The Stats on New York Horse Racing in 2016

By Bennett Liebman
Government Lawyer in Residence
Albany Law School

The New York State Gaming Commission has recently issued its annual report for 2016.[1] Unlike all prior years since pari-mutuel racing started in New York in 1940—and this includes the annual reports of the former State Racing and Wagering Board, the State Racing Commission, and the State Harness Racing Commission—this annual report simply consists of a series of charts showing in a summary manner the handle of the State’s harness tracks, thoroughbred tracks, and OTBs. Data on the financial conditions of the OTBs is included. There is no text and no attempt to explain any developments in horse racing in New York. There is relatively little historical data. The charts provide far less data than the prior reports of the Commission or its predecessors.

The limited data, however, cannot disguise the continuing slumping nature of New York State horse racing. Handle fell by 5.9% to a total of $1.388 billion. In 2015, handle had fallen by a similar 6.1%.[2]  Total handle at the racetracks fell by 6.2%. The live handle at every racetrack declined. (Live handle is the amount wagered on the actual live races conducted at that track.)

Accounting for inflation, 2016 represents the lowest handle in the history of pari-mutuels in New York State. The year 1940 was the first year of pari-mutuel racing in New York. There was almost no harness racing, and there was a total of 230 programs run in the state. There was no racing at all for approximately five months. In 2016, there were 1,294 racing programs run in the state.[3] Yet, handle in New York was (29.3%)[4] lower than it was in 1940. Horse racing in New York has become the equivalent of the 1962 Mets in futility.

To provide other bases for comparisons, 1966 New York racing handle was (656%) higher than 2016, 1976 New York racing handle was (725%) higher than 2016, 1986 New York racing handle was (432%) higher than 2016, and 1996 New York racing handle was (193%) higher than 2016. To summarize, New York racing handle is now (13.1%) of what it was fifty years ago. Live harness racing handle is now (.7%) of what it was in 1976 and (1.9%) of what it was in 1986.[5] Live thoroughbred racing handle is now (8.5%) of what it was in 1976 and (14.7%) of what it was in 1986.

Since we in New York have become largely inured to these horrid numbers, it might be preferable to first accentuate the positives about 2016, spotlight the more interesting facts about the 2016 numbers, and conclude by highlighting, rather than eliminating, the negatives.

Five Positives about 2016.

  1. Capital was the only OTB region to show an operating profit in the absence of operating its own video lottery facilities. Capital OTB handle decreased by less than .9%.
  2. Saratoga Harness increased its total facility handle by 3.4%. Its handle on simulcast imports increased by 4.5%.
  3. Tioga Downs increased its total facility handle by 2.1%.
  4. Monticello Raceway, which has negligible on-track handle, had $72 million bet on its races from outside New York State. It is a decrease from 2015, but is still a substantial number.
  5. Saratoga Race Course, while down slightly in handle, still had a daily total facility handle that averaged $3.87 million.[7] Unfortunately the $3.87 million figure is (52.6%) of the daily average for Saratoga for 1976 and (40.6%) of the daily average figure for Saratoga in 1986.[8]

Five Interesting Facts about 2016.

  1. NYRA, which by law is not permitted to offer wagering on out-of-state harness racing, has become the major betting site in New York for in-state harness racing. NYRA now has a higher handle on New York State harness races than any of the tracks and OTBs. NYRA’s harness handle on New York races is also greater than the live handle at any of the harness tracks.
  2. Capital OTB wagers more on NYRA races than any other OTB, despite the proximity to Aqueduct and Belmont of both Nassau OTB and Suffolk OTB. In total, 4% of OTB handle is wagered on out-of-state races.
  3. Nearly 60% of all New York handle is wagered at the racetracks. In 2011—the first full year without New York City OTB—53.2% of New York handle was wagered at OTBs.
  4. Saratoga Race Course, with only 40 days of racing (17.5% of NYRA’s racing dates), now accounts for 44% of NYRA’s live handle.
  5. Worldwide handle on New York racing declined slightly to $2.632 billion. Of that total, 83.4% was wagered on NYRA racing.

The Negatives.

  1. Even with a VLT facility at Batavia Downs, Western OTB lost nearly $900,000.
  2. Catskill OTB, historically the most profitable and thrifty of the regional OTBs, lost nearly $1.1 million in 2016.
  3. What would have been a huge loss at Nassau OTB was more than cushioned by Nassau OTB receiving revenues from VLTs at Aqueduct pursuant to 2016 State budget legislation.[9] Nassau OTB had net revenues of $5.5 million in 2016. Without the VLT income, it appears that Nassau OTB would have a loss of approximately $7 million.
  4. Total facility handle at Buffalo Raceway decreased by 18.4% in 2016.
  5. Total facility handle at Batavia Downs decreased by 10.7% in 2016.
  6. Total facility handle at Monticello Raceway decreased by 12.7% in 2016.
  7. Assuming the statistics are accurate, average attendance at Monticello was 136. Average live handle per race card at Monticello was $8,306. The 2016 per program handle is (.56%) of the per program handle at Monticello in 1976.
  8. Average attendance per race card at Aqueduct was 2,638.[10] There does not appear to be much synergy from the VLT facility co-located at Aqueduct which produced $857 million in net win in the 2016 calendar year.
  9. Once you subtract the 60,114 people in attendance at the Belmont Stakes in 2016, the average attendance at Belmont Park was 3,532. In reality, the average attendance was significantly less than that since NYRA offers a very low-cost season pass to Belmont at less than one dollar per race day.[11] Since season passholders are counted in the Belmont attendance figure whether or not they are in attendance, it is likely that the average attendance at Belmont Park was below the 3,000 level.
  10. NYRA underperformed in its first full year as a national simulcast hub taking account wagers from across the country. For the twelve months ending on July 1, 2017, “NYRA Bets” had total handle of $20.5 million.[12] That is a minimal fraction of the numbers put up by the major national wagering firms such as Churchill Downs, TVG and Xpress Bet.[13] It also leaves NYRA trailing such minor players in the account wagering field as Am West, Premier Turf Club and the Greyhound Network. NYRA’s hub handle in the second quarter of 2017 improved somewhat, but it has large expenses from producing a national TV show for Fox.[14] It will at best take a long time for NYRA’s national account wagering system to become financially viable.

We will not mess with “Mr. In-Between” in this analysis. There is not much positive to latch onto. The fact is that New York horse racing is a fraction of what it once was. Video lottery revenues are keeping racing alive, but the heart of the sport of horse racing is barely beating.

 

[1] https://gaming.ny.gov/about/index.php?ID=3 [last viewed August 29, 2017].

[2] See Bennett Liebman, “No Dinero from American Pharoah: New York Horse Racing in 2015,” https://saratogainstitute.wordpress.com/2016/07/25/no-dinero-from-american-pharoah-new-york-horse-racing-in-2015/ [last viewed August 29, 2017].

[3] Additionally, in 1940 there were no OTBs, no Sunday racing, no account wagering, only win, place and show wagering, no turf wagering, no ability to wager on out-of-state racing, and no broadcasting of horse racing. Also, the number of races per racing program was much smaller in 1940. The predecessors to the New York Racing Association ran only seven races per racing program. It is likely that in 2016, there were eight times more races in New York State than there were in 1940.

[4] Parentheses will be used for statistics that use real-inflation adjusted numerical comparisons. The website of the Bureau of Labor Statistics is used to calculate the adjusted consumer price index. Mid-year figures (for the month of June) are also used to calculate the annual changes in the consumer price index. https://www.bls.gov/data/inflation_calculator.htm.

[5] By 1986, harness racing was already experiencing major downturns. From 1975–1986, attendance at harness tracks dropped from 28,089,984 to 18,397,142. See Andrew Beyer, “Harness Racing’s Bust in Boom Times,” Washington Post, October 18, 1987. See also, Howard Cosell, “Harness Racing Is Losing Its Charm, Style and Crowds,” Minneapolis Star and Tribune, June 19, 1986; Larry Bortstein, “Hitting on Hard Times: Status of Harness Racing in Steady Decline in Recent Years,” Orange County Register, December 26, 1986.

[6] Johnny Mercer, “Ac-Cent-Tchu-Ate the Positive,” Capitol Records, 1944.

[7] The one issue here is that NYRA’s account wagering is considered a part of its on-track handle. Thus, the actual total facility handle could be somewhat lower than the $3.87 million figure.

[8] Saratoga raced only 24 programs in 1976 and 1986. There was no inter-track wagering at other NYRA facilities on Saratoga racing in 1976, and the 1986 figures include the handle on the simulcast sent from Saratoga to Aqueduct. The 2016 figures, besides including account wagering numbers, also include amounts wagered on Saratoga racing at other NYRA facilities and amounts wagered at Saratoga on non-NYRA products.

[9] Ch. 60, L. 2016.

[10] In 1964, with 210 racing dates at Aqueduct, the average attendance was 31,237. See Joe Nichols, “Thoroughbred Racing,” New York Times, December 20, 1964.

[11] See https://www.nyra.com/belmont/tickets/season-passes# [last viewed August 29, 2017].

[12] See http://www.oregon.gov/Racing/Pages/hub_index.aspx [last viewed August 29, 2017].

[13] Churchill’s hub handle over that twelve-month period of time was $1.39 billion.

[14] “NYRA, FOX Sports Extend TV Deal Three Years,” Blood-Horse, August 24, 2017. See https://www.bloodhorse.com/horse-racing/articles/223263/nyra-fox-sports-extend-tv-deal-three-years [last viewed August 29, 2017].

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The Experts Speak—Incorrectly—on Internet Gambling in New Jersey

By Bennett Liebman
Government Lawyer in Residence
Government Law Center
Albany Law School

In 2013, the New Jersey state legislature passed a bill authorizing Internet gambling in the state through casinos physically located in Atlantic City.[1] The legislature authorized Internet gambling only for intrastate transactions within New Jersey,[2] and the law required “that all hardware, software, and other equipment that is involved with Internet gaming will be located in casino facilities in Atlantic City. All that is needed by a customer is a “computing or similar device of general application and a communications connection through a common carriage or similar medium.”[3] The entire gambling “transaction will take place entirely on the servers and computer equipment located in the casino based in Atlantic City.”[4] By this action, the legislature authorized New Jersey residents—physically located in New Jersey—to bet on virtual slot machines and a host of table games such as baccarat, craps, blackjack, roulette, and poker.

The legislation has a long history in New Jersey. Legislation authorizing in-state casino wagering was introduced as early as 2001,[5] and continued to be offered into the 2010-2011 legislative session. Basically, no action was taken on Internet gambling bills until 2010. In 2010, seven senators introduced S. 490. The bill provided that “all games, including poker, which may be played at a casino, as well as variations or composites thereof, may be offered through Internet wagering.”[6] The servers for the games were required to be located in Atlantic City. The initial tax on the wagers was set at 20% of gross revenue,[7] and a portion of the revenue would be provided to the State’s ailing horse racing industry.[8] The Office of Legislative Services refused to issue a fiscal estimate on the bill, finding that much of the information on future wagering was unknown.[9]

Nonetheless, the bill pass passed the legislature easily in January 0f 2011. The Assembly passed it by a vote of 63-11, and the Senate concurred in a vote of 35-2.[10] The bill, however, was vetoed by Governor Christie on March 3, 2011.[11] The Governor, through an absolute veto,[12] agreed with the intentions of the bill’s authors. Christie said, however, he was worried the bill would expand gambling “in a manner that is contrary to the public’s sentiment with regard to these activities.”[13]
The New Jersey State Constitution requires casino gambling to be restricted to the territorial limits of Atlantic City. Christie rejected the argument that by placing servers in Atlantic City, the bill would satisfy constitutional requirements. However, nothing contained in the legislation would prohibit commercial establishments outside of Atlantic City, such as nightclubs, bars, restaurants, cafés and amusement parks, from offering Internet gambling opportunities in order to attract patrons or customers, potentially leading to the creation of commercial gambling locations outside of Atlantic City.[14] The Governor was concerned that simply locating the servers in Atlantic City would be a legal fiction that would not be authorized under the State Constitution. The Governor wrote, “Senate Bill No. 490 seeks to avoid this requirement by deeming all Internet wagers as being placed in Atlantic City, even if the person placing the bet is outside of the boundaries of the City. In my view, the creation of a legal fiction deeming all wagers to have ‘originated’ in Atlantic City cannot overcome the clear and unambiguous language of the State Constitution.”[15]

The governor was also concerned that moneys from this expansion were to go to the horse-racing industry, and it was his contention that the horse-racing industry should no longer receive subsidies from the State.[16]

In the next legislative session, the legislature went about trying to craft an Internet gambling bill that would meet the governor’s requirements. The legislature was also aided by an opinion issued by the United States Department of Justice that the federal Wire Act

The legislation proposed in 2012[20] was largely similar to the legislation that was previously vetoed. However, the bill made no allocations to the horse-racing industry, and the tax rate was increased to 20% of gross revenues. The bill passed the Assembly by a vote of 48-25 and the Senate by a vote of 33-3. It was sent to the governor for his approval in December of 2012. The Office of Legislative Services would not estimate the increased State revenue that would come from the bill.[21]

This time, Governor Christie did not absolutely veto the bill. Instead, on February 7, 2011, he issued a conditional veto.[22] The conditional-veto power allows a governor to “recommend that an amendment or amendments specified by him be made in the bill, and in such case the Legislature may amend and reenact the bill.”[23] In this instance, Governor Christie submitted a number o recommended amendments, including additional support of problem gambling treatment programs, new ethics provisions, and a ten-year sunset on the law. He basically supported the bill, writing, “I have concluded that now is the time for our State to move forward, again leading the way for the nation, by becoming one of the first States to permit Internet gaming. I authorize this step towards modernizing Atlantic City’s entertainment attractions cautiously, with carefully constructed limitations that will ensure the highest integrity and the most robust oversight.”[24] The legislature swiftly agreed to the governor’s proposed changes. On February 26, 2013, the Assembly passed the bill by a vote of 69-5, and the Senate voted 36-1 in support of the bill. Internet gaming would come to New Jersey with the fiscal year commencing on July 1, 2013.[25]

The Data on New Jersey Internet Gambling

Given the logistical requirements of creating a regulated intrastate Internet gambling system for New Jersey, it took about nine months to put the system online. Internet gambling began in New Jersey on Thursday, November 21, 2013.[26] Thus, the figures for the 2014 fiscal year (which ended on June 30, 2014) only encompass 60% of that year. For that fiscal year, the Internet gaming win was $69.4 million. This resulted in state tax revenue of $10.4 million. Of the $69.4 million win, $19.8 million, or 28.5% of all Internet gambling revenue, was derived from Internet poker. The remainder was wagered on other authorized Internet games. Internet poker accounted for $3 million in tax revenue. In the 42 days that Internet gambling was operational in 2013, poker accounted for 49% of the Internet gambling win in New Jersey.[28] Poker revenue decreased significantly over the next six months.

