On September 4, Governor Eliot Spitzer called on the Legislature to extend the 52-year-old franchise under which the New York Racing Association operates three thoroughbred race tracks – Saratoga, Belmont and Aqueduct. The Governor also recommended that the State separately select an experienced gaming company to operate 4,500 "video lottery terminals," or VLT's – essentially video slot machines – at Aqueduct. Revenues from this new gambling operation would be used to finance improvements at all three tracks, to enrich purses, to subsidize NYRA's money-losing operations and to provide assistance to New York's thoroughbred breeders. Governor Spitzer stated that his proposed approach would "ensure that we have the best possible operator for both the racing and the gaming franchise."

Given the dramatic progress that NYRA has made in recent years in cleaning up the corruption and mismanagement that had long plagued its operations, the Governor might well be right that extending its franchise is the best available option – at least from the perspective of the state’s racing industry. New York State will also benefit from increased franchise fees, and from the tax it levies on pari-mutuel wagering and VLT gambling.

But if we step back and ask not what’s best for the racing industry, but what’s best for New York’s economy, it’s not at all clear that the Governor’s proposal represents the best possible outcome to the long-running debate over the future of the three tracks. For New York City in particular, the real question is not whether NYRA should continue to run Aqueduct. It’s whether Aqueduct should continue to be used for racing at all – or whether there might instead be much more productive uses for the land the track now occupies.

A declining business