Emilie Munson

Emilie Munson is a data reporter for the Times Union. She previously covered federal politics in Washington, D.C., for the Times Union and Hearst Connecticut Media. Emilie also has worked as a state capitol reporter for Hearst Connecticut Media and as an education reporter for the Greenwich Time.

February 22, 2022

Gaming Commission probes clients of horse doping veterinarian Seth Fishman

New York Gaming Commission headquarters on Wednesday, Feb. 9, 2022, on Broadway in Schenectady, N.Y. (Will Waldron/Times Union)

ALBANY — The New York Gaming Commission is seeking more information on the purchases made by people and businesses who were clients of a veterinarian who was recently convicted of federal criminal charges as part of the largest race horse doping investigation in U.S. history.

On Feb. 15, the commission sent letters to the clients of the veterinarian, Seth Fishman, asking them to describe their relationship with Fishman and his companies, which of their horses were treated by Fishman and what they purchased from him, according to a copy obtained by the Times Union.

In the letters, the commission requested responses via email from the clients by Feb. 28, but did not say what would happen if they do not respond.

Fishman, a veterinarian who lived in Florida but had worked for more than two decades in New York, was convicted Feb. 2 in U.S. District Court in Manhattan on two counts of conspiracy to commit misbranding and drug adulteration. During his trial, prosecutors introduced an exhibit that listed Fishman’s clients; it contained contained about 2,000 businesses, owners and trainers around the country, including 265 in New York, according to a copy obtained by the Times Union.

Brad Maione, a spokesman for the commission, said Tuesday the state agency is in an “information gathering mode” regarding Fishman’s clients, but declined to say more about the steps the commission had taken or will pursue.

“At this stage, it would be inappropriate to discuss any potential actions the commission may take in connection with our inquires,” Maione said in an e-mail.

According to the U.S. Department of Justice, Fishman used his veterinarian’s license as a cover for his illegal drug manufacturing business, Equestology, which he operated and concealed from state regulators for 20 years. His products were designed to be untestable and were seized by federal authorities at horse racing operations around the country, including barns in New York.

Some of Fishman’s clients included trainers who were indicted alongside him for their alleged use of performance enhancing drugs.

But Fishman also sold therapeutic medications and traditional veterinary supplies, sources told the Times Union.

The letters indicate the Gaming Commission is trying to learn what products that clients had purchased from Fishman. It is unclear exactly how many people received the commission’s letters. The commission regulates individuals and businesses with licenses to participate in horse racing in New York.

The Gaming Commission also has the authority to issue administrative subpoenas.

Several horse racing investigators told the Times Union they doubted the new letters would produce much notable evidence, but it’s a way for the agency to show they’re doing something.

“They just can’t say they got this list and we didn’t do anything,” said Mike Kilpack, a security and integrity consultant for the National Thoroughbred Racing Association.

A Times Union investigative series that began this month found that lackluster state investigations in New York, combined with underfunded drug testing, have for decades contributed to a proliferation of doping in standardbred and thoroughbred racing. (Emphasized by HRA)

Law enforcement has rarely involved itself in the problem; an exception has been the FBI-led doping investigation that snared Fishman and more than two dozen other horse racing participants. Fishman was one of seven veterinarians, 11 trainers, and nine other defendants described by prosecutors as distributors of performance enhancing drugs that were used to dope horses in multiple states and overseas.

The commission suspended the horse racing licenses of everyone indicted in the case.

Trials are unfolding for multiple defendants and could produce more evidence of how drugs circulated in the industry.

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February 21, 2022

Report: Tioga Downs vendors schemed to dodge state contracting rules

Gaming Commission didn’t scrutinize contracts for obvious red flags, inspector general found

This photo from Thursday, Oct. 16, 2014 show individuals playing video lottery terminals at Tioga Downs, in Nichols, N.Y. The New York inspector general recently uncovered two schemes to dodge state contracting rules involving Tioga Downs. (AP Photo/Mike Groll, File)

ALBANY — In two cases, Tioga Downs contractors participated in fraudulent arrangements to use minority- or women-owned businesses as pass-through entities for the product of other companies in order to give the appearance that the casino project was meeting state requirements about hiring diverse companies for contracts, according to the findings of New York Inspector General Lucy Lang.

A report released to the public Friday revealed two separate but similar schemes involving the construction of a casino at the Tioga Downs harness track in the town of Nichols, near the Pennsylvania border, between 2016 and 2018. The report also highlighted that the compliance team of the Gaming Commission — the state agency that oversees gambling and horse racing licenses — did not conduct the basic oversight of contracting at Tioga Downs to uncover the arrangements.

“We did not make any criminal referrals in our Tioga Downs letter; that however does not preclude a prosecutor from taking action if they choose to do so,” said Aries Dela Cruz, a director of strategic initiatives for the inspector general’s office.

The release of the inspector general’s report comes shortly after the office distributed 15 other reports that had never previously been released describing various misconduct among Gaming Commission employees and at state funds dedicated to horse breeding. The reports identified employees gambling on the job, engaging in workplace sexual harassment, withholding money from racing participants and improperly administrating state breeding awards.

The new report hinges on a New York requirement that construction projects completed by state licensees, like Tioga Downs, comply with a quota of giving at least 30 percent of the contracted work to minority- or women-owned businesses. These businesses are certified by the Empire State Development Corp.

In one instance, Lang found Tioga Downs knowingly used a minority- and women-owned business, Mil-Ray Food Co., as a pass-through entity to get food from Sysco Corp. and Maines Paper and Food Service Inc. Emails showed that Tioga Downs’ then-president and general manager Scott Freeman was aware of and encouraged the operation. The scheme resulted in Tioga Downs improperly claiming $3 million in credits from the state.

“I am very upset and disappointed because that is totally unacceptable,” said Jeff Gural, owner of Tioga Downs, as well as harness tracks Vernon Downs and Meadowlands. “All of the people that were involved no longer work for me.”

Officials with Mil-Ray Food Co. declined to comment. Sysco and Maines Paper and Food Service did not respond to requests for comment.

Separately, a minority-owned business, BSV Metal Finishers Inc., acted as a pass-through for electrical goods from businesses owned by white men, like Kaman Automation, and provided them to Matco Electric Corp., which was overseeing electrical work at Tioga Downs new casino. Matco then falsely reported to LP Ciminelli, Tioga Downs project manager, that BSV was the supplier, when in fact BSV was only a broker. BSV passed along $700,000 in electrical goods and improperly made $34,074, Lang found.

LPCiminelli was also implicated in another larger set of similar contracting schemes uncovered by the inspector general’s office regarding the the Buffalo Billion project, one of then-Gov. Andrew M. Cuomo’s signature economic development initiatives.

Gural said LPCiminelli had a compliance officer who was supposed to supervise those contracts and who had assured him the contracts for his project were in compliance.

LPCiminelli, BSV Metal Finishers and Matco did not respond to requests for comment.

The inspector general also found that the Gaming Commission’s compliance office, which had oversight of the contracts for the Tioga Downs project, did not conduct diligent scrutiny to identify the pass-through arrangements.

“The compliance team did not discover that Mil-Ray is a business without a functioning website that is operated by an individual out of her New Jersey home, information available through a simple Internet search that should have, at minimum, triggered further scrutiny,” Lang wrote.

Brad Maione, a spokesman for the Gaming Commission, said the agency works to create jobs for New Yorkers.

“It is unfortunate that individuals and companies, such as those referenced in the report, seek to unlawfully exploit the programs made to support and encourage the growth of minority- and women-owned businesses (MWBEs),” Maione said. “The commission is thankful for the efforts of the IG to investigate this issue, and we will begin developing procedures that include expanded review.”

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February 18,2022

How New York bankrolls horse racing with billions

All but three of New York’s horse racing tracks would likely close without subsidies provided by the state, a recent study found

A blazing sunrise lights the Saratoga Race Course Sunday, Aug. 9, 2020 in Saratoga Springs, N.Y. The Saratoga Race Course and other tracks operated by the New York Racing Association have reaped many financial benefits from a special agreement with the state. (Skip Dickstein / Special to the Times Union)

On summer days, thoroughbreds worth tens of thousands of dollars thunder around the track at Saratoga Race Course, competing for jackpot winnings and the triumph of victory.

In the white-and-red grandstands, women in wide-brimmed hats and men in suits cast bets and toss back cocktails. Out on the lawn, veteran enthusiasts beat a path between the tellers and their beach chairs, smacking programs and assessing their odds. At this track, there’s lots of money to be won — and lost.

While nearly every horse racing venue across the country shows visible signs of the sport’s overall financial decline, Saratoga appears to be running as smoothly as ever. That’s because, in New York, there is one key player bankrolling the sport at unprecedented levels: state government.

A state-commissioned gaming market study released a year ago found that without subsidies, eight tracks would likely shutter, leaving just the three tracks operated by the New York Racing Association.

