New York State Takes $200 Million In Lottery Money Earmarked For Schools, Gives It To Horse Racing Association Instead

Buzzfeed News:

The state of New York diverted hundreds of millions of dollars from education to a scandal-plagued horse racing operator, Buzzfeed News has found.

Seven years ago, the state legislature carved out a special agreement that so far has taken more than $200 million in lottery revenue — money that otherwise goes to New York’s beleaguered schools — and given it to the New York Racing Association (NYRA), a not-for-profit corporation known for running of one of America’s most glamorous horse races, the Belmont Stakes, but also for allegations of corruption ranging from racetrack tellers laundering drug money to the chair buying the favor of a top legislator. The sweetheart deal was intended to help the racing organization regain solvency and repay a large state loan, but in the end NYRA managed to keep the loan as a gift — and to keep the sweetheart deal, too.

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Now the Audit Director of the Office of the New York State Comptroller has told BuzzFeed News that the state agency has completed an examination of possible misuse of NYRA’s capital expenditures. The results of its audit will be released in the coming weeks.

NYSUT responds to the story:

The $200 million carveout — the full extent of which has not previously been reported — is only a tiny fraction of New York state’s overall schools budget. But according to Carl Korn, of the union representing New York state teachers, directing that money to the racing association instead of to schools has deprived teachers and students of much-needed resources.

“As this deal was being made, New York state was in the process of dramatically cutting education, leading to 30,000 job losses — roughly 22,000 in teachers,” Korn says. “And what is most outrageous is the poorest districts were hit with a disproportionate amount of these cuts.”

Governor Cuomo made one of his fundraisers, Anthony Bonomo, chair of NYRA, but Bonomo had to step down from the position when it was revealed he had given a no-show job to indicted former state Senate Majority Leader Dean Skelos' son Adam and was cooperating with the feds in the investigation.

In turn, Bonomo's son works for Governor Cuomo's administration.

Here is the back story on the Bonomo/Cuomo/Skelos relationship:

In March, Bonomo gives a $50,000 contribution to Governor Andrew Cuomo’s campaign committee. A few days later, Cuomo appoints Bonomo the head of the New York Racing Association or NYRA ( a job that people close to the Administration insist he was qualified for, since he was very knowledgeable of horses and racing. Fair enough ). About a month later, Skelos and his son are slapped with federal corruption charges. And in early June, just four days before the Belmont Stakes – one of the biggest days in racing – Bonomo steps down from his position at NYRA, and presumably starts cooperating with the Feds against Dean and Adam. A month after that the new indictment drops with two new charges including personal details about Adam’s behavior. This signaled to some that federal investigators were likely getting information from Bonomo which helped build the second set of charges.

And the backstory on Bonomo's son working for Cuomo:

The son of Anthony Bonomo, a prominent insurer linked to the federal investigation of Sen. Dean Skelos and who until days ago led the New York Racing Association, began working for the Cuomo administration last year, state records show.

Anthony Bonomo Jr. started in 2014 as an executive assistant for the Office of Storm Recovery, which was launched by Gov. Andrew M. Cuomo to help residents rebuild after superstorm Sandy and other recent hurricanes. Bonomo, who handles constituent services on Long Island, was hired for the $55,000 per year job in May 2014, a spokeswoman said.

Anthony is a hard worker and a smart young man who has done terrific work for the Office of Storm Recovery,a said Barbara Broncaccio, agency spokeswoman.

Now we learn that NYRA got lottery money earmarked for schools, something that was supposed to be a loan meant to help it out of financial woes, then never paid the money back because, why bother when you can just donate to candidates and keep the money (and the lottery funds carveout) instead?

Subsequent events also called into question what the sweetheart deal itself was for. According to Richard Rifkin, one of Gov. Spitzer’s lead negotiators, it was granted to keep NYRA afloat and ensure that the organization would be able to repay the state’s $105 million loan. Amid the political chaos of Gov. Spitzer’s scandal-driven resignation, New York agreed to a let the bankrupt NYRA keep the money. But it also kept the lottery carveout that was supposed to help the organization repay the loan. The carveout is in effect until at least 2033.

Soon after getting its bailout and emerging from bankruptcy, NYRA expanded its political contributions, according to online disclosures and analysis by Bennett Liebman, then an Albany Law School professor and NYRA board member who later became deputy secretary for gaming.

“In prior years, NYRA […] did not play the political game to any great extent,” Liebman writes in his analysis, which shows that NYRA became the largest political donor among gaming interests by late 2009.

Between April 2008 and the next major election in November 2010, its PAC made over a quarter million in political donations, including $50,000 to Gov. David Paterson, Eliot Spitzer’s successor, and roughly $200,000 to legislative candidates and political parties.

Governor Cuomo's New York - a cesspool of corruption and cronyism.

Funny how often NYRA is at the middle of that.