New York OTB Seeks Merger With New York Racing Franchise Holder

New York's largest off-track betting corporation wants to be able to merge with the next holder of the state's Thoroughbred franchise to help end the "perpetual cycle of conflict'' between tracks and OTBs.

The plan, offered to state legislators at a time when the franchise now held by the New York Racing Association is up for bid, also calls for a number of marketing and financial changes to the racing industry that the NYCOTB says are necessary to help both ailing tracks and off-track betting entities.

Daniel Doctoroff, the deputy mayor for economic development for New York City, told legislators in a Nov. 30 letter that the current debate over the franchise offers "a great an unique opportunity to renew the grandeur of horse racing in the state and to enable the industry to become an engine of economic development.''

The plans, some of which are certain to win support within the racing industry, face an uphill battle. Chief among the potential trouble spots for the NYCOTB plan is an effort to cut the amount of money they must distribute to tracks for bets placed on races.

The package of ideas include a restructuring of the state's racing law to permit NYCOTB to merge with the next franchise holder to help eliminate the "destructive competition'' that has plagued NYRA and NYCOTB for years. The NYCOTB did not take sides in backing any of the three groups vying for the NYRA franchise.

The plan also calls for pumping $8 million now collected annually by the state from un-cashed pari-mutuel tickets into a new program to market the horse industry. Until now, the NYCOTB has insisted that the OTBs get the proceeds of the un-cashed winnings.

An improved marketing program, the city argues, will help not only the struggling tracks but also the financially ailing NYCOTB. "The pageantry and excitement of horse racing also merits enhanced presentation. Currently, the thrill of the sport is all but lost in the standard TV formatting used by the tracks for their simulcast signals displayed both on and off-track,'' the city said in its plan. "Such lackluster presentation is out of step with every other successful sport presented on television.'' It said the industry in New York should better promote events like the Belmont Stakes as well as focusing marketing better on horses and jockeys.

The NYCOTB also called for "better alignment of the relationship and economic interests'' of the tracks and OTBs. It said things like better marketing efforts cannot be funded unless the state changes how the OTBs distribute money back to the tracks. It said the current structure leaves NYCOTB paying back more to the tracks and government stakeholders than remains after paying its operating expenses.

"If the current situation continues for even a few more years, NYCOTB will be forced to cease operations, resulting in a loss of 1,500 jobs and significant funding that wagering at NYCOTB provides to the tracks, horsemen and breeders in New York,'' the city said. It said the city should be required to pay in distribution monies no more than its net revenue, minus an agreed-to percentage for funding industry improvements.

The NYCOTB said tracks can afford lower payments from the OTBs because of their revenues from video lottery terminals. It said the next holder of the Aqueduct, Belmont and Saratoga franchise will get $112 million in annual revenue once the casino is built at Aqueduct.

Lowering the distribution money from the OTBs "would allow the OTBs to survive, but more meaningfully, it would also be able to fund the initiatives and upgrades necessary to enlarge overall racing revenues,'' the city said in its report to lawmakers.

The NYCOTB also said tracks should be doing more to capitalize on their VLT operations by incorporating such things as hotels, retail space and other things to bring consumers to the tracks. It acknowledged its past opposition to the VLT parlors. But with the casinos now open at most tracks -- and coming some day to Aqueduct depending on final state approvals – the NYCOTB said the tracks must better capitalize on the new gambling ventures to lure more bettors from competitors.

As legislators weigh a future franchise holder, NYCOTB urged them to consider not just the financial viability of the bidders but also their plans for bringing economic development opportunities to the tracks now run by NYRA.

"Simply put, all levels of government must support these common sense goals to rescue one of New York's oldest and greatest sports and the thousands of jobs that depend on it,'' the city said.