Tom Noonan

In his May 22 press release announcing his seizure of New York’s thoroughbred racing, Governor Andrew Cuomo  –  purportedly a believer in “transparency” in government  –  was only able to muster 113 words explaining his extraordinary action.  While almost all of it was of the “Mom” and “apple pie” variety, one sentence struck me as being out of place:

With the structure of the gaming industry changing here in New York, the state also needs to take a new approach to how it manages and governs racing.

In a mere single sentence, he was able to assume the existence of a hypothetical, and in a complete non sequitur, “explain” his takeover as being caused by that change.

In his reference to the “structure of the gaming industry changing,” we can only assume he means his desire for an amendment to New York’s Constitution that would permit casino gambling in seven locations not on Indian reservations.  Amending the Constitution requires two votes of the Legislature, and then approval by the voting public.  The first legislative vote came shortly after Cuomo identified it as a priority in his January State of the State address.  While the casino approval passed its first hurdle, it is not something that is happening overnight.  In addition to the necessary votes, there would have to be a procurement, selection of winning bidders, environmental impact studies and construction of the facilities.  So why does that require a “new approach to how [New York] manages and governs racing?”  And why does that necessitate the immediate takeover of New York’s racing?

Cuomo’s action followed an Interim Audit by the Racing and Wagering Board that concluded that NYRA had improperly withheld 26% from certain wagers instead of the permitted 25% for over a year, with the incorrect amount known by senior NYRA officials.  The Wagering Board’s Audit has not been completed, and the state’s Inspector General is also conducting an investigation.  Neither of these entities that has oversight responsibility for NYRA picked up the error, nor did any of the 11 NYRA Board Members appointed by the Governor and the legislative leadership.  The Governor, without waiting for the completion of any reviews, decided the solution to whatever ails New York racing would be resolved if there were more state involvement.  Thus, he announced (with the agreement of NYRA’s Board) that the Board would be restructured so that Board membership would be reduced from 25 to 17, with the Governor and legislative leaders picking 12 of the 17.

Since none of this made any sense to me, I continued to wonder what the real reasons were for the Governor’s action.  Thanks to two articles in The New York Times this week, we may be getting closer to an answer.  In the Monday piece, the Times reported that the trade association representing companies that operate tracks and VLT’s kicked in a cool $2 million in December, 2011 to the Committee to Save New York, a “nonprofit social advocacy group” aligned closely with Cuomo.  Genting, a member of the group and the operator of Aqueduct’s VLT’s, added an additional $400,000 to CSNY during 2011.  What did they expect for this level of “investment?”  I am sure it was nothing more than the promotion of CSNY’s “reform agenda” and to “get state government working for the people again.”

Part of CSNY’s “reform” agenda is not transparency as to where they get their money.  Just as with the super-PAC’s on the national political scene, revealing the identity of donors is not required as it is with those who contribute to political campaigns.  When Genting considered an advertising campaign to promote casinos in New York, the Times reported that “according to two people with knowledge of the discussions, the Cuomo administration encouraged” Genting and the gaming association to contribute instead to CSNY.  The Thursday article in the Times disclosed that lobbyists for Genting advocated for a convention center and casino complex at Aqueduct during a Cuomo fundraiser in October.  That the fundraiser was not originally on the Governor’s public schedule was “inadvertent” according to a Cuomo spokesperson.

Cuomo did negotiate with Genting to develop the convention center-casino complex on the Aqueduct site  –  a development described as a $4 billion project that would result in the largest convention center in the United States.  The deal fell apart, according to Cuomo at a press conference this past Monday, because he would not agree to guarantee Genting the casino.  Perhaps a more likely explanation is that he would be awarding a massive, multi-billion dollar contract without going through a bidding process.  According to a Times article on June 1, the state’s Comptroller, Thomas DiNapoli, welcomed the news that a deal fell through since he had advocated a competitive process.

So after the Governor’s “super PAC” receives $2.4 million from Genting and other gaming companies, the Governor makes a priority of getting casinos and attempts to negotiate a multi-billion dollar no-bid contract with one of the super PAC’s biggest contributors.  The Governor’s spokesperson dismissed as “insulting and sensational” any suggestion that money has played a role in the administration’s policy making.

What is truly insulting, however,  –  to our collective intelligence  –  is that such conduct would be condoned by an administration barely two years after the Aqueduct VLT procurement “process” exploded in the face of the prior Governor and legislative leadership.  When Governor Paterson, Speaker Silver and Senate leader Sampson selected the Aqueduct Entertainment Group (AEG) for the VLT contract in early 2010, the selection was so manifestly deficient and AEG so obviously incapable of performing, it had to be withdrawn six weeks later.  The Inspector General issued a scathing 300-page report later that year in which he lambasted all three principals, but also criticized the influence of unrestricted lobbying and campaign contributions in a process he described as “a veritable case study in dysfunctional and politically driven government.”

What does any of this have to do with horse racing?  I don’t know, but it is the Governor who made the connection between casinos and racing when he took control of the NYRA Board.  What I do know is that there is a lot of money flowing, questionable negotiations with one of the largest contributors, and still no explanation coming from the Governor as to the reasons or urgency for his takeover of racing.