In his ongoing effort to demonstrate his ability to relate to the common man or woman, Mitt Romney and his wife do an interview (totally devoid of substance if that even needs to be said) from the boathouse at his vacation mansion in New Hampshire.
Political/Social commentary
The conventional wisdom is that Mitt Romney was in a win-win situation on the Supreme Court decision. If the Court found it unconstitutional, he could say “I told you so,” providing one was willing to parse his numerous conflicting statements on the issue. If they upheld it, he could argue that “you need me to repeal Obamacare” (which he has since said.) But since the case turns on Chief Justice Roberts’ saying it was constitutional because it is a tax, how does Romney justify the individual mandate he achieved in Massachusetts as being an increase in taxes? Now, I understand that Romney has demonstrated a remarkable ability to twist positions, both his own and the President’s, but won’t someone call him on this one?
For some time I have thought that the bitter – and usually mindless – partisanship in this country is our nation’s biggest problem. With that in mind, I cannot say I am surprised by the reaction of so-called “conservatives” to the Supreme Court’s decision on the Affordable Care Act, as well as their vilification of swing voter Chief Justice John Roberts. The “individual mandate” – the subject of almost all discussion – was once a widely-accepted principle by conservatives, and opposed by candidate Barack Obama in 2008. It was not until Obama attempted to address health care reform on a bipartisan basis and included it in the law since derided as “Obamacare” that it became the flashpoint for “conservative” attacks.
New York’s politicians were undoubtedly in a self-congratulatory mood when they agreed on their legislation to reform the racing industry following the controversy surrounding the New York Racing Association. The pretentiously titled bill, “New York State Franchise Accountability and Transparency Act of 2012,” provides for neither. While there are undoubtedly numerous deserving candidates for this year’s category of cynical political moves, filing legislation touting “transparency” on the Saturday night before the Legislature adjourns the following Thursday is in the running.
In fairness, it should not be much of an effort for either individual legislators or the media to digest the legislation since it does very little that had not been announced previously. It transforms the NYRA Board from 25 members to 17, and instead of “only” 44 percent of the current board being comprised of political appointees, the streamlined version will have 8 gubernatorial appointees, an additional two each by the Senate and the Assembly, and the remaining five from NYRA. It also requires the disclosure of interests in racing by the individual members or their family. Finally, it delays implementation of the State Gaming Commission, created by law in March, from October 1 to February 1.
So what does it do to advance the laudable goal of accountability? Uhh, not so much unless you believe that state government’s controlling racing, by definition, ensures accountability. This would be the state government that so botched the 2010 Aqueduct VLT procurement that the Inspector General referred his report to various law enforcement agencies. Or, the state government that could not manage gambling facilities so as to make money in the City of New York. Or, the state government that had four of its agencies responsible for overseeing NYRA, yet none of them uncovered the alleged excess takeout percentage for the 15 months it was in place. Or, the state government that had 11 members on the NYRA Board who also missed the takeout issue.
Now that Governor Andrew Cuomo is firmly in charge, what can we expect from him in terms of accountability and transparency? Let’s start with the State Gaming Commission mentioned above. This comprehensive law (41 pages) consolidates the gaming activities of the state (including horse racing) in one body, and empowers it with considerable authority. It was proposed as a Cuomo initiative and signed into law by him on March 30. He appoints all seven commission members. How is it going thus far? Well, they do not have a web site and the “Accountability and Transparency Act” extends its effective date four months until February 1. I have yet to see a reason why the extension is needed, which may be a good segue to the topic of transparency.
The purported reason requiring the takeover of racing is, according to a statement accompanying the legislation, “the establishment of racinos, the creation of the New York State Gaming Commission, and a [proposed] constitutional amendment on commercial casinos.” These are, again according to the explanation, “exigent circumstances.” Racinos have been her a while, the Gaming Commission is so important that it has not, apparently, been established, and there is an amendment to the constitution that might pass. It is not even apparent what the connection is between these three events – two of which have not even occurred – and horse racing. If there really is a connection, how do the Governor and Legislature enact a 41-page law creating the Gaming Commission – after casinos became a priority – and not address the seemingly exigent circumstances of NYRA? I have not seen any media source address this, and have seen nothing from the Cuomo administration that even attempts to connect these matters other than his bald assertions.
