CAPITOL : NYRA’s future may be in doubt Franchise could be lost after latest incident
The New York Racing Association could be stripped of its role as operator of three thoroughbred tracks in the state, including the historic Saratoga Race Course.
The corporation’s franchise agreement to operate at Aqueduct, Belmont and Saratoga isn’t supposed to run out until 2033 but is now in jeopardy because of a history of possible violations to agreed-upon practices. In the latest incident, a state report suggests NYRA President Charlie Hayward knew the organization was withholding too much from winning bettors during a 15-month period and kept quiet about it.
“This is not an isolated instance,” wrote state Franchise Oversight Board Chairman Robert Megna in a letter Sunday to NYRA Chairman Steven Duncker. “Previously, I raised concerns about management’s failure to reveal the salaries of top offi cials.”
NYRA has also recently come under fi re for its budgeting and expenses, safety conditions at Aqueduct and the way it handled the awarding of a public relations contract for the track in Saratoga Springs.
In his letter, Megna stressed that NYRA operates under a franchise agreement that requires it to adhere to certain laws and rules. “A failure to meet this most fundamental obligation puts into doubt the continued efficacy of the state’s franchise agreement with NYRA,” he wrote.
The power to revoke NYRA’s franchise lies with the state Racing and Wagering Board, which would have to hold a hearing to determine whether the corporation failed to satisfy certain “performance standards.” These standards relate to the operations of the three tracks and include NYRA’s expenses and how it handles betting.
A decision to revoke the franchise can be appealed in state Supreme Court.
A spokesman for the Franchise Oversight Board said it was premature to review NYRA’s franchise agreement, noting that the racing board hadn’t finished its investigation into the takeout percentage dispute and the state Inspector General’s Office had just started its review of the matter.
NYRA is expected to respond to the preliminary report from the racing board by Friday. PERFORMANCE ‘PROBLEMATIC’
Republican state Sen. John Bonacic, who is chairman of the Senate’s Racing, Gaming and Wagering Committee, said NYRA may need to be replaced. “Running a government-granted monopoly on the state’s largest tracks requires … humility … integrity and … common sense,” he said. “NYRA was never strong on the fi rst, the second is now in serious question and the third cannot come if the first two are problematic.”
Bonacic added that NYRA should waive its attorney-client confidentiality with its former integrity counsel to release additional documents to the racing board. The racing board is currently waiting on thousands of documents from NYRA, including a report from its former integrity counsel that could shed light on what the company knew about the takeout percentages before the error was disclosed in December.
Assemblyman James Tedisco, R-Glenville, felt it was too soon to revoke NYRA’s franchise agreement but acknowledged that the situation needs to be evaluated and discussed.
There is also the possibility that NYRA could hold on to its franchise agreement, but executives implicated in the incident could be banned from working at New York’s tracks. Megna has directed the racing board to review whether the corporation’s executives meet the necessary standards to work in the state.
Anyone who works at a race track in New York requires a license from the racing board. A license can be revoked if the racing board determines an individual failed to demonstrate “fi nancial responsibility” and “character” in compliance with the best interests of the public and the racing industry.
The racing board wouldn’t comment on the possibility of revoking the licenses of any current NYRA employees, who would be entitled to a hearing if that route were taken. NYRA has already placed Hayward and General Counsel Patrick Kehoe on administrative leave pending further review.
Bonacic said the action by NYRA is appropriate and wanted to wait until all the facts were in before contemplating Hayward’s fate.
“I think a non-NYRA person needs to come in to run NYRA immediately,” he added, “a person with management and racing experience. People like [former racing board member] Ben Liebman and [Capital OTB President and CEO] John Signor come to mind.”
NYRA spokesman Dan Silver would not comment on the handling of the company’s operations and its management team.
Even less clear than the fate of NYRA’s franchise agreement or its officials’ licensing status are potential civil and criminal ramifi cations. The Inspector General’s Offi ce is looking into possible violations.
Former Assemblyman Richard Brodsky, now a senior fellow for the nonpartisan public policy organization Demos, said the latest incident was entering “weird” legal territory. “I don’t think anyone knows” the legal ramifications, he said.
“This is the kind of thing where the remedy is usually not criminal or civil prosecution,” Brodsky said.
He said it was possible individual bettors affected by the wrong takeout percentage might sue NYRA, local district attorneys might get involved and state Attorney General Eric Schneiderman might consider bringing a case.
Schneiderman spokeswoman Michelle Duffy declined to comment on possible actions by the Attorney General’s Offi ce.