracing in New York. He said that because online wagering is already being conducted, the state should regulate the industry instead of missing out on possible revenues from operators.

"It's real, it exists and we shouldn't just be allowing entities that are not our own to have the whole marketplace," Knowlton said. "It's a real convenience, particularly when you're talking about attracting younger people to the game. If we want to bring New York racing into the 21st century, this is a part of that."

Off-Track Betting executives testified that they are struggling to compete with out-of-state operators--particularly those in New Jersey, where online betting is legal.

The New York legislature passed a law years ago that allows telephone betting on races but not Internet wagering. Joe Lynch, chief of racing operations for the New York Racing and Wagering Board, said the law doesn't cover Internet betting because the activity didn't exist when it was passed.

Bills introduced in New York last year would have amended wagering codes to allow Internet betting on horses, but they never made it out of committee.

Tim Smith, president of Friends of New York Racing and former commissioner of the National Thoroughbred Racing Association, said his group supports the regulation of online wagering in New York, especially with operations like Youbet.com and TVG already taking bets on races at New York tracks.

Smith said that according to NTRA numbers, about $15 billion is bet each year nationally on horse racing, with account wagering representing 20 percent of that.