NYRA Report
David O'Rourke
David O'Rourke, President and CEO, New York Racing Association

STUART S. JANNEY III: The New York Racing Association has been at the forefront of Thoroughbred racing, technology, marketing, pretty much everything to do with the sport for decades. They’ve also been reliable and dedicated partners with The Jockey Club on many initiatives.

David O’Rourke, NYRA’s CEO and president, will share more about NYRA and its vision.

DAVID O’ROURKE: Good morning. I’d like to first thank The Jockey Club for the opportunity to participate in this year’s Round Table. As our country works through the late stages of the pandemic, I am pleased to report that NYRA’s business has successfully managed through this unprecedented time, and in many ways we’ve emerged as a stronger organization.

It’s been wonderful to welcome our fans back to Saratoga this year. Attendance and handle have been strong. And Saratoga, well, Saratoga feels like Saratoga again.

When Jim contacted me about speaking this year and suggested an update on NYRA, I figured the best place to start is what we stand for -- integrity, safety, the welfare of those we employ, and the sustainability of our sport -- and what we as an organization have been doing to support this mission.

I’ll start with a brief overview of the New York Racing Association. NYRA is a private, not-for-profit which operates New York’s three major Thoroughbred tracks under an exclusive franchise. As such, all our profits are re-invested back into our business of Thoroughbred racing.

We believe our non-profit structure is a major advantage. It enables us to completely focus resources and investments in a way that suits our company, our sport, and the industry’s long-term sustainability.

We at NYRA will always be willing to fight the good fight to protect the integrity of our sport; however, the fractured and inconsistent structure of industry regulation has posed significant challenges.

I would like to congratulate The Jockey Club for their success in leading the passage of the Horseracing Integrity and Safety Act.

From the beginning, NYRA has been an ardent supporter of federal legislation, which will improve the integrity and safety of horse racing by requiring a uniform anti-doping and medication control program enforced by an independent Authority. The act will also develop sets of training and racing safety standards, an area in which NYRA, as part of the Thoroughbred Safety Coalition, has been working towards over the past two years.

As a result of HISA, the decentralized rule-making structure racing has endured for generations will be behind us. As a racetrack operator, it is impossible to overstate the importance of this. Racing is a national sport and, as such, requires national rules. This legislation will bring clarity, transparency and consistency to our rules, and will undoubtedly benefit all stakeholders.

I’d like to talk about the people. The racing industry is an undeniable economic driver. In New York alone, the industry supports 19,000 jobs and $3 billion in economic activity. The NYRA tracks are a primary location for much of that activity. Our backstretches themselves are nothing short of small cities. People work, live, and grow up as a part of these communities.

NYRA, our horsemen, backstretch non-profits, along with several independent benefactors, have and continue to invest in these communities, with the fundamental goal of improving the quality of life for the people who care for our athletes.

NYRA houses over 2,000 backstretch employees at our facilities.

At Belmont, we have built two new dorms providing 230 beds and refurbished another 700. In the last few years, essentially every Belmont housing accommodation has been upgraded.

At Saratoga, to date, we have refurbished just under 60% of the housing inventory. Completing the housing project at Saratoga brings with it unique challenges. While the grandstand is historic, many of the backstretch buildings are even older, and not originally designed for their current housing application.

To tackle this challenge, we are currently in the process of improving the underground utility services and developing a proposal for a long-term plan to either refurbish or replace the remaining housing.

Operating hours on the backstretch are anything but the standard 9:00 to 5:00. In 1998, a group of donors, led by current NYRA board member Michael Dubb, saw the need for reliable and attainable day care for the community and helped found the Belmont Child Care Association, BCCA.

In 2003, Anna House was built with private funds on land donated by NYRA. The facility was expanded in 2010, and began offering after-school care in 2014, and this year opened a sister facility, Faith’s House, here at Saratoga. Over 1,000 students have graduated from BCCA’s program, and it stands as one of the highlights of our community, focusing on what’s most important -- the future.

I’d now like to speak about racing surfaces and barns. As a racetrack operator, safety is priority one, and our racing surfaces are central to that focus. NYRA is a year-round circuit. We’re located in the Northeast and, therefore, train and race in what can be considered typical four-season weather conditions.

We maintain and operate 14 racing surfaces totaling over 12.5 miles. Over 10 miles of these surfaces have seen major investment. Aqueduct’s main track and two turf courses are essentially new, a safety rail was installed and the irrigation system upgraded.

The main and Oklahoma tracks at Saratoga have both been completely redone with safety rails installed, and our two turf courses were widened, also receiving a new irrigation system.

Belmont’s training track was widened, along with the installation of a safety rail. However, the main track surfaces, outside of some smaller projects, have not been fully renovated in 50 years. This project is our current focus. It’s a fact the facility was not designed with year-round racing in mind, an aspect we are incorporating into all of our long-term investment plans at Belmont.

An untapped opportunity on this footprint is the roughly 45 acres of infield space, currently inaccessible due to a lack of tunnels.

The debate over configurations and surface types could easily encompass my entire allotted time; but many, if not most, of these plans will require infield access, and this year we are beginning this project by building a necessary headwall along the north section of the track.

