- Associated Press - Monday, August 25, 2014

ALBANY, N.Y. (AP) - Horse race bettors were overcharged $7.4 million because of failures at “every level” by the group that runs three New York thoroughbred tracks, according a state report released Monday.

The state’s inspector general slammed the New York Racing Association for charging one percentage point more in “takeout” fees for so-called exotic wagers for 15 months beginning in September 2010. NYRA holds the state franchise to run racing at Belmont, Aqueduct and Saratoga race tracks.

The report said NYRA officials should have known that the state law allowing a takeout higher than 25 percent for those bets had expired. But “every level of audit and control,” from former top executive Charles Hayward on down, failed to identify the problem, according to the report.

Hayward and NYRA’s general counsel were terminated in 2012 after the problem surfaced publicly.

IG Catherine Leahy Scott said in the new report that Hayward was “derelict in his duties” and that other NYRA officials showed an inexcusable inattention to the problem.

“Unfortunately what occurred undermined that trust because NYRA took earnings away from bettors that were rightfully theirs,” Scott said in a statement.

Hayward, in a statement, said the report confirms the problem stemmed from “simple human error” and that he accepted responsibility from the outset.

NYRA was able to repay only $611,604 to bettors, but set the takeout rate for exotic wagers one point below the legal limit to compensate.

NYRA’s current chairman, David Skorton, said they have new procedures and internal controls designed to prevent a repeat of the overcharge. Skorton said NYRA is a “far different organization” than it was two years ago.

The IG’s report also claimed that state regulators at the old Racing and Wagering Board failed to identify NYRA’s takeout overcharge. The racing board’s duties were folded into the state Gaming Commission in 2013.

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