I wrote previously about the lack of transparency in the Cuomo-initiated Committee to Save New York, a “social advocacy group” whose advocacy appears to be limited to Cuomo’s agenda. Thanks to The New York Times, we learned that casino interests contributed at least $2.4 million of the $17 million raised by the organization in 2011. We do not know who the other donors are, and Cuomo has refused to ask the group to identify them because, according to the Times, his job is limited to “telling people to abide by the law.” So, under the “Accountability and Transparency Act.” a member of the Board of Directors who owns a race horse must disclose that fact, but the Governor who appoints 8 of the 17 members does not have to reveal if his advocacy group received millions of dollars from entities that may have an interest in – to raise a hypothetical – the NYRA franchise.
In his May 22 press release announcing his seizure of New York’s thoroughbred racing, Governor Andrew Cuomo – purportedly a believer in “transparency” in government – was only able to muster 113 words explaining his extraordinary action. While almost all of it was of the “Mom” and “apple pie” variety, one sentence struck me as being out of place:
With the structure of the gaming industry changing here in New York, the state also needs to take a new approach to how it manages and governs racing.
In a mere single sentence, he was able to assume the existence of a hypothetical, and in a complete non sequitur, “explain” his takeover as being caused by that change.
In his reference to the “structure of the gaming industry changing,” we can only assume he means his desire for an amendment to New York’s Constitution that would permit casino gambling in seven locations not on Indian reservations. Amending the Constitution requires two votes of the Legislature, and then approval by the voting public. The first legislative vote came shortly after Cuomo identified it as a priority in his January State of the State address. While the casino approval passed its first hurdle, it is not something that is happening overnight. In addition to the necessary votes, there would have to be a procurement, selection of winning bidders, environmental impact studies and construction of the facilities. So why does that require a “new approach to how [New York] manages and governs racing?” And why does that necessitate the immediate takeover of New York’s racing?
Cuomo’s action followed an Interim Audit by the Racing and Wagering Board that concluded that NYRA had improperly withheld 26% from certain wagers instead of the permitted 25% for over a year, with the incorrect amount known by senior NYRA officials. The Wagering Board’s Audit has not been completed, and the state’s Inspector General is also conducting an investigation. Neither of these entities that has oversight responsibility for NYRA picked up the error, nor did any of the 11 NYRA Board Members appointed by the Governor and the legislative leadership. The Governor, without waiting for the completion of any reviews, decided the solution to whatever ails New York racing would be resolved if there were more state involvement. Thus, he announced (with the agreement of NYRA’s Board) that the Board would be restructured so that Board membership would be reduced from 25 to 17, with the Governor and legislative leaders picking 12 of the 17.
Since none of this made any sense to me, I continued to wonder what the real reasons were for the Governor’s action. Thanks to two articles in The New York Times this week, we may be getting closer to an answer. In the Monday piece, the Times reported that the trade association representing companies that operate tracks and VLT’s kicked in a cool $2 million in December, 2011 to the Committee to Save New York, a “nonprofit social advocacy group” aligned closely with Cuomo. Genting, a member of the group and the operator of Aqueduct’s VLT’s, added an additional $400,000 to CSNY during 2011. What did they expect for this level of “investment?” I am sure it was nothing more than the promotion of CSNY’s “reform agenda” and to “get state government working for the people again.”
Part of CSNY’s “reform” agenda is not transparency as to where they get their money. Just as with the super-PAC’s on the national political scene, revealing the identity of donors is not required as it is with those who contribute to political campaigns. When Genting considered an advertising campaign to promote casinos in New York, the Times reported that “according to two people with knowledge of the discussions, the Cuomo administration encouraged” Genting and the gaming association to contribute instead to CSNY. The Thursday article in the Times disclosed that lobbyists for Genting advocated for a convention center and casino complex at Aqueduct during a Cuomo fundraiser in October. That the fundraiser was not originally on the Governor’s public schedule was “inadvertent” according to a Cuomo spokesperson.
