State to Take Over NYCOTB
by Tom Precious
The state of New York will take over the operations of the New York City Off-Track Betting Corp., Gov. David Paterson announced June 13, as part of a broader plan that could end up consolidating all of the state’s OTBs.
“The state will take over this operation,’’ Paterson said after a series of marathon talks all week in Albany.
The deal calls for the state to take over the NYCOTB in the next 90 days with the creation of a new quasi-government board that will be controlled by Paterson appointees. It also calls for an increase in the takeout on bets by 1%.
Hours after Paterson’s announcement, though, New York City officials still had not publicly backed the deal. At issue is a 5 %surcharge the city collects on bets — worth up to $19 million — that it claims it should be able to keep getting even if it gives up the OTB. State law provides that half of a surcharge goes to the locality where the OTB is located and half to the locality home to the racetrack where the bet is placed, if the track is located within New York state.
The snag means talks will likely continue over the weekend for a final agreement. Still, state officials were hearing Friday evening that NYCOTB had still not rescinded the order yet to shut down the OTB operations on Sunday.
Mayor Michael Bloomberg has said the city will shut down the NYCOTB June 15. He originally was pitching for a change in how NYCOTB shares revenues with other entities, including the New York Racing Association, the state and a Thoroughbred breeding fund. NYRA would have lost $13 million under a proposed plan by Bloomberg.
State negotiators rejected that idea, saying they wanted to hold harmless any of the entities that now get NYCOTB revenues from bets placed on racetracks. The takeover plan emerged the week of June 9, and gained steam over the past two days when neither side could settle on a solution.
An OTB source confirmed the shut-down order is still on for Sunday, though not until Sunday night — giving more time for the sides to settle the surcharge distribution issue.
It is unclear what the state’s control of the NYCOTB will mean. In the short term, it will mean Paterson would have the authority to replace the OTB’s board, and presumably most if not all of the 200 or so non-union employees. There has also been talk of having NYRA run the operation, giving it access to the OTB’s telephone account wagering system.
Senate Majority Leader Joseph Bruno said two of the bidders vying to run the long-stalled Aqueduct casino project have also expressed interest in running NYCOTB if the state takes it over. He did not name the bidders. The Aqueduct VLT project has three groups bidding. They have been going through another vetting process by the state, and Paterson said he expects to have a background report on the entities June 16 from the state Inspector General’s office.
Paterson said the state will now embark on a study to “examine the entire racing and wagering industry’’ in New York that could include consolidating other OTB operations now scattered across the state. He said the NYCOTB headquarters will move from 42nd Street in Manhattan to Aqueduct, and said the winner of the Aqueduct VLT bidding could play a role in the NYCOTB operations in some sort of public/private partnership.
Paterson also used the deal to announce Sen. John Sabini, a Queens Democrat, as his choice to become the new chairman of the state Racing and Wagering Board, the chief regulatory body of the industry. The nomination requires Senate approval. Sabini said his priority will be making racing “a growth industry’’ for stakeholders as well as the state that relies on its revenues.
The new state-run OTB is likely to be called the Empire State Off-Track Betting Corp. The current NYCOTB handles about $1.1 billion in bets each year, out of a total of $2.6 billion bet in New York state.
“There was no way we could let New York City OTB shut down,’’ said Assembly Speaker Sheldon Silver.
Despite the announcement by Paterson, sources said there are still some issues being worked out, including possible payments to the city and pension questions of OTB workers. Reporters noted that Bloomberg wasn’t present at the announcement, raising speculation about a deal possibly in trouble.