NYCOTB May Lower Revenue Sharing

Groups are opposing a plan to permit the NYCOTB to lower revenue sharing payments.

Racing industry groups have begun lining up to oppose a plan to permit the New York City Off Track Betting Corp. to lower its revenue sharing payments to tracks, breeding funds, and other entities.

Other off-track betting corporations, meanwhile, say New York City is getting special treatment that is unfair when they, too, have been financially struggling over the years.

And for the New York Racing Association, which stands to lose $12 million a year under one plan floated by aides to Gov. David Paterson, the situation could have an impact on its still-pending bankruptcy case that NYRA officials are trying to bring to an end.

In response, sources say, negotiators are considering a raise in the minimum takeout on bets, which state officials say would help to make up for the loss of money from the NYCOTB to the various racing industry groups. New York Mayor Michael Bloomberg said the city will no longer bail out the OTB, and he is threatening to shut it down next month unless the state provides a new formula by which revenues are distributed.

The situation is raising sour feelings across the industry.

“This proposed cut represents a $1.2 million annual loss to New York’s thoroughbred breeding programs. It would have devastating effects on over 400 mostly small, family-owned and operated farms, and ultimately damage the entire horseracing industry in New York State,” said Michael McMahon, President of the New York Thoroughbred Breeders.

The group sent a letter to Paterson and legislative leaders May 21 urging them not to, as proposed, cut up to 20%of revenues that OTB now distributes to various racing entities, including the breeding fund.

The breeding group last week adopted a resolution opposing “any and all efforts that would reduce the amount of funding available to the NYS Thoroughbred Breeding & Development Fund, as well as any measure that would otherwise negatively impact or jeopardize New York’s Thoroughbred horse breeding industry.”

NYRA officials are said to be also concerned the plan being discussed could affect an agreement it believes will bring it out of Chapter 11 bankruptcy protection. NYRA President Charles Hayward declined comment.

And Donald Groth, president of Catskill Regional Off Track Betting Corp., said other OTBs should be helped if NYCOTB is getting what he believes is a bailout. “It only deals with NYCOTB while other OTBs have the same problem in varying degrees,’’ he said.

Other OTBs, under the plan being considered, are being left out of the discussions “and so would then continue to falter and fail by the same standard of giving away more than they take in.’’

A draft bill being negotiated would change the formula by which NYCOTB has its revenues distributed to the state, NYRA, other tracks, and entities like the breeding fund. It would define NYCOTB’s operating margin, upon which distribution payments are based, to be revenues left after all expenses are paid out.

An aide to Paterson recently said New York City and New York State together get as much as $17 million a year from NYCTOB. The plan under discussion would cut that by between 15% and 20%.

One idea being negotiated would raise the takeouts on bets in New York handled by NYRA, Finger Lakes racetrack, and the OTBs. It would set a new takeout floor, which currently is 14% for one horse bets; that level would be raised to 16.5%. On multiple bets, the legal takeout floor would go from 17% to 19%, according to one document.