For the 2014 calendar year, Internet gambling win was $122.9 million with poker accounting for $29.1 million of the win (23.7%). Total state revenue was $18.4 million with $4.4 million coming from poker.

In the 2015 calendar year, Internet gambling win was $148.9 million with $23.8 million from poker (16%). Total state revenue was $22.3 million with $3.6 million from poker.

In 2016, Internet gambling win increased significantly by 32% to $196.7 million. Poker only accounted for $26.5 of the Internet win (13.5%). Total state revenue was $29.5 million in 2015 with $4 million from poker. Internet gambling win was 9.4% of the gambling win at land-based casinos in New Jersey.

Media accounts for 2017 seem to show that there will be another increase in Internet gambling in New Jersey for 2017, with Internet win reaching in excess of $250 million.[29] At that level, state revenues would reach $37.5 million.

The Expert Predictions

Despite the pickup in the performance of Internet gambling in the past few years in New Jersey (so that Internet gambling can now be viewed as a net positive), the fact is that it has barely approached the lowest estimates that were predicted for it at the time of the enactment. The expert predictions were almost incredibly far off the map, making one wonder how much expertise the experts ever possessed. One might have anticipated that elected officials would hyperbolize the revenue estimates (both for the casinos and for state taxation) on legislation they were hyping. While that was certainly the case for Governor Christie’s office,[30] the fact is that the entire world of private financial firms vastly overestimated the revenues of Internet gambling.  If this had been an over/under bet on Internet gambling win, everybody was over. If they were contestants on The Price Is Right, they would have all been laughed off the show.

To review how far off the predictions were, the key numbers to remember are $69.4 million in win from Internet gaming in fiscal year 2014, $122.9 million in gaming win for 2014, the first full calendar year of Internet gaming, and $197.6 million in win for calendar year 2016. State tax revenues were $10.4 million in fiscal year 2014, $18.4 million for calendar year 2014, and $29.5 million for calendar year 2016. It is difficult to find any job-creation numbers for New Jersey as a result of Internet gambling.

The hyping started with the bill[31] that was vetoed by Governor Christie in the 2010-2011 legislative session. The one group estimating revenue for that bill was Econsult Solutions, a research firm in Philadelphia. Econsult Solutions estimated a gaming win of $210 to $250 million in the first year of operation.[32] Per State Senator Raymond Lesniak, perhaps the most vocal supporter of increased wagering opportunities in the New Jersey legislature, Econsult’s analysis found that “online gaming could produce between $210-$250 million in gross profit for casinos each year, resulting in $47 to $55 million in NJ tax revenue, and creating between 1,500 to 1,900 new jobs.”[33] Econsult Solutions estimated that at a 20% tax rate, New Jersey tax revenues would increase by $46 million to $55 million in the short run.[34]

For the legislation that was actually enacted in 2012, there were the following forecasts.

  1. Wells Fargo estimated win at $850 million in the firsbt year picking up to $1.5 billion in five years.[35] This number was also echoed by Atlantic City’s largest casino union.[36]
  2. Prominent lobbyist William Passerell III estimated 2,000 jobs in the first year alone.[37]
  3. H2 Gambling Capital estimated first-year win of $370 million and $526 million by 2018. H2 also forecasted that 17 states will have approved Internet gambling by 2017.[38]
  4. Moody’s estimated gambling win of $250 million to $500 million in the first year.[39]
  5. Gambling Compliance, an industry publication which reviews the overall gambling industry, wrote, “Internetgambling in New Jersey will bring in nearly $262 million in its first year and nearly $463 million after four years.” The numbers “could go as high as $575 million after four years.”[40]
  6. Fitch Ratings forecast between $200 million and $300 million in the first year.[41]
  7. Deutsche Bank estimated win in the first year at $250 million.[42]
  8. RBC Capital Markets estimated a $450 million to $600 million market for Atlantic City.[43]
  9. Spectrum Gaming claimed $400 million in annual online win in New Jersey with online gaming becoming an $8.5 billion business in the United States within five years.[44]
  10. Gambling Data predicted $262 million in win in the first year based on an Italian market analysis.[45]
  11. Maquarie Capital predicted a first-year win of $260 million to $400 million.[46]
  12. The Innovation Group in 2011 predicted that Internet gambling would provide $500 million to $750 million in winnings after full ramp-up.[47]
  13. Eilers Research predicted that the New Jersey market would reach $226 million, within two to three years of its start.[48] Eilers predicted that about one third of the revenues would be from poker.[49]
  14. Goldman Sachs, at the time of the passage of the New Jersey legislation, suggested a $200 million win.[50] While this turned out to be the most realistic assessment (even for the 2014 calendar year), nonetheless, in 2009, Goldman Sachs had issued a report finding that the United States Internet gambling market was potentially $12 billion per year.[51] Extrapolating from the 2009 report, the New Jersey Office of Legislative Services suggested that Goldman Sachs’ estimate for New Jersey’s win from online gambling would be $600 million.[52] The Goldman Sachs report also believed that half of the online gambling market would be for poker.[53]
  15. The Chris Christie administration. The Christie administration, even faced with the unlikely prospect that online gaming would start at commencement of the 2014 fiscal year, took the position that for fiscal year 2014, Internet gambling would raise $180 million for the state. [54] With a tax rate of 15%, that meant $1.2 billion in Internet gambling win.[55] The administration basically took the highest potential levels of the Wells Fargo analysis and applied it to the fiscal year.[56] Before the fiscal year began, with it being obvious that Internet gambling would not start at the beginning of the fiscal year, the Christie administration lowered the state revenue estimate to $160 million, which meant an Internet gambling win of $1.07 billion over a shortened fiscal year.[57] Instead of $180 million or $160 million, New Jersey ended the 2014 fiscal year with revenues of $10 million from casino gambling.
  16. The Office of Legislative Services. While the office initially declined to offer financial forecasts, it eventually suggested State revenues of $40 million for the 2014 fiscal year.[58] That would have involved $267 in Internet gambling win in the shortened 2014 fiscal year.
  17. State Senator Raymond Lesniak. Senator Lesniak suggested that Governor Christie’s $160 million State revenue number was off by half. His prediction of $80 million in State revenues showed a forecast of $534 million in Internet gambling win in the shortened 2014 fiscal year.[59]
  18. State Senator Jim Whelan. Senator Whelan, like Lesniak a major proponent of Internet gambling, suggested that State revenues for the 2014 fiscal year would be “well under $100 million given the time constraints.” Assuming that his numbers align with Senator Lesniak’s numbers, that also projects to $534 million in Internet gaming revenues win in the limited 2014 fiscal year.

While not a revenue forecast, one of the most incorrect predictions was issued by casino and real estate developer Skip Bronson. Bronson said in September of 2011, “‘I’ll guarantee, a la Joe Namath, that in less than five years a majority of U.S. states will offer online gaming… “You’ll see a domino effect once the first state moves forward.’”[60] After nearly six years, the total number of states with online gaming is three, Delaware, Nevada, and New Jersey.

What Went Wrong With the Predictions?

The short answer is that everything was wrong with the predictions. Everyone overestimated the total market. Everyone overestimated the size of the poker market. There seemed to be little concern paid to the technology and the time it took to develop an effective Internet gambling system.

The bigger question was why every “expert” was so far off. Political cynics can easily suggest that the analysts wanted to curry favor with elected officials who supported Internet gambling, or that they were trying to assist their current and future potential clients who might be casino firms or firms engaged in supplying casinos with machines and technology. It could also be that the firms really possessed zero expertise or experience in predicting an Internet gambling market for individual states. Rather than admitting their lack of expertise—much as the Office of Legislative Services did in 2010 and 2012—they responded by giving excessive estimates of the potential revenue. In all respects, they were totally wrong, and while the New Jersey Internet gambling market has improved significantly since 2014, the overhyping by the financial firms of the potential of Internet gambling may have hurt the chances of Internet gambling coming to states beyond New Jersey, Delaware, and Nevada.

 

[1] 2013 N.J. Ch. 27.

[2] C.5:12-95.17.g.

[3] C.5:12-97.17.k.

[4] C.5:12-95.17.j. The New Jersey State Constitution requires that gambling houses or casinos must be located within the boundaries of Atlantic City. N.J. Const., art. IV, § VII, para. 2.D.

[5] Assembly, Bill No. 3150 by Assemblymen Anthony Impreveduto and Neil Cohen (2000-2001 Legislative Session).

[6] Senate State Government, Wagering, Tourism & Historic Preservation Committee, Statement To Senate, No. 490, June 3, 2010.

[7] It was reduced to 8% by subsequent amendments.

[8] Senate Bill No. 490 (2010-2011 Legislative Session).

[9] Legislative Fiscal Estimate [Second Reprint], Senate, No. 490, 214th Legislature, Dated: November 24, 2010.

[10] In its first vote on the bill—before amendments were made in the Assembly—the Senate passed the bill with a vote of 29-5.

[11] “Governor Christie Vetoes Internet Gaming Bill as Inconsistent with the Goals of Revitalizing Atlantic City’s Tourism and Gaming Industries,” http://nj.gov/governor/news/news/552011/approved/20110303b.html.

[12] Senate Bill No. 490 (Third Reprint). See N.J. Const., art. B, § I, para. 14 (b).

[13] New Jersey Governor Vetoes Online Gaming Bill, Las Vegas Review Journal, March 2, 2011.

[14] Gubernatorial Veto of Senate Bill No. 490, March 3, 2011, http://nj.gov/governor/news/news/552011/pdf/S-490%20AV.PDF.

[15] Id.

[16] Id.

[17] 18 U.S.C. § 1084.

[18] Virginia A. Seitz, Assistant Attorney General, “Whether Proposals by Illinois and New York to Use the Internet and Out-of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act,” https://www.justice.gov/sites/default/files/olc/opinions/2011/09/31/state-lotteries-opinion.pdf, September 20, 2011.

[19] “DOJʼs Reversal on the Wire Act – What It Means for Internet Gaming,” National Law Review, January 3, 2012. https://www.natlawreview.com/article/doj-s-reversal-wire-act-what-it-means-internet-gaming.

[20] Assembly Bill No. 2578; Senate Bill No. 1565 (2012-2013 Legislative Session).

[21] Legislative Fiscal Estimate, Assembly Substitute for Assembly, No. 2578, December 28, 2012.

[22] Conditional Veto, Assembly Substitute for Assembly Bill No. 2578, http://www.njleg.state.nj.us/2012/Bills/A3000/2578_V1.HTM; see also Ryan Hutchins, “Gov. Christie Approves of Online Gambling with Caveats,” Newark Star Ledger, February 8, 2011.

[23] N.J. Const., art. V, § I, para. 14 (f).

[24] Conditional Veto, supra note 22. The governor did not mention his prior objection that Internet gambling would require an amendment to the State Constitution.

[25] 2013 N.J. Ch. 27, supra note 1.

[26] “Casinos Rolling Online Dice,” Asbury Park Press, November 22, 2013; Wayne Parry, “NJ Becoming 3rd State to Offer Internet Gambling,” Associated Press, November 21, 2013.

