NYC off-track betting heads for finish

Panel voted to shut down
February 19, 2008 4:25:49 PM PST
The nation's largest legal off-track betting operation is apparently doomed to close this summer. The board of directors for the financially troubled New York City Off-Track Betting Corp. voted Tuesday to close the nearly 40-year-old gambling operation, leaving about 1,500 employees looking for work.

Two branches in Queens and Staten Island will close by the end of February, and others could follow before all betting ends for good, chairman David Cornstein said.

Mayor Michael Bloomberg, who appoints the board members, has been hinting for months that the betting operation was in trouble, and said Tuesday at the board meeting that OTB's fate could have been changed if state leaders had acted earlier to rescue it.

Off-track betting technically makes a profit, but is mandated by law to hand over so much of its money to the state that it runs a deficit; Bloomberg and the board believe it is a business plan no longer worth supporting.

"Running a betting parlor is not one of the government's essential responsibilities, and propping up a betting parlor has to be one of the worst ideas I have ever heard," the mayor said. "We cannot continue to take money away from every other purpose that this city has, and subsidize a bookie operation."

The organization operates more than 60 branches throughout the city where gamblers gather to bet on the day's races. OTB says its customers place an average of 1.6 million wagers per day, totaling more than $1 billion in bets per year.

It was established in 1970 to generate public money and to prevent private bookies from doing the same business, but it has long struggled with its finances.

Between 1997 and 2001, the city received an average of $11 million from OTB. That number fell to just $1 million in 2002, and the city got no money in 2003 and 2005, according to a report by the city comptroller.

NYCOTB is supposed to send money to the city based on the amount it takes in from surcharges on winnings, and from income left over after it pays its other financial obligations.

But those obligations to the state and the racing industry are absorbing more and more money, leaving little or none for the city, and reaching a point where the city could have to step in and help cover some of those costs.

At the meeting Tuesday, Bloomberg said that he had just received a letter from Patrick Foye, president of the Empire State Development Corp., vowing that the state planned to turn its attention to OTB.

The mayor dismissed the promise as too little, too late, and was not optimistic that OTB would be saved. The state, he said, missed a major opportunity last week when the Legislature passed a comprehensive racing bill that dealt with "every racing interest in the state except for the state's OTBs."

"Once you start down the road, it really is very hard to reverse something like this. ... I don't know why anybody thinks that the state government is going to address the issue intelligently going forward, when they couldn't do it in the past," he said.

But Albany is known for last-minute deals, and the June shutdown does give the state some time to act.

In the Capitol, a spokesman for Senate majority Leader Joseph Bruno said the Republican will be in talks with the governor's office and the Assembly about OTB and hopes to reach a solution to save it.