Put the New York Racing Association out of business
Charles Hayward, the suspended chief executive of the New York Racing Association (June 25, 2007) Credit: AP Photo/Mike Groll
The New York Racing Association has been milking the people of this state for years, usually without actually breaking the law. Now, it appears to have been caught pilfering illegally, creating the perfect opportunity, again, to demand the abolition of the nonprofit organization.
In 2008, NYRA was allowed to cut payouts on certain bets at the tracks it has the franchise to operate -- Belmont, Aqueduct and Saratoga -- by 1 percent, to help balance its books. That reduced payout expired, by law, on Sept. 15, 2010, but NYRA kept paying bettors too little, until State Comptroller Thomas DiNapoli cried foul 14 months later.
In the end, NYRA bilked horseplayers out of $1 million. And because it sets the payouts for off-track bettors wagering on its races, NYRA caused the state's OTBs to short gamblers another $7 million. And the shortchanging was intentional. Emails unearthed by the state Racing and Wagering Board show NYRA chief executive Charles Hayward knew his organization was shorting players to balance the books and keep state politicians off NYRA's back. Hayward is also accused of lying about the scam when it was uncovered, claiming it's an oversight he'd been unaware of.
NYRA and the OTBs are supposed to return the money, but mostly can't. Those who were shorted on bets placed with Internet or phone accounts can be compensated, but many who made wagers at the windows are impossible to find.
Hayward and NYRA's chief counsel, Peter Kehoe -- both earning $400,000-plus salaries -- have been suspended. That's a start, but barely. The investigation continues, now to be conducted by the state inspector general's office. But NYRA appears to be stonewalling. It's claiming that communications with law firms representing NYRA are privileged, and has withheld thousands of documents.
In the past 10 years, NYRA faced a massive tax fraud indictment, in which charges were dropped after it agreed to significant reforms, and a bankruptcy. As part of the deal that brought the organization out of bankruptcy and garnered it a $100-million bailout from Albany, it gave up its dotty, largely insupportable claim that it owned the three state tracks it merely ran. So why isn't NYRA simply a government agency, utterly transparent, under the aegis of the governor, and paying its employees appropriately uninflated salaries?
Because it's a patronage pit, directly and indirectly benefiting the politically connected of the racing world. The deal then-Gov. Eliot Spitzer made when he bailed out NYRA in 2007 was a one-sided mess that rewarded the organization at the expense of taxpayers.
Now, with racino cash pouring in from Aqueduct (and the state's other racinos) to support racing, there is even more money in play -- and more need to see the operations of these three tracks and their gambling handled responsibly, legally and to the benefit of taxpayers. NYRA is profitable, but those profits belong in the state treasury, not the pockets of a shadowy organization. With a constitutional amendment in the works to expand gambling in New York, now is the time to clean up the state's gambling structure. NYRA is first on the list, and now is the time to shoot it.
