AT A PRESS CONFERENCE in Manhattan last week, Governor Kathy Hochul defended her plan to give the horse racing industry a nearly half-billion dollar loan to renovate the Belmont Park race track on Long Island.
“The horse racing sport, it is a very lucrative sport. And it draws many, many spectators,” she said in response to a question from New York Focus.
That was true — 40 years ago.
In 1979, over 11 million fans surged to the state’s race tracks, and taxes on gambling put hundreds of millions in the state’s coffers.
Today, the industry is a shell of its former self, kept afloat by enormous state subsidies. Attendance is down to roughly 2 million, and New York barely gets $10 million a year from taxes on betting — a sliver of the nearly $200 million in public money the state showers on the industry annually.
Hochul and the horse racing industry claim that the loan, which would be paid back over 20 years with the money that the state gives the industry, would unleash massive economic growth and reverse the industry’s decades-long decline.
“I know there’s a study out there that demonstrates that there will be job growth,” Hochul told New York Focus. “I think it goes without saying that there will be job growth.”
Hochul’s office declined to share the text of the study she cited. So did the New York Racing Association, the industry group that operates Belmont Park and commissioned the study.
The racing association did send a summary that claims the loan will create hundreds of jobs and generate millions in tax revenue. Two sports economics professors who reviewed the summary at New York Focus’s request dismissed it as “clearly unreasonable” and “mostly bogus.”
New York Focus repeatedly asked Hochul’s office, the company that performed the study, the racing association, and a consultancy employed by the racing industry for an introduction to an author of the study or to any other expert who could make the case for the loan. None of them agreed.
The association’s contract with the state to operate three racetracks is slated to expire in 2033. But if the deal goes through, New York could be forced to extend the contract until 2043 — and lock in billions more in subsidies — or face losing much of its investment.
‘Why Would We Be Taking Schoolkids’ Money?’
The proposed loan now goes to the legislature for approval — and it’s not clear whether lawmakers will ask for more evidence or rubber-stamp it.
The chairs of the Senate and Assembly committees that oversee horse racing, Joseph Addabbo and Gary Pretlow, both support the loan proposal. They’ve each received tens of thousands of dollars in campaign contributions from the industry. Neither responded to requests for comment.
When racing association president David O’Rourke testified before several dozen legislators earlier this month, almost none voiced any skepticism — even when he explained that the association is coming to the state for a loan because it can’t get one from a private bank. One legislator suggested that the renovated race track be used as a hockey rink in the winter to host the NHL Winter Classic.
O’Rourke’s office didn’t respond to an interview request for this article.
The only legislator who expressed concern at the hearing was Senator Liz Krueger, who chairs the influential committee in charge of the budget process and who told New York Focus she opposes the loan.
“This is not a good bet,” she said. “I have no basis to believe that they would be able to make their payments for the life of the loan.”
Krueger said she’s especially opposed to the plan for the racing association to use gambling subsidies to pay back the loan. Most of the racing industry’s subsidies come from getting a cut of certain lottery machines’ profits. According to the New York State Constitution, lottery profits must be used to fund education.
A bill sponsored by Senator Robert Jackson and Assemblymember Linda Rosenthal would cancel the industry’s lottery subsidies and redirect the money to schools. That will become virtually impossible if the loan is approved.
“Why would we be taking schoolkids’ money?” Krueger asked.
Betting on horse racing has been legal in New York since 1939, but, like lotteries, is constitutionally permitted only for the purpose of raising tax dollars. But the industry gets far more in subsidies than it pays in taxes.
“It’s ridiculous for us to subsidize gambling, period,” Krueger said. “If you can’t make money gambling, I don’t think you should be in that business.”
Senator Sean Ryan, who chairs the committee that oversees subsidies, said he’s potentially open to the loan if Belmont locals on Long Island support it, but that the economic case for it “doesn’t hold water.”
“If it’s a business proposition, it fails,” he told New York Focus. “The plan at best creates a break even, but only if we maintain a generation of subsidies.”
But Senator James Skoufis, who chairs the committee charged with preventing waste in government, supports the loan and is confident that the racing association can pay it back, he said.
“It’s not as if they’re getting some new subsidy to help them pay for this,” Skoufis told New York Focus. “It’s from the money that they’re already getting.”
‘Clearly Unreasonable Assumptions’
The unreleased study Hochul referred to claims that the renovation will bring 275,000 new fans per year to Belmont. Experts said that’s unlikely, since attendance at Belmont and other tracks has been consistently declining for decades. But even if it happens, it likely wouldn’t bring the promised economic benefits, a previous study shows.
In 2015, the Saratoga Industrial Development Agency commissioned a study of the Saratoga race track, the largest in New York state. Examining past data, it found the track had employed about one worker for every 1,800 yearly attendees. The racing association’s study projects that the renovated Belmont track will employ one new worker for every 630 new attendees — nearly three times as many jobs per attendee.
Similarly, the Saratoga study found that the track had generated $15 per attendee in state and local tax revenue a year. The racing association’s study projects the renovation will generate $36 in taxes per new attendee — more than double.
“The Belmont study made two clearly unreasonable assumptions: There will be a considerable number of new attendees in a sport with declining popularity, and those new attendees will spend over twice as much as current attendees,” said Nola Agha, a professor of sports economics at the University of San Francisco.
The study also doesn’t appear to ask how much of the economic activity generated by the renovation wouldn’t have occurred otherwise, either.
“If I took the $1,000 I spent at the racetrack and I took my family to see Hamilton on Broadway instead, there’s no difference for the state of New York,” said Andrew Zimbalist, an emeritus professor of sports economics at Smith College.
It also appears not to account for a coming casino boom that could cut into racing’s bottom line. New York City is preparing to allow three new casinos, some potentially within minutes of Belmont. Four others opened throughout the state between 2013 and 2019, during which time in-state bets on horse races decreased from over $1.5 billion to less than $1 billion.
“If the main driver for people to attend horse racing is gambling, and there’s an alternative form of gambling that doesn’t involve horse racing, that is going to be a very strong substitute,” Agha said.
But for Hochul, there’s more at stake than bang for New Yorkers’ bucks.
“This is a national treasure,” she said of Belmont. “It’s important to us as part of our identity, but to have that facility in the condition it’s in — it’s not worthy of the name of a New York facility.”
This story was updated to provide additional context on a legislator’s suggestion for Belmont’s winter usage.