Stan Bergstein's Daily Racing Form columns

With permission of Daily Racing Form,  Stan Bergstein’s bi-weekly columns for that publication will appear here every other week. 

July 11, 2006

Politics usually raw deal for racing

Horseplayers in the racing triopolis (my word, not Webster's) of New York, New Jersey, and Pennsylvania went back to school last week.

They learned, or relearned, this basic truth: Politicians rule racing with an iron hand wherever horses race.

Steve Crist outlined recently the bizarre lame duck doings of New York Gov. George Pataki, who would be president, or perhaps king. Nearing the end of his rule in New York, he sprayed favors all over the political map in long-term appointments, the strangest being his complete about-face on the New York Racing and Wagering Board.

A year ago, Pataki was trying mightily to kick Mike Hoblock off the board. Hoblock, no political novice, fought back, using political friendships and savvy and resolve, and frustrated Pataki's efforts. Now Pataki fires Cheryl Buley, whom he named chairwoman when he demoted Hoblock, and replaces her with two close Hoblock associates, one who twice served as a Hoblock executive assistant. New York now has, in effect, an all-Hoblock racing board, not necessarily a bad thing but a weird one considering where this dogfight started and where it ended.

In New Jersey, there are two lessons. One is that Gov. Jon Corzine, a former Marine, is one tough cookie. The second lesson is that the state's casinos blow its racetracks out of the water in media perception, and thus in public perception.

Corzine is hugely wealthy and smart. He grew up on a small farm in Illinois, graduated Phi Beta Kappa from the University of Illinois in 1969, and just 11 years later, at 33, was named a partner in the tremendously successful Goldman Sachs investment banking firm. He became a United States senator six years ago and governor of New Jersey this year.

When Corzine's fellow Democrats in the New Jersey legislature refused to go along with his insistence that a tax increase was fiscally necessary, Corzine stood firm, first threatening to shut down the state, then doing it.

Since casinos and racetracks are under state control, they were closed along with all other services, and stayed closed during the week. A political compromise that split a tax increase between the budget and property tax reduction was reached late Thursday, not in time to save Friday's cards but just in time to save the $750,000 United Nations Stakes at Monmouth Park on Saturday afternoon and the $200,000 Titan Cup at the Meadowlands that night.

In Pennsylvania, the Department of Revenue issued regulations requiring racinos to pay local municipalities a $10 million minimum tax on gaming revenues. That could boost the tax on racinos from 55 percent to 63 percent, causing Mohegan Sun to consider whether to turn back Pocono Downs to Penn National, which sold it to Mohegan for $280 million two years ago with a reported provision to cancel the deal if slots weren't in place by July 1 of this year. Mohegan Sun's understanding, which its local municipality had agreed to, was that it would pay 2 percent of revenues to it, or $2 million on every $100 million of revenue, with a cap of $10 million.

Mike Jeannot, vice president of Magna Entertainment's The Meadows near Pittsburgh, pointed out that this is not just an issue of concern for the racetracks.

"This will become an issue of concern for all licensees down the road," he said.

Meanwhile, the Pennsylvania legislature continued bickering over who gets racino spoils, and the last track/racino license in western Pennsylvania still is up for grabs, now so muddled that the state is suing Commonwealth Court, which had ordered the matter reconsidered.

While all of this was going on at the state level, Rep. John Conyers of Michigan was telling the House of Representatives that it should not let racing fans bet on the Internet.

If anyone in the room is developing a complex, you are not alone.