Wednesday, May 2, 2012

Believe half of what you see, son, and none of what you hear

Ordinarily, I try to be a skeptic without becoming a cynic. The folks I live with like me better that way. Maintaining this stance with regard to the New York Racing Association (NYRA) and The Daily Racing Form (DRF) is getting harder and harder.

A couple of weeks ago, while reading The Paulick Report ( I came across a press release written by Dan Silver of NYRA which announced that the attendance at Aqueduct was up on April 7, the day of the Wood Memorial. I was skeptical about this because I was at Aqueduct that day. I did not have to buy a ticket, there was no paid admission, and I did not pass through any kind of turnstile. I wondered how NYRA came up with the statement, "This year’s attendance of 12,514 was a 3 percent increase from last year’s attendance of 12,144.”

I wrote to Silver and asked about the number. He replied a couple of days later (after some prompting) and said,  “Per our Director of Admissions, ‘Yes, we can estimate the attendance within 3 percent for live racing days. We use the daily percent of Post Parade programs sold to calculate Aqueduct’s attendance.’"

This struck me as a little thin and I wrote to Jerry Davis of NYRA with some follow-up questions about his methodology.

It seems from what Dan says that you believe there is a linear relationship between the number of programs sold and the number of people at the track. That is, for every X (number of programs sold) there is a corresponding Y (number of people at the track.)

Is the relationship really linear (not geometric or something else)?  Have you tested it?

Is it the same relationship on weekends and weekdays?

Is it the same relationship on big stakes days as on ordinary days?

Do you ever run out of programs? NYRA ran out of food in the deli and reportedly out of beer cups by the time of the Wood last Saturday.

Did you always estimate attendance that way or did you change when the casino opened?

Does the casino action affect track attendance? In a way you have measured?

Do you also estimate at Belmont and Saratoga where NYRA charges admission?

I just want to make sure I understand as much as I can before I go forward.

Thanks in advance.”

Davis did not choose to get back to me, so I was left thinking that at best NYRA uses a pretty poor estimating procedure, and at worst, they just make it up. Reporting an exact number to the public is not the same as calculating an estimate.

I looked around to see where else this “number” appeared. These things always used to appear at the end of the Equibase official charts of the races at each track, but do not any longer. I asked Equibase about this and they did not reply. I wrote to Brisnet, another supplier of data and analysis for horse races and asked where they got the number they printed in their results charts for Aqueduct that day. They got back to me and told me they got it from NYRA. I wrote to DRF and they told me they were forwarding my question to “editorial” for review.

So far, no answer from them.

Well, so what. Who really cares how many people went to the track that day? Maybe the NYRA marketing department does, or the folks who needed to order enough plastic cups for beer, but what’s the difference to the rest of us? Something in me did not want to let this rest. My feeling was that if I could not trust NYRA on something like this, maybe I could not trust them on things that really count. I was dissuaded from blogging about this by the feeling I would just come across as a sorehead (something I have been accused of before). After all, I only go to the NYRA tracks a half dozen times per year, my wagering is simple and very modest, and I lose more than I win. No skin off my nose.

Then came the revelations of the last few days.

At the Paulick Report I saw an article about a recent report titled,



Audits and Investigations Unit April 26, 2012

The report details the State’s inquiry into a situation already known to careful followers of thoroughbred racing. I first became aware of this some months ago. The specifics are pretty arcane, but to simplify, the “takeout” is the overhead each racetrack takes out of the money wagered on the races. This goes to pay for track operations, purses to the winners, payments to the state and the like. The percentage of each betting pool that the track “takes out” of what it pays the winning bettors is set by regulation in each jurisdiction, and typically varies by type of wager. The rest gets paid to the winners. The size and variability of the takeout from place to place and from wager to wager is a matter of fierce debate among some who wager on horse races. Bettors REALLY care how much return they are getting on their speculative investment.

The regulation in New York had a sunset provision affecting “exotic” wagers like trifectas and Pick Fours. After the middle of September 2010, without a change in the sunset provision, NYRA would take less and the winning bettors would get more. Given the size of NYRA’s operation and the fierce loyalty bettors have to their own money, any swing is important. In this case, the total amount that went to NYRA and not to the bettors was almost $8.5 million.

The report, which can be found in full at

says in part

“The Board’s review thus far has found the following:

Based on a review of NYRA’s emails, several NYRA personnel, including CEO Charles Hayward, were notified and/or were aware that the exotic takeout rate had expired. NYRA may not have lowered the rates due to perceived political and financial reasons. In an email dated September 1, 2010 NYRA Vice-President Liz Bracken informed a NYRA Manager that, “takeout legislation sunsets middle of September, but I have not heard that we intend to lower takeouts.”

The email was subsequently forwarded to two other NYRA employees.

Mr. Hayward was notified via email by a concerned bettor on September 28, 2010 that the law had sunset and the rates had expired. Mr. Hayward notified the bettor that he was
referring the issue to NYRA’s General Counsel Patrick Kehoe.”

And later,
“In August 2011 (almost a year after the rates had expired) the Daily Racing Form (DRF) publisher and columnist Steve Crist passed along an email from a DRF reader indicating the rates had expired and were outside the parameters of the Racing Law. Mr. Hayward emailed Mr. Crist on August 1, 2011 confirming that the reader was correct and requested that Mr. Crist keep the information confidential. Mr. Crist agreed.”

Read that last sentence again.

The publisher of the biggest American newspaper devoted to horse racing agreed not only to keep silent about NYRA’s defrauding of the public at large, but also to abet that fraud being perpetrated against one of his own subscribers.

The Paulick Report (May 1, 2012) has an item in which it reports,
“Crist and Hayward are former business partners who in 1998 put together an investment group to buy Daily Racing Form. They sold it six years later for a tidy profit. Crist remained with the newspaper as publisher and columnist, and shortly after the Form was sold Hayward was named CEO of NYRA, where Crist was employed as an executive in the mid-1990s. The friendship between the two men has spawned a cozy relationship between the newspaper and the racing association it covers.”

“Cozy”? That does not begin to describe the way I feel about the relationship between Crist/DRF, and NYRA.

As of today things stand this way -

NYRA has sanctioned Hayward and Kehoe by placing them on unpaid administrative leave.

Crist says “With hindsight, I regret that I didn’t follow up on the issue. But I personally do not believe Hayward knowingly overcharged his customers….”

The big bettors who use internet betting sites have mostly gotten their money back because they had an electronic trail of the bets and the payouts.

The ordinary guy, pushing his $10 bill through the mutuel window?
And no way to ever recoup.

Occupy Wall Street? How about Occupy Saratoga? Years ago, the late Tom Ainslie wrote “This is a game that punishes innocence.” It was not the only thing he had right, but it is the thing that is on my mind today.