It's Official: State Takes Over NYCOTB
New York officials announced the evening of June 15 a deal to avert the closure of New York City Off-Track Betting Corp. by having the state take over the entity. The move could be a prelude to a statewide consolidation of all OTB corporations.
“The finalization of this agreement is a win for the state, a win for the city of New York, and a win for the people whose livelihoods depend on a well-run OTB,” Gov. David Paterson said.
The state on June 13 announced a deal to take over NYCOTB and its 1,500 workers, but New York City Mayor Michael Bloomberg nixed the idea, saying the city wanted to keep in excess of $18 million in annual revenue sharing from a surcharge on winning bets.
The state, in legislation expected to be approved June 16, will assume control of NYCOTB as a new public benefit corporation. In a partial win for Bloomberg, the city will continue to get a portion of the surcharge on bets made at Aqueduct and Belmont Park, which amounted to $4.25 million last year. The city will also get another $3.25 million a year by broadcasting racing on the city’s two cable channels now run by NYCOTB.
“Although the negotiations went down to the wire, they produced an agreement that truly belongs in the winner’s circle,” Bloomberg said in a statement. “Working with state leaders, we have put out to pasture a fiscally flawed arrangement with OTB--one that threatened to divert city funds from police and fire protection, public schools, and other essential services. Instead, the city will continue to receive a public benefit from racing that takes place in New York City.”
Bloomberg originally sought a major change in the way in which NYCOTB revenue is distributed between the state, the New York Racing Association, the Thoroughbred breeding fund, and other tracks. For NYRA, it would have meant a loss of at least $13 million--an amount that may have jeopardized its attempt to emerge later this month from Chapter 11 federal bankruptcy protection.
“OTB is an important part of the Thoroughbred racing industry, and racing is important part of the state economy,” Assembly Speaker Sheldon Silver said. “There is much that has to change to make the Thoroughbred racing industry in general, and OTB in particular, more profitable, and this agreement helps move us toward that goal.”
Still to be decided is which of three bidding groups will operate NYRA’s future video lottery terminal casino at Aqueduct. At least two of the bidders have said they would be interested in also running the operations of NYCOTB if the state takes control of the entity, which includes a telephone account wagering business and 68 betting parlors that handle about $1.1 billion in bets a year, or more than 40% of all bets made in New York each year.
Paterson earlier said the state would also be interested in using the NYCOTB deal as a prelude to a broader move to consolidate the other OTB corporations in the state. Racetracks and the OTBs have been fighting for years for a dwindling share of racetrack bets.
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