[27] All financial information is from the monthly Internet gross revenue reports issued by the New Jersey

[28] Many assumed that Internet poker would be the driving force behind Internet gambling in New Jersey due to the fact that there appeared to be unspent demand for the product. Internet poker with Americans playing poker through foreign operators had appeared to be an incredibly successful business whose operations had been largely halted by the Unlawful Internet Gambling Enforcement Act of 2006 and the 2011 prosecution and conviction of the main Internet sites that tried to circumvent the law by offering Internet poker. See United States v. Scheinberg, 10 Cr. 336 (LAK) (Apr. 14, 2011).

[29] Elaine S. Povich, “How Casinos, States Are Winning Big from Online Gambling,” Route 50, June 6, 2017.

[30] Governor Christie’s revenue estimates were so far off the mark that they gave cover to the legislature to have revenue estimates that were also excessive, but seemed modest in comparison to the Governor’s predictions.

[31] S. 490. See supra note 8.

[32] Hoa Nguyen, “Doubts Raised about Estimate for Internet Gambling Revenue in Atlantic City,” Press of Atlantic City, April 8, 2013; Raymond Lesniak, “Money Flowing out of N.J. Can Be Kept Here,” Courier Post, December 19, 2010.

[33] Raymond Lesniak, “Lesniak Set to Re-Introduce Online Gaming Bill,” States News Service, August 17, 2011; see also John Froonjian, Casino, Horse Racing Advocates Join to Support Sports Betting,” Press of Atlantic City, September 27, 2011; see also MaryAnn Spoto, “N.J. Scrambles for the Lead in Race for Online Gambling,” Times of Trenton, January 4, 2012.

[34] Legislative Fiscal Estimate, Assembly Substitute for Assembly, No. 2578, State of New Jersey, 215th Legislature, Dated: December 28, 2012.

[35] Heather Haddon, “New Jersey Starts Taking Bets Online,” Wall Street Journal, November 21, 2013; see also Chris Sieroty, “Internet Gambling Seen as Big Boost to NJ Casinos,” Associated Press, February 28, 2013.

[36] Hoa Nguyen, supra note 32; Donald Wittkowski, “Atlantic City Casino Union President Calls on Governor to Sign Internet Gambling Law,” Press of Atlantic City, January 31, 2013.

[37] Jennifer Bogdan and Donald Wittkowski, “Consultant to Help New Jersey Launch Online Gambling,” McClatchy-Tribune Business News, May 23, 2013.

[38] Id. See also Wayne Parry, “Casinos Brace for Impact of Internet Gambling,” Associated Press, Pittsburgh Post-Gazette, May 7, 2013. When the bill was first passed, H2 Capital estimated a win of $410 million for the first year growing to $590 million over a few years. Alexandra Berzon, “Internet Gambling Scores Its Biggest Win,” Wall Street Journal, February 27, 2013.

[39] Bob Jordan, “Online Gambling Marketing A Sure Thing,” Asbury Park Press, December 2, 2013.

[40] Wayne Parry, supra at note 38.

[41] Jennifer Bogdan, “Lawmakers: Online Gambling Won’t Make Expected Revenue,” McClatchy-Tribune Business News, December 6, 2013.

[42] “Atlantic City Casino Revenue to Increase with Arrival of Online Gambling,” Press of Atlantic City, March 4, 2013.

[43] Wayne Parry, “Wall Street: Online Bets Can Help AC Market Grow,” Associated Press, May 22, 2013.

[44] Donald Wittkowski, “Internet Gambling Set to Go Live on November 26 Following Five-Day Trial Period,” Press of Atlantic City, October 13, 2013. At an earlier point, Spectrum predicted a $250 to $300 million estimate for Internet gambling. See supra note 37.

[45] Hoa Nguyen, “New Jersey Treasurer Insists Internet Gambling Could Net $1.2 Billion,” Press of Atlantic City, April 20, 2013; see also John Brennan, “Studies See Far Less from Online Betting than State Predicts,” Bergen Record, April 23, 2013.

[46] Hoa Nguyen and Donald Wittkowski, “Christie Signs Internet Gambling Bill After Revisions by Legislature,” Press of Atlantic City, February 27, 2013.

[47] Bill Ordine, “N.J. Internet Gambling Bill Awaits Christie’s Signing,” Philadelphia Inquirer, February 10, 2011.

[48] John Brennan, Analyst Sees Less Gambling Tax than Christie,” Herald News, December 27, 2013.

[49] Id.

[50] Alexandra Berzon, “N.J. Gambles on Revenue in Online Bets,” Wall Street Journal, February 28, 2013.

[51] John Brennan, “Legislator Presses for Online Gaming,” Bergen Record, September 25, 2011.

[52] Legislative Fiscal Estimate, supra note 34.

[53] Id.

[54] See Hoa Nguyen, supra note 32. “Christie Bets Big on Web Gambling,” Atlantic City Press, March 3, 2013.

[55] John Brennan, “Online Gambling Could Start by Fall as Christie Gives OK,” Bergen Record, February 27, 2013; Kate Zernike, “Casinos Ailing, New Jersey Tries New Ways to Bet,” New York Times, February 28, 2013.

[56] See Brennan, supra note 45.

[57] Ryan Hutchins, “Every Casino in A.C. Plans to Offer Web Gambling, Newark Star Ledger, July 2, 2013.

[58] Bob Jordan, “Atlantic City Bets on Online Gambling,” Asbury Park Press, November 21, 2013.

[59] Id.

[60] John Brennan, Legislator Presses For Online Gaming,” Bergen Record, September 23, 2011.

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New Jersey Horse Racing by the Numbers

By Bennett Liebman
Government Lawyer in Residence
Government Law Center
Albany Law School

Too often in looking at the declining popularity of horse racing in the United States, we focus on the state of New York. New York, despite its difficulties, remains the largest market for horse racing in the country. It was the site of the most significant horse racing for the second half of the nineteenth century and the entire twentieth century. It was the first state with legalized off-track betting. It has arguably the most mature racing market. It is somewhat understandable why the handle declined in New York State over the past half century so that the New York handle for 1990 (the first year of pari-mutuel wagering), adjusted for inflation, was 20 percent higher than in 2015.[1] The New York handle for 2015 was, adjusted for inflation, the lowest in its history.

A more interesting view of the changes in horse racing handle might be seen in New York’s neighboring state of New Jersey. While New Jersey was an important horse-racing venue in the late nineteenth century, anti-gambling efforts during the Progressive Era ended horse racing in New Jersey. After 1893, horse racing stopped in New Jersey as the race track operators feared they would be prosecuted for running disorderly houses or operating a lottery or both.[2] To formally put an end to racing, the New Jersey Constitution was amended in 1897 to ban all forms of gambling. Racing was not allowed until the State Constitution was amended in 1939 to authorize pari-mutuel racing on horses.[4] Horse racing itself did not start up in New Jersey until Garden State Park, in Cherry Hill, New Jersey, opened for thoroughbred racing in 1942. Thus, there had been no horse racing in New Jersey for nearly 50 years.

Even after racing resumed in New Jersey, the tracks were not located in proximity to the New York metropolitan area. There were Garden State Park and Atlantic City Race Course in southern New Jersey and Monmouth Park and Freehold Raceway in central New Jersey. Racing did not start in the New Jersey portion of the metro New York area until the Meadowlands opened for racing in September of 1976. Even in 1976, there were only 86 racing days at the Meadowlands.

New Jersey did not even authorize Sunday racing until approved by the voters in 1990.[5] Additionally, New Jersey was late in the game in adopting both off-track betting and account wagering. Casinos were not authorized to allow wagering on horse races until 1992.[6] Full off-track betting and account wagering were not authorized in New Jersey until 2001,[7] more than thirty years after they were authorized in New York State. New Jersey was far less of a mature market than New York.

Current Condition of New Jersey Racing

The New Jersey Racing Commission’s 2016 annual report shows in significant detail the current condition of New Jersey racing.[8]

New Jersey is left with three operating tracks. Monmouth Park conducted 57 thoroughbred programs in 2016. Freehold Raceway conducted 110 harness programs. The  Meadowlands Racetrack conducted 90 harness programs and 12 thoroughbred programs. New Jersey conducted a total of 269 racing programs in 2016.[9]

This is certainly down significantly from the heydays of racing in New Jersey. There were 774 racing dates in 1986 and 686 in 1976. Nonetheless, before the advent of the New Jersey Sports and Exposition Authority in 1974,[10] New Jersey raced far fewer days. In 1966, there were 228 racing programs, and in 1956 there were 200 racing dates.

Total handle in New Jersey for 2016 was $674,157 million. Over 56 percent of this amount, or $379 million, was wagered away from the tracks, at OTB’s, through wagering accounts, or at a casino.[11] Of the amounts wagered off-track, $179 million was bet via account wagering, $165 million at the six OTB’s and $34 million at casinos. In all, $295 million was wagered at the tracks. Of the amount wagered at tracks, $45 million was wagered on track on the live racing product at these tracks. A total of $430 million was wagered worldwide on New Jersey racing in 2016.

New Jersey began exchange wagering in April of 2016. However, the exchange wagering handle has been, thus far, maintained as a trade secret by online gambling company Betfair which operated the exchange wagering system in New Jersey.

The Not-So-Bad News

In the world of racing economics where bad news seems to overwhelm the good news, the most encouraging numbers are from New Jersey’s account wagering system. Account wagering in New Jersey is limited to New Jersey residents, and it accounts for 26.6 percent of all New Jersey handle. Account wagering handle is up from $99 million in 2012 to $179 million in 2016, although account wagering handle has largely been at the same basic level since 2014. Mobile device handle, which barely existed in 2012, is now up to $52.6 million per year. New Jersey account wagering handle is considerably larger than the account wagering handle of the New York Racing Association, which since the summer of 2016 has marketed itself to the entire nation.[12]

The New Jersey OTB handle of $165.9 million is also not bad news. New Jersey only has six OTB locations, and the OTB handle has only dropped by 3 percent since 2013.[13] One might have anticipated that OTB handle would have fallen more significantly as account wagering increased. That drop appears to have occurred most noticeably at the Bayonne OTB branch, where handle has decreased by 29.2 percent since 2013. The other OTB branches that were in existence before 2013 have suffered losses, but their losses are less than that of the Bayonne branch. Vineland handle is down 13 percent, Woodbridge is down 20 percent, and Toms River is down 10 percent. Nonetheless, overall OTB wagering has held up in New Jersey over the past five years.

The Bad News

Despite the not-so-bad news at the account wagering and off-track sites, there is plenty of bad news from New Jersey racing.

First of all, the total New Jersey handle, when accounting for the cost of living, is dismal. New Jersey “real handle” [14] is 27.8 percent of the 1986 handle, 25.1 percent of the 1976 handle, 28.2 percent of the 1966 handle, and 27.9 percent of the 1956 handle.[15] You might reasonably anticipate declines in 1976 and 1986 when there were more live racing programs in New Jersey than in 2016, but there was considerably less racing in New Jersey in 1966 (228 programs) and 1956 (200 programs). Even though there was far more racing in New Jersey in 1986 than in 2016, the popularity of racing was starting to lag. The New Jersey Racing Commission in its 1986 report noted, “The New Jersey racing industry enters 1987 with the awareness that it must confront the problem of declining handle and attendance with a well-defined plan for the future.”[16] A 1982 Rutgers study on racing had noted that the average daily handle and the average daily attendance were beginning to decline in New Jersey in the late 1970s and early 1980s.[17]

The handle at the individual tracks is even more dismal. Handle at the tracks was $295 million in 2016 with $119 million at the Meadowlands. In 1986, where there was inter-track simulcasting between the New Jersey tracks, and there was no OTB or account wagering, the tracks handled $2.4 billion in inflation-adjusted handle. Wagering at track facilities in real terms has declined by 87.7 percent since 1986. At the  Meadowlands, the drop has been even deeper. Total facility handle at the Meadowlands has dropped by 90 percent in real terms since 1986.

It certainly would be anticipated that live handle would decrease at tracks in an era where people in New Jersey can bet at OTBs or thorough account wagering on most every racing product in the world. Nonetheless, it might also have been anticipated that the total handle on New Jersey racing might not suffer significantly, since people throughout much of the world have the opportunity to wager on New Jersey racing. The worldwide handle on New Jersey tracks should counterbalance the fact that New Jerseyans are betting less on the Jersey product. That counterbalance has not occurred. Total wagering on New Jersey racing shows the state at its weakest. A total of $430 million was wagered worldwide on New Jersey racing in 2016. The 2016 handle on New Jersey racing in real dollars is now 17.5 percent of the track handle in 1986, 16 percent of the handle in 1976, 18 percent of the handle in 1966, and 17.8 percent of the handle of 1956. In real terms, Jersey track handle is 13 percent lower than the real handle at Garden State in 1943 where there were 50 days of racing.[18]

New Jersey no longer measures attendance at its racetracks. The numbers apart from the major days of racing at Monmouth and the  Meadowlands must be miniscule in comparison to the past. Attendance was 6.74 million at the New Jersey tracks in 1981[19] and 6.4 million in 1986.[20] By now, it would be difficult to believe that the daily attendance for the entire state exceeds one million. Despite decent account wagering numbers and not-too-awful OTB numbers, the fact is that New Jersey racing is a shell of what it once was. The economic conditions of the New Jersey racing industry are not significantly different than the New York racing industry.