Recently, there’s been a push among some state lawmakers to cut financial support for the industry and steer those funds to health care, human services or education.

Horse racing in New York has been propped up by more than $2.9 billion in state taxpayer dollars and government-directed benefits since 2008, a Times Union investigation has uncovered.

That’s more than twice the money New York budgeted for the state Department of Agriculture in the same time period, and 13 times what it spent on veterans’ services.

The payout is also more than eight times what state and local governments have given during the same period to IBM, the technology juggernaut headquartered in New York, according to Good Jobs First, a nonprofit that tracks corporate subsidies.

New York has provided horse racing numerous ongoing subsidies, including tax breaks, arguably favorable leases, debt forgiveness and redistribution of revenues from video lottery terminals (VLTs), commonly referred to as video slots. In return, the state takes a loss, regaining tax revenues at a fraction of what it distributes.

Economists view this as a unique arrangement in the world of corporate and sports incentives.

Racetracks — including the state’s crown jewel, Saratoga — are dependent on the benefits. A state-commissioned gaming market study released a year ago found that without subsidies, eight tracks would likely shutter, leaving just the three tracks operated by the New York Racing Association. But NYRA’s racing would be significantly diminished and race horse breeding would be “devastated,” the study concluded.

The Times Union obtained recent annual financial statements for the nonprofit corporation, which operates Saratoga as well as Aqueduct Racetrack and Belmont Park — the state’s premier thoroughbred tracks. The statements indicate NYRA would be posting multi-million-dollar deficits annually without its supplemental funds.

Recently, there’s been a push among some state lawmakers to cut financial support for the industry and steer those funds to health care, human services or education.

Those proposals have triggered fierce pushback from New York racing executives and their allies who are banding together to defend their subsidies and the jobs they support.

“All of racing could be hurt irreparably if we don’t fight this,” Joe Faraldo, president of the Standardbred Owners Association of New York, told industry stakeholders at a conference at the Saratoga track in August.

The most well-known way New York funnels money to horse racing is by directing a portion of video slot revenues to tracks and race horse breeders. The justification: Some of the VLTs are stationed in racinos adjacent to horse tracks. Tracks depend on those funds to operate, with some of that money flowing to breeders, health insurance for jockeys and, soon, for trainers, too.

New York’s horse racing subsidies 2008-2021

But the Times Union found New York’s support for horse racing goes far beyond the video slot supplements. The state has paid for debts accrued by NYRA …… and spent millions annually to cover property taxes on the three tracks that NYRA leases from the state for $1 per year.

NYRA was also exempted from state and New York City income taxes … and New York waives sales taxes on the training and maintenance of race horses. The sale of race horses — which sometimes go for hundreds of thousands of dollars or more — is also exempt from sales taxes. Despite this, the state does not verify that the horses ever race, and state agencies have no idea how much revenue New York is passing up through that exemption, the Times Union found. Over the last 13 years, New York race tracks have paid about $184 million in pari-mutuel taxes and regulatory fees, state Gaming Commission records show.

Off-track betting venues have contributed $130 million in pari-mutuel taxes and fees, the records show.

Together, that’s less than a 15 percent direct return on the funding the state has directed to the industry.

“It’s right down there with film credits. That’s bad,” said Greg LeRoy, executive director of Good Jobs First. “There’s been numerous independent studies and state audits that have been done on taxpayer return on film production tax credits, and they’re invariably in the teens.”

But the picture is more complex. New York horse breeders and others who derive their livelihood from the industry pay corporate and personal income taxes, too, while the state collects sales taxes on things like concessions that are sold at the tracks. Some tracks — Saratoga in particular — provide a boost to tourism in the surrounding community.

Note: Times Union was unable to obtain data on payments for a handful of select years.
Sources: New York State Gaming Commission, Hempstead Office of the Receiver of Taxes, Nassau County Government, Saratoga Springs Office of Finance, Saratoga County Treasurer’s Office, New York Department of Taxation and Finance, Office of the State Comptroller, Saratoga Springs School District, New York City Department of Finance

The Saratoga County Industrial Development Agency published a report in 2014 indicating the state’s investment of VLT revenues in the thoroughbred racing industry “has had significant and far-reaching economic impacts.” The report said the revenues “revitalized the industry” and “provided a significant boost to the state’s agriculture industry.” The agency has not conducted a more recent study.

NYRA’s financials

NYRA’s recent financial statements reveal the organization’s dependency on state government.

Radha Radhakrishna, an adjunct professor at Columbia University Business School and founder of a portfolio analysis and forensic accounting firm, reviewed those financial statements — from 2018, 2019 and 2020 — at the Time Union’s request.

“If I look at it as a company that I would want to invest in, obviously they are not doing well,” Radhakrishna said. “They badly need that money they are getting from video lottery terminals. … That deal keeps them afloat.”

The financial statements show the organization posted a $55 million operating loss in 2020, before accounting for its video slots supplement, tax breaks and other means of support, according to Generally Accepted Accounting Principles (GAAP), which are widely used accounting standards.

The nonprofit’s operating losses, before subsidies, were even larger before the COVID-19 pandemic: Under the accounting standards, NYRA produced operating losses of between $76 million and $81 million each year from 2016 to 2019, the financial statements indicate.

A look inside NYRA’s books

The bulk of NYRA’s operating revenues come from wagering on its races and simulcasting of its races. Its operating expenses include employee compensation, purses, facility operations and other categories. Its operating loss is its operating expenses minus its operating revenues. In addition to operating revenues, NYRA receives VLT support payments for operations, purses and capital expenses allocated to it by the state. The data below reflects Generally Accepted Accounting Principals. NYRA had other non-operating revenues and expenses not shown on this chart. Under a non-GAAP measure that NYRA also uses, NYRA had an operating loss of $3.1 million in 2020 and operating income of $4.3 million in 2019 and $3.6 million in 2018.

Patrick McKenna, NYRA’s spokesman, said the organization uses non-GAAP accounting standards to assess its operating income, while excluding video slots money and some expenses. By that measure, NYRA had an operating loss of just $3.1 million in 2020, with an operating income of $4.3 million in 2019 and $3.6 million in 2018, financial statements show.

“NYRA’s racing operations have been profitable every year since 2014 apart from 2020, when NYRA faced an unprecedented business interruption due to the COVID-19 pandemic,” McKenna said. “It should be noted that (the prominent accounting firm) KPMG has issued ‘clean’ and unqualified audit opinions in each of those years.”

Still, New York’s comptroller reported in audits in 2016 and 2018 that the organization continued to produce multimillion-dollar annual deficits. In both years, the comptroller also recommended that the nonprofit not use its alternative accounting method to calculate publicly shared operating profits or losses; the comptroller said NYRA had done that on a few occasions.

“Reporting such numbers to the general public and to the NYRA board in this way is not a fair presentation of the profitability of NYRA’s racing operations, and can leave decision-makers with the false impression that no actions are required,” Comptroller Thomas DiNapoli wrote.

In 2016, the comptroller recommended that NYRA develop a detailed plan to eliminate its annual deficits from racing operations, before accounting for video slots subsidies. In 2018, the comptroller reported that NYRA had not done so.

NYRA’s then-general counsel, Joe Lambert, wrote in response to the comptroller in 2018 that “there are no deficits” and said the organization uses its video slots payments “precisely as required by statute and contract.”

NYRA’s recent financial statements show its racing expenses consistently exceed the revenues it collects from wagering. The organization’s biggest expenses are stakes and purses — the financial winnings of race horse owners. Purses comprised at least a quarter of its operating expenses each of the past five years.

“Prior to 2017, they had an issue with employee pension funds and other post-employment benefits, but they have since recognized (it),” Radhakrishna said. “They have a deficit of about $70 million in there, and they have to make it up sometime.”

But from its video slots supplements, NYRA raked in about $85 million annually before the pandemic to cover its operating costs and roughly $33 million annually to pay for its capital expenses, its financial statements show. Having the video slots funds enabled NYRA to offset their operating losses each year.

Joe Appelbaum, president of the New York Thoroughbred Horsemen’s Association, pointed to the new 1863 Club at Saratoga Race Course, shown here, as evidence of VLT revenues have helped bolster New York tracks. The 1863 Club has private boxes and fine dining. (Susie Davidson Powell / Times Union archive)

“VLT funds are directed to important capital improvement projects at all three tracks to enhance the quality and safety of racing operations, improve the fan experience and modernize residential housing for the NYRA backstretch community,” McKenna said. “These are investments in the future of Saratoga Race Course, Belmont Park and Aqueduct Racetrack that will benefit New York racing for decades to come and increase the value of these New York state-owned assets.”

McKenna noted that NYRA has spent $93 million on capital improvements at Saratoga since 2016.

