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This is ALL THINGS CONSIDERED from NPR News. I'm Michele Norris.

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And I'm Melissa Block.

This weekend's Kentucky Derby marks the unofficial start of the thoroughbred racing season. And news is that the sport is in big financial trouble nationwide. In New York State, the $2 billion horseracing industry is in freefall, and there are growing fears that this summer's season at Saratoga Springs could be cancelled altogether.

North Country Public Radio's Brian Mann reports.

BRIAN MANN: Horse racing in New York State has never been an easy ride. The sport has been plagued by scandal, bankruptcies and federal investigations for years. But the last decade, it seemed like things were turning around.

Unidentified Man: And the gutsy gal named Funny Cide has won the 129th Kentucky Derby.

MANN: New York-bred horses like Funny Cide and Tin Cup Chalice were winning big races. Wall Street was booming, which meant more people buying and racing thoroughbreds.

The New York Racing Association - the nonprofit that runs the state's tracks at Saratoga, Belmont and Aqueduct - reorganized and cleaned up its act. But like a gambler's run of good luck, it all came down in a crash.

Mr. JACK KNOWLTON: You know, at this point, there's not a lot to be optimistic about in New York racing.

MANN: Jack Knowlton runs the stable that trained Funny Cide.

He stands on Union Street in Saratoga Springs, where the Victorian-style racetrack and gorgeous 19th-century mansions are framed by blossoming pear trees. Knowlton loves racing here, but he says shrinking prize money and a new round of scandals have pushed the sport to the brink.

Mr. KNOWLTON: A lot of people are reluctant to jump in because they're concerned that maybe there isn't going to be racing. And they're concerned that the purses have gone down, and that it's a very cloudy future.

MANN: Here's how things went horribly wrong for New York horseracing: First, the state's decade-long effort to build a casino at the Aqueduct track got tangled up in Albany politics. That meant fewer gambling dollars to pour into prize money at the track. And yes, there's a new federal investigation under way into that mess.

Then, New York City's off-track betting parlors went belly up this year, with critics blasting them for mismanagement. The joke in New York is that this is the only state in the country where even the bookies can't turn a profit. Without that revenue, the state racing association says it could literally run out of cash before this year's summer meet in Saratoga.

Former Mayor J. Michael O'Connell turned up for a protest rally outside the track gates that drew more than 200 people.

J. MICHAEL O'CONNELL (Former Mayor, Saratoga Springs): I go back to a time when World War II, they closed down for three years. But Saratoga without horse racing is just something unbelievable.

MANN: Thousands of jobs are on the line if the season is cancelled, but so is Saratoga's international reputation as a thoroughbred mecca. Molly Gagne has run the racetrack's telephone switchboard for a quarter century.

Ms. MOLLY GAGNE: Saratoga would fall apart. And this is the summer place to be because of the track.

MANN: The economic pain has already spread well beyond Saratoga's posh neighborhoods and high-end shops.

During the good years, the horse-breeding industry here grew dramatically. Scott Van Laer, who owns a stable in Ray Brook, New York, spent hundreds of thousands of dollars on his latest batch of yearlings. Now, he's not sure they'll find buyers.

Mr. SCOTT VAN LAER: It's definitely hurt us. We were very much in the red for 2009. What I need is a good sale horse this year.

MANN: Finding buyers willing to bid up prices on one of his ponies won't happen, he says, if there's not a season at Saratoga Springs.

Mr. VAN LAER: The question is how many farms are going to be left operational? Three of the top four breeding farms in the state are shuttered.

MANN: New York's legislature is considering a $17 million bridge loan that would allow the Saratoga season to go on this summer.

(Soundbite of music)

MANN: If lawmakers approve the deal, opening day is scheduled for July 23.

For NPR News, I'm Brian Mann.

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