 

[1] Bennett Liebman, “No Dinero from American Pharoah: New York Horse Racing in 2015,” Saratoga Institute on Equine, Racing, and Gaming Law blog (July 25, 2016), https://saratogainstitute.wordpress.com/2016/07/25/no-dinero-from-american-pharoah-new-york-horse-racing-in-2015/.

[2] “No Racing in New Jersey,” N.Y. Times, April 1, 1894.

[3] N.J. Const., art. IV, § VII.2 (effective October 19, 1897). See generally Fundamental Laws and Constitutions of New Jersey 1664-1964 at 174 (Julian P. Boyd ed., Princeton, N.J., Van Nostrand, 1964).

[4] Id.

[5] “New Jersey Voters OK Sunday Racing,” Associated Press, L.A. Times, November 8, 1990.

[6] Ch. 19, L. 1992; N.J.S.A. 5:12-191. The same constitutional amendment that authorized Sunday racing also permitted casinos to wager on horse racing at New Jersey tracks.

[7] Ch. 199, L. 2001, N.J.S.A. 5:5-128.

[8] http://www.nj.gov/oag/racing/downloads/ar2016.pdf.

[9] The shuttered racetracks that conducted pari-mutuel racing in New Jersey were Garden State and Atlantic City.

[10] The New Jersey Sports and Exposition Authority was the state agency established to construct and operate the Meadowlands.

[11] In 2016, the Borgata Hotel and Casino was the only Atlantic City-based casino offering wagering on horse racing.

[12] See NYRA Board meeting of December 14, 2016, https://www.nyra.com/belmont/about/board-meetings#.

[13] Two OTB branches have opened since 2013 at Gloucester and Hillsborough.

[14] Real handle or inflation adjusted handle is determined in reference to the consumer price index using the consumer price index of the Bureau for Labor Statistics. https://www.bls.gov/data/inflation_calculator.htm.

[15] The sources of New Jersey handle information are derived from the annual reports of the New Jersey Racing Commission for the years 1986, 1976, 1966, and 1956.

[16] Forty-Seventh Annual Report of The New Jersey Racing Commission (1986).

[17] Rutgers Graduate School of Management Interfunctional Management Program, Analysis of the New Jersey Racing Industry 5 (1982).

[18] “Daily Camden Handle $720,377 for 50 Days,” New York Sun, September 13, 1943. For the year 2016, New Jersey handle was 11.7 percent higher in real terms than it was for the first New Jersey racing season in 1942 when the only racing was 55 days at Garden State.

[19]  Rutgers Graduate School, supra note 17 at 5.

[20] Forty-Seventh Annual Report of The New Jersey Racing Commission, supra note 16.

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 The Horse Racing / Oxford English Dictionary Exacta

By Bennett Liebman
Government Lawyer in Residence
Government Law Center
Albany Law School

Who benefits from the sport of horse racing? Many would say that there are significant economic benefits from horse racing. Horse racing and breeding can create thousands of jobs. Others might say that the main benefits of horse racing are entertainment and amusement. For much of the 20th century, horse racing was probably the leasing spectator sport in the nation.

Yet, a look at the Oxford English Dictionary (OED)[1] and other dictionaries should tell us that the chief beneficiary of horse racing has been the English language. The words, phrases, and idioms of horse racing have become the language of America.

It’s not just the language of denizens in Damon Runyon’s short stories. It’s not confined to the tracks and it’s not confined to gamblers. It’s everywhere.

Take a look at the words. There’s “workout” which was originally “a practice run for a racehorse.” There’s “dead heat,” meaning a tie, which was used for horse racing as early as 1796. There’s a “dark horse” “of whom or which nothing is generally known” which derives from a description of a horse race in a novel by Benjamin Disraeli in 1831. There’s “running mate” used in harness racing from the 1850’s. There’s “first string” which was originally “the best or fastest racehorse belonging to a specified owner or trainer.” The term “hands down,” meaning with little effort, derives from horse racing, “with reference to a jockey dropping the hands, and so relaxing his or her hold on the reins, when victory appears certain.” A “turf war” – signifying a fight over territory – started as a dispute involving horse racing or horse racing organizations.

There are numerous gambling terms derived from horse racing that have made their way into general usage. They are “morning line,” “pari-mutuel,” “parlay,” “trifecta,” “tipster,” “hot tip,” “daily double,” “quinella,” “triactor,” “across the board,” “exacta,” “out of the money,”[2] “form book,” and “off the board.”[3]

There are words included in descriptions of races that have filtered their way into the language. They include: “armchair ride,” “fast track,” “match race,” “homestretch,” “backstretch,” “wire-to-wire,” “at the wire,” “under the wire,” “no hoper,” “post time,”[4] “photo finish,” “post time,” “rank outsider,” “mudders,” “walkover,” “in the running,”[5] “also ran,” “run for one’s money,” and “Garrison finish.”[6]

Terms involving weight had their origin in horse racing from “heavyweight” to “featherweight” and “lightweight.”

There are descriptions of racing including “steeplechase,” “turfdom,” and “point-to-point.” There are terms that originated with people associated with horse racing like “clockers,” “hot walkers,” and “tipsters.”

Other terms of racing origin include “hippodrome” now used as a name for theaters which began life as a course for horse racing. The word “ascot” signifying a specific tie is derived from the clothing worn at the fashionable Ascot racing meet. The English Derby ended up the basis for the felt hat known as a “derby.” The phrase “all ages” meaning an event open to everyone, regardless of age, started off as a racing term referring to races that were open to all horses no matter their age.

Much of the most recent usage of horse racing terminology in America has come in the field of journalistic coverage of political elections. It has come at a time when the media collectively has been faulted for so-called horse race coverage of elections. The coverage has been criticized for focusing on tactics, strategy, gaffes, appearances and whoever is the leader in the polls. The horse race coverage avoids focus on important and actual substantive factual position on issues.

The horse racing coverage tends to thrive on the use of horse racing terminology. The late political commentator Tim Russert loved calling any trio of states or issues a trifecta. During the 2000 presidential election, he regularly advised that Al Gore needed to win the trifecta of Pennsylvania, Michigan and Florida.[7] Since Russert’s use of the trifecta, American political commentary including the 2016 presidential campaign has been awash in trifectas.

While Donald Trump may have started off as a dark horse, he soon emerged as a first string candidate. There were numerous Republican no hopers such as Lindsey Graham, George Pataki, Rick Santorum, Bobby Jindal, and Mike Huckabee. They all finished off the board and out of the money. While Hillary Clinton led wire to wire in the Democratic primaries, at one point political pundit Chris Matthews found that “Senator Bernie Sanders suddenly looks headed for daily double in American politics in Iowa and New Hampshire.”[8] By the spring, “the odds-on favorites won; the Trump-Clinton daily double finished double-digit lengths ahead of their rivals.”[9] The candidates chose their running mates and engaged essentially in a match race, where the candidate contended that their opponents were mudders, and Trump was the winner following a photo finish at the wire. Trump’s win along with the Republican majority in the House and Senate assured a Republican trifecta in the federal government.[10] There were similar trifectas in state governments as a growing number of states elected Republican governors and Republican majorities in both legislative houses.[11] The stock market even hit a superfecta after the Trump victory.[12]

Perhaps the start to ending horse race journalism would be to prevent journalists from using horse racing terms in describing elections.

Non-Racing Phrases

Oddly enough, there are some racing-style phrases that did not originate in racing. The sport of kings was not originally racing. It was hunting and war.

While the term “jockey” has been use for professional race riders since the 17th century, it started as a diminutive or familiar by-form of the name Jock or John.

The term “ringers,” signifying fraudulent substitutes, had its origin as a general term for counterfeits, well before being applied to horse racing. The Phrase Finder, however, suggests that the phrase “dead ringer” meaning an exact duplicate does stem from horse racing.[13] The   word “handicaps,” while in use as a phrase in horse racing since 1751, was first applied as a type of general game in the 17th century. A “railbird” was a tropical American cuckoo long before it was used to describe a racing enthusiast.

“At the gate,” meaning close at hand, was in use before organized horse racing began.

“Simulcasting” started off as a term to describe shows aired both on TV and radio. It later referred to shows aired on more than one TV network, before it had any application to horse racing.

A “teletheater” was not initially a location – other than the actual race track – that showed televised horse races. It was originally “a television series consisting of a number of self-contained dramas.”

“Long shot” initially referred to long barrel guns and the furthest distance which a shot fired from a weapon can reach.

The “triple crown” referred to the papal tiara, centuries before there was a potential triple crown in English or American racing.

Other terms we associate with racing that did not have a racing origin include “mount,” “pinhook,” “paddock,” “outrider,” “tout,” and “stayer.”

The use of the word “upset” for an unexpected or surprise winner (rather than for a revolt or tipping over) did not come as a result of the horse named Upset, who in 1919 became the only horse to defeat Man o’ War.[14] There are numerous examples of the  press using the word “upset” to signify a surprise victory in the 19th century.

Possible Racing Terms

Finally, there are familiar phrases that may have come from horse racing.

“Hat trick” – referring to a set of three successes in a match – probably had its origins in cricket.[15] It was, however, used in racing for a rider winning three races in a meet,[16] well before it was first utilized in ice hockey for a player scoring three goals in a game.

While the OED does not find that the word “charley horse” meaning stiffness or a cramp comes from horse racing, the Online Etymology Dictionary suggests that the term derives “probably from somebodyʼs long-forgotten lame racehorse.”[17]

The term “wild goose chase” may have its origins in racing. It was first used in 1602 as “a kind of horse-race or sport in which the second or any succeeding horse had to follow accurately the course of the leader (at a definite interval), like a flight of wild geese. The Online Etymology Dictionary finds that it was first used in Romeo and Juliet in the 1590’s “where it evidently is a figurative use of an earlier (but unrecorded) literal sense in reference to a kind of follow-the-leader steeplechase.”[18]

The use of the term “Big Apple” as a reference to New York City arguably stems from horse racing. The Online Etymology Dictionary claims that it derives from jazz musicians calling any city, especially a northern city, the “Big Apple.” Yet, it was used as early as 1921 “to refer to New York racing circuit, considered as the pre-eminent one.”  Word Origins states, “This name for New York City was originally horse-racing slang that made its way into the vernacular.”[19] The Phrase Finder writes, “Probably the strongest contender is that it was coined in the horse racing community in the southern USA.”[20]

The Online Etymology Dictionary finds that the term “give and take” as of 1769 was “originally in horse-racing, referring to races in which bigger horses were given more weight to carry, lighter ones less.”[21] The OED suggests, however, that the term was in use as early as the  16th century to denote exchanging repartee and blows.

The point is that were it not for horse racing, the English language would be far less rich and interesting. Hands down, from the perspective of the dictionary, horse racing’s linguistic contributions triumph over all other sports in a walkover.

 

[1] All references in this article are to the Oxford English Dictionary, Oxford University Press (2017). http://www.oed.com.i.ezproxy.nypl.org/.

[2] The OED now uses “out of the money” principally for the pricing of puts and calls.

[3] “Off the board” has the same general meaning as “out of the money,” referring to contestants that do not finish in the top three. It is not referred to in the OED but is in general usage.

[4] https://www.merriam-webster.com/dictionary/post%20time

[5] “10 Phrases That Come from Horse Racing,” May 1, 2014, http://blog.wordnik.com/10-phrases-that-come-from-horse-racing.

[6] The term is not referred to in the OED but can be found at https://www.merriam-webster.com/dictionary/Garrison%20finish. It refers to a come-from-behind victory and is named after the 19th century American jockey Snapper Garrison who was noted for his rallying finishes.

[7] Peter Marks, “The 2000 Elections: The Media; A Flawed Call Adds to High Drama,” New York Times, November 8, 2000.

[8] Chris Matthews, Hardball with Chris Matthews, for January 21, 2016, MSNBC.

[9] Joe Dowd, “A Political Circus, Come and Gone,” Long Island Business News, April 25, 2016.

[10] Steve Kornacki, Hardball with Chris Matthews, for December 29, 2016, MSNBC.

[11] Andrew Malcolm, “Hillary Clinton Wasn’t the Only Big Election Loser,” Chicago Tribune, November 16, 2016.

[12] Adam Shell, “Stocks Hit Superfecta Driven by Trump Win,” Milwaukee Journal Sentinel, November 22, 2016.

[13] http://www.phrases.org.uk/meanings/dead-ringer.html.

[14] “Sports Legend Revealed: Did the Term ‘Upsetʼ in Sports Derive from a Horse Named Upset Defeating Man oʼ War?” Los Angeles Times, May 10, 2011, http://latimesblogs.latimes.com/sports_blog/2011/05/sports-legend-revealed-did-the-term-upset-in-sports-derive-from-a-horse-named-upset-defeating-man-o-.html.

[15] Besides the OED, see http://www.wordorigins.org/index.php/site/hat_trick/.

[16] Per the OED, it was utilized in racing as of 1893.

[17] http://www.etymonline.com/index.php?term=charley+horse&allowed_in_frame=0. See also http://www.wordorigins.org/index.php/site/comments/charley_horse/ and “10 Phrases That Come from Horse Racing,” supra note 5.