Joe Appelbaum, president of the state Thoroughbred Horsemen’s Association, pointed to the new 1863 Club at Saratoga, the site of private boxes and fine dining, as evidence of what elevates New York racing above what he called “zombie tracks” around the country.

“How does this building get built?” he asked. “That’s through our supplement.”

New York’s one other thoroughbred track, Finger Lakes Gaming and Racetrack, and seven standardbred tracks also receive video slots supplements to help pay for their purses, but they collect less than NYRA does, Gaming Commission reports show.

John Matarazzo, director of racing operations at the Saratoga harness track at Saratoga Casino Hotel, said roughly 88 percent of the purses at his track are paid for by the video slots funds.

“Prior to the VLTs, our purses for the year were roughly $3 million,” Matarazzo said. “Now, they’re over $15 million, so it is significant.”

It wasn’t always this way, said professor Raymond Sauer of Clemson University, a sports economist with a passion for horse racing.

“When states started licensing horse tracks … they did it to collect the tax off wagering revenue,” Sauer said. “That was the motivation in the 1930s, when the states were all broke, to bring back horse racing.”

Now, the roles have reversed, and horse racing is on “corporate welfare,” Sauer said.

“They’ve got their hands out,” Sauer said. “They need it to stop the slide in some sense because race tracks are going out of business.”

New York’s horse racing industry has benefited from nearly $3 billion in financial support that the state has directed to it over the last 13 years, more than New York City’s subsidization of Yankee Stadium.

The first race leaves the starting gate on opening day of the 153rd meeting at the Saratoga Race Course on July 15, 2021, in Saratoga Springs. (Skip Dickstein / Special to the Times Union)

This March 26, 2020, file photo shows an empty Yankee Stadium on opening day. (John Woike / Samara Media via AP)

Horse racing vs. the Yankees

Few sports receive state subsidies as wide-ranging as horse racing’s take in New York, according to Andrew Zimbalist, a Smith College economics professor who studies the sports industry. Some cities have kicked in similar amounts to boost their teams, though.

Zimbalist compared the subsidies for the New York tracks to those received by the New York Yankees. The baseball team usually gets about 3.3 million attendees for their 81 home games, compared to roughly 1.5 million attendees for 1,186 days of racing at 11 New York tracks.

In 2009, the Yankees opened a new stadium. The team funded about $670 million of its roughly $2.3 billion construction cost; public financing and tax breaks kicked in the rest. The city’s subsidization of Yankee Stadium adds up to just over half the benefit horse racing has received over the past 13 years.

“The Yankees have to pay corporate income taxes,” Zimbalist said. “There is no rule that says when you buy a hot dog at Yankee Stadium, you don’t have to pay any taxes, or when the Yankees buy baseball bats from Louisville that they don’t have to pay any sales taxes.”

Assemblyman Gary Pretlow, D-Mount Vernon and chair of the chamber’s Racing and Wagering Committee, said the way New York invests in horse racing isn’t that different from its support of other industries.

“We prop up nursing homes; we prop up developers that are building in various communities,” Pretlow said. “There are a lot of industries that do benefit from the state giving them a helping hand.”

Marc Dunbar, a Florida horse racing lobbyist and attorney who used to own a track, said New York’s support for NYRA is unique.

“It is a legacy level of sponsorship that can’t really be justified by any public policy or any basis in studied, reasoned economic incentives,” Dunbar said. “It just is tradition.”

Decoupling

New York and multiple other state legislatures have recently contemplated so-called “decoupling” — dividing horse racing from public payouts.

Florida lawmakers decided last year that video slots didn’t have to be tied to harness racing, a move that is likely to lead to the closure of the last harness track in that state. Pennsylvania has debated slashing its support payments and reallocating those dollars for education scholarships.

In March, several groups, including People for the Ethical Treatment of Animals and New York Communities for Change, launched a six-figure advertising campaign urging lawmakers to reallocate horse racing subsidies to other causes, such as health care or education.

Assemblywoman Linda Rosenthal, D-Manhattan, has a pending bill backed by those groups to redirect the approximately $230 million in video slots revenues that flow to horse racing each year to schools and human services.

In 2020, state Sen. Jessica Ramos, D-Queens, introduced a similar bill to shift those revenues to the Metropolitan Transportation Authority. The bill never passed.

NYRA is promised revenues from video slots located at Aqueduct through a 2008 agreement with the state. Other tracks and race horse breeders also receive a portion of revenues from video slots at casinos located at their tracks or at off-track betting locations through separate legislation.

About half of the net win from video slots, after prizes are paid out, flows into state education funding, while the remaining money is divvied between the racinos, horse racing causes and the Lottery. Appelbaum, the leader of the Horsemen’s Association, said the state has at times struggled to site casinos due to local opposition, and may have lacked this revenue stream without the cooperation of race tracks.

Dave O’Rourke, New York Racing Association president and CEO, attended the Racing and Gaming Conference at Saratoga on Monday, Aug. 16, 2021, at Saratoga Race Course in Saratoga Springs. (Will Waldron / Times Union)

Sen. Joseph Addabo, D-Queens, who chairs that chamber’s Racing, Gaming and Wagering Committee, staunchly backs the billions directed to horse racing through video slots subsidies and other means.

“In gaming, there are a lot of subsidies going on, but also jobs,” Addabo said. “What you don’t want are thousands of people out of work and not paying their taxes to the state and not buying things.”

Pretlow said the idea of taking video slots money away from horse racing “would kill the industry. The purpose of the legislation was to save the tracks and save the industry.”

New York’s horse racing insiders have been gearing up to protect their funding, if needed. In September, NYRA and thoroughbred and standardbred racing groups launched a coalition called We Are NY Horse Racing, pulling in support from organizations like the Saratoga Chamber of Commerce and the Building and Trades Council of Nassau and Suffolk counties. They point to the jobs created by the industry and its economic impact as reasons why state money should continue flowing to horse racing tracks and breeders.

More than casino revenue

Eleven other states fund horse racing through casino or video slots revenues, according to the American Gaming Association. But New York finances horse racing with more than VLT dollars.

12 states, support horse racing through taxes on casino gaming, including: New Mexico, Oklahoma, Arkansas, Louisiana, Indiana, West Virginia, Pennsylvania, Maryland, New York, Massachusetts, Delaware, Maine

In 2008, New York bailed NYRA out of bankruptcy, using $159 million to wipe away NYRA’s debts, according to the state comptroller’s office.

The state also signed a franchise agreement that gave NYRA the exclusive right to operate racing at Saratoga, Aqueduct and Belmont for the next 25 years.

“NYRA has successfully enhanced the quality of thoroughbred racing in New York by funding a robust purse account while completing important capital improvement projects to enhance the fan experience, modernize facilities and grow the sport,” McKenna said. “This was the intent of the franchise agreement reached between NYRA and New York state guaranteeing these funds through 2033.”

The franchise agreement also transferred ownership of Saratoga, Aqueduct and Belmont from NYRA to the state, which agreed to pay the local real estate taxes for the properties.

Since 2008, the state has paid more than $404 million in taxes for the three tracks, according to data from local and county taxing jurisdictions.

New York paid the property taxes for Belmont Park owed to Nassau County with this check in 2012. Source: Nassau County Treasurer’s Office

In contrast to NYRA’s $1 per year track leases, the state charges New York Arena Partners $2.24 million annually to lease part of the Belmont Park property, where a new arena for the New York Islanders and retail shops operate. The arena partnership makes “payments in lieu of taxes” to municipal agencies, according to a spokeswoman for the Empire State Development Corp.

NYRA is also exempt from paying state and New York City income taxes, but pays payroll and federal income taxes.

The 2008 agreement with NYRA said the nonprofit would pay the state an annual franchise fee equal to the lesser of either its adjusted net income or operating cash. NYRA has never paid a franchise fee to the state since the agreement was signed, according to the state.

The state also forgoes millions in tax dollars from sales tax exemptions for the training and maintenance of race horses and the sales of race horses. The Department of Taxation and Finance estimates that the state passes up $5 million annually by exempting the training and maintenance of race horses; it has no estimate for the exemption on the sales of race horses.

LeRoy, who studies government incentives, said most industries that receive multiple subsidies get temporary benefits to kick-start their economic development as they are getting off the ground. But horse racing is an old enterprise, and NYRA was in the red when its subsidy deals were set up.

“When you look at the deep subsidization of multiple forms of taxation (for horse racing), it says propping up,” LeRoy said. “It says deep entrenched corporate interests.”

Economic impact

Over time, the number of horses bred in the state, the number of races held, attendance at horse racing tracks and in-person wagering at the tracks and at off-track betting parlors have all declined in New York. The bright spot is mobile wagering, which skyrocketed in recent years, a phenomenon NYRA is tapping through its own mobile horse racing betting platform, NYRA Bets. On a national level, the 2021 New York Gaming Market Study found that mobile wagering has helped keep the total amount of money wagered from declining.

