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NYRA's Hayward says takeout reduction permanent
OZONE PARK, N.Y. – Though he admitted that there were others who could have discovered it, New York Racing Association president and CEO Charles Hayward on Tuesday took responsibility for the mistake that led to NYRA charging too high a takeout rate on certain wagers for a 15-month period, an error that cost bettors $7.9 million.
“I’m the CEO, ultimately I’m responsible,” Hayward said Tuesday in his first public comments on the issue, which surfaced on Dec. 21. “If you’re looking to blame somebody, that’d be me. The buck stops here. There’s a lot of people both inside NYRA and the state that had the opportunity to review that and the bottom line is we missed it.”
It was revealed last week that NYRA had improperly charged a takeout rate of 26 percent – 1 percentage point higher than allowed by law – on exotic wagers, including trifectas, superfectas, pick threes, pick fours, and the grand slam – from Sept. 15, 2010 through Dec. 18, 2011. Hayward clarified that the pick six wager was not impacted by this overcharge because state law allows NYRA to charge a takeout rate of up to 36 percent on that wager.
As an attempt to rectify the situation, NYRA on Wednesday instituted a 2 percentage point decrease on the takeout rate on the wagers in question. Hayward said the takeout reduction on those wagers would be permanent and not for only 15 months as had been reported by some outlets. Hayward declined to comment on whether NYRA would seek a takeout reduction on straight win, place and show wagers and two-horse wagers such as the exacta and daily double.
NYRA also has committed, as per request by the Franchise Oversight Board and the State Racing and Wagering Board, to refund money to those customers it can successfully identify as being overcharged. Hayward said that of the $7.9 million overcharged, approximately $1.1 million was to bettors ontrack. Of that total, approximately $420,000 was wagered through NYRA Rewards, making it possible for NYRA to track down those bettors.
“The rest of the off-track monies the simulcast holder was largely the beneficiary of that higher takeout,” Hayward said.
Hayward pointed out that NYRA’s takeout rates are published daily in the racing program, Daily Racing Form, as well as in all simulcast contracts, which are approved by the New York State Racing and Wagering Board.
The board has also instructed New York State’s off-track betting corporations to track down bettors who may have been affected by the takeout overcharge.
Hayward noted that NYRA “opposed initially” the takeout increase when it was proposed as part of the franchise agreement because “we felt it was bad for business.”
Robert Megna, the state’s budget director and chairman of the Franchise Oversight Board, which also didn’t detect the mistake, sent a scolding letter to Hayward last week which in part chastised him for comments he made defending NYRA’s wages paid to its executives.
“You have repeatedly argued that the high compensation paid to NYRA officials is needed to ensure that the best talent is attracted to the Association,” Megna wrote. “That position, of which we are skeptical to begin with, rings hollow in light of NYRA’s failure to manage a most basic accounting task.”
Since Oct. 5, NYRA has been operating without a designated chief financial officer. Ellen McClain, who had been the CFO since July 2009, was promoted to chief operating officer, replacing Hal Handel, who left the company in September. Hayward said NYRA hopes to hire a CFO sometime in January.
“We made a mistake,” he said. “We’re trying to do what we can to fix that for the customers, but it doesn’t eliminate the fact that we made a mistake, for which I apologize. The most important thing for the state is to have a healthy racing and breeding program, and I think we’re a lot better off today than we were two years ago, a lot better off than we were four years ago, a lot better off than we were six years ago.”
- 1.Posted 12/11/2013 03:00PM
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