Tuesday, October 23, 2012
Will New York Regulators Oversight Be Overlooked?
Finally, the entire world has been made privy to the "New NYRA” movers and shakers with last week’s announcement of appointments to its Board of Directors by Governor Andrew Cuomo and the majority leaders of both the State Senate and Assembly. James Odato
reported, "A total of 10 current and former NYRA trustees will sit on the NYRA board, a total of 17 people, five of whom were picked by NYRA from among its existing board, which is being phased out. The others include two NYRA members from among eight appointees of Cuomo and one current NYRA trustee picked among the two appointees of the Assembly."
Adam Sichko, who still characterizes the NYRA management scandal as a betting scandal
wrote, "The new board gives the state a majority for the first time in the 57-year history of The New York Racing Association Inc. ..." >
How, exactly, does a Board -- whose voting majority still includes members who served during times of alleged questionable decision-making -- guarantee reform? The five NYRA-selected nominees include the former Board Chairman on whose watch the "last-straw" mismanagement opportunities occurred. Shouldn't he be joining the CEO he fired on the sidelines?
I find it interesting that the board appointments were announced prior to the release of the Inspector General's report on the takeout overcharging, i.e., NYRA's self-described "unintentional oversight" that appeared more like "intentional overlooking" to higher-ups.
For discussion purposes, let's assume Team Cuomo's preferred press leak conduit, Frederick U. Dicker, was as accurate about the latter as he was the former here: "... the state Inspector General has concluded that "negligent oversight" by NYRA's top management and its Board of Directors was responsible for the massive "takeout" scandal that cost bettors nearly $8.5 million over a 15-month period ending late last year.
Acting Inspector General Catherine Leahy Scott, nearing the end of a five month investigation, concludes that former NYRA CEO Charles Hayward and General Counsel Patrick Kehoe, along with "virtually everyone else in a position of responsibility, " knew of a legal requirement to lower the amount the association took from bets being placed at the three tracks but failed to act ...
... Hayward and Kehoe were fired by NYRA in May after the state Racing and Wagering Board disclosed the takeout scandal. However, the Inspector General's report will say the state board didn't act quickly enough.
Hopefully the report will specify how soon would have been "quickly enough." What will it say about the role of the State Racing and Wagering Board, or the Franchise Oversight Board itself, whose chairman, Robert Megna, will now sit on the "NYRA Reorganization Board?" Will the hat switch from overseer to one of the overseen motivate him to contribute more positively from the racing customer's perspective?
"Cuomo followed up the report by ordering an investigation by the Inspector General, partly to determine if NYRA officials had engaged in criminal conduct or might be liable in a civil court action.
The IG report concluded that no criminal conduct occurred and that a successful Civil Court action was unlikely ..."
Such an oversight without criminal intent suggests incompetence, but under any label, the overcharge was unacceptable. A differently defined "oversight" is the intended job of the Racing and Wagering Board. NYSRWB chairman John Sabini's job was not only to know what NYRA was actually doing but what it was supposed to be doing. Unfortunately, no "intentional oversight" was in place when it counted, revealing a similarly unacceptable level of incompetence deserving a similar result.
The situation may have been summed up best in an article by Frank Angst of the Thoroughbred Times: 'In a sport losing 4% of its fans a year, remaining customers questioned why they were over-charged by NYRA and why the regulator charged with oversight took more than a year to notice the problem.
Joseph Riddell, a former part-owner of an ADW who regularly wagers on NYRA tracks, said for the over-charging to last 15 months pointed to real problems at the NYRA and the NYSRWB.
"We, as an industry, have told our fans that we don't care," [he] said. "This is another example. People who allowed this to happen should not continue to have jobs in this industry. The people that let this happen are either lazy, or incompetent, or corrupt."'
When the overcharge was finally made public, Sabini gave this explanation video interview. "We have insisted that NYRA drop the rate for the same time period of 14 months. Going forward, the two-point differential will make up to the folks who play [the ability] to make up as much as they can. And, in fact, it will make the pools more attractive going forward ..."
The DRF subsequently reported that the reduced rates would be permanent. Who at the NYSRWB actually determine(s) what rates are to be charged for each pari-mutuel pool, and how are those figures arrived at? Will the Governor's call for greater transparency apply to the NYSRWB as well as the new NYRA?
