The New York Racing Association could be insolvent by next year, state comptroller Thomas DiNapoli warned Monday, saying it desperately needs revenue from video lottery terminals at Aqueduct Racetrack that do not exist yet.
DiNapoli also said he is putting auditors on-site at the troubled agency to intensively monitor NYRA's condition, and said it needs to cut spending.
"NYRA is still on very shaky financial ground," DiNapoli said in a statement. "After declaring bankruptcy and getting bailed out by taxpayers, NYRA continued business as usual for too long. There's too much at stake to let NYRA continue its fiscal mismanagement. My auditors will begin real-time auditing of NYRA's books."
But DiNapoli also said part of NYRA's troubles lie with the state, which has failed to close a deal awarding a contract to operate 4,500 VLTs at Aqueduct. The slotlike machines would brings millions of dollars to NYRA and the state.
"The state also has to live up to its end of the deal," DiNapoli said. "But it looks like the selection of a VLT operator for Aqueduct is still an open question. When you start with six potential bidders and end up with only one, it begs the question of how the process was handled and whether the state can actually close the deal. The fact is NYRA can't make it long without significant restructuring and revenues from VLTs."
Officials at NYRA, which went into bankruptcy and was bailed out by the state, said in response to the audit that they have taken measures to rescue the association and it is on the mend - but needs the promised VLT revenue.
Charles E. Hayward, president and chief executive of NYRA, said in a letter to the comptroller's office that NYRA's financial troubles were also caused by the failure of the financially troubled New York City OTB to pay NYRA $19.9 million it owed the agency as of May 31.
He added that NYRA has cut operating costs by 2.2 percent since 2008, reduced purses for some races, and laid off 12 professional staff.
NYRA runs thoroughbred racetracks at Belmont, Aqueduct and Saratoga. The state granted it a $25 million loan in late May to keep it afloat amid persistent financial troubles. NYRA had warned more than 1,400 workers they might be laid off if financial help did not arrive.