Takeout Decrease is Leftout

§ 32. This act shall take effect immediately; provided that sections two, twenty-two, twenty-three and twenty-four of this act shall take effect on the ninetieth day after it shall have become a law and shall expire and be deemed repealed 2 years after such effective date.

That's the clause in SENATE BILL #S8549 SAME AS ASSEMBLY BILL #A11635, passed on June 17, 2008, that required that the 1% increase in the takeout rate for super exotics at NYRA tracks expire on Sept 15, 2010. NYRA's failure to revert to the lower rate has it in the hot seat again.

NYRA...will be required to pay back bettors about $8.6 million...if it can track them down through racing accounts. It will also have to help clear up IRS issues with those who won exotic bets during the period. Further, NYRA will be required to pay a $50,000 contribution to a racing-related charity. [Albany Times Union]

In a press release, NYRA cited "the complexity of the takeout provisions in the Racing Law" in explaining the oversight. Section 32 above actually isn't all that complex. In fact, it's relatively straightforward. [..deemed repealed 2 years after such effective date]. It's Section 2, which lays out the actual takeout rates, that's complex. I'm not going into it in detail because, to be quite honest, I don't understand at all how it translates into a 1% increase in the takeout rate on superexotics. NYRA did though.

Maybe obscure, though not entirely appropriate, is a better way to describe Section 32 in that the clause is tucked away at the very end of 17 pages that only a sadist would actually read through. Whatever the reason, NYRA was certainly not the only party who missed the boat, as Matt Hegarty reports in the Form.

And not even the racing board was aware of the error, since it signed off on documents throughout the past 15 months that described the superexotic rate at 26 percent. Under New York's laws, the board is required to review and approve NYRA's business plan every year, and the plan that was approved for 2012 listed the superexotic takeout rate at 26 percent rate. The board also approves NYRA's simulcast contracts, which list the takeout rates applied to all wagers. [DRF]

However, it was reported quite definitively at the time the bill was passed that the increase was indeed temporary. Hegarty wrote on June 17, 2008 that the provisions sunset after two years. Here's Paul Post's piece in Thoroughbred Times from June 18, 2008:

Scheduled to last two years, the takeout increase has the negative effect of reducing bettor winnings.

“Increasing the takeout at a time when racing is in distress is not a good idea,” said Bennett Liebman, head of Albany Law School’s Racing and Wagering Law Program. “In New York, no one can ever tell when something is temporary or not.”

That surely turned out to be a prescient comment. (I missed the clause myself, and needed Mr. Liebman to point it out to me.) And, in the same article, Charlie Hayward is quoted as saying (with respect to the state takeover of NYCOTB that the increase was related to): "The short-term pain will result in a much bigger reward, long term.” Don't know if, by 'short-term pain,' he was referring specifically to the increase being temporary and I won't put words in his mouth here. But I think one could fairly surmise that he was.

If he was however, he apparently forgot about it. As did Paul Post. And Matt Hegarty. And Bennett Liebman (who now works on racing and gaming matters for the governor). Those are all really sharp guys! The always takeout-vigilant HANA didn't seem to realize anything was amiss. It all smacks of a mass Vulcan Mind Meld.

Even no less of an authority on both the Pick Six and takeout as Steven Crist, who referred to the sunset provision (if rather skeptically) in his column of June 17, 2008, didn't seem to notice. If he missed it, then I suppose anyone could have. Still, the whole thing is really kinda weird.

[UPDATE: Pull the Pocket posts about one horseplayer who emailed the Racing and Wagering Board about the sunset provision in early 2011, several months after it should have taken effect.]