If Mr. Sabini believes lower takeout would attract more handle, why does New York's maximum takeout rate exceed Kentucky's 19%?
Sabini drew further scrutiny recently as described in a Paul Moran column: "... In requesting that the Court of Appeals hear Dutrow's case, attorney Michael Koenig said it should decide whether the appearance of bias by racing board Chairman John Sabini cost the trainer his right to a fair proceeding on drug violations. He claims that Sabini had a conflicting role as an officer of the Association of Racing Commissioners International, which advocated, not without support, revoking Dutrow's license. ...
... Sabini's tenure at the Racing Board has not been without some controversy and is prone to grandstanding. The quarantine barn imposed upon Belmont Stakes horses and excessive testing of those in the Travers Stakes are indefensible examples of a politician wanting for a grasp of the sport's realities run amuck. And the 10-year suspension of Dutrow, no doubt influenced by peer pressure and public relations considerations, may be beyond reasonable. "
Prior to the Belmont Stakes, Bob Ehalt offered this opinion: 'The SRWB, which pulled a Rip Van Winkle while New York bettors were being charged the wrong takeout rate, hopped onto a soapbox Wednesday and placed the Belmont Stakes under its protective wing by mandating a new set of pre-race regulations for all starters in the race.
... Thank heaven, racing fans. You can now go to bed safe and secure in the knowledge that the SRWB has your back -- just as it did during the 14 months when the New York Racing Association was using the wrong takeout rate.
... As much as Sabini may have wanted to come across as racing's toughest sheriff this side of the Mississippi, he better resembles Barney Fife.'
A state appointee who draws criticism from the racing media is not unusual but one who unintentionally draws laughter is a detriment. If Gov. Cuomo is serious about "New York taxpayers and the betting public [deserving] a racing industry that is managed competently ...," then replacement within the ranks of regulators appears to be necessary as well.
Written by Indulto
Thursday, October 04, 2012
Team Cuomo's premature leaking of their preference for privatization provided a precarious preview of the practice of politics applied to problem-solving for New York racing.
All the Governor's horses and all the Governor's men still haven't put the New York Racing Assn. together again. At least, the executive order that officially reorganizes the NYRA and makes the search for a new chief executive possibly has been issued.
Presumably, Team Cuomo’s next encounter with the press will address shorter-term problems and display more of the increased competence and decreased corruption that was promised during their premeditated displacement of their predecessors.
It occurred to me while watching "‘Ahnold's’ "60 Minutes" interview Sunday night that racing seems to turn governors into "Governators." In 2009, Hollywood's imaginary "Terminator" signed a bill increasing takeout on exotic wagers at California tracks.
The bill had been pushed through the legislature by his CHRB Board appointees who literally dismissed prepared statistical testimony by horseplayers and California’s chief executive either preferred casinos to fill the state’s coffers or was looking for Native American PAC money, or both.
In 2012, NYRA's "terminator" sought to assume control, ironically based on the then-existing management's failure to lower takeout when required. Cuomo's image has not descended to the level of his former counterpart, but his remarks here
seem more like those of an "aggravator" rather than an "innovator."
'"We're going to be putting a new board in place to basically take control, and then how you do the business of quote-unquote horse racing and what is racing in the future, and how do you really incorporate all the knowledge and potential of the entertainment industry, which is a big component of this, is something we're working through," Cuomo said.
... Cuomo said he was not necessarily pushing for the racetracks to be put in private hands.
"I'm not really a horse racing expert," he said. "I don't know this industry especially well. The point of the exercise of appointing the board is to do the study and the research to answer that question."'
At most venues, privatization might be a valid alternative, but not so Saratoga Racecourse which is itself a museum of racing, a bastion of American tradition, and the source of fond memories that millions of life-long racing enthusiasts have, will take with them to their final resting place after, hopefully, passing their passion to the next generation.
Saratoga also is the centerpiece of a vital community and cultural center that most rational people would protect and preserve for future generations, not to mention an economic engine for that region. The big-picture profit motive, however, is not always compatible with such objectives.
Belmont Park, home of the too-often irrelevant Belmont Stakes, is also a scenic setting that would merit preservation if its sprawling surroundings capable of supporting the capacity crowds (100,000+) of Triple-Crown attempts, could attract them in years where the same horse doesn't win both the Kentucky Derby and Preakness.
