NYRA fires Hayward and Kehoe

With talk swirling of state officials considering the future of its racetrack franchise, the New York Racing Association has fired president Charles Hayward following revelations he may have known the racing group was violating state law by not lowering pari-mutuel takeout rates on exotic wagers.

Also let go was Patrick Kehoe, NYRA's senior vice president and counsel.

The termination of Hayward and Kehoe came May 4, the same day the NYRA board was to provide its response to state regulators looking into the matter. The state Inspector General's office launched an investigation into the matter that could result in civil or criminal sanctions.

"C. Steven Duncker, the chairman of NYRA's board of directors, stated that the board's decision was based on a determination that these executives failed to perform their duties at a level required by the board," NYRA said in a brief written statement. "Mr. Duncker noted that there are ongoing governmental inquirings relating to the circumstances surrounding the takeout issue, that NYRA was cooperating with these inquiries, and that NYRA expects that those inquiries will thoroughly and fairly investigate the matter."

Hayward and Kehoe were both named in a recent interim report by the New York State Racing and Wagering Board as having possible knowledge that NYRA illegally maintained a 26% takeout level for 15 months after expiration of a state law. The takeout was not lowered until last December to its proper 25% level.

In the meantime, bettors lost out on more than $8 million because of the higher takeout, and only a fraction of them got refunds.

Duncker submitted a written response to Robert Megna, chairman of a state government panel that oversees NYRA's finances, May 4. He told Megna NYRA is treating the situation "with the utmost seriousness."

"As Gov. Cuomo observed following release of the interim report, if the preliminary findings of the [NYSRWB] are born[e] out by a full investigation, now being handled by New York State Inspector General, they are very troubling,'' Duncker wrote. "NYRA's board understands the gravity of the situation and the need for swift and decisive action."

The NYRA chairman said besides firing Hayward and Kehoe, the board's executive committee has been given authority "to take all appropriate action in this mater in order to streamline decision-making." That includes, Duncker said, finding an interim replacement for Kehoe, though the letter was silent on who will be picking up Hayward's work.

He said NYRA has also retained outside lawyers -- he did not name them or their fees–to represent NYRA in the investigation by the Inspector General.

"In closing, on behalf of the entire NYRA board, I want to assure you of our commitment to fulfilling NYRA's obligations under the law and its franchise agreement, and to maintaining the integrity of its operations, and Thoroughbred horse racing, in New York State," Duncker wrote.

The franchise oversight board that Megna heads has the legal authority to take over NYRA's franchise if there are major breaches of the exclusive contract NYRA has to run Aqueduct Racetrack, Belmont Park, and Saratoga.

In a radio interview the governor cited NYRA as one of his top priorities to tackle before the end of the legislature's 2012 session. However, he did not say what he might have in mind, legislatively, involving NYRA.

That has only fueled speculation that the governor, who has already complained about the state of the racing industry in New York and the manner in which racetrack casino contracts were awarded, might have other plans for NYRA.

Duncker, who has declined interviews, again said May 4 he had no comment.