Anne M. Eberhardt

NYRA Proposes More Pari-Mutuel Wagering

Organization proposed wagering in an initial 10 restaurants and bars.

The New York Racing Association is proposing a plan to let it operate pari-mutuel wagering in an initial 10 bars and restaurants in New York City.

Seeking to make up lost revenues from the closure more than a year ago of the New York City Off-Track Betting Corp., the new NYRA effort calls for self-service betting machines to be placed in 10 facilities across the city that had previously been locations as NYCOTB wagering facilities.

“It’s a big deal,” NYRA president Charles Hayward said of the new effort.

NYRA officials unveiled the new plan Feb. 14 to a state panel that oversees its finances; the panel’s members, reserving final judgment, encouraged NYRA to pursue the endeavor, which would need approval by the state racing board, the New York City mayor, and city council.

NYRA’s plans call for 10 facilities in the first year, growing to 40 restaurants and bars by the third year. In year one, officials project the sites will generate $45 million in handle. By year three, the 40 sites would handle $165 million in bets. For the state, NYRA is dangling the prospects of more money in the form of revenue-sharing: nearly $5 million over the three years in state taxes and about $19 milllion for purses.

“I’m always in favor of more revenues,” said franchise oversight board chairman Robert Megna, who is also Gov. Andrew Cuomo’s budget director. But he cautioned NYRA that there are still a number of unanswered questions about the plan, including urging NYRA to devise a strategy for the types of bettors it is trying to attract at the facilities.

“Each of the board members has expressed some interest in this as an issue,” Megna told Hayward.

Hayward said NYRA has held no discussions yet with New York City officials.

NYRA has captured about 35% of the handle lost when NYCOTB closed following its bankruptcy protection period. “That means 65% went someplace else,” Hayward said.

NYRA also believes a state statute enacted in the early 1990s negates the need to seek state legislative approval for the New York City plan.

In other matters, Megna openly wondered about whether the split that drives money to NYRA purses needs to be adjusted now that funds are flowing from the new Aqueduct casino. “Is it too much,” he said of projected purse increases.

Megna did not elaborate, but told Hayward, “We are always going to be asking you about it because it’s a lot of money.”

The franchise board raised a number of other questions about recent controversies involving NYRA, including a critical audit by the state comptroller and how it handles bad debt cases involving ADW customers.

The board also wanted answers about the embarrassing episode in December in which it was revealed that NYRA did not, as required by law, drop the takeout on its exotic wagers from 26% to 25%.

“We did not obey the law…but we were not trying to mislead anyone,” Hayward said.

NYRA has said the mistake was not caught by its staff, the state racing board, or outside auditors. The amount “over-withheld’’ by NYRA totaled $1.2 million, while $7.9 million in additional takeout was charged through simulcast wagers. NYRA said it has been able to identify bettors who were charged $500,000 too much out of the $1.2 million bet through NYRA, and will be able to meet a state-imposed deadline to refund those wagers by the end of March.

Those who bet with tickets will get no refunds since there is no proof, but NYRA has cut the takeout to 24%--from the 26%–-to try to get some of that money back to what Hayward called “that category of bettors.”

Jonathan Sack, a Manhattan lawyer who is NYRA’s integrity counsel, a post required by state law, told the oversight board that he saw “no indication of intentional wrongdoing” in the takeout episode.