[18] http://www.etymonline.com/index.php?allowed_in_frame=0&search=wild+goose+chase. See also http://www.phrases.org.uk/meanings/dead-ringer.html on the equine origins of the “wild goose chase.”

[19] http://www.wordorigins.org/index.php/site/big_apple/.

[20] http://www.phrases.org.uk/meanings/64200.html.

[21] http://www.etymonline.com/index.php?term=give-and-take&allowed_in_frame=0. See also “10 Phrases That Come from Horse Racing,” supra note 5.

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CONFESSIONS OF A RECOVERING RACING REGULATOR

Prepared Remarks for the Association of Racing Commissioners International Annual Convention, April 18, 2017

By Bennett Liebman
Government Lawyer in Residence
Government Law Center
Albany Law School

When Ed Martin asked me to speak about confessions of a recovering racing regulator, I was perplexed. What life lessons do I have? I was a member of the State Racing and Wagering Board in New York for nearly 12 years from 1988-2000. What wisdom can I possibly impart to a new generation of regulators? Did I have any lessons?

One of the most perplexing changes to me was in the agenda of the Association of Racing Commissioners International meeting. When I went to ARCI meetings in the 1990s, they were largely excuses to play golf or to go to the local track. I was the substantive part of the agenda, talking about rules and fouls and ethics. Because I’m old, I have a limited recollection of those conventions, but I do remember being on a dinner cruise to the Statue of Liberty one year and talking to Tom Lomangino who ran the Maryland Racing Commission laboratory. I think we concluded that the saying on the Statue of Liberty “Give me your tired, your poor, your huddled masses yearning to breathe free” was actually the poet Emma Lazarus’s subtle reference to Lasix.

Yet now Ed has a convention tackling truly important issues. The only filler in the convention is me. It’s like the traditional poker story often attributed to Warren Buffet. “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.” I’m the patsy. I’ve gone from the content guy to the comic relief of the ARCI meeting.

In fact, looking at my credentials, I’m probably the founding partner of the firm of former, former and former. Former member of the Racing and Wagering Board, former Acting Co-Chair of the Racing Board, former Deputy Secretary to the Governor for Gaming and Racing, former NYRA Board member, former Columnist, Daily Racing Form, Former Columnist, Hoof Beats.

Also, here is the record of New York racing since I joined on. In 1987, total handle was nearly $3.5 billion. For 2015, the last year for which we have stats, the handle was less than $1.5 billion. When you apply the cost-of-living changes, since I joined the Board, handle is down by nearly 80 percent. Since I joined the board, live harness racing handle – that’s the amount bet at harness tracks on their live product ‒ is down by 97.5 percent. I haven’t even helped the state. Revenue to the state from horse racing is down nearly 90 percent. If you’re looking for whom to blame for the state of New York racing, I could be the primary suspect. I’m approaching the guy who used to run a harness track in New York who said: “I should be in charge of the state’s problem gambling program because I’ve proven conclusively that nobody will bet in any facility that I run.” So you need to question my authority before you accept what I’m saying.

So before I can impart my racing life lessons, let me talk about where I came from.

I was a lawyer who had met Mario Cuomo when I was in law school. When he became Secretary of State in New York, I became an assistant. When he became lieutenant governor, I became his associate counsel and then counsel. I was a special deputy counsel when he became governor. I did much of the state’s ethics work. I helped research speeches. I can say with some certainty that I am the only person to have drafted speeches for both Mario Cuomo and Joe Neglia. I worked on all kinds of major projects. I thought I was a serious, thoughtful, respected attorney.

Of course, the minute I got appointed to the Racing and Wagering Board, I instantly became a hack.

I always get asked about Mario Cuomo’s relationship with racing. Cuomo seemed to have a rocky relationship with racing. It wasn’t that he hated it. He was puzzled by the fascination people had with it. He was baffled by people’s interest in it. And he had a decent amount of experience in it. He grew up in Jamaica, Queens, which had New York’s most successful track, Jamaica. He went to junior high school at a location less than two miles from both Aqueduct and Jamaica. His law partner and close friend Peter Dwyer was a diehard racing fan. Dwyer and his pal Freddy Flynn would even in the old days drive to Harrington Racetrack in Delaware, because Harrington was the only track in the Mid-Atlantic that was open between Christmas and New Year’s. Dwyer would come into the office and say “My ex-partner is the Secretary of State, and I’m the only lawyer in Brooklyn who doesn’t have a pass to the track.” Cuomo’s political career was largely launched by Jimmy Breslin who spent considerable time at the track. At the Department of State, we had a number of racetrack enthusiasts, besides myself. Our administrative director swore that he had a computer program that would beat the harness tracks, Cuomo’s top assistant ended up doing some horse owning and breeding, and our top government lawyer was in a fraternity with an assortment of future thoroughbred trainers. One of his early jobs was to run from Aqueduct to the street outside the track to convey race results to his frat brother’s father who was a local bookie. Oddly enough, our overall boss in the governor’s office – a non-racing type ‒ Mike Del Giudice, became the chair of NYRA. Maybe because Cuomo came from Queens, Governor Carey put him on a racing study panel, and he came away from it saying that the white-haired guy, future Hall of Famer Phil Johnson, was the one who knew anything, but Cuomo largely saw us as non-serious, biased supporters of racing, whose opinions we should downgrade.

The one moment I do remember is him coming into the office one day and saying that his wife, who ended up being a close friend of Mary Lou Whitney, was going to Belmont Park that day, and he was studying the entries. There was a horse named State running, who was actually a regally bred horse trained by Woody Stephens. Cuomo was the Secretary of State. State had five letters in it. It was in the fifth race running out of post five. Destiny. Kismet. He bet. And of course, the horse finished fifth.

Initially, I felt that I seemed well placed in 1988 to be on the Racing Board. My parents just before my birth lived three blocks from Aqueduct. They actually entered a contract to buy a house about 100 yards from Aqueduct. You could see Roosevelt Raceway from my high school. Much of my college career was spent at Saratoga Raceway. My suitemates actually sent a letter to Stan Bergstein asking for job advice. One of my suitemates became a harness driver and groom. I helped work on a harness tip sheet in law school. I had season tickets to Saratoga, before the era of Chris Kay, so they were affordable. My wife grew up on Meadowlands Street in the hamlet of Delmar, New York.  Many of you may remember the late Clyde Hirt from Sports Eye. My next-door neighbor dated Clyde Hirt’s daughter. What else was I going to do with my life? I had the right breeding to be a racing commissioner.

I was the first of the Slingerlands members of the Racing and Wagering Board. From my appointment until the termination of the Racing and Wagering Board, there was always one member from the hamlet of Slingerlands, which has a population of approximately 7,500. After being reaccomodated, I was followed by Cheryl Buley in 2000, and Cheryl was replaced by my neighbor Dan Hogan, who served until the board was legislated out of existence and replaced by the Gaming Commission in 2013. Thus, for nearly two and a half decades, there was a Racing and Wagering Board member from Slingerlands, New York. We had a Slingerlands seat.

I can remember buying a train ticket from Penn Station to Belmont Park in 1989. I asked for a receipt, and the clerk said, “What a life. Getting paid to go to the racetrack.”

But glorious it was not. It was not the part of Garrison Keillor’s Lake Wobegon where “all the women are strong, all the men are good looking, and all the children are above average.” We were the part of Lake Wobegon “that time forgot, and the decades cannot improve.”

And time had truly forgotten the Racing and Wagering Board. Our main office was in Manhattan near Little Italy and Chinatown. Today it’s an NYU dorm in the heart of what is now trendy NoLo. Back then, it was the dive of dives. It was the building where the heroin in The French Connection had been lost, and it must have permeated the building and its inhabitants. Everything in the building not tied down would be stolen. The subway rumbled right under the building, so you had to stop hearings every 10 minutes because the noise was deafening when the trains went by. We shared the building with the state’s Public Service Commission, which, unlike ours, was a substantive agency. Their Albany-based personnel were so scared of going to the building that they travelled in convoys on subways from Grand Central Station to get there. They would not send material to New York City except by UPS, since they assumed that any other mode of transport would get lost. We had no computers. We had, basically, IBM selectric typewriters and a few word processors that used floppy disks. We had no faxes.

I worked mainly in the Albany office, which was far nicer but is only remembered because a third of the small floor we occupied held a large craps table. We were the office with the craps table. In order to use a fax, I had to walk about 500 yards over to my friends at the governor’s office and ask them to fax any info.

I recall our big hearing at the Board in the second month was there. We had an all-day hearing to consider what to do about NYRA’s termination of its gap attendants. I got up the next morning and went to my local newspaper store, and I saw this huge, huge write up of the story by Clyde Hirt in Sports Eye. I had never met Clyde Hirt, but I knew he wasn’t at the meeting. Instead, our chair, Richie Corbisisero, had one of the lawyers in the office take long notes on the meeting and then gave them to Clyde who reran them as his entire story. I thought I had followed Alice down the rabbit hole.

It got worse. Everything about it was old. We had two secretaries in New York in their 80s, Ruthie and Helen. They had the lowest-level jobs in the State, and they were working to provide a living for their sons who were in their 50s and were still not self-supporting.

I got the impression that they threw anyone who had a restaurant background into the agency. Our chairman’s family ran a large restaurant and catering facility. Our director of bingo had run a catering hall and bowling alley in Staten Island. The family of one of our assistant counsels ran a large kosher deli and catering facility on Long Island. We had an investigator who ran a restaurant in New York’s northern suburbs. When the director of bingo retired, he was replaced by a guy who did not run a restaurant, but he had the same name as the people who ran Nathan’s hotdogs; so, obviously, they sent him to the Racing and Wagering Board.

Our meetings when I started at the Board could have been held in secret. I only recall one person showing up for a Board meeting in my first six years there. We had open meetings that nobody attended. We would hold the meeting, and Richie Corbisisero would call up Clyde Hirt and tell him the decisions. We could have met in the backroom on a takeout Chinese restaurant and nobody would have known. We had a press officer who wasn’t allowed to talk to the press. It got a little bit better when Mike Hoblock became chairman and we tried to take the Board show on the road, but, even then, we would hold meetings at racetracks, and the track leadership wouldn’t show up for the meeting.

A year before I got to the Board, there was an infamous incident where Mario Cuomo had called up the office wondering about the agency’s recommendation on a bill to reduce the taxes paid by harness tracks. The Board really didn’t have a position, but other agencies had suggested that the bill would be signed and the Board should recommend approval.

Cuomo phoned asking for an explanation of the approval recommendation. He went through the whole agency as either people weren’t in the office or nobody in the office could give him any explanation of the agency’s position. Just a typical day at the Racing and Wagering Board.

And we got worse. During the early- and mid-1990s recession, we started to shed staff. By 1996, we had nobody around. We shed all our OTB people. We shed our branch offices. We had one racing investigator on central staff. We had one racing administrator on staff in Jim Gallagher, and we had 2.5 attorneys. We had no hearing officers; so I held all the hearings. We could hardly do drug cases because we had no personnel. We had the Flanders case pending for years.

We were saved from being laughingstocks by the arrival of Ed Martin and our chairman, Mike Hoblock, at our agency in 1997, and we began to have resources to actually do our work. We were better. Much better. We had an OTB staff. We did investigations. We did hearings. We had faxes and the Internet.

Yet, it seems that we never grew up to be a real agency. We never climbed out of the rabbit hole. I remember Mike Hoblock saying something that went like this. If the State Health Department tells a facility to jump, the facility says “How high?” When we say jump, everyone ignores us.

I once shared a meal with a former OTB official who simply said, you might put out a policy directive. We would ignore it. You did it again, and we would continue to ignore it. We figured you would lose interest and not come back a third time. The industry will always see racing commissioners the way Tom Meeker at Churchill Downs once characterized them as “gnomes” or those “little cloisters that meet in their own little states and make these grand and wise decisions.” I think I said in a speech fifteen years ago, that tracks thought racing commissions were two-thirds of the old Perry Mason objection. Commissioners were not necessarily incompetent but certainly immaterial and irrelevant.

So with that look back at my career as a racing bureaucrat, what actually have I learned?

If you’re a racing commissioner, you will always be considered part of the problem and not the solution. You will not stop decades of narrative. Racing commissions are always going to be viewed as clueless or out of touch.

It doesn’t matter that racing administrators here today, like Ed Martin, Mike Hopkins, Larry Eliason, Charley Gardiner, John Wayne, and Rob Williams from New York and other states, have had decades of experience in racing and probably more relevant experience than many people running tracks. It doesn’t matter that when racing was popular, nobody thought racing commissions were responsible for the sport’s popularity. But now in harder times, it’s the racing commissions who are to blame. That is the way it has almost been since the advent of the racing commission. For eighty years, the narrative has been set that racing commissioners are clueless. You are not going to change that. I used to think when I started as a racing commissioner, please don’t make us look like the NCAA. But the NCAA has clout. I don’t think we ever reached the NCAA level. Instead, racing commissioners are seen as a combination of W.C. Fields and Captain Hook’s assistant, Mr. Smee. Windbags and toadies. We’re like political versions of stewards. It is so ingrained in racing that you are not going to change the narrative.

