SBD/May 1, 2012/Facilities

Two NYRA Execs Placed On Unpaid Leave Amid Reports Of False Takeout Rates At Tracks

E-mails show Hayward knew of the overcharging back in August '11
The New York Racing Association BOD yesterday announced the Exec Committee has placed President & CEO Charles Hayward and Senior VP & General Counsel Patrick Kehoe on administrative leave without pay, pending further review. The decision follows the April 29 release of the New York State Racing & Wagering Board’s interim report into the matter of incorrect takeout rates at the tracks (NYRA). The DAILY RACING FORM’s Matt Hegarty wrote the suspensions come “after the release of a state report challenging claims by the association that it was unaware late last year that it had been incorrectly applying a higher takeout rate to its trifecta and superfecta bets.” The decision by NYRA “underscores the seriousness with which the allegations in the report are being viewed.” NYRA Chair Steven Duncker said that the association “will issue a response” to a letter from New York Gov. Andrew Cuomo’s office, and to the allegations in the report by May 4. The report “called into question a statement by Hayward that the association had made an ‘inadvertent error’ when it applied the wrong takeout rate" (DRF.com, 4/30).

ON THIN ICE: Cuomo yesterday called the findings of the racing board “shocking” and said, “If the facts are correct, they’re very troubling, to say the least.” Asked about Hayward’s future at NYRA, Cuomo said, “Let’s get the facts first. But if the facts are correct, it’s a problem” (BLOODHORSE.com, 4/30). In Albany, James Odato notes Hayward was “already on thin ice with state authorities for a series of missteps in dealing with government leaders,” and again he now “finds himself in serious trouble.” E-mails collected by the racing board's investigators show that Hayward “had known about the overcharging since at least August 2011” (Albany TIMES UNION, 5/1). The AP’s Michael Gormley noted NYRA is one of the state's “most enduring political powers, holding the racing franchise since 1955.” The state in ‘08 awarded “another 25-year franchise to NYRA, even though it was in bankruptcy proceedings at the time.” NYRA in exchange “dropped its claim to the land on which the tracks are located and collected $105 million from the state to avoid bankruptcy” (AP, 4/30).

TAKING ACTION: The N.Y. TIMES’ Drape & Bogdanich report the New York State Racing & Wagering Board yesterday “limited the size of the purses offered in races involving cheaper horses.” It acknowledged that “fattened purses, many of them being offered at racetracks where casinos had been opened in recent years, had created a dangerous incentive to push sore or unfit horses onto the track.” The board said that racetracks “could not offer purses greater than twice the assigned value of the horses running in any claiming races.” Drape & Bogdanich note the board “made its announcement on the same day that The New York Times published an investigation that showed how richer purses had created an incentive for trainers to run unsound horses.” Revenue from the recently opened Resorts World Casino at Aqueduct “had increased purses by about $130,000 a day” at NYRA’s tracks, including Belmont Park, Aqueduct and Saratoga (N.Y. TIMES, 5/1).
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