Ed Martin, president of the Association of Racing Commissioners International and former executive director of the New York Racing and Wagering Board, said subsidies for racing are a public policy decision, “just as the state subsidizes rural roads where there is not a lot of activity.”

The investments help keep farms operating and preserve green space, others added.

“What about those grooms? What about the guy that sells the food on Plainfield Avenue outside of Belmont Park? He’s probably putting three kids through college,” Faraldo, the standardbred association leader, said. “What do you want to do, take that money away from these hard-working people, move it over to some social program, which is popular today, become a socialist society in essence by picking on this industry?”

Despite its large investments in racing, the state has not conducted a study of the jobs produced by horse racing or its economic impact, a spokesman for the Gaming Commission said.

We Are NY Horse Racing claims a $3 billion economic impact and 19,000 jobs created across the state, ranging from trainers and veterinarians to track security officers and clerks. Those numbers come from a 2018 study from the American Horse Council, a national lobbying group for the equine industry.

Good Jobs First identified several major deficiencies with the study.

“Those numbers are baloney — simply wrong,” Zimbalist, the sports economist, said. “Let’s say Saratoga, Aqueduct and Belmont all disappeared. People who normally would have gone to the race track are now going to do some other entertainment. … Those entertainment venues will now have to hire more people to service the additional people going to their events.”

Zimbalist said the only net positive economic impact from New York racing is if it draws attendance from other states. A 2014 survey conducted by NYRA found 39 percent of attendees at Saratoga Race Course came from out of state.

A more rigorous study of the economic impact of horse racing, which focused on just the Saratoga Race Course, the most successful track in the state, found in 2014 the operation generated a regional economic impact of 2,590 jobs, $101 million in wages and earnings, and $237 million in sales (economic output). It also contributed $6.8 million in local government revenue and $7.4 million in revenue for state government.

Bennett Liebman, a former New York deputy racing and gaming secretary, spoke during the Racing and Gaming Conference at Saratoga at Saratoga Race Course in Saratoga Springs on Monday, Aug. 16, 2021. Liebman contends jobs numbers boasted by the New York horse racing industry are inflated. (Will Waldron / Times Union)

Bennett Liebman, a former New York deputy racing and gaming secretary, wrote an analysis on why jobs numbers boasted by the New York horse racing industry — in the past, claiming 35,000 and 40,000 jobs at various times — are inflated.

“We may not know how many jobs (the industry) has produced, but it is certainly nowhere near the levels that the surveys authored on behalf of the industry have indicated,” he wrote.

Roughly 2,000 full-time, seasonal and part-time employees worked at Saratoga Race Course in 2021, McKenna said, and many employees shift between NYRA tracks.

The New York Thoroughbred Horsemen’s Association counts up to 2,500 trainers and grooms working the backstretch and not employed by the tracks, Appelbaum said.

“These are the sorts of jobs that are disappearing downstate and provide a real opportunity for immigrants and local residents alike to work without having earned an advanced degree,” Appelbaum said.

JMS Advisors, a firm hired by the Empire State Harness Horse Alliance, found in 2020 that the entire standardbred racing industry in New York, including seven tracks, produced 3,949 jobs in 2018 — direct and indirect — and produced a $462 million economic impact.

Still, Sauer, the economist, said racing may have to start thinking about its “post-subsidy plan,” as various interests compete for state support.

“This is a political tug of war which will continue.”

The starting gate at Saratoga Race Course in Saratoga Springs is pictured on April 18, 2021. (Skip Dickstein / Special to the Times Union)

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In February 2020, federal agents stormed the barns and offices of a racehorse training facility in Middletown.

They had intercepted communications suggesting an employee of the Mt. Hope Training Center was the source of drugs used to dope horses on behalf of the facility’s owner, Richard Banca, according to a federal criminal complaint.

The evidence recovered by investigators at the Orange County training facility that day helped the U.S. Department of Justice build one of the biggest doping cases in the history of horse racing — allegations that continue to reverberate through the sport two years later.

The case, which would lead to 29 arrests and the dismantling of an expansive racehorse doping ring, marked an extraordinary moment in the history of a sport that has long been policed by commissions or bodies that regulate racing at the state level. It also raised questions about why it took a federal agency to clean up an industry where cheating has endured, in part, because of languid state investigations that rarely involve law enforcement authorities.

Inside Banca’s personal office on the barn’s second floor, agents found a handwritten ledger with a list of horses’ names. There was a syringe on top, along with a note offering instructions on how to administer a custom drug concoction through a tube inserted down a horse’s nose and throat, according to the federal complaint.

They found a substance labeled “bleeder” — believed to have performance-enhancing effects — next to another syringe. A second bottle in the office contained adrenaline. Another medication they found was from a company that wasn’t authorized to make animal drugs.

Federal agents arrested Banca and his assistant trainer Conor Flynn a few weeks later on charges of obtaining misbranded or adulterated drugs through interstate commerce. They have pleaded not guilty; Banca’s attorney said he would vigorously fight the allegations against him in the appropriate forum. Other attorneys either declined to comment or did not respond to the Times Union’s queries.

The 27 other people charged include top thoroughbred and standardbred trainers, veterinarians and their partners who allegedly supplied illegal performance-enhancing substances.

Horse Racing Unbridled

Nearly undetectable

In October 2019, New York-based standardbred horse trainer Thomas Guido III allegedly made a request to Louis Grasso, his equine veterinarian and drug supplier. Guido kept his horses at Grasso’s Golden Shoe Training Center in the Orange County village of Montgomery, multiple sources confirmed to the Times Union.

Guido wanted 4,000 units of erythropoietin, or EPO, a hormone that stimulates red blood cell production; it was one of the doping agents used by champion cyclist Lance Armstrong as part of his extensive cheating regimen.

EPO increases the oxygen-carrying capacity of the blood, stimulating endurance and delaying fatigue — all of which make it enticing to people who want the fastest horse on the track.

Trainers in the industry told the Times Union that 4,000 units of EPO isn’t a large amount for a horse but could be used for a popular technique called “micro-dosing,” and it was enough to catch the eye of the U.S. Department of Justice. Federal prosecutors described the communication between Guido and Grasso in a criminal indictment related to the Navarro and Fishman cases.

That alleged transaction, in part, helped investigators uncover what they described as a much larger operation.

Like Fishman, Grasso had built a business supplying adulterated and misbranded performance-enhancing drugs to trainers across New York and the rest of the country for years, prosecutors alleged.

It wasn’t Grasso’s first federal indictment: In 1992, the vet had been convicted of selling anabolic steroids, and his license to practice equine medicine at racetracks was stripped by the state of New York.

So how did the alleged doping network go undetected for so long?

Part of the answer is that some medications and drugs, like EPO, are exceedingly difficult to trace. The EPO molecule becomes undetectable to current testing in a horse’s body within hours or minutes, depending on the quantity, even though the key benefit of the drug — the enhanced red blood cells that it produces — lasts for about 120 days, said Kenneth McKeever, professor of animal science at Rutgers University.

The medication first went on the market in the late 1980s to treat kidney failure in humans, but quickly began cropping up in equine circles, McKeever said.

EPO has never been permitted for use in racehorses under New York regulations. According to the state Gaming Commission, between 2003 and 2006, 12 standardbred horses racing on New York harness tracks tested positive for EPO, but none have been identified more recently.

Still, some experts believe those caught using the drug represent just a small fraction of people in the industry who actually use it.

Medina Spirit with jockey John Velazquez aboard passes the finish line on the way to winning the 147th running of The Kentucky Derby at Churchill Downs Race Track on May 1 in Louisville, Kentucky. Medina Spirit was trained by Bob Baffert and his subsequent drug positive triggered several enforcement actions against Baffert. (Skip Dickstein/Special to the Times Union)

“Who are you kidding?”

In two squat, unassuming buildings tucked between a jail and a post office in Ithaca, New York’s equine drug laboratory is widely respected as one of the most advanced in the U.S. Since 1971, the laboratory has conducted over 5,000 drug trials and has its own herd of horses for research. It’s able to test for over 4,000 drugs, Maylin said.

But the New York Equine Drug Testing Lab and most similar facilities across the U.S. can only test for three varieties of EPO, while scientific literature cites 82 kinds of EPO worldwide, he said.

“Are they being used? I don’t know,” Maylin said in a recent interview. “But they’ve been synthesized; they’re available. So if you’re testing for EPOs and you’re only doing three and there are another 70-plus out there, who are you kidding?”

Mary Scollay, executive director and chief operating officer of the Racing Medication and Testing Consortium (RMTC), said she’s heard allusions to a “rainbow” of EPO varieties, but she hasn’t identified all of them and doesn’t know where one would get them.

Maylin said that his lab is working to develop more EPO tests, but the research is difficult, time-consuming and expensive.