Most telling is that -- even hosting six Breeders' Cup Preps on the sixth best day of racing, nationally -- attracted fewer than 9,000 on-track patrons. Belmont's residential community offers little to entice patrons from getting right back on the parkway.
OTBs, ADWs, alternative forms of gambling, the inconvenience/cost of getting to the track and the emergence of large-screen HDTVs that outperform binoculars have all negatively impacted Belmont attendance. Aqueduct faces the same problems but must also contend with weather/temperature variables.
Now it’s the second-class treatment of horse racing’s customers as compared with those of Genting’s clientele. Is profitability even a possibility while maintaining two physical plants ten miles apart without VLT revenue?
People are getting tired of hearing endless generalities but no specifics as to how racing will be promoted as a downstate entertainment destination. At some point the reality has to set in that the downstate track(s) must embrace the off-track customer to survive.
The NYRA can provide the product necessary to be the most entertaining venue – on-track and off – if it will start catering to recreational rather professional/high-volume bettors.
The new NYRA must take the lead by lowering direct takeout sufficiently that all customers are attracted to compete on a level playing field. It must then publicize who some of the winners are, and how they won. Promote socializing among players and support groups of fans of consistent winners.
The component combinations comprising each exotic IRS signer should be available for on-line viewing, and willing winners interviewed as to what thought processes were involved. Demystify winning and enable others to share and enjoy the experience; even if only vicariously. Some progress has been made in this area but much more is needed.
Create player partnerships that legally enable tax liability to be distributed among partners. Providing this service to NYRA account holders betting on-line would provide a competitive advantage to NYRA and grow customer interest substantially. Providing such a service to on-track patrons meeting for the first time could also augment couples handicapping contests for singles. Handicapping can be great entertainment as an activity done on one's own but even more entertaining as part of a group.
On Monday, New York's "Governator" signed the bill giving state appointees "temporary" control of the NYRA board for the next three years as reported in the Times Union '"Because it isn't just reporters who have deadlines, Gov. Andrew Cuomo has signed the legislation laying out the reorganization of the New York Racing Association, including the creation of a control board that will place NYRA in state hands for the next three years. The bill had to be signed by midnight.
We still don't know who the appointees to the board will be — though those names will be coming "in the near future," according to the governor's news release.
… "New York State's racing industry is a major economic driver in the state, supporting thousands of jobs and attracting tourists from around the world," Governor Cuomo said. "New York taxpayers and the betting public deserve a racing industry that is managed competently and does not neglect the health and safety of the horses.
“The NYRA Reorganization Board will restore public trust, accountability, and transparency to the racing industry in our state, so New York can continue to offer one of the most exciting, enjoyable, safe horse racing experiences in the nation. "'
The piece went on to quote several powerful legislative leaders who will be involved in making appointments to this "Reorganization Board."
The wagons are circling. Is filing one's tax return at the last minute the equivalent of the Governor's eleventh-hour heroics after more than three months had elapsed since the bill was passed?
Procrastination without production has been known to precede prevarication. Team Cuomo's priority should be "restoration" of transparency.
Written by Indulto
Wednesday, September 26, 2012
Gov. Cuomo: Be Careful What You Wish For
On June 21, the New York State Legislature passed a bill to give effective control of NYRA to the Cuomo administration. Three months later, the Governor had still not signed the bill; nor had he provided any information publicly that indicated what would be done, and who would be doing it.
The only exception to the news blackout appeared to be occasional tidbits from unidentified sources dispensed by the New York Post’s Frederick U. Dicker who happens to be writing an authorized biography of the governor.
In the wee hours of September 24, Dicker apparently let multiple cats out of the bag in his ‘Governor’s ‘Bettor’ Way’ plan to kill NYRA and privatize horse racing
, some of which was confirmed a few hours later by Cuomo aide, Howard Glaser, on Dicker’s radio show which can be heard here
According to the DRF’s Matt Hegarty
, “Rich Azzopardi, a spokesman for Cuomo, said on Monday morning that ‘the governor would have no comment on his plans for NYRA’s board or the information in Dicker’s column’.”