Cuomo did negotiate with Genting to develop the convention center-casino complex on the Aqueduct site – a development described as a $4 billion project that would result in the largest convention center in the United States. The deal fell apart, according to Cuomo at a press conference this past Monday, because he would not agree to guarantee Genting the casino. Perhaps a more likely explanation is that he would be awarding a massive, multi-billion dollar contract without going through a bidding process. According to a Times article on June 1, the state’s Comptroller, Thomas DiNapoli, welcomed the news that a deal fell through since he had advocated a competitive process.
So after the Governor’s “super PAC” receives $2.4 million from Genting and other gaming companies, the Governor makes a priority of getting casinos and attempts to negotiate a multi-billion dollar no-bid contract with one of the super PAC’s biggest contributors. The Governor’s spokesperson dismissed as “insulting and sensational” any suggestion that money has played a role in the administration’s policy making.
What is truly insulting, however, – to our collective intelligence – is that such conduct would be condoned by an administration barely two years after the Aqueduct VLT procurement “process” exploded in the face of the prior Governor and legislative leadership. When Governor Paterson, Speaker Silver and Senate leader Sampson selected the Aqueduct Entertainment Group (AEG) for the VLT contract in early 2010, the selection was so manifestly deficient and AEG so obviously incapable of performing, it had to be withdrawn six weeks later. The Inspector General issued a scathing 300-page report later that year in which he lambasted all three principals, but also criticized the influence of unrestricted lobbying and campaign contributions in a process he described as “a veritable case study in dysfunctional and politically driven government.”
What does any of this have to do with horse racing? I don’t know, but it is the Governor who made the connection between casinos and racing when he took control of the NYRA Board. What I do know is that there is a lot of money flowing, questionable negotiations with one of the largest contributors, and still no explanation coming from the Governor as to the reasons or urgency for his takeover of racing.
In this weekend’s news we learn that an organization that was harshly condemned by its oversight authority has fought back, accusing the oversight authority of “unsubstantiated accusations,” and a “flawed process” in which there was “minimal contact” with the organization. Was this the Board of the New York Racing Association contesting the actions of the Cuomo administration? Actually no; rather, it is the statement of the organization representing Catholic nuns in the United States questioning the Pope’s decision to begin an inquisition of the nuns, as reported by The New York Times.
But New York’s own authoritarian and out-of-touch hierarchy was not to be outdone. John Sabini, Chair of New York’s Racing and Wagering Board, has issued decrees that will, as he put it, “underscore the symbolism of the world-class racing held in New York State.” While I would agree that “symbolism” is the operative phrase here, judge for yourself if Sabini’s protocols are those of a world-class racing jurisdiction: All horses entered in the Belmont Stakes must be moved to a special barn by Wednesday; the barn will be guarded and have a single point of entry; entry and exit logs will be maintained to record any entry to a stall, including by the horse’s trainer; there will be searches and checks of any equipment, food, hay or bales of straw; best of all, no beverages or food for human consumption will be permitted near a stall.
Are these changes – in effect only for one race, the Belmont Stakes – ones necessitated by threats, evidence of wrongdoing, or perhaps something questionable about the running of the Kentucky Derby or Preakness Stakes? If so, such reasons were not disclosed by Sabini, nor were there any media reports to that effect. Rather, we should be viewing these steps in the lens of the takeover of New York racing by Governor Cuomo on May 22. Cuomo’s action followed an Interim Audit by the Racing and Wagering Board that concluded that NYRA had improperly withheld 26% from exotic wagers instead of the permitted 25% for over a year, with the incorrect amount known by senior NYRA officials. The Governor’s solution to improving the quality and integrity of New York racing is to put state government in charge.
While I have been questioning both the wisdom and likely effectiveness of such a move (see blogs here and here), Cuomo’s action has not been met with the level of scrutiny one would expect from New York’s media. I view the Belmont Stakes protocols as motivated less by a desire to ensure the integrity of the race than a need to show that the takeover was more than a naked power grab. If integrity is the true motivation, why are these procedures in place for just one of the thousands of races run in New York each year? Is a race that could produce the first Triple Crown winner in 34 years more susceptible to abuse than, say, a $7,500 claiming event at Aqueduct during February? If the integrity of the race is the true concern, what does it say about those state officials now controlling racing that this is the only race that warrants this level of protections? If you believe racing is that prone to corruption, why not apply the same protocols to every race?
