NEW YORK, July 12 The New York Racing
Association could become insolvent in 2011 if it does not get
revenue from a slot machine contract for Aqueduct Racetrack
that looks doubtful, the state comptroller said on Monday.
New York state is counting on an upfront payment of $300
million from the winning bidder on the slots contract to help
ease its cash crunch.
Last week, the Lottery Division only qualified one company,
Genting New York (GENT.KL), which is part of a Malaysia-based
powerhouse, to expand gambling at Aqueduct Racetrack.
Two other bidders were rejected last week for trying to
negotiate improved terms. A previous winning bidder was
rejected due to state and federal probes whether Democratic
Governor David Paterson chose it to aid a political ally.
"When you start with six potential bidders and end up with
only one, it begs the question of how the process was handled
and whether the state can actually close the deal," Democratic
Comptroller DiNapoli said in a statement.
"The fact is that the New York Racing Association can't
make it long without significant restructuring and revenue from
video lottery terminals," said DiNapoli.
The New York Racing Association exited bankruptcy in 2008
after getting a $105 million of state aid. The state gave it
another $25 million loan in May 2010 after DiNapoli's auditors
determined that by June it would not have enough cash to
operate its three New York horse-racing tracks in the state.
DiNapoli, who had to use his subpoena power to get
financial data from the racing association, faulted it for
waiting more than a year after it emerged from bankruptcy to
begin significantly slashing spending.
Intensifying his scrutiny, DiNapoli said his auditors would
be posted on-site at its tracks.
Recommending several cost cuts, he also questioned the high
salaries paid to seven executives, who make from $255,000 to
$460,000 a year, and the association's spending $6 million for
personal and miscellaneous services.
Some of the problems facing the New York Racing
Association, which hosts the Belmont Stakes, the thoroughbred
race held every June that is part of the Triple Crown, are
shared by other tracks that also are luring fewer gamblers.
Most of the New York Racing Association's revenue comes
from betting on horse races, which fell 13.2 percent to $2.22
billion from 2006 to 2009, DiNapoli said.
One problem, however, is unique to New York: DiNapoli found
that the the association is still owed $17 million from the
bankrupt New York City Off-Track Betting Corporation.
(Reporting by Joan Gralla; Editing by Andrew Hay)