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The Fate of Off Track Betting in New York and NY Horse Racing Industry

3 January 2011 by Devon Chappell

Image courtesy of Time Magazine; Photo: Mario Tama/Getty Images

Image courtesy of Time Magazine; Photo: Mario Tama/Getty Images

The New York horseracing industry is no doubt facing some rocky times. If lowered attendance at the tracks wasn’t enough, the off-track betting system in New York simply isn’t making the cut, which in turn, is causing negative repercussions for the NY racing industry at large.

It shouldn’t be news that the New York City division of the OTB has been going under for the past year. Filing for Chapter 9 Bankruptcy just over one year ago, NYC OTB is now officially shut down. Despite a historic deal with Governor David Patterson that involved taking over the NYC OTB, the New York Senate failed to pass legislative changes contingent to keep the NYC OTB open for business. As of early December, 2010, off-track betting shops throughout the five boroughs of New York City were being closed.

And now that the deal is done, so to speak, the NY Assembly (lower House) racing committee is hard at work trying to find a way to give the NYC OTB another life, or at least, to keep New York’s five remaining OTB Corporations from incurring the same fate as that of the NYC OTB, which include:

Capital OTB (operating a television and internet wagering network and the OTB “parlor” Tele-plex racing center in Albany), Catskill Regional OTB Corporation (internet wagering at and betting shops throughout the Catskills), Suffolk Regional OTB Corp. (Internet and telephone wagering, Suffolk OTB Racing Forum Headquarters and several shops and “quick bet” locations throughout Suffolk County), Nassau OTB Corporation (Nassau Downs, operating, Teletheatre Race Palace and several “Fast Track” restaurant locations throughout Nassau County), and the Western Regional OTB (Batavia Downs Racetrack/Casino, Teletheatre, Dial-a-bet, EZ bet locations and 35 branches in Western New York State).

The main topic of discussion at the recent Assembly hearing was how to fix the New York off-track betting model, which OTB executives say is what helped give them a $95 million debt with the New York Horse Racing Assocation (NYRA) in the first place. The NYRA, by the way, operates three of New York’s most prolific horserace tracks – Belmont, Saratoga and Aqueduct. However, unlike the NYRA, New York Thoroughbred Horsemen and Standardbred Owners Association of New York – which all believe the remaining five OTB corporations should be consolidated into a single track-owned conglomerate with online betting streaming rights – OTB executives said that consolidation is not necessary and that those calling for it are only looking to “feather their own nests”.

President of the Catskill OTB, Donald Groth, said that while there is a valid perception that the OTB is a failure, it’s because of a State-mandated fiscal revenue sharing model that has effectively pressured the NYC OTB to close. Needless to say, this could very well end up being the fate of other NY OTB Corporations. While not necessarily backing Groth, Jeff Cannizzo of the NY Thoroughbred Breeders stated that closing the NYC OTB is a mistake, calling to light the 36% of state breeding funds that come from the NYC OTB.

All things considered, a permanent shutdown of the NYC OTB could very well become a costly mistake for the State of New York, which is facing a $10 billion deficit. Not only would it cost the State $20 million up-front, an estimated $600 million in liabilites, i.e, retirement pensions for OTB employees, is on the stable…err….table.

If the NYC OTB is indeed resurrected by the Senate, the next question is: What will become of the OTB in New York? A consolidation is certainly a prospect – a top contender, in fact. The one thing that is most obvious is that the OTB is fractured and needs serious reformation. Everyone but the OBT Corporations (which have been turning a profit, mind you) strongly believe that neither the State nor the industry itself can support five different OTB centers and redundant betting systems spread throughout New York. One prominent option on the table is a private-owned, OBT conglomerate modeled after the system in Pennsylvania.

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