I think I’ll Have Another is a very good horse who has an excellent shot at becoming that elusive Triple Crown winner. But other horses of recent years about whom one could make the same statement have failed in their bid – Big Brown, Smarty Jones and Silver Charm come to mind – and some outstanding horses have not done it – Spectacular Bid and Sunday Silence. Should I’ll Have Another come up short, the critics will be legion in arguing it was because there were no illegal steps taken by his connections. Should he win, we can expect the New York officials who now rule racing to be gloating because it was a clean result. So, which one of these results is going to further the interests of racing in the United States? In either case the focus will be on shenanigans and not the horse.
I believe firmly that racing should be clean, fair and free of drugs to the extent reasonable. What New York officials have done, however, is focus the spotlight on the unsavory aspects of the sport even though there is no reason to do so. In their zeal to put their stamp on the unwise takeover of racing, they have again demonstrated – in a remarkably short time span – they are on a par with the Vatican when it comes to authoritarian mindlessness.
A week ago we awoke to the news that the Governor of New York, Andrew Cuomo, had seized control of the major thoroughbred racing in the state through an “agreement” with the Board of the New York Racing Association. This followed a controversy involving an improper takeout rate, the Board’s firing of its President and CEO Charles Hayward and its General Counsel Patrick Kehoe, and the Board’s attempt to name the replacements for Hayward and Kehoe. The agreement was reached by the Board’s agreeing to reduce its size from 25 to 17 members, and increasing the number of state-appointed Board members from a mere 44 per cent to 71 per cent, with the Governor appointing 8 members. The legislative leaders would each appoint two additional state representatives.
The agreement was announced in a press release from the Governor’s office that identified no specifics as to what the new Board would accomplish other than gauzy statements about the “interests of racing” and ensuring the “integrity” of the sport. Had these high-minded statements not been preceded by the most blatant intimidation and character assassination by the Governor’s staff, and the manipulation of an all too complicit media, it might be possible to take them seriously.
It’s not precisely clear – to put it mildly – exactly what the problems are, or what NYRA’s role in them is, that warranted the precipitous action by Governor Cuomo. The current controversy began with the release of an “Interim Audit” by the state’s Racing and Wagering Board following the realization that NYRA had continued to collect a 26% takeout rate on exotic wagers instead of 25%, as seemingly required by an expired statute. (This topic is covered in more detail in my previous post Something fishy about NYRA controversy?) The Interim Audit, based on a review of 5,000 documents from NYRA but seemingly no actual interviews of anyone, suggests that Hayward was aware of the improper increased takeout but did not correct it. Shortly thereafter, the NYRA Board fired Hayward and the General Counsel, although I have seen nothing to indicate that the Board actually conducted its own inquiry or interviewed either employee. (The state’s Inspector General is now conducting its own investigation.)
The NYRA Board named replacements for Hayward and Kehoe. This action prompted an outraged letter – although I think “outrageous” might be more apt – from two Cuomo appointees, John Sabini, Chair of the Racing & Wagering Board, and Robert Megna, Chair of the Franchise Oversight Board and Cuomo’s Budget Director. The duo rejected the replacement appointments as invalid, without identifying any regulatory provisions or NYRA by-laws justifying that conclusion, and directed that payments due NYRA from Aqueduct’s VLT’s instead be sent to the Lottery. Again, there was no authority cited justifying this latter action.
More troubling than even these actions of questionable legality, however, were statements in the May 15 letter disparaging the motivations or behavior of unnamed Board members with no substantiating evidence. The letter raised the possibility that a majority of Board members may have a conflict of interest because of “specific financial interests in horse racing.” This letter by the state’s two highest officials regulating horse racing fails to mention, however, that such “specific financial interests” are explicitly permitted under the state’s laws. In addition, the letter warns that the Racing & Wagering Board “[u]pon completion of the Inspector General’s investigation … will commence a review of the licenses of management and Board members to determine whether standards of character and fitness have been violated sufficient to terminate an individual’s right to participate in horse racing….” Or, to paraphrase, after an independent, objective review – the results of which are not known – we are still going to see if we can punish you. Finally, the letter threatened to consider revocation of NYRA’s franchise – but again, only after the completion of an independent, objective review.
