Fired NYRA head says report flawed

PHOTOGRAPHER: David Lombardo

Ousted NYRA president and CEO Charles Hayward says his firing was a mistake and predicts he will eventually be exonerated of any wrongdoing.

On Friday, just a few days after being suspended, Hayward and NYRA General Counsel Patrick Kehoe were let go by the corporation’s board of directors, which cited evidence in an interim report by the New York State Racing and Wagering Board. The report highlighted emails from Hayward that indicated he knew about an incorrect takeout percentage the company was withholding on exotic bets, but did nothing to stop it and cost bettors $8.5 million over a 15-month period.

NYRA is a private entity that holds a 25-year franchise to operate thoroughbred racing at the Belmont, Saratoga Springs and Aqueduct racetracks on state land.

“Both the interim report and the investigation on which the report is based are flawed and admittedly incomplete,” Hayward said in response to his firing. “The interim report badly misinterprets documents and was prepared without interviewing me or any other individual relevant to their investigation.”

The most damning evidence in the report is an email he sent that acknowledges NYRA was withholding more than the legal limit on winning exotic bets and that it had put off fixing the situation for fiscal and political considerations. The recipient of that email has stated this week his belief that Hayward wasn’t aware NYRA was breaking the law.

“I expect to be fully exonerated when all the facts come out,” Hayward said.

A NYRA spokesman did not return an email for comment and Charles Wait, a Saratoga Springs resident on the NYRA board of directors, has not responded to questions about NYRA for a week.

Meanwhile, Gov. Andrew Cuomo on Monday said legislative action is being considered to end what he calls a troubled history at NYRA.

“The last episode with their CEO last week … really caused the Legislature to take note and the executive to take note, and we are meeting literally as we speak,” Cuomo told reporters. “We are discussing possible legislative reform to NYRA. NYRA has a troubled past … it seems like there is a never-ending list of the problems at NYRA.”

“I don’t know that NYRA can lose the franchise,” Cuomo said. “There is a contract … the question is how you make it better.”

Hayward addressed the racing board on Thursday through his attorney, Eric Corngold, who made the case that the incorrect takeout rate had been an honest mistake, which could actually be demonstrated by the racing board’s interim report. In Hayward’s defense, Corngold noted private and public statements Hayward made arguing that lower takeout rates actually yielded more revenue.

Corngold also urged the board not to make any additional decisions before all the facts could be gathered. He stressed that the suspensions of Hayward and Kehoe could fulfill the “response and action” required of NYRA by the state for Friday.

Instead, the board fired them and touted the decision as evidence of its commitment to solving this problem and moving forward.

State Sen. John Bonacic, chairman of the Senate’s Racing, Gaming and Wagering Committee, said the decision to terminate Hayward seemed appropriate based on the interim report.

“The Senate looks forward to working with the governor on NYRA oversight,” he said. “It would be my preference to develop a newly reconstituted NYRA board with a small number of board members and therefore greater accountability.”

Director of State Operations Howard Glaser, a close adviser to Gov. Andrew Cuomo, told Talk 1300, a radio station, on Monday that the administration is having conversations about the best way to manage racing in the state. He said it wasn’t clear that NYRA’s structure is the best option, as it had failed to serve bettors recently.

Glaser contended that there is currently very little state control of NYRA. It falls under the purview of the racing board, the Franchise Oversight Board and the state Comptroller’s Office.

Asked about the possibility and legal means of revoking NYRA’s franchise agreement, he said, “We still have a lot of lawyers and they’re looking at those questions right now.”

NYRA employees are licensed by the state racing board, which also could hold a hearing to determine the status of the franchise agreement the company has to run the three racetracks. In order to revoke the franchise agreement, the board would have to decide NYRA failed to meet certain performance standards.

Last week Cuomo said any state action should be reserved until all the fact are collected.

A spokesman for Assembly Speaker Sheldon Silver did not respond to a question about potential legislative plans regarding NYRA.