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NYRA takes customer-relations hit on incorrect takeout

Posted: Thursday, December 22, 2011 1:14 PM

by Frank Angst

According to fans posting on blogs, forums, and social media sites, the New York Racing Association has delivered a lump of coal for customers this holiday season.

On Wednesday, the New York State Racing and Wagering Board (NYSRWB) revealed that NYRA overcharged customers on many of its exotic wagers for more than a year. The NYSRWB said takeout rates for the pick six (on carryover days), pick three, pick four, Grand Slam, trifecta, and superfecta wagers, by law, were supposed to be 25% since September 15, 2010, but NYRA continued to charge 26%, resulting in customers being shorted $8.6-million.

In a sport losing 4% of its fans a year, remaining customers questioned why they were over-charged by NYRA and why the regulator charged with oversight took more than a year to notice the problem. NYRA and the NYSRWB found themselves in the crosshairs of customers of NYRA tracks Aqueduct, Belmont Park, and Saratoga Race Course.

Joe Riddell, who regularly wagers on NYRA tracks, said for the over-charging to last 15 months points to real problems with NYRA and the NYSRWB.

“We, as an industry, have told our fans that we don’t care,” Riddell said. “This is another example. People who allowed this to happen should not continue to have jobs in this industry. The people that let this happen are either lazy, or incompetent, or corrupt.”

Tom Casaregola, director of audits and investigations for the NYSRWB, outlined the problem at Wednesday’s meeting but offered no explanation for why the overcharging was not noticed sooner.

As part of the franchise agreement in September 2008, NYRA received a two-year waiver from a New York law that limits the highest takeout for race wagers to a maximum of 25%, allowing the racing association to charge 26% for the listed wagers through September 14, 2010. But on September 15, 2010, the law on maximum takeout required the rate revert back to 25%. That rollback did not occur.

NYSRWB spokesman Lee Park said the problem was noticed during a discussion of a different topic last week between officials from the NYSRWB and the Office of the New Comptroller. He said in researching information on the issue being discussed, the comptroller official pointed out that NYRA was overcharging on takeout. The takeout amount is the percentage of money retained from wagering pools to pay tracks and purses.

On Wednesday the NYSRWB passed resolutions that will require NYRA to attempt to reimburse bettors the $8.6-million, noting that some players owed money could be documented through advance-deposit racing accounts and tax records. NYSRWB Chairman John Sabini acknowledged it would not be possible to reimburse players who wagered on-track or at simulcast outlets and turned in winning tickets.

NYRA will lower its takeout rate on the involved wagers to 24% for 15 months. NYRA proposed the lower takeout idea as an “equitable and immediate remedy to its customers.” Sabini said that move will help square things with on-track players.

“It’s unfortunate that this mistake wasn’t discovered sooner and that the adjustments weren’t made in a timely manner,” Sabini said. “The board is eager to figure out why this happened and why the adjustment wasn’t made.”

Park said Sabini is committed to looking at all reasons why the problem took place, which could include an investigation of NYRA and internal investigations. In a statement, NYRA blamed the problem on, “the complexity of the takeout provisions in the racing law."

Fans were blasting that excuse in the hours that followed. Jeff Platt, president of the Horseplayers Association of North America, said handicappers had noticed the problem early this year and documented it in various forums. A poster at a fan site said he had e-mailed his concerns to the NYSRWB about the issue but that fan did not provide a contact e-mail. Park said it would be difficult to determine if such an e-mail had been received without the person’s name or e-mail.

Still, Platt questioned why a problem that was noticed by horseplayers was not observed by NYRA officials or the regulator.

“The fact that just regular horseplayers were noticing this means that NYRA saying this ‘was just too complicated,’ doesn’t hold water,” Platt said. “If a regular person can make this determination just by reading the statutes online, how can a racing association and a racing board take more than a year to notice?”

A poster on the paceadvantage.com fan site who goes my the moniker “chickenhead,” called for the Office of the New York State Attorney General to examine what happened.

“There is a specific problem here in that a significant breaking of a regulation that impacted consumers to this large amount of money went on for such a long time,” the poster said. “In a tightly regulated market, this is not supposed to happen. That's the point of regulation and a regulator, particularly in light of the difficulty in this instance of ever getting remedy back to the people specifically harmed.”

Riddell, a former part owner of an account-deposit wagering service, agreed. He said it should not immediately be assumed that the over-charging was a mistake. He noted that if a small ADW overcharged customers for a year, it would be assumed that the operator was corrupt and not that it had made a mistake. He said NYRA should be held to the same standard.

Frank Angst is senior writer of Thoroughbred Times.