If threats and intimidation were not enough, the Governor and his allies found a media all too eager in the effort to portray a NYRA that is “institutionally rotten” or one that has “veered from scandal to criminal scandal.” While there are those naive souls who think the Fourth Estate is an essential check on the abuses of government, some in New York’s print media have too often been a lazy and complicit abettor. The NewYorkPost.com, NYDailyNews.com and Albany’s TimesUnion.com – the latter a publication that I am sure does not like to be grouped with the downstate tabloids – all ran editorials condemning NYRA and demanding reform. What reforms were needed? The Post didn’t offer any specifics other than getting rid of NYRA. The Times Union didn’t get its hands dirty with delving into specifics, although the May 18 editorial did opine that it “would be precipitous of the Cuomo administration” to remove NYRA from managing the tracks now; after Cuomo’s coup, however, it became “a step in what could be the right direction.” At least the Daily News had some ideas for reform even if they were not ones NYRA controlled, such as closing Belmont or Aqueduct.
After Cuomo’s successful takeover (which does require legislation) was completed, another party jumped into the fray. Joe Drape of The New York Times reported that the firm that had been NYRA’s “Integrity Counsel” had distributed a report, in June 2011, to each member of the Board regarding two investigations it had undertaken. Drape characterized the document as a “corruption report,” and intoned that any current board member retained on the new board would “have to answer for why they appear to have done nothing about the investigations.” Drape does not describe any of the allegations in the report, nor does he appear to have asked any NYRA Board member for a response. We have to leave that to The Saratogian (via the Associated Press) which quoted Board member John Hendrickson saying the report “was investigated and deemed to be without merit.” Hendrickson said state government had the report and there was nothing to hide.
That did not stop Senator John Bonacic, however, from pontificating that NYRA’s failure to release the report publicly was “a sword to stab at the public’s request for integrity.” Perhaps Senator Bonacic should save his umbrage for the two NYRA Board members who are appointed by the State Senate and apparently did not bring any of the allegations to public attention when they were disclosed to them a year ago. Incidentally, the “Integrity Counsel’s” allegations were made in a court dispute the law firm is having with NYRA over termination of their contract. The state’s Inspector General, in a letter on January 24, 2012, noted that NYRA had terminated the contract, but replaced it with a “more cost-effective, contract [sic] to a different integrity counsel.”
So, there you have it. This current controversy has been going on since the Racing & Wagering Board released an “Interim Audit” on April 26. What new facts have come out since then? I cannot think of one, but that has not stopped a constant barrage questioning the integrity and character of anyone ever associated with NYRA. We have a Governor and his staff who engineered a coup with an entity established by law, taking actions of questionable legality, and by engaging in threats and assaults on the integrity and character of NYRA Board members without citing any evidence justifying the attacks. We have a media that has gone along all too willingly, either because they do not want to ask rather obvious questions, or because NYRA has become a convenient punching bag. None of these players have identified anything they would do differently. And this is the environment in which we are to believe that “integrity” will be the focus for New York racing? I know I won’t be holding my breath waiting for their changes.
We are all complex individuals, so it may not be fair to distill someone’s character to five sentences spoken by them. But for someone aspiring to be President, this morning’s piece on NPR may just say it all.
For reasons that escape me, a rich right-winger wants to revive the story of the relationship Barack Obama had with a former pastor of his, Jeremiah Wright, with some Super-PAC ads. This had become controversial in 2008, and there are many who think that one of Obama’s finest moments as a candidate was when he distanced himself from the intolerance spewed by Wright.
On Thursday, Romney disapproved of the plan, saying:
I hope that our campaigns can respectively be about the future and about issues and about a vision for America.
Then, he was asked about a statement he made on Sean Hannity’s show in February. Here is his response, as reported by Glenn Thrush and Maggie Haberman on Politico.com:
I’m actually — I’m not familiar with precisely, exactly what I said. But I stand by what I said, whatever it was. And with regards to — I’ll go back and take a look at what was said there.
Here is the statement from Hannity’s show:
I’m not sure what is worse, him [Obama] listening to Reverend Wright or him saying we must be a less Christian nation.
