05/23/2007 11:00PM

Capital OTB loses rebate approval


The New York State Racing and Wagering Board on Thursday declined to give approval for Capital District Off-Track Betting Corp. to offer rebates to its customers, citing evidence of multiple people betting through the same account and other breakdowns in the program.

Capital began the program last year under provisional approval from the racing board. The program allows customers to receive rebates on handle when a customer's monthly wagering totals hit certain thresholds.

Capital had hoped to get permanent approval for the program at the Thursday meeting, but the racing board instead said the program must be suspended as of May 30, when its conditional approval expires. The decision is based on a monthlong review of Capital's administration of the rewards, according to Dan Toomey, a spokesman for the board.

Toomey emphasized on Thursday after the meeting that the approval was rescinded "without prejudice," meaning that Capital can reapply for approval after addressing the problems highlighted by the board during the meeting.

"They have a chance to look into these findings and apply again, as long as a number of these problems are fixed," Toomey said.

John Signor, Capital's vice president, said on Thursday that the company was "shocked" at the board's actions, stating that board officials had not informed Capital about its concerns prior to the meeting.

"This is all news to us," said Signor. "We have a call in to the board to get more information. We don't know where they got their information, and we don't know how they got their information."

According to Toomey, the board noted five concerns about the program, including the allegation that multiple people bet through the same account. The other concerns included a failure by Capital to provide detailed financial statements about the program on a quarterly basis; a failure by Capital's comptroller to audit the program since it had been in existence; the lack of a log for customer complaints; and the practice by Capital of allowing customers to combine handle totals from separate phone and teletheater accounts for the purposes of rebates.

The allegation that multiple people bet through the same account bears similarity to accusations in a federal indictment three years ago that customers of offshore rebate shops had bundled bets through one account in order to maximize the size of their rebates. The indictment claimed that the activity was illegal because individual customers could avoid paying taxes because they had not provided the proper identification to the companies that ran the operations.

Toomey said that the board had not claimed that Capital did anything illegal. "We're not a criminal agency," Toomey said. "That's not for us to decide."

Signor said that Capital had no knowledge of the practice of bundling bets. He did address one of the complaints of the board - that players were allowed to combine handle totals through two accounts - by saying that the board had been informed that Capital planned to allow customers to receive rebates on the combined handle total when the conditional approval was granted last March.

"For whatever reasons, they're saying they don't approve of it now," Signor said.