If Abe Lincoln, George Washington, and Eleanor Roosevelt returned to earth as a racing commission, they would be considered political hacks serving as the three blind mice of racing.

Iron rule of politics: When an elected official says that they are a friend of racing, and this might not be true in Kentucky, the odds are 3-5 that they are not a friend of racing. Politicians hear “horse racing,” and they see dollar signs.  In some states, they see Jockey Club-types ponying up real dollars. In other states, they see it simply that if someone can afford to lose money to race a horse, they certainly have enough money to invest in political candidates. Election season brings out the friends of racing.

Sometimes, I think the wisest words on politics and racing were said by President Rutherford B. Hayes in 1879. Before the start of a race in Kentucky, Hayes said, “Ladies and Fellow Citizens, I am told that the race is ready to be run and by speaking I should only delay the enjoyment. With so good an excuse for saying nothing, I am sure you will be glad to know that I propose to let the race go on.”

Where is Rutherford B. Hayes when racing needs him?

Again, this statement might not be applicable in Kentucky, but budget people in other states do not like horse racing. They see it – pardon my Yiddish – but as schnorrers, beggars, or posers looking for larger pieces of a diminishing pie. They all see less and less money coming in to the states from racing and yet, at the same time, they see more and more people looking for the crumbs. In the six gubernatorial administrations I’ve seen in New York, most every counsel or program person assigned to racing quickly wanted out. Referring to the movie, horse racing is the Chinatown of the state budget and governmental world. It’s so fouled up that nobody can deal with it.

Because it’s so unimportant fiscally, it takes on another serious repercussion. It becomes the opposite of The Godfather. Racing politics isn’t business. It’s personal. Track representatives get drunk and badmouth politicians. It happens all the time, regardless of parties, and the pols don’t forget. In New York, Governor Eliot Spitzer saw Senate Republican leader Joe Bruno as an enemy of NYRA and supported NYRA as the enemy of his enemy. The Assembly Democrats in New York always saw that racing was important to some Republican leaders, so they would simply hold racing hostage until their other deals would be done.

Nobody takes the racing industry’s financial numbers seriously. The numbers are nice, but, seriously, nobody in government remotely believes them. They are far too used to racing CEO’s complaining annually that the legislature is killing them. You can put your financial impact statements into as many press releases as you want, but nobody believes that a sport where attendance, handle, and breeding are constantly decreasing can continue to be the support of so many thousands of jobs.

You ain’t going to change the face of racing. There’s a reason there is no racing commissioners wing of any racing hall of fame. Nobody’s walking around the racetrack thinking how good racing was when Ashley Trimble Cole or Herbert Bayard Swope chaired the racing commission. Nobody even remembers them. Nobody remembers a racing commissioner or a boxing commissioner. We, you and I, are yesterday’s news.

What should you be doing about it?

I did not think this way when I first joined the Racing Board but after simulcasting and international racing and nearly universal account wagering, there simply is no reason to oppose uniform rules. The thought process that now goes into uniform rules is exceedingly better than it was twenty years ago. It wasn’t always the case, but there now is one world of racing. What happens in New York does affect Kentucky, Florida, California, and even England. Our differences are minor and often pointless. Unless you have an incredibly damn good justifiable public policy reason, uniformity is best. It’s always been true about the rules of the race, but now it’s true of most every rule that racing commissioners promulgate. Racing commissioners do look like the three blind mice when they ignore the need for uniformity.

Respect the sport. Horse racing is really about the oldest sport that exists. It brings out so much to everyone. What sport do we have that has a lineage out of Winston Churchill? Winston Churchill legalized the tote in the UK when he was Chancellor of the Exchequer in the 1920s, and his maternal grandfather Leonard Jerome first brought pari-mutuels to America in the 1870s. Supreme Court justice Louis Brandeis, one of the people least likely to ever wager, wrote about thoroughbred horses, “I supposed them to be lank, thin and to the uneducated mind unbeautiful. Quite the contrary. They are the most beautiful living creatures I have ever seen.” Benjamin Disraeli coined the phrase “dark horse” to mean an outsider.

 Horse racing has even given the English language a richer vocabulary. Words and phrases like  “workout,” “dead heat,” “hands downs,” “all ages,” “turf war,” morning line,” “pari-mutuel,” “parlay,” “trifecta,” “tipster,” “hot tip,” “daily double,” “quinella,”  “across the board,” “exacta,” and “out of the money” all come from racing. Even the nickname “The Big Apple” for New York City is probably a racing term.

 When I was on the NYRA Board, I used to get passionate about our history of New York racing. How could the Futurity, which was the most important race in America for decades, be downgraded in status? How could the Ladies Handicap, the oldest stakes race in the country for fillies and mares, become ungraded? Part of what’s great about racing are its traditions. It’s why people weep when they hear “My Old Kentucky Home.”

 My parents and my family got drawn into racing when I became a fan in my early 20s. It brought out the absolute best in my family. They never had a bad day at the track. Our trips were planned around going to the track. My father – who probably would not have run after Joe DiMaggio –

would run after Andy Beyer, Harvey Pack, or Steve Crist. No sport brought us together as much as racing. No sport ever could. We need to respect the sport. It’s why racing should be the king of sports.

 Racing commissioners need to take the lead on safety. I was nominally, with Gordon Hare of the Oklahoma Racing Commission, the chair of the rules committee in the mid-1990s. We didn’t do much. Nobody except the Jockeys’ Guild even bothered to lobby us. Yet the Jockeys’ Guild asked us to take a position on safety vests. We supported them fairly early, and it actually made a difference. And you can make a difference. You can improve the lives of the people who work in the sport and the animals who are our principal athletes. It should be easy for commissioners to do the right thing here.

The other obvious right thing is charity. There are so many worthwhile charities associated with horse racing, horses, riders, and the backstretch communities. You need to set a good example here for everyone.

Ethics. This ought to be so easy. Obviously, act ethically. There’s a moral imperative here, but there’s a pragmatic one here as well.

This is racing. Everyone sees you at the track or at an OTB. They’re suspicious. Are they making a bet? What are they telling the stewards? What kind of inside info do they have? Will the stewards give the commissioner’s horses more slack because they want to keep their jobs? Are they getting free meals in the trustee’s room? Stay out of it. You are immediately suspect. You don’t need to have everyone looking at you like you’re taking money away from the bettors.

More pragmatically, it’s racing. People understand racing scams. They almost expect them. You’re far more likely to get caught than in most any other activity. I think I could go through the history of the Racing Commission in New York and point out the scandals. The odds are you’re going to get caught. So for your own self-interest, do the right thing.

Finally, and I have been saying this for as long as I became a commissioner, you work for the public, and the public are the fans of racing. Without fans – and most of them are gambling on the sport – you have nothing. They don’t have lobbyists. They don’t have clout. They pay for the sport through their betting dollars. No sport has a closer relationship to its fans. They are the true investors in racing. Never forget it. You need to stand up for their rights. They are what racing needs.

You may not be able to change the course of horse racing. You are certainly not going to change the narrative of the clueless racing commissioner, but you do have the power, if only in a humble and modest manner, to make things better for the people in racing. Stand up for these people, please, because racing is our greatest sport. Please make it better by respecting the sport and standing up for its fans and participants. You’ve been granted a great privilege here in serving as racing commissioners. Please pay it forward.

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The 2017 Gubernatorial Budget and the Future of the New York Racing Association

By Bennett Liebman
Government Lawyer in Residence
Government Law Center, Albany Law School

1. Introduction[1]

It has been four and a half years since the New York Racing Association (NYRA), which runs the three principal thoroughbred racetracks in New York State (Aqueduct, Belmont and Saratoga), effectively became a state agency (with 12 of its 17 members appointed by state officers) known as the New York racing association reorganization board (Reorganization Board).[2] As initially enacted, the Reorganization Board was scheduled to go out of existence after three years in the fall of 2015.[3] Budget legislation passed in 2015 increased the life of the Reorganization Board for another year,[4] and subsequent legislation passed in 2016 continued the Reorganization Board for another year.

In 2016, a variety of proposals were made which would have eliminated the Reorganization Board and re-established NYRA as a private body.[5] The Reorganization Board itself offered a general plan for private control.[6] Governor Andrew Cuomo offered a program bill which would have terminated the Reorganization Board,[7] and the Legislature passed a bill providing for a privatized NYRA.[8] In the absence of a consensus on what to do about the Reorganization Board and faced with the prospect that the Governor might veto the privatization legislation, the Legislature quickly reversed itself on the issue and passed a bill proposed by the Governor extending the life of the Reorganization Board for another year.[9] The initial legislative bill ending the Reorganization Board has been pocket vetoed by the Governor.[10]

2. The Governor’s 2017 Budget Proposal on NYRA

Governor Cuomo in his January 2017 budget proposed legislation that would end the Reorganization Board and return NYRA to its former private not-for-profit status.[11] The legislation terminating the Reorganization Board would take effect on April 1, 2017. Unlike the Governor’s 2016 program bill, the 2017 budget legislation was specifically endorsed by the management of NYRA,[12] and the prospect for the passage of some form of NYRA privatization legislation has to be considered very high.

The 2017 budget legislation is basically a variation of the Governor’s 2016 program bill[13] with a certain number of added breaks and protections granted to NYRA.

Among the proposals continued from the program bill, the budget legislation would create a 15-member board. Of the 15 members, eight of the members would be appointed by the current executive committee of the Reorganization Board. One would be the CEO of NYRA. Six would be selected by the Governor. Legislative leaders would pick one member each of the six gubernatorial leaders, leaving the Governor with four appointees. The six publically appointed members would all need to be New York State residents.

The Governor would select the initial chairman of the NYRA Board who would serve for a three-year term.[14] Subsequent chairmen would be appointed by the NYRA Board.

Initial NYRA Board members would have staggered terms. Subsequent NYRA Board members would serve full three-year terms. No board member could serve more than the lesser of three terms, or nine years.

The New York horsemen and the New York breeders would not appoint a voting member to the NYRA Board. Instead, each group would appoint one ex officio non-voting member to the NYRA Board. This is the same situation that exists under current law, where the horsemen and breeders are relegated to ex officio status.[15]

The Franchise Oversight Board[16] can require NYRA to hire an independent financial advisor, a corporate restructuring professional, and submit a corrective action plan (subject to the Franchise Oversight Board’s approval) when NYRA’s financial position has deviated materially from its financial plan.

Added to the program bill of 2016 were two proposals requested by NYRA. NYRA is given authorization at Belmont Park[17] to run races after sunset.[18] These races must end before 11:00 PM, and the times of the races have to be coordinated with Yonkers Racetrack.

NYRA is also given authorization, subject to approval by the horsemen and the breeders, to reduce its winter racing schedule. NYRA currently is compelled to run 95 days at Aqueduct between December and April.[19] Under this bill, NYRA, if it were to receive permission from the horsemen and breeders, could reduce the racing dates as it sees fit.

NYRA also obtained some benefits from certain removals from the 2015 program bill. NYRA will no longer be subject to the Freedom of Information Law and the Open Meetings Law. There will be no cap on revenues from VLTs to NYRA. There is no requirement that NYRA must spend $16 million per year on capital expenditures at Saratoga. Only one gubernatorial appointee is required on any NYRA committee established pursuant to statute.[20]

Finally, the Franchise Oversight Board under the prior 2016 program bill had broad powers to recommend to the State budget director to end NYRA’s receipt of racing support payments from VLTs at Aqueduct. Under the budget bill, the termination of support payments can only occur after “two consecutive years of material losses due to circumstances within the control of the franchised corporation, as determined by the franchise oversight board.” The Franchise Oversight Board “may by majority vote request the director of the budget to impound and escrow racing supporting payments.”

3. Summary of Provisions Affecting the Governor’s Powers

As compared to the 2016 program bill, the Governor’s office largely retains all its prior appointment powers. The Governor gets to appoint four of the 15 members of the Board and its first chairman. Should the Governor so choose, through his appointments to the current Oversight Board, he could effectively stack the existing executive committee to de facto grant himself further NYRA Board appointments. The Governor’s powers over the NYRA Board appointments are diminished only slightly.

The Franchise Oversight Board also retains much of the powers it was to be granted under the 2016 program bill.

Where the Governor seems to have limited his power vis-à-vis the 2016 program bill is in placing fewer limits on the racing support payments provided to NYRA from VLTs. The 2016 program bill limited NYRA’s VLT revenues to a maximum of $46 million. In the 2016-2017 State fiscal year, NYRA would have received $59 million in VLT revenues.[21] Yet the 2016 budget legislation effectively put a floor on VLT payment to NYRA at $54.96 million.[22] Since that same legislation diverted certain Aqueduct VLT revenues to support Nassau County Regional OTB, it appears that the maximum that NYRA will receive in future VLT payment will be the $54.96 million number. The State has, effectively, already placed limits on NYRA’s potential VLT revenue stream.

The Governor also removed the requirement contained in the 2016 program bill that NYRA remain subject to the Open Meetings Law and the Freedom of Information Law. Yet, this is not a limitation on the Governor’s power but is simply ending a requirement that has been placed on NYRA. In terms of the Governor’s powers regarding NYRA, the 2017 budget bill is only slightly more restrictive than the 2016 program bill.

