Note: This presentation was built upon several PowerPoint slides that are not included in this condensed transcript. Mr. Duncker’s entire presentation, including all slides, can be viewed by accessing the Round Table Conference video replay on The Jockey Club website. Mr. Duncker’s remarks begin about 46:45 into the conference.

C. Steven Duncker: Thank you, Dinny and Jim…

The horse racing industry got some great news last week when all the sections of state government approved Genting as the VLT operator at Aqueduct. As all of you know, this has been quite a journey. I say this is specifically good news for the industry, not just good news for NYRA because I think this is going to have a big impact on the entire industry and I’m going to talk about that in a few minutes.

[On the slide], you see a seven-month gap between February ’08 when we had our franchise renewal and September of ’08 when we signed our documents. That time was spent digging into the guts of leases, the nitty gritty of franchise….to set us up to be able to go forward, in a way. A team led by Jim Heffernan and Patrick Kehoe really did a tremendous job [with that] for NYRA.

These statistics [on slide] are something we are incredibly proud of, to be able to run 36 percent of the graded stakes in the country. But we’re also very humble about it. Our New York horsemen are tremendous. They support us like crazy. But if it wasn’t for all the other geographies coming to NYRA, running their horses, supporting us, this wouldn’t look anything like this. We thank everyone who does that.

We are justifiably proud of the fact that we have three of the top eight meets in average purse distribution, but I want to make a different point here: that seven of the top eight are not-for-profit tracks. I think that’s a big deal. I don’t think it’s coincidental.

What I’m going to talk about next is the sustainability of high purses. At a not-for-profit track, your main goal is increasing purses to horsemen. To do that, you really have to generate sustainable handle.

In the last two months, NYRA has run three percent of the race days [nationally], given away nine percent of the purses [nationally], but, amazingly, 22 percent of the total bets in the industry were made on NYRA races. We’re going to be looking at this for all of our race meets and taking note of this fact.

You’ve heard a lot about new media. It’s not really about using new media. We all do it. It’s about how well you do it. I’m going to focus on one part of this, which is our YouTube series. We have six different series on YouTube...and the one I like best is called Time Machine. [For example, we have one of] Allen Jerkens discussing Onion-Secretariat Whitney in 1973. [video]

Probably the most noticeable change we have had at NYRA, at Saratoga especially, is [the addition of] Shake Shack, Blue Smoke, the Paddock Bar. This is part of the initiative we’ve undertaken to get branded concessions and create a buzz and the only thing I’ll say is: we started at the top.

For those of you who don’t live in New York [City] and may not know Union Square Hospitality Group, Danny Meyer’s group runs the best restaurants in New York, as rated by Zagat. There are 26,000 restaurants in New York and two of his have been number one and two for 10 years. He’s been a friend of mine for a long time and we twisted his arm and he’s brought his magic to Saratoga.

We think it’s a great thing for the fans. We look over and people are at the Paddock Bar having a good time and we’re going to keep trying to do that.

Something that’s a little more forward thinking — and I talked about the VLTs and I’m going to talk about them again — is this: eventually, it seems like we’re going to get some money to redo our facilities. Charlie Hayward [NYRA president] did something really smart when we thought we were going to get VLTs three years ago. He said, “There’s 2,000 possible projects [we could do]; we need some help with this.” He went out and he interviewed consultants and picked Turnberry [Consultants].

They’re unbelievable to work with. They started as people who helped universities and one of the first was Oxford, which was 400 years old, bringing it into the future. They did a great job with that. They’ve given us a lot of suggestions and things for our board to look at in terms of our facilities. It’s going to be done in an organized way that gets us the best outcome and we’re very, very excited about it.

Another situation we’re dealing with that doesn’t get as much air time but is a big problem/opportunity is the fact that New York City OTB is in bankruptcy. I think everybody knows this and as I walk around people just say, “Won’t you take it over?” or something like that.

I could spend an hour talking about it but I won’t. I’ll just say this is a lot more tangled than you might think. This is going to take a lot of cooperation and intelligence. We’re working hard on this but I don’t want to leave the expectation that this is an easy fix.

I will point out one snapshot of why it’s not an easy fix. NYRA owns 26 percent of the debt that OTB owes. That means we have 26 percent of the vote for whatever happens. Twenty-six percent of the votes is just not a majority. Other people have other agendas with 74 percent of the vote. I don’t want to oversell how tough that is.

I’m going to get on a personal soapbox for 60 seconds.

It is not new news to people that pari-mutuel takeout is an issue. I’m not thinking I’m giving you some Rosetta Stone moment. But I’m going to try to shade it just a little bit differently and I’m going to do it by pointing the finger directly at NYRA. In 1960, the takeout at NYRA was 15 percent. There was no competition from other forms of gambling. In 1970, it was raised to 17 percent. There was a little bit of competition: you could play the lottery in some states. That’s it. In 2010, you can gamble anywhere you want on anything you want and we’ve raised our price to 19.81 percent. What business people in this audience think that’s a way to do more business?

Now, I’m not trying to oversimplify it. I understand there are rebates. I understand there’s sensitivity analysis to this. But the point is I wanted just to show what our competitors are charging. I play some tournament poker and you can sit down for an eight percent entry fee [and] you can play two days of poker. I mean, we’re being priced out of this market to some extent. So, once again, to the extent that the VLTs get up and going, to the extent that we figure out the OTB mess and we have some room to run, one of the things that we think is critically important going forward at NYRA is working to reduce the takeout to bring the price of our product down in a competitive marketplace for the gambling dollar.

I have a slide that says “Thank You” and the reason I wanted a slide that says “Thank You” is because at NYRA we are supported by everyone in this industry. Everyone in this room [today] supports NYRA and we do not take it lightly. Our New York horsemen are great but when I look around the track, I see people from all over the country, especially our Kentucky friends who come up here and support us in such great numbers. And we do not take that lightly.

We sometimes haven’t been that easy to support but I can tell you that I’ve been chairman of NYRA for seven years now and I’ve never had the sense of optimism and excitement that I have right now. Some good things are going to happen at NYRA and it’s going to help the entire industry.

I’m very excited about.

Thank you for listening and I hope to see you at the racetrack.

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