NY Inspector General: 2011 NYRA Takeout Fiasco an ‘Inexcusable Subversion of Public Trust’

by | 08.25.2014 | 10:04am
Former NYRA CEO Charles Hayward

After a lengthy investigation that spanned over two years, New York's Inspector General, Catherine Leahy Scott, has concluded her investigation into the New York Racing Association and several of its current and former officers regarding the period in 2011 when NYRA improperly overcharged bettors.

The Times-Union reports that the inspector general found that the $7.4 million in fees taken by NYRA during a 15-month time period was the result of “many people failing to perform their duties and the former head of NYRA being derelict of his.”

Leahy Scott's office was tasked by the state's Franchise Oversight Board to investigate into the time period when NYRA overcharged bettors. The inspector general's findings, which will be released in an official report later on Monday, not only found former NYRA CEO Charles Hayward and NYRA's counsel, Patrick Kehoe, at fault, but also put blame on the Racing and Wagering Board, NYRA's auditors, and several current and former members of the NYRA board.

The report described the entire episode as “an inexcusable subversion of public trust.”

Read more in the Times-Union.  Read the Inspector General's press release here.

Monday morning, Dr. David Skorton released the following statement:

“The New York Racing Association is a far different organization than it was two years ago when Governor Cuomo and legislative leaders appointed a new Re-Organization Board of Directors, comprised of subject matter experts and others. In addition, the new Re-Organization Board's Audit and Compliance Committee is led by New York State's first Inspector General, Joseph Spinelli, and that committee has instituted new internal audit policies, procedures and controls.

“In addition, the new Re-Organization Board has also transformed the management of thoroughbred racing in New York State by appointing a new CEO. The CEO has recruited a new executive team, including a new General Counsel, a new Chief Compliance Officer and other key executives with no connection to these events cited by the Inspector General.

“The new management team has already instituted sweeping changes that coincide with the Inspector General's recommendations. Our new Re-Organization Board of Directors and senior management team share a steadfast commitment to greater transparency, compliance and accountability.

“The Re-Organization Board of Directors and new management team have – and will continue to work in collaboration with the State of New York and the Gaming Commission. This is important, as we promote the vitality of a sport that generates more than $2.1 billion in economic impact across New York State, and is responsible for creating more than 17,400 jobs for New York State residents.

“We thank the Inspector General for her professionalism and guidance.”

Statement of Charles Hayward on New York Inspector General's Report:

The Inspector General's Report at long last confirms what I said two years ago —
that the incorrect takeout rate was the result of simple human error, an
unintentional oversight by many people, including NYRA's board, audit committee
and management, several outside auditors, and multiple state agencies,
including the New York State Racing and Wagering Board.

When the mistake was discovered, NYRA — under my leadership — did the right
thing by providing refunds to those bettors who could be identified and reducing
the required takeout rate by two points to benefit bettors.

As NYRA's then-CEO, I accepted responsibility from day one. I am proud of the
achievements of the dedicated and experienced team with whom I worked and of
everything we did to advance the sport of thoroughbred horse racing.

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