4. The Effect on NYRA

This is a bill that NYRA’s current management under CEO Chris Kay could only have prayed for. This is Chris Kay 2.0. The CEO is made a member of the Board. The current Reorganization Board—which has basically given NYRA management a blank slate—largely picks its successor, which effectively means that the compliant Reorganization Board gets to remain as a private not-for-profit board. While there are term limits on board members, they largely will not kick in until the mid-2020s. The horsemen and breeders do not have formal representation on the board, which is similarly in accord with NYRA’s initial recommendation on privatization. The status quo will prevail.

Not only will the status quo prevail but NYRA will get broader authority. The sunshine laws will no longer apply to NYRA, lessening some public scrutiny of the Kay regime.

NYRA gets to have night racing at Belmont Park, which races in May through July and September through October. While the costs of lighting the facility and the parking lots are high, this would potentially make it easier for NYRA to host the Breeders’ Cup. While regular night racing has hardly been a success in the United States, it may also be that NYRA management envisions night racing as a gateway to establishing a broader evening entertainment experience at Belmont. Chris Kay is a former Universal Studios executive, and NYRA may envision something akin to a Universal City Walk at Belmont Park.

An end or a limitation to winter racing may similarly save NYRA considerable revenue.  Maintaining winter racing at Aqueduct has always been a priority of the breeders and the horsemen. Accordingly, it will be interesting to see if and how NYRA tries to use its influence and power to persuade horsemen to limit winter racing. Will NYRA go easier on pushing for anti-Lasix regulations?[23] Will NYRA try to use its power over stall space allocations to deal with recalcitrant horsemen? Will it provide added revenue or other perks to horsemen and breeders as a way to coax these groups into supporting a limitation on winter racing?

5. Who Loses Under this Bill?

The short answer is the horsemen and the breeders lose. Under the Legislature’s 2016 vetoed bill, they became voting members on the NYRA Board. Under the 2017 budget bill, they have again been relegated to ex officio status. Similarly, added pressure will be placed on these groups to accede to limitations on winter racing.

The New York OTBs are probably losers here as well. Less NYRA racing in the winter is simply bad for OTB handle. Also, if NYRA moves much of its Belmont racing to the evening, the OTB’s lose a daytime product. Since betting at the OTB’s has become largely a daytime experience, nighttime Belmont racing will unlikely be beneficial to the OTBs.

Also, if NYRA does implement Belmont evening racing, those tracks that race at night might be adversely affected. This would include the upstate harness tracks who would be running at the same time as Belmont, such as Saratoga Harness, Vernon Downs, Tioga Downs, Batavia Downs and Buffalo Raceway. Also likely to be affected are those out-of-state tracks that run in the evening such as the Meadowlands in New Jersey and Penn National in Pennsylvania. These tracks would suffer from added competition against their simulcasting signals.

There may be potential complaints from Nassau County communities around Belmont Park, such as Elmont and Floral Park, which have traditionally voiced opposition to NYRA evening activities at Belmont. Given the influence that Republicans in Nassau County have in the State Senate, this opposition may cause problems for NYRA in achieving these goals.

Finally, if you believe that the current regime at NYRA is good for thoroughbred racing, then this legislation will clearly be perceived as beneficial. NYRA management will largely be unchanged. If, however, you regard the NYRA regime as a self-perpetrating group largely oblivious to the needs of racing and racing fans, be prepared for eight more years of the same.

6. Issues in the Budget Bill Draft

Reconverting NYRA back to a private organization does bring with it a string of issues. If the point of having a new privatized NYRA was to allow for long-term planning, why is there no long-term planning committee? What happens to the availability of records that were created when NYRA was a public body? What happens to the availability of the records of the pre-2012 NYRA which were arguably available during the time that NYRA was a public agency? What happens to the existing NYRA website showing the content of prior Board meetings and the materials used to discuss these meetings? What happens to the ability of the State Comptroller to audit NYRA?[24] Finally, what happens to the internal ethics provision that the Reorganization Board put into place in 2012 and 2013—no fund raisers on NYRA property, no campaign contributions from NYRA officers, and no campaign contributions from NYRA itself or a NYRA created PAC? What happens to these actions of the Reorganization Board?

Finally, there are somewhat confusing issues as to when a new NYRA board would actually come into existence and replace the Reorganization Board. The effective date clause in the bill states that the new board provisions “shall take effect upon the appointment of a majority of board members.” Yet the executive committee of the Reorganization Board “shall continue to exist until such time as the appointments required hereunder are made.” On top of that, the members appointed by the executive committee cannot vote until they have a racetrack management license. So who would be in charge at a time when a majority of new members has been named, but an insufficient number of them has licenses? Who runs NYRA under this possibility?

Perhaps all these questions will be answered when the State’s 2017 budget is passed.

 

[1]  This essay uses materials previously used in earlier essays on this overall topic which include “The Future of the New York Racing Association Reorganization Board,” https://saratogainstitute.wordpress.com/2016/03/30/the-future-of-the-new-york-racing-association-reorganization-board/, “The Future of the New York Racing Association Reorganization Board: Take 2,” https://saratogainstitute.wordpress.com/2016/05/04/the-future-of-the-new-york-racing-association-reorganization-board-take-2/, “New York State and the New York Racing Association: Can’t Anyone Privatize These Racetracks?,”  https://saratogainstitute.wordpress.com/2016/06/08/new-york-state-and-the-new-york-racing-association-cant-anyone-privatize-these-racetracks/ and “NYRA Enters the World of Chelm,” https://saratogainstitute.wordpress.com/2016/08/01/nyra-enters-the-world-of-chelm/.

[2] L. 2012, Ch. 457.

[3] Id. at § 4.

[4]  L. 2015, Ch. 59, pt. PP, § 1.

[5] See generally “NYRA Enters the World of Chelm” supra at note 1.

[6] The video presentation of the Reorganization Board’s plan recommended at its April 12, 2016, meeting can be viewed at https://www.nyra.com/belmont/video—april-12-2016-board-meeting/.

[7]  Governor’s Program Bill #24, (2016); https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/GPB24_NYRAREORGANIZATION_BILL.pdf.

[8] Assembly Bill No. 10429, same as Senate Bill No. 7918 (2016).

[9] L. 2016, Ch. 73, pt. C, §1.

[10] The legislative proposal, A. 10429, was submitted to the Governor’s Office on December 22, 2016, and was not acted on by the Governor. Since the legislative session had ended by the time that action was due on the bill, without gubernatorial approval, the legislation was de facto vetoed under Article 4, §7 of the State Constitution. See also Yancey Roy, “Key Senator: Cuomo Proposal Allows Gov Control of NYRA,” Newsday, January 19, 2017.

[11] FY 2018 New York State Executive Budget Revenue Article VII Legislation, Part NN. The part is entitled “Re-privatize the New York Racing Association,” https://www.budget.ny.gov/pubs/executive/eBudget1718/fy18artVIIbills/REVENUEArticleVII.pdf, Assembly Bill No. 3009, same as Senate Bill No. 2009.

[12] Tom Precious, “Cuomo Proposes Returning NYRA to Private Control,” BloodHorse, January 18, 2017, http://www.bloodhorse.com/horse-racing/articles/219148/cuomo-proposes-returning-nyra-to-private-control.

[13] See note 7 supra.

[14] The power of the Governor to select the first chairman of the privatized NYRA was similarly in the 2016 plan suggested by the Reorganization Board. See note 6 supra.

[15] Racing, Pari-Mutuel Wagering and Breeding Law, §207.1.b.

[16] The Franchise Oversight Board is a five-member public agency designed to represent the State in its real estate dealings with NYRA and to enforce and monitor the State’s agreements with NYRA. See Racing, Pari-Mutuel Wagering and Breeding Law, §212. The Franchise Oversight Board is largely a continuation of the former non-profit racing association board that was established to monitor NYRA in 2005. See L. 2005, Ch. 354.

[17] Belmont Park in recent years has raced in May, June, the first half of July, September and October.

[18] Currently, NYRA cannot race after sunset. See Racing, Pari-Mutuel Wagering and Breeding Law, §203.

[19] Racing, Pari-Mutuel Wagering and Breeding Law, §238.1.(d).

[20] Under the 2016 program bill, three publically appointed members, including at least two appointed by the Governor, had to be on each statutory committee.

[21] See New York State, Gaming Commission, Video Gaming Report http://nylottery.ny.gov/wps/portal/Home/Lottery/Home/Video+Gaming/VIDEO+GAMING+REPORTS.

[22] L. 2016, Ch. 60, Part SS. See Tax Law, §1617-a.

[23] The leadership of the New York horsemen has been vocally opposed to ending the race-day use of the drug Lasix, which is used overwhelming in North American racing to limit bleeding in race horses.

[24] While §209 of the Racing Pari-Mutuel Wagering and Breeding Law authorizes the State Comptroller to audit NYRA, the Comptroller’s authority to audit non-governmental entities has been limited by the State Court of Appeals. See generally Matter of New York Charter Schools Assn., Inc.  v. DiNapoli, 13 N.Y.2d 120 (2009). If NYRA is a private organization, NYRA may well challenge the audit authority of the Comptroller.

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Assessing and Updating the Rules of the Race

By Bennett Liebman
Government Lawyer in Residence
Government Law Center
Albany Law School

Speech before The Racing Officials Accreditation Program
Tucson, Arizona
December 5, 2016

Thank you for having me here today. And thank you for that overly kind introduction which only proves one thing: I’m old.

I got the request to speak here last week; so I’m somewhat of an added starter here. I should be wearing substitute silks. It has been suggested that I drew in from the also-eligible list. I have tried to do some research for the speech, since I’ve said and written a little on this overall topic for about a decade. I spend a good deal of my time writing articles of critical importance to gambling and horse racing. My recent law journal article on the history of dog racing in New York State was a real page-turner, and you can look forward to even more cutting-edge articles awaiting publication on the history and meaning of the term “pari-mutuel” and how New York racing developed a theme song for the Belmont Stakes.

Stewards and racing officials have been just about my favorite people in the business. Racing officials were incredibly kind and generous to me when I became a commissioner. My friend Leo Connelly brought me out to his office in Syracuse to show me how to watch races. Mark Thomas, who was our assistant state steward at NYRA, gave me all his cassette tapes from the first national class on stewarding. The late NYRA steward Dick Hamilton became a cherished close friend. Wendy Davis let me participate in teaching classes to stewards. In fact, Leo Connelly and I got to be the moderators for the early programs we held here on stewarding during the symposium.

That said, and even though I have said little in recent years on this topic, I find, somewhat unfortunately, that things have changed far little than they should have, and I can actually largely update what I was saying in 2006.

From a historical perspective, horse racing officials were the leaders in sports technology. We were the worldwide leaders. The sports world started using photo-finish cameras in track and field for the 1932 Olympics in Los Angeles. Racing built on this innovation, and racing was the first professional sport to add photo-finish cameras and electronic timing in approximately 1935. In the mid-1940’s, racing became the first sport to authorize film and tape reviews of race. Racing was the first sport authorizing objections and inquiries to be resolved by game officials through reliance on film and tape.

Of course, there were some hiccups along the way. You can see that Massachusetts – not surprisingly ‒ had its problems in trying to implement photo finishes. They even banned the photo-finish camera for a time in the 1930’s. And even into the 1970’s, especially if you ever spent time at Saratoga harness, you would continue to hear fans complain that the photo-finish camera was rigged or favored either the outside or the inside horse, depending upon what losing horse they wagered on. It may not have come easy, but we were the leaders.

But we’ve been joined by others in recent years. Every major sport now has significant elements of video replay and post-live action review available. Have we been surpassed? Well, both yes and no. They may have more technology, designated replay officials, elaborate procedures and even bunkered troops reviewing tapes in distant cities. But they’re basically reviewing objective decisions. Racing is still the one professional sport using replays to make decisions on judgment calls. The others basically don’t.

Look at the other major sports. Baseball reviews catches and safe and out calls and whether the ball left the park. The only thing remotely subjective are the interference plays, and by now the rules on an issue like home plate interference are practically black and white. If it becomes anything near subjective, the initial decision is upheld.

The NFL calls are also designed to be totally objective. Was the ball caught? Was it a touchdown? Was it out of bounds?

Hockey is even more restrictive. It’s only for goals, and everything is designed to be objective. Was there a goal? Did time expire? Was the net dislodged before a goal?

The NBA is a little trickier. The on-court decisional reviews are supposed to be objective. There are also reviews of fights and flagrant fouls because major penalties have to be assessed immediately, but for the on-court action, the review is objective.

In tennis, where the replays have probably been most successful, we’re looking at line calls, and the video decisions are quick and non-controversial.

So we’re seeing a replay world, where we are looking at replays largely focusing on objective factors. Nobody is reviewing balk calls, check swings, pass interference, or intentional grounding, boarding, or charging. We also are not reviewing certain decisions that could be objective, but would involve changing the entire ethos or pace of the game. You could arguably objectively review the strike zone in baseball, travelling in basketball, boarding or all offsides calls in hockey, and foot faults in tennis. Nobody is willing to go that far.