It can take months or years to identify a tiny trace of a substance showing up in a horse’s hair, urine or blood. More time is required to develop a reliable way to test for that compound. Research needs to be conducted to determine the effect of the substance on the horse and in what concentrations, if any, it should be permitted.

Sometimes the lab will spend months working on a test for a substance only to find that trainers or owners willing to cheat have moved on to something else, Peck said.

Researchers suspect that some racing participants have shifted to using substances that spur the horse’s own natural production of EPO in the spleen instead of injecting EPO directly into the body, McKeever and Maylin said. Indeed, Fishman, the convicted veterinarian, was caught on wiretaps touting the benefits of an “EPO mimetic.”

“That’s sort of the cutting-edge thing,” McKeever said. “If you’ve got something that will stimulate EPO production and it’s something we can’t detect, (these) molecules — they’re a threat.”

Scientists at Maylin’s lab spend time each month researching new drugs being released worldwide and looking at scientific research. But so do those looking for an advantage in horse racing — rogue scientists he refers to as “garage chemists.”

Those individuals “monitor the literature, and they’ll find a source — almost always from China — and they’ll incorporate that into their work,” Maylin said.

Dr. George Maylin, director of the New York Equine Drug Testing and Research Laboratory, pulls a frozen racehorse test sample from a storage freezer at his lab on Sept. 10, 2021, in Ithaca. Horse racing drug test samples go back decades. Maylin discussed the challenges with keeping up with doping in the sport. (Will Waldron/Times Union)

The 81-year-old scientist with tidy white hair pulled open the vault-like door to his freezer and revealed floor-to-ceiling rows of preserved samples — over 500 vials of blood and urine in clear tubes the length of a finger. Each was drawn from a racehorse and has been set aside because it contains a peculiar, as-yet-unknown substance. Maylin is working and waiting for the day when he has the right test or technology to identify each one.

“Some samples are 10 years old,” he said, closing the door and plunging the mystery samples back into darkness. He’ll keep them until he runs out of space.

Caught by the DOJ

It wasn’t Maylin or his lab who caught Navarro, Fishman, Guido and Grasso, and the wider drug scheme they were allegedly a part of. It was the FBI.

In 2020, the two men and 27 other defendants were indicted by the Department of Justice in a series of doping cases that ensnared trainers, veterinarians and their partners across the standardbred and thoroughbred racing industries.

The indicted trainers include Jason Servis, a thoroughbred trainer who in 2019 won $29 million in purses for himself and his owners at New York tracks; Michael Tannuzzo, who trained thoroughbred horses in New York; and standardbred trainers Rene Allard, Richard Banca and Conor Flynn, who kept their horses in Middletown. All of those trainers have pleaded not guilty to federal charges and are awaiting trial.

In 2020, the two men and 27 other defendants were indicted by the Department of Justice in a series of doping cases that ensnared trainers, veterinarians and their partners across the standardbred and thoroughbred racing industries.

The indicted trainers include Jason Servis, a thoroughbred trainer who in 2019 won $29 million in purses for himself and his owners at New York tracks; Michael Tannuzzo, who trained thoroughbred horses in New York; and standardbred trainers Rene Allard, Richard Banca and Conor Flynn, who kept their horses in Middletown. All of those trainers have pleaded not guilty to federal charges and are awaiting trial.

The case also brought charges against veterinarian Kristian Rhein, who practiced at Belmont Park; Alexander Chan, who worked for the New York Racing Association as an examining veterinarian from 2012 to 2015; and distributor Lisa Giannelli, who allegedly shipped drugs to trainers and other racing participants around the state. Gianelli and Chan pleaded not guilty, while Rhein pled guilty and was sentenced to three years in prison.

Allard, through his attorney, denied the allegations made against him. Banca’s attorney said he declined to speak to the Times Union and would vigorously fight the allegations. Attorneys for the other indicted individuals named in this story declined to comment or did not respond.

Thoroughbred trainers Navarro and Tannuzzo never had a positive drug violation in New York prior to their arrests, Gaming Commission data shows. Servis had one in 2005.

Standardbred trainer Banca had three positive drug violations in New York in the 11 years prior to his arrest, Gaming Commission data shows. Allard and Flynn each had one.

Asked why the performance-enhancing drugs described in the federal indictments were not caught by his tests, Maylin said he can test for some of those drugs, but not all. He is not familiar with some of the compounds described the indictments, and therefore cannot test for them. He has requested samples of those drugs from the Justice Department.

“I don’t believe anybody doing drug testing knows what the heck these things are, if they’re anything,” he said.

New York’s Equine Medical Director Scott Palmer said that when the state in 2020 tested the thoroughbreds in New York belonging to the federally indicted trainers, 77 percent tested positive for clenbuterol, a drug that can help with respiratory issues and also builds muscle mass. About 200 standardbred horses and 100 thoroughbreds were tested.

The Department of Justice said this month that its investigation is continuing.

Maximum Security #7, ridden by Luis Saez, led the field out of turn four during the Florida Derby at Gulfstream Park on March 30, 2019 in Hallandale, Florida. Maximum Security was allegedly given performance enhancing drugs on at least one occasion, according to the U.S. Department of Justice. (Matthew Stockman/Getty)

“The Allard death camp”

The federal cases have shaken loose details about the ways people in horse racing are cheating to win. In addition to giving horses EPO, various indicted individuals were allegedly applying analgesics — including snake venom — to deaden a horse’s nerves and block pain; bronchodilators to increase oxygen intake and lessen fatigue; and other drugs, including Viagra, to induce performance-enhancing effects, according to federal prosecutors.

Some fed baking soda to horses as a way to mask the presence of prohibited substances in their urine, according to prosecutors.

Horses that received the substances targeted by the FBI won high-profile races — including Maximum Security, which placed first at the Kentucky Derby in 2019 before a disqualification for interfering with other horses.

But other animals have died from doping.

According to a Department of Justice complaint, Allard’s practices made him one of the most winning standardbred trainers of his era, but other indicted racing participants called his barn “the Allard death camp.” The complaint noted that Grasso, who worked with Allard’s horses, said three died.

Likewise, Grasso counseled the trainer Guido after a horse he was training died after receiving a performance-enhancing drug that Grasso gave Guido.

“I’ve seen that happen 20 times,” Grasso told him.

Drug money

Maylin’s lab, which is associated with the State University of New York at Morrisville, has an annual budget of about $5.5 million, funded by the state through fees it collects from the racing industry. Maylin was paid about $235,000 in 2020, according to a tax document filed by the Morrisville nonprofit that helps administer the lab. He requested another $450,000 from the state to support lab operations in the upcoming fiscal year.

Maylin contends a lack of funding has inhibited his ability to test for more drugs.

“Another million would help a great deal,” he said. “The program was deficient in money for a number of years from 2010 on. … Right now we have as much research money in budget as any lab in the U.S.”

Wayne Duer, a former equine drug laboratory director in Florida, said the labs nearly always need more money because of the great expense of their research and equipment.

Testing vessels used in the process of checking for performance enhancing drugs in racehorses are seen at the New York Equine Drug Testing and Research Laboratory on Friday Sept. 10, 2021, in Ithaca. One sample can cost $180 or more to test. (Will Waldron/Times Union)

Sampling has dropped

A lack of resources has been choking off the number of samples that state regulators have been collecting and sending to Maylin’s lab, he said. The scientist reported that the number of samples sent to his lab has dropped significantly since 2015, even prior to 2020 when racing was reduced.

The Gaming Commission collects and pays for the vast majority of samples collected for drug testing from standardbred and thoroughbred horses in New York. Not every horse is sampled; typically, top performers are sampled on race day and some are subject to a limited amount of out-of-competition testing. Thousands of samples are collected by the Gaming Commission. The New York Racing Association also pays for some sampling and testing of its own.

A routine test of blood or urine costs about $180 per sample, while testing a hair sample costs about $250, Maylin said.

“Everything started getting expensive,” Maylin said. “COVID really messed things up. But collecting samples is an ordeal for the regulators. You have to have veterinarians; you have to have skilled assistants. And for that reason, the number of samples decreased. And the number of samples taken are strictly in the domain of the Gaming Commission — the regulators.”

Asked to explain the decline, the Gaming Commission — through a spokesman for Gov. Kathy Hochul’s office — said it was attributable “in part” to a reduction in races in New York.

Only a tiny fraction of samples collected from racehorses are flagged as “positive” for drugs detected in violation of racing regulations. Some illicit drugs and steroids always trigger a positive. Some therapeutic drugs are not allowed in certain concentrations or in certain time frames around race days.

Out of thousands of samples collected, the Gaming Commission reported in 2018 that there were 44 post-race positives among race horses; in 2019, the number was 43. The vast majority of the positive tests were among standardbred horses that race separately from thoroughbred horses. In 2020, when racing was reduced by COVID-19, the Gaming Commission reported 16 post-race positives.

