The hypocrisy of it all

Editors Report
6/30/03

Shocking charges about corruption in New York State gaming abound in a report just released by New York State Attorney General Elliot Spitzer.

The report charges that the practices of a certain prominent gambling institution "functionally financed criminal operations, essentially allowing tellers to borrow seed money to run money laundering, gambling or loan sharking operations. In addition, lax controls fostered an environment where tellers cheated the betting public through a host of swindles." Finally, says the report, this institution's "culture of indifference created an atmosphere enabling yet other crimes." Attorney General Spitzer, who has made a name for prosecuting Wall Street criminals, continues that this inattention "has turned the corporation into a vehicle of criminal opportunity by dishonest outsiders."

It sounds like the worst nightmare imagined by all those critics of Indian casinos, doesn't it? But Spitzer and his eager attorneys aren't talking about Indian gaming at all, or in fact, about any casino. The report attacks employees and management at the New York Racing Association, Inc. (NYRA), the non-profit corporation that runs three of the most famous racetracks in the country, Belmont Park, Aqueduct and the Saratoga racetrack. NYRA operates under the New York State Racing, Pari-Mutuel Wagering and Breeding Law, with continually renewed state franchises to conduct betting. The total annual handle, including off-track betting, exceeds $3 billion, and its net income by law is allocated to purses and funds to improve thoroughbred horse breeding and to make capital improvements at racetracks. Excess income is supposed to return to the state treasury.

The state has been investigating NYRA for years. In one sting, an undercover State police officer posed as a drug dealer and was able to launder more than $300,000 at all three NYRA racetracks. A number of NYRA employees have been arrested and convicted on several charges, including federal tax evasion.

This sounds to us like a major story, with sensational charges against a large outfit of public concern. So where is the media? Where is the two-part TIME magazine cover story? Where is the Wall Street Journal editorial campaign? What, not even a peep from the Boston Globe? These are questions that must occur to everyone in Indian country who has endured the highly colored and much less substantial spate of exposes that those outlets have produced on Indian gaming.

To be fair to everyone concerned, including NYRA, the story is still developing. At a press conference on June 24, a NYRA lawyer, Denis McInerney from the prestigious law firm of Davis Polk & Wardwell, denounced the report as unfair and called its conclusions "unfounded." He accused the Attorney General's office of ignoring many improvements in the last two years, since the AG's investigations became known, and argued that some of the recommended security controls were prohibitively expensive. Perhaps some investigative reporters could take time out from the Indian casino beat and sort out these charges.

The story certainly "has legs," as they say. The same state law that authorized six Indian casinos also provided for installation of thousands of video lottery terminals (VLTs) through NYRA. Aqueduct Racetrack is planning a $100 million expansion with 4,500 VLTS to open by March 1, 2004, turning it into one of the largest of the new breed of "racinos." Questions have already come up in the gaming press whether the partner and supposed financier of this project, MGM Mirage, will get in trouble with casino regulators for its association with a company, NYRA, showing "rampant criminal activity."

And wait a minute. Didn't we say NYRA ran the Saratoga racetrack in Saratoga County? Wasn't it the Saratoga County Chamber of Commerce that just won the big case in the New York State Court of Appeals that invalidated the state gaming compact with the St. Regis Mohawk Tribe? The press often describes Cornelius D. Murray, the lawyer for the Saratoga Chamber, as an "anti-gaming" activist, yet the prime attraction for his lead client's economy is the annual racing season. It now looks as if there are at least as many questions to be asked about Saratoga's main employer as about any, or all, Indian casinos.

(We won't even dwell on Murray's colleague in that case, Jay Goldberg, who is well known for his closeness to Atlantic City casino mogul Donald Trump.)

There is certainly work here for the mainstream press. Maybe it should re-examine the prevalent clich? that the fight over Indian gaming is a matter of "pro- and anti-gambling forces." It certainly seems to us that some of the most vehement opponents of tribal sovereignty and economic development are acting from some pretty seamy motives. The scrutiny that Indian casinos and financial backers get in the press would be more tolerable, and even helpful, if the same energy went into putting the non-Indian gaming interests under the spotlight. We believe the tribal operations will look pretty good by comparison.

The press could go beyond the criminal charges and compare the elaborate internal checks and controls on money handling. (Spitzer's main charge about NYRA's encouragement of criminality focused on its lax money handling. In the past, it turns out, teller cash-boxes weren't reconciled for up to eight weeks, leading to overages and shortages in the tens of thousands. His report cited casino controls by contrast and NYRA complained the comparison was unfair because casinos operated in such a heavily regulated environment.)

The press might ask what the profits go for, when there are any. (NYRA apparently is operating at a loss, as is Trump's casino company.) The Indian Gaming Regulatory Act requires all tribal casino profits to go for the good of the tribe. Where are the schools, health centers, cultural programs, housing developments erected by the non-Indian gaming companies?

The press should certainly compare the support given to state and local governments. Casino compacts for the Mashantucket Pequots and Mohegans in Connecticut and the Senecas in western New York provide payments of up to 25 percent of the slot machine net drop to state funds, sums of hundreds of millions. The non-Indian casinos in Atlantic City are fighting tooth and nail against the governor's proposal to raise their state tax rate from six to 10 percent of corporate revenues. NYRA observes that its payments to New York state have been dropping because the state legislature has been cutting its tax rate.

These are matters we would love to see reported by all those mainstream journalists whose ears might have perked up at our opening paragraph and who probably quickly lost interest when it turned out we weren't exposing our own dirty laundry. Will the day arrive when non-Indian gaming gets at least the attention the tribal casinos have endured? We aren't holding our breath.

You need to be logged in in order to post comments
Please use the log in option at the bottom of this page