from the Standardbred Owners Association of New York

Editor’s Note: The following is a transcript of the testimony given by SOA of New York president Joe Faraldo regarding a proposed constitutional amendment to allow full casino gaming in New York State. It was presented to the NYS Senate Committees on Racing & Wagering and Judiciary on September 7, 2011.

I want to thank Chairman Bonacic and the Committee members for the opportunity to testify today. As you might imagine, many who are among the 40,000 New Yorkers employed as a result of the state’s critically important racing, equine and agriculture industries are extremely concerned about their futures and their livelihoods, and so we are very grateful to be able to share our thoughts and concerns about a proposed constitutional amendment to allow full casino gaming in New York.

My name is Joe Faraldo and I am the president of the Standardbred Owners Association, representing horsemen at Yonkers Raceway. I am also advocating here today on behalf of thousands of members of the Empire State Harness Horsemen’s Alliance, a statewide organization comprised of the SOA, Harness Horse Association of Central NY, Monticello Harness Horsemen’s Association, Saratoga Harness Horseperson’s Association and the Western NY Harness Horsemen’s Association.

And finally, I am extremely proud to be able to announce that I am also speaking to you today as a member of a new statewide advocacy group that is now coming together — the New York Horse Racing and Agriculture Industry Alliance — that will consist of horsemen, breeders, and agricultural and farming industry representatives and organizations from across the state.

The goal of this Alliance will be to protect the current and future interests of a horse racing and agriculture industry that is, as I mentioned before, responsible for 40,000 jobs across New York. So while you will no doubt be hearing today from a Gaming Association that represents the interests of nine racino owners, you will also be hearing — for the first time — from representatives of the tens of thousands of New York horse owners, trainers, veterinarians, farmers, feed suppliers, breeders, grooms, blacksmiths and others who could potentially see their livelihoods threatened should a constitutional amendment be adopted without specific protections and support for New York racing.

However, before we get to a more detailed discussion of our position on a constitutional amendment, let me first provide you with some context about the status of our sport. While the harness racing industry has seen a number of challenges and threats in recent years — from the proposed reductions in legally mandated payments to our industry as part of various OTB bailouts to the continuing struggle to get racino owners to adequately promote and support racing at their tracks — we also have seen significant job creation and major economic gains. Thanks to the thoughtful, racing-based video lottery terminal (VLT) initiative created by you and your colleagues in the New York State Legislature, we have worked our way to an unprecedented renaissance in harness racing and Standardbred horse breeding.

This dual purpose VLT initiative — charged with funding education and supporting a horse racing industry that is a major job-generator across virtually every region of the state — has increased purses and attracted investment into our breeding and agriculture sectors like never before. New farms and training facilities are opening in regions across the state and our New York Standardbred horses are commanding the highest prices by far at auction. At a recent sale, for example, New York-breds averaged more than $36,000, while our nearby competitor, Pennsylvania (which also has a major VLT initiative) barely averaged more than $27,000.

The economic multiplier effects of this purse money on various sectors of New York’s economy are really quite amazing. Just consider a few of these very real, very concrete, very significant examples of how VLT-generated purse money is filtering throughout our local economies and is attracting even more investment in New York State:

• Blue Chip Farms in Wallkill, N.Y., has made $9 million in capital investments to their property since 2001 and has purchased and franchised stallions worth $11.3 million here in New York since the inception of the VLT program. Each of these investments has generated additional expenditures for New York feed companies, hay growers, veterinarians, trucking companies, plumbers, electricians, tractor mechanics and more.
• In 2006, a horse family from New Jersey moved to New York and built the Mt. Hope Training Center in Orange County. They have invested millions of dollars in this new facility, including building a new half-mile track and a new 62-stall barn, all with New York contractors and workers.
• In nearby Middletown, N.Y., Mark Ford has built a brand new, 85-acre training center that includes a five-eighths-mile track and seven barns with 300 stalls. This facility — which directly employs 22 full time workers and hosts an additional 30 to 40 grooms employed by the trainers at the farm — represents a capital investment of more than $8 million. It is also important to note that of the ten trainers currently stabled at the facility, eight have come to New York from other states — specifically as a result of New York’s VLTs.
• Finally, in yet another truly inspiring story about New York investment, consider that in May of 2007, a gentleman named Agostino Abbatiello purchased an empty, abandoned horse farm in Pine Bush that he has since invested more than $4 million into and which now is home to the Pine Bush Training Facility. What was an abandoned property only four short years ago now hosts eight to ten trainers at a time — again, many relocating here from other states — and accounts for between 50 and 60 good New York State jobs.

As you can see, this isn’t just economic theory or conjecture. These are proven, on-the-ground economic gains in communities throughout New York State that are taking place thanks to our harness racing industry, and a similar renaissance in the Thoroughbred racing and breeding industries is no doubt about to occur with the opening of the Aqueduct VLT facility in the fall of 2011.

So then, in light of all of these positive economic gains, you can imagine why the members of this racing and agriculture Alliance are on pins and needles about how the proposed constitutional amendment will play out. For while it certainly could represent a real opportunity to expand upon these gains and benefits, it could also have the exact opposite effect if New York State, our elected officials, and ultimately our voters, do not make the right economic choice and take specific, pro-active steps to protect our racing and agricultural industries.

To avoid cannibalizing a strong and growing racing industry — and potentially erase several years of economic gains — then any resolution to allow full-scale commercial casinos must include strong, detailed language mandating that these new gaming opportunities provide similar contributions to the state’s job-intensive racing and agriculture industries as currently exist in the VLT law. Without such mandated contributions, any resulting shift from existing VLT wagering to these new, competing full-scale casino wagering vehicles will undoubtedly decimate racing and, by extension, our agricultural industry. It is, quite frankly, economically illogical to consider trading off tens of thousands of existing racing, agricultural and equine-related jobs in exchange for increased profits for casino owners and a limited number of new positions for blackjack dealers, croupiers and pit bosses.

Furthermore, one must carefully consider what additional costs might be involved in the “fine print” of any proposal and what other details will be involved in this promise of new casino-related jobs. For example, if the racino operators are angling for reduced tax rates as a trade off for these additional jobs, then the state must consider how it will handle the transition from existing (and extremely popular) lottery table games such as roulette and craps to full casino versions of these table games with potentially different tax rates. If the racino operators are seeking lower tax rates on these new games than the current lottery based versions, how will that impact revenue to the state and to education? And how will the state protect our agri-industry within this transition?

These types of questions — and the need to effectively balance the various interests of the state, public school students, the racino operators, the racing industry, and agriculture in New York State, as the existing VLT program has done — are critical to the process and to the policy discussion we are now undertaking. So with New York continuing to face unprecedented economic challenges — and with “jobs, jobs, jobs” serving as the state’s current public policy mantra — we in the NY Horse Racing and Agriculture Industry Alliance look forward to working closely with you in your deliberations over the issue of a potential constitutional amendment. We remain committed to the belief that any such initiative must generate important funding for education in New York and simultaneously protect and promote New York racing, jobs and agriculture.

Once again, on behalf of more than 40,000 industry representatives across New York State, thank you for the opportunity to share our thoughts.