Thoroughbred Breeding and
Selected Operating Practices (Issued 11/14/12)
To determine whether the New York State Thoroughbred Breeding and Development Fund (Fund) has been receiving all of the statutory commissions it is due from New York State-based racetracks, off-track betting corporations (OTBs), and Video Lottery Terminal (VLT) operators. In addition, our objective was to assess whether the commissions were used in compliance with statutory guidelines. Our audit covered the period January 1, 2008 through January 26, 2012.
The Fund is a public benefit corporation established to promote and encourage the breeding, raising, and racing of quality thoroughbred horses in New York. The Fund provides cash awards to the breeders and owners of registered New York State-breds and registered New York State-based stallions. The Fund receives its operating monies (commissions) from a statutory percentage of VLT revenues and a statutory percentage of wagers placed on in-State thoroughbred race meets. In calendar year 2010, the Fund received commissions of $11.4 million, and paid cash awards totaling $9.6 million. The Fund's operating expenses for administration and promotion average about $1.5 million a year.
- The Fund has been receiving the statutory commissions due from the tracks, OTBs, and VLT operators. However, while assessing the statutory commission rates due the Fund, we found that the New York Racing Association (NYRA) had shortchanged winning bettors by approximately $7.4 million between September 15, 2010 and December 21, 2011. This happened because NYRA was not complying with statutory retainage rates on exotic bets. As a result of our finding, which was identified in December 2011, an investigation was conducted by the NYS Racing and Wagering Board which led to the firing of two senior NYRA officials: its President/Chief Executive Officer and its Senior Vice President/General Counsel.
- The Fund improperly underreported statutorily limited administrative expenses and promotional expenses by $399,908 for calendar years 2009 and 2010.
- Continue to ensure that the appropriate amount of commissions is received from tracks, OTBs and VLT operators.
- Ensure that administrative and promotional expenses are properly reported.
- Work with NYTB officials to explain the level of quarterly report detail necessary for Fund officials to make informed comments and decisions.
Other Related Audits/Reports of Interest
State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone: (212) 417-5200; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236