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.