But Maylin said in 2019 there were 176 positive tests total — including samples from out-of-competition testing and horses at the state fair, as well as hair samples, all of which are not reflected in the numbers the Gaming Commission shares publicly. In 2020, with reduced racing and testing due to COVID-19, the lab found 86 positives, Maylin said. Not all positive tests result in violations depending on what is found and when.

Jeffrey Gural, a New York horse owner, breeder and operator of two New York harness tracks and the Meadowlands in New Jersey, said the Gaming Commission has done “the minimum” to root out drug use.

“It’s unfortunate that the state wasn’t given the resources to clean it up on their own, and pretty much turned a blind eye to what’s going on,” Gural said. “I think (the Gaming Commission has) done as little as possible. In fairness, they don’t have the resources — but I don’t think they really ever made a big deal out of not having the resources.”

NYRA declined to comment on the performance of the Gaming Commission in drug testing and identifying violations. Patrick McKenna, vice president of communications at NYRA, said New York’s equine drug rules and protective measures are among “the strictest and most comprehensive in the nation.” He noted the steps NYRA has taken to combat doping, including out-of-competition testing, employing investigators and, most recently, advancing its own disciplinary measures against trainers accused of drug violations, like Baffert.

Test kits for equine performance enhancing drugs are stored at the New York Equine Drug Testing and Research Laboratory on Sept. 10, 2021, in Ithaca. Horse racing drug test samples stored in the lab go back decades. (Photo by Will Waldron/Times Union)

Dr. George Maylin pulls a frozen racehorse test sample from a storage freezer at the lab, which he leads. He said his work has been limited by a lack of funding. (Photo by Will Waldron/Times Union)

Change ahead

Over the years, drug testing has improved significantly, but labs are still trailing the cheaters.

In 1983, Maylin told Congress in a hearing that “since my involvement in 1971 there has been a constant infusion of drugs into racing.” At the time, Congress was considering a proposed bill to deliver uniform rules for drug use and testing for racehorses across the country.

It was not until 2020, after the sprawling federal case exposing horse racing doping, that Congress finally approved a law to establish national regulations for the sport and replace the current balkanized system of rules and enforcement varying by state.

The federal Horseracing Integrity and Safety Authority (HISA) is now in the process of creating the new rules that will govern thoroughbred horse racing and shopping for a new enforcement agency to oversee drug use in the sport, after failing to reach an agreement with the U.S. Anti-Doping Agency (USADA) to do the job. HISA is expected to take over regulation of the sport in the next year or so.

Who will be HISA’s new partner on drug testing and how they will remedy the issues that have challenged state drug testing operations is still unknown.

“It’s going to come down to one thing, finances,” Maylin said. “If (a new enforcement agency) takes over and the pot of money is no different than it is now, don’t expect much.”

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January 27, 2022

Baffert testifies in NYRA suspension hearing: I was ‘betrayed’

On July 12, 2021, horse trainer Bob Baffert left federal court in the Brooklyn borough of New York where Baffert is fighting the New York Racing Association’s suspension of his ability to race at their tracks. That fight is ongoing as Baffert now faces an administrative hearing held by NYRA that will determine whether he is suspended. The trainer testified during the hearing Thursday. (AP Photo/John Minchillo, File)

About two weeks after the Kentucky Derby, Hall of Fame trainer Bob Baffert received a curt phone call from top officials at the New York Racing Association.

In the brief exchange, NYRA CEO Dave O’Rourke and then-Senior Vice President of Racing Operation Martin Panza asked Baffert for his home address because they wanted to mail him something overnight, Baffert recounted Thursday. Then they told him to read his email. After that, they could talk more.

When Baffert clicked on the message in his inbox, he said he was stunned to see a notice from NYRA declaring that he was being temporarily suspended from racing at their three tracks — Saratoga Race Course, Aqueduct Racetrack and Belmont Park.

“I was pretty disappointed. They were friends of mine and I sort of felt, you know, sort of betrayed in a way,” Baffert said Thursday, testifying in his defense to try to stave off a suspension. “I’ve always showed up and ran all these races. … I was a little bit surprised by it.”

After all, Baffert has never had a positive drug violation in New York in decades of racing in the state.

The temporary suspension was eventually forestalled by a judge. But in administrative hearing proceedings launched this week, NYRA has moved to make the suspension a reality, based upon previous drug-related violations Baffert has received in other states, including a positive test violation issued to Baffert’s horse Medina Spirit after winning the 2021 Kentucky Derby. That violation prompted NYRA to pursue their suspension.

After four days, the hearing is nearing a close, and the hearing officer, former New York Solicitor General Peter Sherwood, will soon issue a decision regarding whether Baffert will be suspended from New York’s top thoroughbred tracks, and if so for how long. Closing arguments were scheduled to begin Friday morning.

Baffert, who testified for much of Thursday’s session, recounted the events surrounding each of six drug positive violations that the trainer received in 2019, 2020 and 2021.

The trainer emphasized that he tries to always follow state regulations on medication usage. He attributed some of his past violations to “mistakes” by his veterinarians or employees. He offered his explanation for each of the incidents and described a friendly working relationship with NYRA officials — until after the 2021 Derby.

NYRA’s legal team sought to highlight that Baffert’s recent violations — particularly repeat positives of the same drug — were a pattern, not merely coincidental mistakes. NYRA attorney Henry Greenberg grilled Baffert about his changing story regarding Medina Spirit’s drug positive in the Derby.

Baffert recounted the days after the Derby in depth: On May 8, one week after Medina Spirit placed first in the race, Baffert received a call from his employee and right-hand man Jimmy Barnes, who told him Kentucky officials were searching the barn after Medina Spirit tested positive, Baffert said.

The media learned about the positive soon after Baffert did, and soon the news was all over the Internet. Baffert described it as a “nightmare” scenario.

Baffert flew from California to Kentucky, and on May 9 gave a lengthy press conference in which he insisted he did nothing wrong and never administered the medication betamethasone to the horse. He suggested a “conspiracy” or some outside problem caused the positive test.

“I was just so upset that I knew that I didn’t inject that horse with betamethasone,” Baffert remembered Thursday. “I knew there had to be a reason.”

Greenberg, NYRA’s attorney, suggested that Baffert’s allusion to a conspiracy cast aspersions on state regulators and brought harm to the horse racing industry.

The next day, May 10, Baffert gave a series of television interviews, again saying he had no idea how Medina Spirit could have a betamethasone positive because no one treated the horse with that drug. Baffert said his violation might be an example of “cancel culture,” a phrase that Baffert on Thursday said he regretted using.

Greenberg, NYRA’s attorney, suggested that Baffert’s allusion to a conspiracy cast aspersions on state regulators and brought harm to the horse racing industry.

The next day, May 10, Baffert gave a series of television interviews, again saying he had no idea how Medina Spirit could have a betamethasone positive because no one treated the horse with that drug. Baffert said his violation might be an example of “cancel culture,” a phrase that Baffert on Thursday said he regretted using.

Finally on May 11, Baffert issued a press release stating they had identified a probable cause of the drug violation, a topical ointment that contained betamethasone that was applied to the horse for a skin rash. That substance is permitted for use around races. Betamethasone cannot be injected in a horse within two weeks of a race in Kentucky.

Baffert said Thursday he learned about the ointment from his veterinarian, Dr. Vincent Baker, and didn’t previously know there was betamethasone in it.

According to Baffert and Clara Fenger, a racetrack veterinarian who testified on his behalf Thursday, New York’s equine drug laboratory performed testing on Medina Spirit’s sample from the Kentucky Derby and determined the betamethasone detected had not been injected.

NYRA’s and Baffert’s attorneys also questioned the trainer about previous comments in which he voiced support for the use of anabolic steroids for certain horses in the mid-2000s. He said he’s opposed to them now.

Churchill Downs, which hosts the Kentucky Derby, has suspended Baffert for two years. NYRA is pursuing a suspension by charging that Baffert’s actions have threatened the integrity of horse racing and the welfare of horses, jockeys and their business.

Baffert’s attorneys argued that NYRA is suspending him because the organization’s board members have a “personal vendetta” against him and are tired of their horses losing to his.

NYRA’s attorneys Thursday questioned Baffert about why he is alleging that NYRA has a conflict of interest, when he has not objected to the members of other state regulatory boards owning horses — or even owning horses trained by him.

Top jockeys Johnny Velazquez and Mike Smith and a former New York Gaming Commission official testified in support of Baffert Wednesday.

NYRA executives described how Baffert’s drug positives hurt their brand and upset their customers and bettors. A NYRA veterinarian and equine investigator discussed the organization’s efforts to prevent injury to horses and monitor medications and drugs.

