NYRA, which hosts major events such as the Breeders’ Cup, Belmont Stakes, and Travers Stakes, revealed on Wednesday, December 21st, that its tote system underpaid customers by $8.6 million during a 15-month stretch of 2010 and 2011. The error went undetected by state racing officials and a panel for the financial oversight of NYRA before it was noticed during a breeding fund audit led by state comptroller Thomas DiNapoli.
NYRA officials admitted that the company, which had fought to remain solvent after bankruptcy and repeated financial lifelines from New York State, did not adjust its exotics takeout rate when lowered by the expiration of a state wagering provision. As a result, NYRA has made an agreement with the New York State Racing and Wagering Board to compensate winning ticket holders and apply further reductions to its takeout percentage.
NYRA’s takeout, a surcharge on winning tickets applied through state law, was raised from 25 percent to 26 percent on exotic wagers in September 2008 as part of a franchise extension deal between the endangered company and the State of New York. The takeout hike required a provision to the state gaming code, which capped exotic takeout at 25 percent. When the provision expired in September 2010, NYRA was obligated to restore the lower takeout rate, but continued to levy and post winning payouts through the tote system at 26 percent.
'Complexity of Racing Law' Cited
A statement written by Director of Communications and Media Dan Silver underscored ‘complexity of the takeout provisions in the Racing Law’ as the cause of NYRA’s tote error. The incorrect percentage affected winning tickets at NYRA tracks, simulcast facilities, and ADW providers on all trifectas, superfectas, Grand Slams, Pick 3s, Pick 4s, and Pick 6s.
NYRA stated that it will cooperate with the New York State Racing and Wagering Board in reimbursing customers who hold proof of a short payout, such as uncashed winning tickets and Internet wagering receipts. Its statement added that the NYSRWB has approved a further one percent reduction on the mentioned exotic pools to 24 percent, effective immediately.
The latest admission of NYRA, which conducts racing at Saratoga Racecourse, Belmont Park, and Aqueduct Racetrack, is another in a long line of integrity issues plaguing the American racing industry. The issue of ‘fair’ payouts has already been a frequently discussed but unresolved issue in the sport as its aging tote system operates under growing scrutiny. NYRA has also dragged through a poor relationship with Governor Andrew Cuomo as it launches its casino operation at Aqueduct and looks to overcome its financial problems.
Problems Span For More Than a Decade
NYRA was originally founded as the Greater New York Racing Association in 1955, when it took control of the state’s three primary thoroughbred tracks, and has operated as one of the world’s most prestigious racing circuits. The company began to weather fiscal problems in the early 90s and was federally indicted in 2003 when an investigation uncovered money laundering and tax fraud schemes amongst several of its tellers.
NYRA, which operates as a quasi-governmental entity, was in chapter 11 bankruptcy from November 2006 to September 2008 and kept in operation through loans supplied by New York State and forgiveness of debts. Long at war with state government, it was at the time of its 25-year franchise extension that NYRA relented on a long-contested claim to ownership of the land upon which its three tracks sit.
NYRA’s fiscal situation was further muddled by a ten-year delay of the VLT casino at Aqueduct and liquidation of the New York City Off-Track Betting Corporation, a large generator of its handle.
Paul-John Ramos - Paul-John is a freelance writer based in Yonkers, New York. His past articles have appeared at Classical Net and his poetry in Steam ...
