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John McLoughlin is a veteran Capital Region journalist, now at NewsChannel 13. Reach him by email at JMcLoughlin@WNYT.com.

McLoughlin Take 2: NYRA never got its role as ward of state

Friday, May 4, 2012
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Charlie, Charlie, Charlie, please do us a favor, will ya? Spare us all the cheap Saratoga T-shirts and the one-size-fits-all caps and the rest of the tchotchkes and just give us an honest break at the betting windows. OK?

But instead, the Racing & Wagering Board reported this week that Charlie Hayward and the New York Racing Association had been sticking it to those very race fans whom NYRA professes to value so highly. Last December, the association that runs Saratoga, Belmont and Aqueduct said it inadvertently had failed to lower the takeout on certain exotic bets from 26 to 25 percent, as dictated by law, thereby nailing its bettors for about $8.5 million, that’s all.

Our bad, just a mistake, mea culpa, NYRA insisted. Except that it was not a mistake, at least not in the sense that NYRA goofed and as soon as they saw they goofed they acted quickly to correct it.

For those of you who have been out of town, here it is: Racing & Wagering discovers accidentally that NYRA failed to lower from 26 percent to 25 percent the “takeout” on exotic bets — that’s kind of like what the mob used to call the “skim” in Vegas, except the takeout goes to overhead and not to Vinnie Boombots.

“An unintentional oversight,” said NYRA, beating its breast. I’m sorry but I laugh excessively every time I read those words in print; over the years NYRA never missed a change in takeout, up or down.

Racing & Wagering discovers that Charles Hayward, president and CEO of the horse race company, had been alerted BEFORE the rate was due to change in September 2010, but Hayward and other NYRA honchos knowingly continued to charge bettors the higher takeout for 15 months. Nine months ago, a reader of the Daily Racing Form sends a letter to Steve Crist, the publisher and Hayward’s buddy, complaining about the illegal takeout. Crist emails Hayward, who emails him back, saying yeah the guy is right we’ve been doing that for several reasons including the belief that NYRA is getting “smacked around by Cuomo.”

The SMOKING GUN: Hayward asks Crist to keep all this under his hat and Crist agrees. Crist later writes a column describing the illegal takeout as “an honest mistake.”

Charlie, you thought you were getting “smacked around by Cuomo” back then? NYRA’s chairman has now suspended Charlie and his top legal counsel without pay, about half a million, including benefits, in Charlie’s case. And Charlie, I’m afraid that I will pick six winners in a row before you get to use the NYRA executive bathrooms again.

Let’s tie up some loose strings:

• NYRA illegally pocketed the $8.5 million. Not true. NYRA caused that amount to be illegally withheld from bettors, but $7.4 million of that money went to other racetracks and off-track betting sites that bet on NYRA. After reimbursing affected bettors, NYRA netted $531,000 in ill-gotten gains.

• Was there any “honest mistake” about it? Not really. Back in February, Hayward testified before the Racing & Wagering Board and stated: “We did not obey the law.” He goes on to assert, however, that NYRA was not trying to mislead anyone because it had been published in several places that NYRA was still using the then-illegal takeout.

• Will criminal prosecutions follow? Ain’t no lawyers at this keyboard, but a prosecutor probably could theorize that Hayward allowed or caused the illegal takeouts to continue to protect his own half-mil salary. Seems awfully far-fetched, but I have seen worse.

• So, is Crist proud of his role as a journalist in this case? Seems not. A former New York Timesman, Crist put out a statement saying he regrets not having followed up on the issue but still does “not believe that Hayward knowingly overcharged his customers.”

• Why do some newspeople still talk about pick-sixes involved in this controversy. I dunno, maybe because they did not read the 19-page report. The pick-six has absolutely nothing to do with this story.

So why did you do it, Charlie? Well, he told Crist in the email (imagine a half-mil-per businessman laying it all out like a teenager on Twitter) that NYRA had experienced those always pesky “substantial losses” in 2010 and 2011, plus the OTBs might scream “like stuck pigs,” and, of course, Cuomo was tap-dancing on their heads.

Nowhere does Charlie mention the biggest reason: NYRA, in all its arrogance, has never been able to understand or accept its role as a ward of the state of New York. The incorporation papers say private, nonprofit, but when you take the kind of money NYRA has taken from taxpayers, you are a ward.

I’m telling whoever is left standing at NYRA, forget about inviting Cuomo to just attend Travers Day, ask him if he would like to ride one of the mounts. Oh, and give him one of those gee-whiz-I-wish-I-had-one-of-them NYRA key rings to keep him busy.

 
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