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January 26, 2022

Top jockeys and former Gaming Commission official defend Baffert in NYRA suspension hearing

Renowned jockey Johnny Velazquez smiles at the Saratoga Race Course on July 23, 2018 in Saratoga Springs, N.Y. Velazquez rode trainer Bob Baffert’s horse Medina Spirit to a first place finish in the 2021 Kentucky Derby and defended Baffert during his hearing Wednesday as the New York Racing Association attempts to suspend him for drug violations. (Skip Dickstein/Times Union)

Renowned jockeys Johnny Velazquez and Mike Smith, as well as a former New York Gaming Commission steward, took the stand at an administrative hearing Wednesday to testify in support of legendary horse trainer Bob Baffert in his battle against the New York Racing Association, which is seeking to suspend his right to continue racing at their tracks.

Former steward Steve Lewandowski, who left the Gaming Commission in 2019, said that he called Baffert after NYRA announced it would suspend him last year following his horse’s positive drug test in the Kentucky Derby. Stewards are race officials who help oversee and enforce state rules at race tracks.

“I did call him when this whole process started up, and I offered my support because I feel he is being unfairly taken advantage of,” Lewandowski said during testimony Wednesday.

“Why?” Baffert’s attorney Craig Robertson asked.

“Because he’s never had any problems in New York until now,” Lewandowski said.

NYRA is attempting to suspend Baffert over a positive drug test his horse Medina Spirit received after winning the Kentucky Derby last May, as well as for six other out-of-state drug violations issued against Baffert in 2019 and 2020. Baffert has never had a documented drug violation in New York.

NYRA has alleged Baffert’s behavior threatens the integrity of horse racing and poses a threat to the health of horses, jockeys and NYRA’s business. Baffert’s legal counsel says NYRA’s efforts to suspend him are unfair and the association has a “personal vendetta” against him because its board members, who race horses, are tired of losing to the successful trainer.

On Wednesday, the third day of the hearing, witnesses called by both NYRA and Baffert’s attorneys took the stand to testify.

NYRA’s witnesses provided details on how Baffert’s violations produced complaints among their customers and unfavorable press for the sport, influencing their brand.

Jockeys who worked with Baffert countered in their testimony that they had no direct knowledge of Baffert administering medications or drugs that were not permitted to his horses and defended him as an excellent trainer.

Velazquez, who rode Medina Spirit in the Derby for Baffert, said the trainer told him he did not administer the horse betamethasone, a steroid, prior to the race. “I believed him,” the jockey testified.

Betamethasone cannot be administered to a horse via injection within 14 days of a race, according to Kentucky rules. Baffert has insisted the drug must have entered the horse’s system via an ointment.

Velazquez also rode another Baffert horse, Gamine, that received a post-race positive. In that case, Baffert called Velazquez to report the positive test result and said their team had administered a medication to the horse, but they believed it was enough time in advance of the race to be compliance with the rules, Velazaquez said. They never spoke about the matter again.

The most heated moments of the proceedings came when NYRA’s attorneys cross-examined Lewandowski.

“NYRA just decides to suspend Bob Baffert and not even talk to him? Do you think that’s right?” Lewandowski shouted at NYRA’s counsel. “That’s what you’re doing to Baffert! You suspended him without even speaking to him!”

NYRA issued a temporary suspension to Baffert after the drug test results came back following Medina Spirit’s Kentucky Derby win. Baffert sued, and a judge ordered NYRA to stop its suspension because he ruled Baffert had not been given an opportunity for due process. NYRA then established procedures for holding an administrative hearing to suspend Baffert. Hearings on the matter began Monday.

This is not the first time that Lewandowski has emerged as a defender of a trainer facing consequences for drug violations. In 2019, he wrote a letter to the New York Gaming Commission alleging that syringes used as evidence to slap thoroughbred trainer Rick Dutrow with a 10-year license revocation and $50,000 fine were planted by another state steward, Braulio Baeza. The Gaming Commission and Baeza have said that’s not true.

When NYRA’s attorneys brought up the Dutrow case on Wednesday, Lewandowsi’s frustrations mounted.

“One of us is lying. It’s either Braulio Baeza or me,” Lewandowski yelled at NYRA attorney Henry Greenberg. “Are you accusing me of lying?”

NYRA’s attorneys also pressed Lewandowski about a controversy in 2018 over whether a horse trained by Baffert was strategically used to block the field and enable a Triple Crown victory by Justify at the Belmont Stakes held in New York. Lewandowski said he did not recall the matter and described Baffert as having no previous issues in New York.

Two witnesses called by NYRA — the general manager for NYRA’s online wagering platform, NYRA Bets, and NYRA’s vice president of marketing — both testified that the Kentucky Derby positive drug test for Baffert’s horse had detrimental effects on NYRA’s business.

After that test result disqualified Baffert from winning the Kentucky Derby, bettors called NYRA Bets demanding their wagers back, Matthew Fieg, the general manager said.

NYRA’s lead veterinarian and top equine safety investigator also described their efforts to ensure horses do not race when injured or impaired by performance enhancing substances.

NYRA is seeking a “lengthy” suspension for Baffert, but the duration of the ban, if one is imposed, will be determined by the hearing officer.

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January 24, 2022

NYRA says Baffert has taken a ‘wrecking ball’ to horse racing in disciplinary hearing

On July 12, 2021, horse trainer Bob Baffert left federal court in the Brooklyn borough of New York where Baffert is fighting the New York Racing Association’s suspension of his ability to race at their tracks. A disciplinary hearing held by NYRA to suspend Baffert began Monday. (AP Photo/John Minchillo, File)

Seven months after his Kentucky Derby drug violation, a hearing to suspend horse trainer Bob Baffert from racing at New York Racing Association tracks began Monday with fiery opening statements in which each party accused the other of seeking to destroy its business.

The high-profile disciplinary hearing represents an unprecedented instance of New York’s top horse racing organization taking action to ban one of the nation’s most successful thoroughbred trainers as a result of doping violations in other states.

On Monday, the New York Racing Association (NYRA) said Baffert had taken a “wrecking ball” to the sport of horse racing with his history of repeated drug violations. NYRA Attorney Henry Greenberg alleged Baffert’s actions have also threatened the continuation of horse racing and NYRA’s business.

NYRA has charged Baffert with engaging in conduct detrimental to racing, to the health of horses and jockeys, and to NYRA’s business interests. It is attempting to suspend Baffert from racing at its tracks, the Saratoga Race Course, Aqueduct Racetrack and Belmont Park. Their action results from Baffert’s drug violations in the Kentucky Derby and in horse races in other states, but not in New York.

Greenberg said NYRA is seeking a “lengthy suspension” for Baffert from the hearing officer, but did not specify a duration.

Baffert’s attorneys argued Monday that NYRA is suspending Baffert because its board members had horses that competed against him and they were tired of losing to the famed trainer. Baffert’s attorney Craig Robertson claimed NYRA has a “personal vendetta” against the trainer that it inducted into its “Walk of Fame” in 2018.

“The most that he (Greenberg) is going to be able to establish is that there were minor overages of lawful allowable medications used in horse racing every day,” Robertson said.

In May, Medina Spirit, a thoroughbred trained by Baffert, tested positive for drug use after placing first in the Kentucky Derby. The incident drew national attention as the sport of horse racing has recently wrestled with a number of doping scandals. Then, in December, the horse died from a heart attack after a workout at the Santa Anita racetrack in California.

Baffert has won the Kentucky Derby a record seven times, garnered millions of dollars in races across the country and staked out a reputation as a preeminent thoroughbred trainer.

But Baffert has also been cited for at least 29 failed drug tests over four decades, according to the Associated Press.

In the hearing, NYRA highlighted that five of Baffert’s horses tested positive for six drug violations since July 2019 (other than Medina Spirit). When California regulators searched Baffert’s barn in August 2019, they found 25 unlabeled medications and “a tube of ‘bute’ paste,” Greenberg said, referring to the analgesic drug phenylbutazone.

Baffert has never had a drug violation in New York, Robertson said, making a point that is supported by New York Gaming Commission data. Robertson noted that the state Gaming Commission, which regulates horse racing, has not taken any action to suspend Baffert or revoke his license to race in the 30 years he’s competed in the state.

Soon after Medina Spirit tested positive for a medication not permitted for use in the Derby, NYRA swiftly moved to temporarily ban Baffert from racing at its tracks. Churchill Downs Incorporated, which hosts the Kentucky Derby, suspended Baffert for two years.

Baffert countered by filing an action in U.S. District Court in Brooklyn against NYRA, and he initially won a preliminary injunction because the association did not give the trainer a hearing before suspending him or immediately thereafter.

NYRA then established its procedural steps for the proceeding and scheduled the disciplinary hearing that began Monday. It marks the first time NYRA has conducted this kind of administrative hearing.

On Friday, a judge dismissed Baffert’s case against NYRA, saying the trainer’s claims of injury by NYRA were not ripe for court yet since the hearing had not taken place. Baffert’s attorney said after the ruling that they may revisit their claims in court depending on the outcome of the disciplinary hearing that is expected to last several days.

