Purpose

To determine the extent of implementation of the recommendations in our initial audit report, Financial Condition and Selected Expenses (2015-S-21).

Background

The New York Racing Association, Inc. (NYRA) holds the exclusive franchise to operate New York State’s three major thoroughbred racetracks: Aqueduct Racetrack, Belmont Park, and Saratoga Race Course. In 2011, Resorts World New York City Casino (Resorts) opened adjacent to Aqueduct Racetrack. According to NYRA’s Franchise Agreement with New York State, a percentage of Resorts’ Video Lottery Terminal (VLT) revenues is to be directed to NYRA for capital expenses, operational support, and enhanced purses. In 2012, a temporary, State-controlled Reorganization Board of Directors was put in place to oversee NYRA operations. The Reorganization Board was dissolved in June 2017, and control of NYRA was returned to a private not-for-profit organization. For the period January 1, 2016 through June 30, 2017, NYRA received about $177 million in revenue from Resorts, distributed as follows: $37 million for operations; $91 million for purses; and $49 million for NYRA’s capital program.  

Our initial audit report, which was issued on June 10, 2016, assessed NYRA’s financial condition and selected expenses. We found that although NYRA’s overall financial condition (including VLT revenue subsidies) was sound, its traditional racing-related operations (excluding VLT funding) continued to produce multi-million-dollar annual deficits. Also, NYRA had paid certain expenses that were not ordinary or necessary for racing operations, which contributed to NYRA’s racing-related deficits.

Key Finding

NYRA made some progress in addressing the issues identified in our initial report. Of the four prior recommendations, two were partially implemented and two were not implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audit/Report of Interest

New York Racing Association, Inc.: Financial Condition and Selected Expenses (2015-S-21)