Anne M. Eberhardt

NYRA Takeout Error Missed by Other Agencies

Officials under criticism because wagering overcharge was overlooked for 15 months.

Just days after being praised by state officials for their fiscal openness, officials with the New York Racing Association were enduring a new round of criticism after revelations it had been overcharging bettors on exotic wagers.

The mistake went on for 15 months, during which time NYRA charged a 26% pari-mutuel takeou trate on certain exotic bets, such as trifectas and Pick 3s, instead of the allowed 25%. State racing officials had approved the higher level several years ago, but the rate was supposed to have been lowered by NYRA late last year.

The error went unnoticed by different layers of state regulatory bodies. It was caught recently by state Comptroller Thomas DiNapoli during an audit not of NYRA -- which is under a regular fiscal watch by the comptroller -- but during a formal review of the finances of the New York State Thoroughbred Breeding and Development Fund.

“Over the past several years, comptroller DiNapoli’s auditors have fought to scrutinize NYRA’s books to make sure the organization is operating in the best interests of the horse racing industry and the state," said Mark Johnson, a DiNapoli spokesman. “The state’s horse racing franchise is a valuable asset, and the comptroller’s office will do everything in its power to make sure NYRA is run ethically and efficiently."

Given that so many entities had a role in missing the takeout error, it is uncertain if there will be additional action beyond the steps under way. Those include NYRA lowering its takeout rate to 24% and identifying as many bettors affected as possible, such NYRA wagering account customers.

NYRA and the New York State Racing and Wagering Board did not return e-mails seeking comment Dec. 22.

The higher takeout level of 26% was no secret; it was listed on NYRA’s website and in official racing programs.

The state’s Franchise Oversight Board, which monitors NYRA’s finances, said NYRA had made $1 million through the additional percentage point of  takeout. Another $6 million went to others taking the NYRA simulcast signal, including other tracks, advance deposit wagering companies, and off-track betting corporations.

While NYRA said it has cut the takeout to 24% as part of a plan to make up for the mistake, state officials were talking about refunds getting into the hands of bettors who paid more during the past 15 months. But, for some bettors, the proof is gone and it will be impossible to offer refunds.

It was just Dec. 19 when the chairman of the Franchise Oversight Board complimented NYRA for being more upfront with its annual budget plans than in past years, when the state and NYRA tussled over fiscal matters. NYRA shared details with the oversight panel of its upcoming 2012 budget prior to the plan’s approval by the NYRA board of directors.

Forty-eight hours later, Robert Megna, also the budget director for Gov. Andrew Cuomo, wrote a stinging letter to NYRA president Charles Hayward for the takeout error; in a rare step for a top state official, Megna also openly questioned the oversight abilities of the state racing board.