Defending the Indefensible 2 (NYRA Edition)

I get it – I really do. I work in pricing and I know the complexity that contracts can frequently take on. In my line of work, we had a fairly complex client contract that involved a 3rd party, wherein we would have to pay the 3rd-party in instances where their install software loaded our software onto a customer’s device. We used the 3rd-party software perhaps 30% of the time; I discovered that our accounting group was paying the 3rd party in 100% of instances. I figured I saved our company$100K/year by pointing out the error. (In a fit of gratitude, my boss told me to take the rest of the year off, having paid for my salary and then some for the whole year. Not really.)

But the truth of the matter is I actually saved our company about 1/100th of 1 cent per subscriber/year. The accounting group in charge of knowing this particular thing is counting sums so much in excess of this, with variances in the millions of dollars, that I think it would have cost our company money to train this particular handful of people to know this. I came at a bargain.

I look at NYRA overcharging some exotic bettors with a too-high take rate (26%-25%) as an example  of administrative oversight as opposed to a willful money grab. There are multiple prices (takeout splits) between the racing association and its vendors, namely the totes and the ADW services, that I can see how it happened, that the legislated agreement to lower takeout just got overlooked. Not changing is easier than changing, and it never made the top 10 list of NYRA prioritized activities.

So, now that we’ve caught it, I see the lower takeout on NYRA superexotic bets (24% vs 25/26%) as an opportunity for horseplayers. This is the perfect type of natural takeout experiment we have been looking for – an unwanted price decrease. I assume that NYRA won’t be promoting the lower takeout, but if a handle increase occurs for these pools, the association will have powerful evidence to take to the legislature to justify lower takeouts in the future.

It’s human nature to be mad about this situation, perhaps boycotting NYRA as a result. But I’m willing to support the corrective action, and in it take advantage of the opportunity to show I support lower takeouts. In 2012, I will concentrate my NYRA betting in the S-E pools, the Superfecta, Grand Slam, and Pick-Ns. I encourage you to do the same.

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