So, over the course of a mere five sentences, we go from what, on its face, is a resonsible and reasonable sentiment to an absolute lie – Obama wants to make the United States a “less Christian nation?” In between, we have what could be Romney’s campaign slogan: “I stand by what I said, whatever it was.”
I was quite surprised when I learned of the controversy concerning the New York Racing Association’s failure to adjust a takeout rate to conform with a statute. Surprise turned to concern, however, when I looked into the details.
For those not familiar with racing jargon, “takeout” is the percentage of wagered money that is retained by the track. The takeout percentages may vary by bet type, with win wagers having a lower takeout than “exotic” wagers – those involving multiple races or multiple horses in a single race. In an effort to assist the struggling New York City Off-Track Betting Corporation, the Legislature raised the maximum takeout on exotic wagers from 25% to 26%, with a provision that the change would expire two years later, on September 15, 2010.
On April 26 of this year, New York’s Racing and Wagering Board – one of four state agencies with some level of oversight responsibility for NYRA – released an interim audit concluding that NYRA’s CEO Charles Hayward knew of the violation and continued to collect the extra takeout despite that knowledge. The audit conclusions were reported in both local and industry media, and several days later the NYRA Board fired Hayward and NYRA’s General Counsel Patrick Kehoe.
NYRA’s Board replaced Hayward as President of the Board with NYRA’s Chief Operating Officer Ellen McClain, and Kehoe with Kenneth Handal as Secretary of the Board. On May 15, the head of the Racing and Wagering Board and the head of the Franchise Oversight Board, who happens to be Governor Cuomo’s Budget Director, sent the NYRA Board Chairman a scathing letter saying the NYRA Board lacked the authority to take this action and threatened revocation of NYRA’s franchise to run New York racing. The pair reached these conclusions even though McClain was not mentioned in the audit report, and Handal was not connected to NYRA during the period under review. In a further remarkable statement, the letter raised the possibility that members of the NYRA Board could be in a conflict of interest because they had “financial interests in horse racing.” The Board responded by asserting its authority to make the appointments.
Since media accounts tend to rely on press releases and Executive Summaries, and then feed on one another by parroting what they read elsewhere, I searched in vain for the actual audit. Surprisingly, I could not find it on the site of the Racing and Wagering Board even though it is updated daily, and the report itself was released as interim because of the “seriousness of the findings.” I finally found it by chance on Google while looking for a related matter. Here are some of the surprising items I found in the report:
- The audit was based on a review of 5,000 NYRA documents; the Board also says that NYRA has not provided all requested documents.
- It appears that no one was interviewed, including Hayward and Kehoe, even though there are also other NYRA employees identified in emails who had knowledge of the issue.
- Three auditors responsible for providing independent reviews of either NYRA or the company that processes bets did not identify the issue. One of the auditors actually identified the correct statutory takeout rate as well as the incorrect actual rate, but did not raise the issue.
- The Office of State Comptroller is identified in the Interim Audit as the “primary governmental agency responsible for auditing NYRA.” Even though the Racing and Wagering Board found that OSC reviewed NYRA’s “detailed financial records, including future cash flow projections” around the time the higher takeout rate expired, “the Board has not examined OSC’s work papers to determine if OSC had reviewed the takeout rates.”
- Another of the state oversight agencies, the Franchise Oversight Board, headed by Governor Cuomo’s Budget Director, has no full-time staff and could not be expected to perform a detailed analysis.
- The Racing and Wagering Board annually “reviews the complete volume of the Racing Law for provisions that may sunset…. The Board performed this review in 2010 but did not identify the relevant NYRA takeout section as expiring. However, it was not standard practice to identify expiring provisions of law when revering sections were in place.”
- Emails play a significant role in “who knew what” and “when did they know it.” There is an email from a bettor to Hayward questioning the takeout rate in September 2010; there is another from the Daily Racing Form‘s Stephen Crist in August 2011; and, there is an allegation that someone emailed the Board in January 2011. The emails to Hayward represent a sizeable portion of the Board’s case against Hayward. The Interim Audit reports that the Wagering Board could not find the email supposedly sent to them, postulating that it was kicked out for having a virus or being spam.
