New York State gave more than $200 million in education money to a scandal-plagued horseracing organization, according to a Buzzfeed News investigation.
That money could have funded 10,000 students for one year of schooling.
Instead of schools, the money went to the New York Racing Association, which runs the Belmont Stakes race. NYRA operates Belmont Park, Saratoga Race Course and Aqueduct Racetrack.
The state legislature gave the money to NYRA through a carve out in lottery revenue.
During a 2008 bankruptcy dispute with the state, NYRA gave up its ownership claims to three racetracks. In exchange, it received a $105 million loan, a 25-year franchise and a $200 million carve out from lottery funds that otherwise would go to education.
In the carve out, the state allowed NYRA to keep 7 percent of state revenues from video lottery terminals, or digital slot machines, at Aqueduct Racetrack in Queens. The state allows other organizations to keep some of the cut in similar arrangements, but 7 percent is much more than other groups get. NYRA gets to keep the carve out until at least 2033.
The state intended for NYRA to use that money to repay their loan, but the state eventually decided to let NYRA keep all of the $105 million loan.
Essentially, the state gave NYRA a large loan and a lottery carve out to help NYRA pay back the loan. Later, the state said NYRA didn’t have to pay back the loan and could keep the carve out.
The arrangement was set up during the administration of former Gov. Eliot Spitzer, a Democrat, who resigned in March 2008 amid a prostitution scandal. Current Gov. Andrew Cuomo is not involved.
Now, the state comptroller is investigating whether NYRA spent its carve out money improperly. NYRA’s PAC spent generously in the 2010 election cycle. It’s possible a portion of NYRA’s carve out money went to the political campaigns that made the carve out possible.
