By David Grening
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
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
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
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
“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.”