I had initially decided to write a post on the NYRA issue when I read the report in Friday’s Saratogian by Paul Post (who is doing an excellent job reporting this) that the Governor was considering adding more state-appointed members to NYRA’s Board. My only thought was “are you kidding me?” As someone who spent an entire career working for government, I am not one of those who reflexively reject government involvement. But let’s look at just two recent examples concerning horse racing in New York (and ignore others, including the prolonged effort to award the franchise now held by NYRA).
First, we had the bankruptcy of the New York City Off-Track Betting agency. Now how does an entity that collects bets and has a guaranteed share of the wagers (see discussion of “takeout”) go bankrupt, particularly in New York City? You have fixed costs such as rent and computers (and if you have ever been to an OTB you know there aren’t any amenities above that), and labor costs. Yet this one needed a state bail-out (the one that began this controversy) and still could not cut it.
Then there was the fiasco with the public bidding for the Video Lottery Terminals to be placed at Aqueduct Race Track that resulted in a 300-page audit by the Comptroller in 2010. For those who would like to forget, VLT’s were initially authorized in 1991, and a company was to be selected by the Governor, Speaker of the House and Senate President. Nineteen years later, the then-Governor and Speaker of the House stepped aside and allowed the Senate to work its will. The result of this “process” was so odoriferous that it had to be withdrawn. It was only when the procurement was sent to professionals in the budget office that we got a speedy and solid result. While revenue from the VLT’s has long been viewed as essential to NYRA’s financial stability, the revenue was going to contribute billions of dollars to the state’s educational system. Despite the financial significance of getting the VLT’s up and running, it took almost two decades to get it done, and had to be delayed further because of what can only be described – at best – as gross incompetence by the most powerful public officials in the state.
So there is not exactly a stellar record when it comes to the state’s involvement in horse racing affairs. The current law provides that NYRA’s 25-member Board shall have nine state appointments. As noted above, there are four state agencies with oversight responsibility, and two of them did not exactly cover themselves with glory in the current matter. So there is, by law, a significant involvement by state government in the conduct of racing in New York. In my years of following both horse racing and politics, I have not detected a high level of interest in racing by anyone in power until, of course, it comes time to award a trophy at Saratoga.
But I do not think it is the interests of horse racing that is the motivation for the growing conflagration that again engulfs New York racing. If there are two things one can say about Charles Hayward, they are that he is an experienced business executive and that he loves the sport. In his tenure with NYRA, he has improved the integrity of an operation that once had pending criminal charges, brought a measure of financial stability to the organization, and managed the extension of the franchise. Let’s not forget that a year ago at this time there were questions about whether there would actually be a race meet at Saratoga.
I am not defending the failure to adjust the takeout race. In Hayward’s email to Stephen Crist he stated NYRA was working on making the necessary adjustments, but he was concerned about political fallout, both from the Governor and particularly from the OTB outlets in New York who would be losing the extra revenue. While this may not have been the best course of action, Hayward certainly looks prescient in assessing the political landscape. Incidentally, keeping the takeout rate at the higher level did not result in what one would call a windfall for NYRA. According to the Interim Audit, the total excess income realized by NYRA during the roughly 15 months the higher rate was in effect was $1.1 million, more than half of which has been reimbursed to bettors. By way of comparison, NYRA has received $22 million from VLT revenues since the Aqueduct casino opened October 30, 2011, according to the Daily Racing Form‘s Matt Hegarty.
The most disturbing part of this whole controversy, however, is not the behavior of NYRA officials, but that of New York political leaders including the Governor and his high level staff. Yes, the failure to address the takeout rate is a matter that warrants investigation, but it was identified and corrected a full five months before the Interim Audit was released. The purported reason for the Racing and Wagering Board’s release of an interim report is the “seriousness of the findings.” Yet the auditors did not bother to even interview Charles Hayward, and if they actually interviewed anyone else it is not disclosed in the report. When the report was released by the Wagering Board, it had to have been with the knowledge that the likely result would be a firestorm surrounding NYRA, and the opportunity for some serious political posturing.
