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New York comptroller suggests OTB changes

Posted: Thursday, May 20, 2010 2:46 PM

by Paul Post

Handle at New York’s five regional off-track betting operations outside New York City declined about 10% from 2004 to ‘09, according to a state comptroller’s audit released on Thursday.

“OTB is hitting the homestretch and it’s coming in last,” Comptroller Thomas DiNapoli said. “If OTBs are going to remain viable, New York will have to take action to bring back the bettors and fix OTB. The current business model just doesn’t work.”

A state Task Force on the Future of New York Off Track Betting has recommended greater shared services between New York Racing Association and the OTBs, and among the OTBs themselves. Possible steps include one account wagering platform, marketing program, and television system.

Such action, however, has been slow in coming because NYRA and the OTBs generally compete with each other for wagering dollars.

DiNapoli’s office is also conducting an audit of NYRA’s finances that it expects to release later this summer. Its OTB audit includes several major findings:

• From 2004 to 2008, the corporations were required to pay 56% of remaining handle (after paying bettors) to racetracks and state and local governments before paying operating expenses. Although most OTBs reduced such expenses, their bottom line dropped 67% because of declining handle and mandatory upfront payments to the tracks and government;

• The corporations are facing stiffer competition from casinos and out-of-state account wagering companies such as TwinSpires.com that do not pay taxes to the state;

• State law permits the OTBs to take nighttime Thoroughbred races only if they pay harness tracks compensation at rates that are outdated and too high;

• Harness tracks can veto proposed new OTB locations that would be less costly to operate; and

• As of the audit period, only Capital and Nassau regional off-track betting had online wagering programs.

Internet wagering is seen as a major growth area. Most corporations, however, do not have the money to make such investments.

The audit urges the state to review OTB payments to harness tracks. Every harness track has a racino, a major new revenue stream, but OTBs are still giving the tracks the same payments as they were before gaming facilities started opening in January 2004.

The report also says out-of-state account wagering outlets should be subject to state law and regulations; and that the state should take a fresh look at the payments OTB makes to the tracks and government, and the OTBs’ ability to open remote betting locations.

Paul Post is a Thoroughbred Times correspondent based in New York