Baffert continued racing at NYRA tracks as the court case unfolded, winning $2.7 million at NYRA tracks in 2021, data collected by Equibase shows.

Baffert attended the hearing Monday, which took place in a Manhattan law firm’s office. Retired judge and former New York Solicitor General Peter Sherwood is overseeing the administrative proceeding.

NYRA’s and Baffert’s attorneys gave opening statements Monday. The attorneys questioned one witness, a former New York Gaming Commission associate counsel, Rick Goodell, regarding the state’s drug regulations and other rules.

At the same time that NYRA charged Baffert with conduct detrimental to racing and its business, the organization made similar charges of trainer Marcus Vitali, who also has accrued drug violations in multiple states. The New York Gaming Commission refused to issue a license to Vitali in 2019. Vitali’s administrative hearing with NYRA is scheduled to begin on March 1.

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January 8, 2022

U.S. Anti-Doping Agency declines to regulate horse racing

Medina Spirit, ridden by John Velazquez, far right, races towards the finish line during the 147th Kentucky Derby at Churchill Downs in Louisville, Ky., on Saturday, May 1, 2021. Medina Spirit, whose victory in the Kentucky Derby had been called into question by a failed post-race drug test, died on Monday, Dec. 6, 2021 after suffering an apparent heart attack at the Santa Anita Park racetrack in Southern California, said Dr. Jeff Blea, the equine medical director for the California Horse Racing Board. (Christian Hansen/The New York Times)

ALBANY — When the U.S. Anti-Doping Agency announced late last month that it no longer planned to work with the newly formed federal horse racing authority, the news came as a shock even to insiders.

“I was surprised just like everyone else,” said Joe Appelbaum, president of the New York Thoroughbred Horsemen’s Association, a group that has closely tracked the progress of the new Horseracing Integrity and Safety Authority (HISA).

After years of resistance to federal regulations for horse racing, Congress finally won the support of key thoroughbred racing groups in 2020 and was able to pass a new law in 2020 that will replace the current state patchwork of rules. Congress selected USADA, the official U.S. anti-doping organization for the Olympics, as its first choice for the critical entity to oversee drug testing in horse racing and implement medication rules.

For months, USADA and HISA negotiated behind closed doors over the job. Then, just before Christmas, USADA abruptly announced those talks were over and USADA was out.

USADA said the two sides were unable to reach a deal “which would have given us a reasonable chance to put in place a credible and effective program.”

The announcement has left the horse racing industry in limbo; it remains unclear how drug testing will be regulated and monitored if the USADA will not be in that role.

As horse racing tries to clean up a sport that’s been marred by numerous doping scandals, the selection of a drug enforcement organization is critical. Currently, equine drug testing is performed and regulated by individual states, who have different requirements.

Federal law says that if HISA can’t work with USADA, the group “shall enter into an agreement with an entity that is nationally recognized as being a medication regulation agency equal in qualification to the United States Anti-Doping Agency.” Racing sources told the Times Union HISA is likely now to consider organizations that perform drug testing for other national sports leagues, such as Drug Free Sport International.

“There are groups out there to do this stuff; we just need to commit as an industry to employ them,” Appelbaum said.

Drug Free Sport International did not respond to a request for comment.

In 2020, Senate Minority Leader Mitch McConnell, R-Ky., ushered the oversight law through the Senate by securing the support of the top Kentucky horse racing organizations. This week, a spokesman for McConnell said he continues to “have confidence” in HISA, even though the deal with USADA has fallen through.

Rep. Paul Tonko, D-Amsterdam, who fought for years to pass the legislation in Congress, said he’s still holding out hope that HISA will work out an agreement with USADA, whom he considers the premier anti-doping organization.

“We have got to make certain that the legislative intent of this act be adhered to,” Tonko said. “It’s a huge disappointment that the negotiations broke down, but I am hopeful they will come back to the table. I will strongly encourage them to get their business done, and if not, I think we’ll just pursue in other ways to make sure the legislative intent is indeed adhered to.”

USADA’s CEO Travis Tygart said in a written statement on Dec. 23 that his organization is “deeply disappointed” that it could not reach an agreement with HISA, but it has offered to assist the industry in the future as it develops its program.

“After months of negotiations, we have been unable to enter an agreement in line with the requirements of the Act, and one which would have given us a reasonable chance to put in place a credible and effective program,” Tygart said. “While we are obviously saddened by the outcome at this stage, we tried our absolute best to find a way forward but without success.”

Charles Scheeler, board chair for HISA, said in a statement in December it was grateful for USADA’s expertise in developing draft federal regulations that will govern medication use and drug testing in horse racing. HISA will now continue its search for an independent enforcement agency, he confirmed.

Finalizing the new federal medication rules for horse racing will now be delayed, but HISA submitted proposed track regulations to the Federal Register this week.

HISA declined to comment for this article and USADA did not respond to a request for comment.

New York Racing Association officials expressed confidence that HISA will ultimately improve the sport.

“HISA will achieve a national approach to medication control, establish the strongest anti-doping authority in the sport’s history and create uniform safety and integrity standards across the country,” NYRA spokesman Patrick McKenna said. “NYRA has supported and advocated for these broad reforms since Rep. Tonko first introduced the legislation back in 2015, and we continue to believe that HISA will modernize the sport in important ways in the near and long term.”

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November 17, 2021

New bill would redirect funds from horse racing to schools, human services

Echo Zulu with jockey Ricardo Santana Jr. puts a considerable distance on the field on the way to winning the 130th running of the Spinaway at the Saratoga Race Course Sunday Sep, 5, 2021 in Saratoga Springs, N.Y. Two state legislators have introduced legislation that would shift $230 million in annual supplemental funding from horse racing tracks and breeders to New York schools and human services. Special to the Times Union (Photo by Skip Dickstein)

ALBANY — State legislators have introduced a bill that would shift approximately $230 million in annual revenue from slot machines that’s currently paid to horse racing tracks and breeders and redistribute it to schools, human services and other public uses.

The legislation, sponsored by state Sen. Zellnor Myrie, D-Brooklyn, and Assemblywoman Linda Rosenthal, D-Manhattan, is backed by a cadre of animal rights groups and social service nonprofits, who said they plan to use advertising and grassroots organizing to draw attention to the issue.

“The state has been propping up this industry for decades and there is no reason for that to continue, especially when we need the money the state has been giving to the industry,” Rosenthal said in an interview.

But the funding stream for horse racing has defenders in the Democratic caucus, like state Sen. Joseph Addabo, D-Queens, who said the money helps preserve jobs created by the industry.

The bill would allocate a portion of slot machine revenues to agricultural grants, funding for horse care and the adoption of horses, and supporting economic development in communities that host horse racing facilities.

But it would eliminate the direct payments to New York’s tracks, including the Saratoga Race Course, as well as racehorse breeders. The payments come from slot machines located at the tracks or at casinos adjacent to them.

The annual payments provide millions of dollars to the tracks, some of which might be threatened with closure without the supplementary funds.

“NYRA will vigorously oppose this legislation in order to protect jobs for working families, preserve the horse racing economy and ensure the sport’s success now and in the future,” said Patrick McKenna, a spokesman for the New York Racing Association, which operates Saratoga Race Course, Aqueduct Race Track and Belmont Park. “Racing support payments are not subsidies. The payments from (slot machine) revenues are made to the thoroughbred industry in part because NYRA transferred land and other intellectual property to the state in 2008, and has acted as the steward of the properties in the years since.”

Najja Thompson, executive director of the New York Thoroughbred Breeders, said on behalf of a coalition of horse racing, business and labor groups called We Are NY Horse Racing that horse racing in the state produces thousands of jobs for minority, immigrant and union workers and makes $3 billion in economic impact.

Edita Birnkrant, who leads an animal rights group formed to protect New York City’s carriage horses, defended the legislation. “It is absolutely absurd and unfair that the racing business alone has received billions when more than 1 million businesses in New York with far more jobs and much greater economic impact receive no subsidies,” she said.

State Sen. Jessica Ramos, D-Queens, introduced a bill in 2020 to take slot machine revenues from the horse racing industry and reallocate the funds to the Metropolitan Transportation Authority. The bill never passed.

Other states have also considered legislation that is known by the industry as “decoupling,” or separating horse racing from other supplemental gambling funds.

Florida’s Legislature and Republican governor passed legislation this year to allow parimutuel operators to offer card rooms and slot machines without continuing horse racing or jai alai.

Pennsylvania debated legislation this year backed by its Democratic governor to take slot machine revenues going to horse racing tracks and use it to pay for college scholarships. The idea did not win approval from the Republican-controlled state Legislature.

“No one is saying this is one session and done,” Rosenthal said about the New York bill. “There is a lot of education that needs to happen around this.”

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