Sale of New York City OTB to Magna has little chance of gaining necessary passage in the state Legislature

Given the opportunity to do something intelligent with off-track betting for the first time since its inception 30 years ago, New York went the other way.

What a surprise.

By choosing to sell a majority interest in New York City Off-Track Corp. to a partnership of Magna Entertainment Corp., Greenwood Racing, and Thoroughbred owners/real estate developers William Mack and Robert Baker, rather than to the New York Racing Association, New York City Mayor Rudy Giuliani made a deal that he claims could reach $389-million. He claims that it was "at least $113-million more" than NYRA's offer, but NYRA Chief Executive Officer Barry Schwartz said Magna was allowed to restructure its bid in the last two weeks but NYRA was not given the same opportunity.

It will not matter, because New York City's deal with Magna has absolutely no chance of getting the necessary legislative changes that would allow a private entity to operate one of the state's six regional off-track betting corporations. The chances of it happening are so slim that it is amazing the deal was even announced. Giuliani, a seasoned politician, should have known this better than anyone.

What New York City officials should have done before offering to sell a majority interest in New York City OTB was to get the racing law changed first to allow private entities to operate it, and then solicit bids.

By doing it backward, it guarantees that Magna, Greenwood, Baker, and Mack will not only be fighting NYRA but the state's five other OTB corporations, the New York Thoroughbred Horsemen's Association, the entire Standardbred industry in the state, the OTB unions, which filed suit in March to stop this sale, and the New York City Council, which has already gone on record vigorously opposing the sale of a money-making entity.

Every politician with connections to OTB throughout the state of New York is going to join the anti-Magna/Greenwood crusade, and there are lots of them. Since the state of New York committed its original off-track betting sin-creating OTB as a separate entity to compete with the state's existing racetracks rather than letting the tracks operate the system-OTB revenue has been tied into local government revenue streams. Making it even more problematical for there to be any change in the status quo, the state of New York tacked on an additional surcharge on winning OTB tickets and tied that money into local municipalities. What politician will vote to change that? More importantly, the state racing law plainly states that OTB corporations can only be operated by a public-benefit corporation performing a governmental function in their municipalities.

Magna Chairman Frank Stronach can throw around all the money he wants, but every time off-track betting and/or New York City OTB and/or simulcasting is mentioned in the racing law, a change will have to be made. And every single change will have to be approved by the Legislature.

Stronach did a great job of winning the bid by hiring former state Republican Party Chairman Bill Powers and New York State Assembly Speaker Sheldon Silver's former press secretary, Pat Lynch, as lobbyists, but the battle is just beginning.

State Senate Majority Leader Joe Bruno has been a staunch NYRA backer for years. Silver has strong ties to organized labor, and he is unlikely to jeopardize that constituency.

Here's political reality in Albany: There has not been a state budget passed on time for the last 16 years. This controversial deal will not sail through the State Legislature. This deal will die unfulfilled.

The law would have been easier to change had the bid been awarded to NYRA, which is a not-for-profit corporation.

Selling New York City OTB to NYRA would have also made sense. It would have been the first time in 30 years that New York took steps to undo the incredible mistake of creating OTB as a separate entity.

Every single racing state that has instituted OTB since has used New York as an example of how not to do things.

Here we go again.