New Plan Has State Running NYCOTB

Negotiators eye a plan to have the state of New York take over the running of NYCOTB.

Negotiators are eyeing a plan to have the state of New York take over the running of New York City Off-Track Betting Corp., which is threatening to shut down this weekend unless a revenue sharing structure it says is costing the city more than $20 million a year is changed.

One idea under consideration would have the state guarantee that the OTB would not cost the city any operational money in return for certain operational efficiencies and an audit of its finances by the state comptroller.

Two takeover ideas have been under discussion, negotiators said. One would be a short-term takeover plan in which the state would assume the operation of the NYCOTB by having Gov. David Paterson appoint a new board to replace the city-controlled NYCOTB board. Another includes a far more dramatic idea in which the state approves a permanent takeover as part of what was described by one official as a “bridge’’ for all the state’s OTB’s to be consolidated down the road.

The chief opponent to a state takeover has been New York Gov. David Paterson, according to sources. But on June 11, Paterson signaled he is now open to the idea.

Asked about a possible state takeover, Paterson said, “Because the urgency of the situation, there’s no option that I won’t explore at this point.’’

Paterson held closed-door talks on the NYCOTB situation with Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver. After the meeting, Bruno said a state takeover “is the way to go.’

“I believe we’ll get a resolution,’’ he added.

Earlier in the day, Bruno said the state has to act quickly “to create some comfort level’’ so the NYCOTB does not close on Sunday, as Mayor Michael Bloomberg is threatening to do after a series of on-again, off-again talks this week in Albany.

Bruno said he also expects the Paterson administration next week to make its choice – which needs agreement from Bruno and Silver – for an operator to run a long-stalled casino at Aqueduct. Three groups are vying for the VLT project at the track, and officials have floated the idea that the winning bidder could be involved at some point in the future in the running of the NYCOTB if a state takeover occurs.

Bloomberg has said the NYCOTB costs the city each year because of a flawed revenue sharing structure and said the city will no longer subsidize a “bookie’’ operation with funds that could go to police or fire services. Assemblyman Gary Pretlow, chairman of the Assembly racing committee, disputes that, saying the city purposely fails to include $14 million it receives from a betting surcharge.

Bloomberg has signaled he is open to a state takeover of the NYCOTB, the nation's largest. It began operations in 1971, and has more than $1 billion a year in handle and averages 1.6 million sales transactions a day.

The city has pushed a plan that would cut at least $13 million in NYCOTB payments to the New York Racing Association, which opposes the idea because it would, in part, hurt its efforts to emerge from Chapter 11 bankruptcy protection. And breeders oppose it because a state thoroughbred fund would  see its funding cut by about $1.5 million annually. An alternative plan has been to have NYRA and others raise takeout levels to make up for the lost proceeds from the NYCOTB.

After a negotiating session, Silver said the sides were looking at a “takeover, a state guarantee of a certain amount of funds (for NYCOTB) or some combination thereof.’’ He said any guarantee of funds must include an audit of NYCOTB “to determine where the money is going.’’

But Silver lashed out at Bloomberg for threatening to shut down the NYCOTB and put 1,500 people out of jobs at a time of a soft economy. “I think it is unfortunate the mayor is using those workers as hostages,’’ he said.

Some lawmakers are pushing to get a deal approved as early as June 12 before legislators go home for the weekend. The city is preparing to shut down the OTB on June 15.