In many ways, the tunnel project signals the first phase of the redevelopment of Big Sandy for the next generation of New York racing.

Barns are another ongoing focus of the investment plan. Between Aqueduct, Belmont, and Saratoga, NYRA maintains 4,200 stalls spread amongst 168 barns.

At Belmont, we’ve added almost 250 stalls, and 27 barns have been rebuilt. This project is ongoing and essentially always will be. To stay ahead of the curve, each year we allocate capital as part of a long-term maintenance and refurbishment program.

To recap what we just went over, 2,000 beds, 4,200 stalls, and over 12 miles of racing surfaces, required infrastructure which since 2013 NYRA has allocated 50% of its capital budget towards.

Our continued focus on these investments is fundamental to the sustainability of our industry here in New York as well as nationally. With that comes the need to grow our cash flow and audience. We need to adapt our business model as necessary and to put on the best show possible for our fans and owners.

Ten years ago, at this conference, McKinsey, as part of a study commissioned by The Jockey Club, offered several findings and recommendations concerning the sustainability and growth prospects for Thoroughbred racing. The report was wide-ranging and somewhat sobering.

One specific quote for me stuck out: "In our view, no other major sport has lost control of its distribution to the extent that racing has."

It was both scary and true. In 2011, there were 43 hours of racing on mainstream national television. That year, professional poker had three times our coverage.

During that period, NYRA was focusing on upgrades to our television infrastructure. We, like most of the industry, were behind the curve in adopting high definition.

NYRA’s ADW at the time was limited to New York. We competed well in our home market but were not playing on the national level. After significant investment in our TV infrastructure, we turned our focus to two growth objectives: Expand our ADW nationally and distribute more live racing.

Around this time, Tony Allevato joined NYRA and was tasked with leading this effort. NYRA’s simulcast show was arguably one of the most comprehensive. Additionally, we had been producing content on local sports networks for decades. We did not, however, have a live racing production that targeted the general sports audience.

Fox Sports the previous year had worked with The Jockey Club on a series of shows and expressed interest in experimenting with daily coverage of the Saratoga meet.

In that first year, 2016, we internally produced 80 hours of programming and successfully launched NYRA Bets nationally. In each subsequent year, that coverage expanded.

Fox also invested in NYRA Bets, and it’s a formula that has worked well for both companies. Fox has been the best partner we could ask for, and this past winter we announced an extension to the original agreement, ensuring coverage through 2030.

I would like to acknowledge the growth and excellence our TV department has achieved. In five years, the in-house production level has gone from regional replay show to live racing on network television. Simply impressive.

In 2021, there will be over 800 hours of racing on national television. Essentially all Belmont Park, Churchill Downs, and Saratoga races are covered, and through cooperation with several other tracks, such as Oaklawn, Fair Grounds, and Tampa Bay, we can offer shows highlighting some of the best racing throughout the year.

During this period, NYRA Bets has also done extremely well, expanding into over 30 states and generating returns we’re able to reinvest back into all of our racing operations.

A more concerning trend, however, is industry handle. Over the last decade, wagering turnover has stagnated at around $10 to $11 billion annually. ADWs have seen impressive growth, but for the most part, it’s been just enough to keep this number from declining.

In contrast to this, regulated sports betting, from a standing start, has grown to $30 billion in three years. ADWs are a great product for our core audience, but a bit of a tough sell to the casual sports fan. It’s a one-product offering that more and more will compete with sports books that are offering every other sport -- literally, every other sport.

Sports book operators are in growth and acquisition mode and are signing up millions of customers with marketing budgets we should all envy.

Fortunately, here lies our opportunity. The situation has the potential of a perfect storm. Our content is back on national television and at a larger scale than ever before, and sports books are spending millions of dollars every month to sign up general sports fans.

It seems obvious that our industry should want -- need -- our wagering content on these platforms. Even capturing a single-digit market share of the most modest projection of the sports betting market would break us out of our sideways pattern in handle growth.

The Australian market is frequently cited as an example of a marketplace where fixed odds and pari-mutuel coexist, and turnover and revenues to racing has grown as a result.

For our industry, New Jersey is a first mover in sports wagering, and, with its recently approved regulation on fixed odds for racing, is somewhat of a perfect test market.

A marketplace where most sports books offer racing should be our goal. Fixed odds on simpler wagers alongside pari-mutuel exotics is a potential winning combination, offering the new player a familiar entry point while maintaining deep exotic pools for our more experienced players.

There are a lot of risks, challenges, hesitations, and hurdles to realize a market where fixed odds and ADW offerings come together. But we here at NYRA believe the rollout of sports betting is a once-in-a-generation opportunity.

And with our industry partners, we are moving forward to do everything we can to seize that opportunity. The returns to the industry could be enormous and allow us to continue investing in the tracks, the barns, the dorms and, of course, TV coverage.

I would like to thank The Jockey Club for the opportunity to speak here today and hope to see everyone out at the track this August. Thank you.

STUART S. JANNEY III: Thank you, David. I look forward to the continued success of NYRA.


Back Agenda Next