So the issue is what horse racing should be doing in the age of replays, understanding that officials in racing make largely subjective rather than objective calls. I would suggest that racing’s goals should include how best to use technology to help the on-site racing officials, how to use technology to assess the performance of racing officials, and how to show our fans that we are working to improve the quality and the consistency of our decisions.

My basic suggestion is that we need to nationally unify our rules governing the running of races, unify our rules on entries, and keep racing commissions out of the review of steward judgment calls.

It ought to be obvious that we need national uniformity in our race rules. There no longer are meaningful borders between states on racing. Everyone bets on everything. New Yorkers arguably have – at least as measured by purses – the best racing in the country. But most of the money bet by New Yorkers is bet on out-of-state tracks. 72% of the money bet at New York State tracks is bet by out-of-staters. And most obviously to me, this should be an obvious move. It’s not a hard policy call like our drug rules; it’s a no-brainer to have a uniform rule.

And there’s a need for a uniform rule. As our jurisdictions moved away from the Gertrude Stein rule that “a foul is a foul is a foul” to the more Monty Python notion of “The Meaning of (Foul) Life,” states went their separate ways.

New York, for instance, banning interference, impeding and intimidation, or the foul, altered the finish of the race. New York’s rule on the meaningfulness of fouls is actually written in the alternative, so it’s incredibly hard to analyze it. The model rule is probably written better banning interference, impeding and intimidation where the stewards believe the interference altered the finish of the race.

Other states are even different. Arizona has no ban on intimidation. It does require racing room and you can’t keep a horse in the pocket, which reads like some odd attempt to prevent Angel Cordero from retroactively riding in Arizona. Oregon and Colorado also require racing room.

California is as oddly worded as New York and includes language that seems to narrow the situs of a foul only to those areas where the incident would have affected the race finish, while broadening the nature of a foul to include placements to where a horse was reasonably expected to finish.

Ohio retains the rule that a foul is a foul is a foul. In the UK and Hong Kong, fouls are only determined based on the effect solely of the horses involved in the incident.

I used to be bothered by the lack of any definition of interference, impeding and intimidation, but you see all the other sports which don’t specifically define major terms. There is no baseball rule defining a check swing, no NFL rule on what constitutes holding, and not much in the NHL on what constitutes boarding. It just is what it is.

But how can intimidation or impeding be a foul in one state and not in others? What’s the point of a pocketing rule or a racing room rule? Do you have to cross in front of a horse to cause a foul? What if you just force a horse wide? And then California adds making the part of the race in which the foul occurred part of the foul calculus. What ever became of the notion of the hazards of the start?

And obviously we have enormous problems with applying what I’m terming the Monty Python meaningfulness rule. It cannot just be an excuse for scrutinizing fouls in races.

Should we only apply the rule involving placing decisions between the fouler and the foulee? Do we care if the foulee would move up to a position where it would have earned a higher check, or should it only involve cases where the horse would have finished in the top 3 or 4 places? And most importantly, what degrees of proof are needed to determine whether a foul affected the result? You can go anywhere from finding that there was no reasonable doubt that it affected the result to some credible evidence that it might have affected the result. We have a mess on our hands. We need a national uniform rule on what a foul is and how it affects the finish of the race.

As an aside, I love the notion of taking a Wayback Machine back to the past to apply the Monty Python rule retroactively to past major events. Secretariat certainly doesn’t get taken down in the 1972 Champagne Stakes, where he won by two lengths. Equipoise probably wins three additional races. Dr. Fager probably doesn’t get taken down in the 1967 Jersey Derby, where he won by 6 ½ lengths. And maybe we don’t even have the disqualification (DQ) controversy in the 1980 Preakness, where Codex beat Genuine Risk by 4 and ½ lengths.

We also need to deal with couplings and uncouplings. Traditionally in racing, horses with the same trainers and/or the same owners were coupled in the wagering. Traditionally, if one part of the entry was DQ’d due to a foul, the entire entry was DQ’d. This got changed over the decades so that the innocent part of the entry was only DQ’d if the incident affected the finish of the innocent entry mate. You also kept entries out of exotic races. Gradually over the years, with the need to fill races and the need to expand wagering opportunities, the coupling rules were weakened extensively.

It’s worth going back and reviewing what used to be the fan and commentator history on uncouplings. It once was incredibly unpopular; we had fans protesting and rioting about mistakes on couplings. In 1976, the New York Racing Board allowed it in thoroughbred racing for horses with the same trainer. It proved so unpopular that it was repealed four years later. As late as 1999, Andy Beyer could say that the “practice has generated immense suspicion and hostility.” Nonetheless, the pendulum has shifted and uncouplings are basically accepted.

But they’re coming under increased scrutiny largely as a result of the running of the million dollar Sword Dancer Handicap at Saratoga about three months ago.

That race was won by the overwhelming favorite, Flintshire, trained by Chad Brown. Flintshire’s uncoupled entry mate, Inordinate, ridden by Aaron Gryder, also trained by Chad Brown, moved off the rail in the stretch to make way for Flintshire. The stewards disallowed the foul claim made by the trainer of the horse to the outside of Inordinate. The fan reaction against the free passage of Flintshire has forced an overall review of the issue.

And there really are major reasons to review these rules. First of all, here in Tucson, we have the traditional Stan Bergstein ecumenicalism and parity issues. The coupling rules are far different for harness racing than for thoroughbred racing. There’s no reason for that.

The rules on what horses can be uncoupled differ from jurisdiction to jurisdiction, and the rules on whether to disqualify the innocent party of the entry differ.

In New York, you only disqualify the innocent party if due to the foul, another horse was prevented from finishing ahead of the innocent entry mate. Under the model rules, it’s discretionary with the stewards. Some states disqualify the innocent party, where the innocent party was unduly benefitted. My personal favorite might be New Jersey, where the thoroughbred rule largely follows the discretionary model rule and the harness rule provides for the DQ of the innocent entry mate, where the foul may have affected the finish of the race.

You also have issues over whether you can take action against an uncoupled entry due to a foul by the uncoupled mate. In New York, under the literal rule, you could only take such action if the horses have the same trainer, but not where they have the same owner but a different trainer.

The UK has an interesting way of dealing with the entry issue. A maneuver in the interests of a horse under common control is considered a violation. It does not include pure pacemaking, and the jockey is responsible – and potentially the common trainer ‒ for the assistance violation.

It’s not too dissimilar from what happened in the 2006 Hambletonian. Trainer-driver Trond Smedshammer, on the tiring leader, pulled his horse off the rail in the stretch to make room for one of his uncoupled trainees. He received a 30-day suspension for helping. In 1969, driver Yves Filion opened up the rail for his brother Herve with a coupled entry. He got 15 days. And about 74 years ago, the incredibly talented rider Don Meade got a 19-month penalty for signaling to the rider of his entry mate to take care of one of the competitors. In short, we need a uniform rule on this topic and we need to consider applying the UK improper help rule to these entries when there is no actual interference.

Finally, we need to end racing commission review of steward judgment calls. It still happens in some states, and there’s no reason for it. All other sports have rejected the secondary review of judgment calls made by game officials. The Court of Arbitration for Sport has consistently rejected review of “field of play” decisions. Besides the need for finality, the fact is that the technologic innovations have tried to make sure that the decisions are made at the most knowledgeable level. Let’s face it, the volunteers who serve as racing commissioners are not at the most knowledgeable racing level. They should not be reviewing steward judgment calls.

There are a few categories of calls that can be addressed through administrative appeal.

Obviously, bad faith decisions. You can’t uphold decisions made by the 2002 Olympic figure skating judges who agreed to vote jointly for their home country skaters. You can’t uphold decisions by crooked NBA ref Tim Donaghy, and you can’t uphold the early 1980’s Great Barrington Fair stewards’ decision, where the stewards took down the first two finishers to put up an exacta they had wagered on.

You can’t uphold obvious mistakes of fact, where the wrong horse was ID’d. Most obviously, in 1986, when the Saratoga stewards took down the horse Allumeuse in a race where he was not involved in the incident.

You also can’t uphold decisions made based on a mistake of law. If the rule says “you can’t run inside the pylons,” and the judges don’t take down the horse because they saw that the horse received no advantage from running inside the pylons, that’s a mistake of law that needs to be addressed.

That really isn’t too different than the George Brett pine tar decision. The penalty for excess pine tar was that you tossed out the bat. You did not declare the batter out. It also was the last play of the game. So no field of play decisions were affected. It was the equivalent of DQ’ing a horse because it was late to the paddock or ran in the wrong silks.

So what does racing do to utilize new technology? The problem is that racing stewards make judgment calls. These are not the kind of decisions that replay officials make in other sports. They make objective fact calls. What would they rule on: running inside the pylons, leaving the course in a steeplechase?

Moreover, until racing has actual uniform rules on what constitutes a foul, you can’t have officials in a bunker in Lexington or Columbus or in a highrise in Manhattan making DQ decisions. And even if you did have a uniform rule of the race, you would have to get individual racing commissions to cede jurisdiction to a central body. If the past is any prologue, that is not about to happen.

So how does racing use technology as we go forward? In the non-steward field, inevitably down the road, we are going to see technology, rather than humans, review the finish line camera results and other portions of the running of the race. There is a strong likelihood that individual racetracks and/or state budget offices will work on racing commissions to limit the number or put an end to the use of patrol judges and placing judges.

Eventually, we will get to automated timing and microchip identification of horses that are engaged in workouts, and we will be seeing a shakeout in how and where racing will employ the use of clockers.

These are depressing results for many of us who like heavy doses of tradition in horse racing. But it’s likely to happen. This hotel, as we speak, is holding a luncheon for the Arizona production of “Fiddler on the Roof.” Horse racing is much like Anatevka, because without our traditions, we would be as shaky as a fiddler on the roof.

Moving on to stewardship, if we are serious about judging fouls on the basis of how they affected the finish, we will need technology that accurately measures the speed of horses throughout the race. Did a bump or a jostle actually affect the speed of the horse? How many lengths were actually lost when a horse was forced to check? How much distance was lost as a result of a horse being forced wide? Can we develop algorithms that would legitimately estimate how a horse would likely have finished if it was not fouled or impeded? If we want stewards to make informed calls on whether an incident affected the result, we need to provide stewards with the most information possible. We will need a Trakus 2.0 or maybe even a Trakus 3.0 to do this.

Perhaps we need to let stewards consult with designated replay review officials in the bunker during the inquiry. This is not too dissimilar to the NFL review. In the NFL, game officials make the call with the help of review officials. Wouldn’t you want the stewards to be able to talk to a Mike Pereira-type when they reviewed the race? This could work to provide expertise and limit steward inconsistencies. I’ve always thought that it would be nice to have a devil’s advocate present in the stewards’ stand, and this video replay assistant could deliver that outside voice.

Perhaps a subsequent day review would be the best way to use replay officials in racing. This could work similarly to the NHL review session, but without the power given to the NHL replay officials. The day after the game, the NHL replay officials gather in Toronto to review the issues that came up in the prior games. They review hits and checks to see if they merit suspensions. They generally determine whether incidents merit greater punishment and whether in-game calls were correct. Thus, they serve as a way to review the overall work of the game officials and to provide a more detailed and accurate view of what actually took place in the game.

In racing, they could review the basically objective incidents that could not be called on-track due to time limitations. Now this should involve whip violations, how often was the horse struck, how high was the hand, where was the horse struck, at what point in the race was the whip used, and did the whip strike another horse or another rider. They also could review the objective elements in a harness race, including running inside the pylons, staying in lane during the stretch, and resolving lapped on breaks at the finish line. You might even use the subsequent day review to look for foreign objects on tracks.

On a more subjective level, you could review the tapes of riding incidents to help determine issues of the severity of jockey or driver misconduct. If it’s truly dangerous riding, the replay officials can suggest increases in the penalties for jockeys or drivers.

They can review tapes to see if the rider or driver ran the horse on its merits. They would have time to review tapes to see review form reversals and to check on races with suspect payouts. I’m not proposing that the review officials have independent authority, but they ought to be able to make recommendations to the proper authorities.

This could potentially work to improve stewarding decisions and decrease inconsistency without affecting the sovereignty of racing commissions and racing stewards.

So in conclusion, let me reiterate what I’ve said this afternoon. Horse racing was the early leader in technology. It is still basically the one professional sport where the in-game officials use replays to make subjective decisions.

To make stewarding consistent, we need uniform rules of the race, uniform rules in couplings, and we need to keep racing commissions out of in-game decisions.

Because replay officials generally make only objective calls, racing would get less benefit from replay officials than other sports get.

Racing can be helped by better technology in making the decision of whether a foul affected the result of the race. Let’s hope we can afford the technology.

There should be times when stewards could consult replay officials during the race review to obtain additional expertise and to get a different perspective on the running of the race.

We definitely ought to be able to have expert replay officials review tapes of the race in the days after the race to help make decisions on objective issues that could not have been called due to time restraints on the game officials and to provide subjective input on the severity of any misconduct that occurred in a race.

Most importantly, we can improve stewarding through technology, but we need to put our own house in order first.

Thank you for letting me speak to you this afternoon.

 

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