While NYRA was going to the most obvious target of media coverage, the role played by state actors has been overlooked. There is no mention that 9 members of the 25-member NYRA Board are state government appointees. While the report does mention that four state agencies have oversight responsibility for NYRA, the auditors did not check to see if the Office of State Comptroller – the “primary governmental agency responsible for auditing NYRA” – even checked the applicable takeout rates when reviewing the books. A second agency, the Franchise Oversight Board headed by the Governor’s Budget Director, was given a free pass because they lacked staff. While I am not completely familiar with New York’s government, I would be willing to wager that the Budget Director is widely viewed as the second most powerful person in any Governor’s administration. So if he needed some help, he could probably get it. Also, the inability to closely monitor a situation did not prevent him from signing the May 15 letter disapproving of the NYRA Board’s appointment of a President and Secretary, or from threatening to revoke the franchise of NYRA and determining whether the right of individual Board members to “participate in horse racing” should be revoked. Finally, the Racing and Wagering Board gave itself a pass because of the legal sophistry described above where it claimed it did not have the responsibility to evaluate all the statutory changes applicable to New York racing. None of these shortcomings, however, has been considered a sufficient reason to delay what looks like an unnecessary rush to judgment.
I don’t know what is going on here, whether it is a personal vendetta, a power play, or an attempt to cover up governmental ineptitude by focusing all the blame on a single individual and a group of citizens who do not get paid for their service on the NYRA Board. What I am fairly certain of, however, is that it has little to do with what is in the best interests of horse racing in New York.
My most recent post discussed an incident from Mitt Romney’s prep school days where he was offended by the hair style of a younger schoolmate. As reported by Jason Horowitz of The Washington Post, when the student, thought to possibly be gay, returned from a vacation with bleached-blond hair hanging over an eye, the offended scion said to a friend, “He can’t look like that. That’s wrong. Just look at him.” He proceeded to gather a group of friends who overcame the younger student while Romney cut the hair of the screaming and crying kid. Romney has said he doesn’t remember the incident even though five of his friends at the time, including participants, have corroborated independently the allegation. He actually laughs about it when questioned.
We are now going to hear the predictable “boys will be boys,” as well as comments that it was a different time and that what happened 50 years ago is not relevant. As a contemporary of Romney, I can attest that, yes, it was different 50 years ago if one means that intolerance of homosexuality was more acceptable back then. What is not different, however, is that a gang assault on a vulnerable individual was just that – and act of cruelty or viciousness that was not excusable because the victim belonged to a disfavored group. If the victim were black, one would not hear the excuse that racism back then was OK.
But is it relevant in terms of what it says about the character of the individual? One detail from the Horowitz piece has not been widely reported. This had to do with what Romney did to a faculty member who was blind. After holding a door open for the teacher, Romney then gestured him through the next set of doors, which Romney had left closed. The teacher walked into the next set of doors and hilarity ensued, unless, of course, you were the victim.
That was still 50 years ago. Is there current relevance? I think there are two areas where details of Romney’s more recent adult past are going to cause him some difficulty along the same lines. One was during his tenure as a stakes bishop in the Boston area Mormon church. While it has been reported that Romney displayed acts of compassion and kindness for members of his flock, The Real Romney, a book by two Boston Globe reporters, also describes less flattering aspects during his leadership. An excerpt from Vanity Fair cites incidents where his behavior towards some women, in the words of the authors, “was the product of a hidebound, patriarchal structure, inflexible and insensitive in delicate situations and dismissive of those who didn’t share his perspective.” Among the named women who were quoted, was an unmarried pregnant woman who believed that Romney, in his capacity as a church leader, threatened her with excommunication if she did not put the baby up for adoption. Romney denies having done this.
The other area of concern is Romney’s Bain Capital experience. He likes to describe himself as a job creator in contrast to the “incompetent” Obama, and there is no question that jobs were created in some of his investments. But creating jobs was not his goal. His goal was making money for his investors, not that there is anything wrong with that. If jobs were created, however, that would be incidental to his mission. If jobs were lost in order to return millions of dollars to his investors, as many assuredly were, well that is an unfortunate part of our system of capitalism.
I do not think we have heard the last of either of these topics, and the image of a joyful Romney pinning down a helpless kid will be in the back of many minds.
Tom Noonan 