01/13/2012 2:40PM

NYRA denies allowing account-wagering customers to bet on credit

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The New York Racing Association on Friday strenuously denied that it has allowed any of the customers of its account-wagering operation to bet on credit in response to a letter from the chairman of the association’s oversight board calling for an investigation into the allegation.

“The funding policies for NYRA’s advanced deposit wagering program are in compliance with the law and pursuant to the procedures approved by the New York State Racing and Wagering Board,” NYRA said in a statement. “We refute any allegations that suggest otherwise, and stand by our advanced deposit wagering account funding practices.”

On Thursday, Robert Megna, chairman of the oversight board, which has the power to revoke NYRA’s franchise, sent a letter to the board asking for an investigation into NYRA’s account-wagering operation, in response to allegations that “NYRA has effectively extended credit to certain customers by allowing these patrons to place wagers before their accounts have been properly funded.”

Lee Park, a spokesman for the racing and wagering board, would not comment when asked to describe the specific funding practices that are under investigation.

“Suffice it to say that the board is going to conduct an investigation into NYRA’s account-wagering practices,” Park said. He would not comment further.

The allegation has arisen at a time when NYRA’s franchise is under increasingly vigilant scrutiny because of the success of a privately operated casino at its Aqueduct racetrack that opened in October. NYRA, a non-profit which also operates Belmont Park and Saratoga Race Course under a 30-year lease with the state, receives a portion of the revenue as subsidies from the casino, along with horsemen and breeders.

The allegation follows the revelation late in 2011 that NYRA had been improperly applying the wrong takeout rate to superexotic wagers for 15 months. The error, which went undetected by the oversight board and regulators until it was revealed in an unrelated audit of the state’s breeders’ fund, has exposed NYRA to additional criticism of its management practices.

Among other methods, NYRA’s account-wagering operation allows customer to deposit funds by check, linked debit-card accounts, and by cash transfer through credit cards. The practices are identical to those used by other account-wagering companies.

Using a check, it is possible for customers to deposit funds to their accounts that exceed the amount of money in their checking account, just as a customer at a grocery store could write a personal check that would later be rejected by the bank for insufficient funds. Customers can also use credit cards that would apply the cash transfer to a credit debt, even if the customer did not have the cash to immediately pay off the ensuing debt.