How in the name of greater transparency did we go from press conferences to disseminating information in drips and drabs through exclusive leaks to a favored member of the press who just happens to be writing an authorized biography?
My own reaction to Dicker’s revelation is one of amusement. It’s like falling asleep watching “Adam 12” and waking up to “Car 54 Where are you?”
Now I’m being scheduled to watch a replay of the Pataki era racing franchise renewal process and a revival of the deep-seated fears of Churchill Downs Inc. (CDI) and Frank Stronach that were clearly in evidence among Saratoga supporters during the hearings. I’ve read this book before … the title was “Portnoy’s Complaint.”
Wrote Dicker: ”State officials believe operators of such prestigious tracks as Churchill Downs, …, as well as the managers of major entertainment destinations, will pay huge fees to run the three New York tracks.
“… It will take several months to draw up the specifics and bids will likely be solicited by the middle of next year.
“…Why not let Churchill Downs compete with Santa Anita, …, with Madison Square Garden for the best operation of the tracks?’’ asked the source.
“Aides to Cuomo had worked for months on a sweeping NYRA reorganization plan in preparation of the governor’s signing of new legislation giving the state direct control of the 55-year-old racing association’s operations.
“But in mid-summer, as the Saratoga meet got under way, the Cuomo aides decided that NYRA’s organizational structure and management team, …, wasn’t up to the job and that a new approach — proven outside management — was needed.
‘The NYRA model won’t work. It’s flawed, and it’s unable to do the job. Privatizing makes the most sense,’’ said the source.’
Hegarty reported, ”Howard Glaser … said … ‘the state is considering issuing a request for proposals to replace NYRA, the not-for-profit company that by law holds the franchise to operate Aqueduct, Belmont, and Saratoga until 2033.
“The option will be considered once NYRA’s board is reconstituted with a majority of state appointees and the new board has time to assess the association’s operations ... ‘We’ll see when the new board is in place what the ultimate review will entail,’ ”
Then things got a little more interesting. Continued Glaser: “…The “legal franchise” continues to reside with NYRA…that doesn’t change. That was part of a legal agreement. But that’s a different question as to who the operator is.”’
Surely Team Cuomo remembers CDI’s purchase of Hollywood Park and its subsequent failure to generate sufficient profits without the ability to install slot machines. As a result, CDI sold the track to the same developer who eventually razed Bay Meadows in Northern California and now plans the same fate for its Southern California property.
Did the Cuomo aides forget the Magna bankruptcy that followed Frank Stronach’s acquisition of racetracks in Florida, Maryland, California and elsewhere? Did they ignore not one, but two unsuccessful installations of synthetic surfaces at Santa Anita followed by a re-installation of a dirt surface at multi-million dollar expense each time?
Then there’s this: Would the political aspirations of the man who wouldn’t allow NYRA to outsource telephone call center jobs to CDI withstand the hypocrisy of outsourcing racetrack management jobs to Kentucky or elsewhere?
And how would the failure of “New” NYRA to improve the situation over the next three years impact the Governor’s political future?
In her “Saratogian” column
, Barbara Lombardo zeroed in on two Glaser understatements, “One thing is clear: The functioning of NYRA is substandard.”
and “I think it’s indisputable that NYRA has had a series of flaws in its management.”
Lombardo also pointed out that “Glaser did suggest that the three tracks could actually have different management, noting that Aqueduct “has a very different character” than it did before the introduction of slots and has a “very different character than Saratoga.”’
One could argue that it wasn’t the NYRA model that was dysfunctional, but rather its practitioners. Indeed it was a rudderless ship that sailed successfully into Saratoga’s September sunset with diminished and discouraged decision-making capacity. Some contend the current culture of leadership commenced well before the wayward Hayward came onboard.
I don’t see “New” NYRA losing its license to run Saratoga and it’s hard to imagine any entity not based in New York ever getting control of Belmont. I think it’s more likely that racing operations at Aqueduct would shut down than it is that some other entity would take it over.
When did Team Cuomo decide that evolution was insufficient and that revolution was necessary? When did the Blues Brothers suffer the illusion they were the Founding Fathers? Once they finally emerge from their deafening silence we can determine whether they were enrolled in witness or witless protection.
Oversight without insight is lunacy.
Written by Indulto