The list of challenges facing the new board of the New York Racing Association is so long board members have already decided they need additional meetings.
The 17-member reorganization board, the majority of whom are state appointees, met for the first time Wednesday to assess the nonprofit racing corporation’s standing and to plan for the future.
The state takeover of the board was approved last summer after mismanagement and a string of scandals over the years, including an incorrect takeout percentage on exotic bets that cost bettors millions.
The board is scheduled to transition back to private control late in 2015, according to the enacting legislation. Before that happens, though, the current board’s responsibilities include:
• Selecting a new CEO to handle day-to-day operations at the three thoroughbred racing tracks NYRA operates
• Implementing new safety regulations at the tracks
• Upgrading the account wagering system
• Choosing a new company to process bets
• Reviewing and approving a 2013 budget
• Evaluating investments in higher purses
• Determining long-term goals at the three tracks
• Planning for the possibility of seven new casinos in the state
• Devising a strategy to transition NYRA back to private control
“I think it’s obvious that we have quite a bit of work ahead of us,” said Rick Violette, a nonvoting member of the new board and president of the New York Thoroughbred Horsemen Association.
The board’s next meeting was initially planned for March, but the consensus at Wednesday’s meeting was that there is too much to do to wait that long. They will most likely have a meeting of their finance committee and the entire board early in January.
“I think it was apparent that there was quite a bit on the table that needed to be addressed,” Violette said.
John Hendrickson, a special adviser to the board, said the first thing the new board has to accomplish is the selection of its management team. In May, when Gov. Andrew Cuomo announced plans for the new board, he said their first task would be a nationwide search for a CEO and general counsel. These two leadership posts were vacated in May, when Charlie Hayward and Patrick Kehoe were fired following the takeout scandal.
Since May, NYRA President Ellen McClain has been running day-to-day operations and Ken Handal has served as general counsel, but Cuomo had said new leadership was needed to ensure the integrity of racing at the Saratoga Race Course, Belmont Park and Aqueduct Race Track.
Hendrickson said, “Getting the management team set and restoring the public trust is number one.”
The nationwide search will be led by the board’s executive committee. Board member Leonard Riggio said selecting a CEO will allow the board to focus on broader issues, rather than being bogged down in day-to-day management.
Violette described this process as very important but stressed that it was only one of many top priorities.
The board also needs to review possible replacements for NYRA’s bet processing company, United Tote, which is operating on a nine-month extension that ends after the 2013 Saratoga meet. A replacement was identified this summer, but NYRA’s management team couldn’t make a decision until the new board was named, per a directive from the governor.
Violette also cited needed updates to NYRA’s account wagering platforms, which allow racing fans to place bets remotely with an Internet connection. In the meeting, Riggio said NYRA’s gambling options for smartphones and tablets were not good and meant they were losing gamblers to other options that offered better platforms.
He said upgraded technology wasn’t in place for two Belmont seasons and two Kentucky Derbys, technology that could have generated a lot of bets with NYRA. An upgrade had been planned by management, but he said it got waylaid for some reason.
“I just want to make sure that there is some process here,” Riggio said of implementing an upgrade. “It can’t wait until next March before it is resolved.”
At the request of the state, the NYRA board will evaluate its investment in higher purses. State overseers have questioned whether the use of revenue generated by electronic slot machines at the Resorts World Casino at Aqueduct has been well spent on higher purses.
The consensus in the racing industry is that the investment has generated a buzz about the state’s racing and increased gambling, but Hendrickson said the board’s racing committee would likely review the issue and assess whether the investment yields are maxing out.
A more immediate concern is the cleanliness of the Aqueduct Race Track, which Violette said was never in worse condition than it was at the start of this year’s winter meet. Floors and rugs were dirty, losing tickets were just being left on the ground and seats were not cleaned in the months since the previous meet.
McClain said the issue stems from a contract dispute with the operators of Resorts World Casino, which is adjacent to the track. She said Resorts World was responsible for cleaning but has not fulfilled that responsibility.
The plan is to eventually bring cleaning back under the purview of NYRA, although it will take time to find a replacement, as the previous cleaners were let go when they entered the current arrangement.
McClain said cleaners from Belmont were brought to Aqueduct to help out in the interim.
“It’s not where we would like to be,” she said, promising the board a report.
Hendrickson said in the meeting that the cleanliness issue had to be resolved immediately.
“We can’t wait for a report,” he said.
Resolving this disagreement is just part of the sometimes contentious arrangement with the operator of Resorts World, which has delayed the development of a simulcast facility on the grounds.
“It has been a very slow go,” McClain told the board.
Long-term issues, like the antagonistic relationship with the Resorts World operator, will likely be put on the back burner in the coming months out of necessity, said Violette.
Part of the long-term responsibilities of the board involve drafting strategic plans for each track, McClain said in the fall. Those plans would determine where NYRA invests its money and energy.
The NYRA board also needs to figure out how its three tracks will operate if there are seven non-Indian run, live-table casinos in the state, a possibility as soon as 2014.
As the NYRA board tries to move forward, it will receive the same type of scrutiny usually reserved for governmental bodies, as open meeting and freedom of information requirements will now be imposed. Hendrickson said he couldn’t imagine those requirements would be a hindrance, noting the open meetings of the Saratoga Performing Arts Center.
“It hasn’t slowed them down,” he said.
The new board has also put an emphasis on getting input from the public, including at a public hearing in Saratoga Springs during the summer meet. Hendrickson and Charles Wait, a board member and Saratoga Springs resident, will chair the hearing.
The board has reason to hope that its job could be easier in 2013, as the consolidation of the state Racing and Wagering Board and Division of Lottery means one less agency to answer to. Riggio also noted that despite this consolidation, Cuomo has promised the state would try to streamline its oversight, but there will still be at least five state agencies watching NYRA in 2013.