By Matt Hegarty
SARATOGA SPRINGS, N.Y. – New York City Off-Track Betting Corporation will submit a plan to New York Gov. David Paterson in the next several weeks to significantly overhaul the company in an attempt to restore it to financial stability, the new chairman of the company said on Tuesday.
Meyer "Sandy" Frucher, who was installed as chairman of the state-owned company in June, said the plan would seek to swiftly address the company’s deteriorating financial condition. He said he believed that New York’s largest racetrack operator, the New York Racing Association, would likely play a significant role in offtrack betting operations.
"There are no opportunities for us that can be presented incrementally or by repackaging the company with baling wire," Frucher said. The plan "has to deal with past obligations that can’t be met. It has to deal with structural issues that have to be fixed. And it has to deal with recapitalization of a model that is decades old. You simply can’t fix this incrementally."
As for the role of NYRA in the plan, Frucher said, "It’s safe to say we will be working together."
New York City OTB is currently $46 million in debt – including a $10 million debt to NYRA – and is running a cash deficit from its ongoing operations, according to the company. The state took over its operation last year from New York City after Mayor Michael Bloomberg threatened to close the company’s branches and account-wagering operation, citing his displeasure with OTB’s operations.
New York City OTB is the largest bet-taker in the United States, with approximately $1 billion in annual handle. Revenue from the bets made at its parlors and through its telephone and Internet betting operation are shared with the state’s Thoroughbred and harness racing industries and with state and local governments.
Plans to overhaul New York City OTB have consistently failed to gain any traction over the last 20 years because of complicated regional and political interests. Many racing officials, however, have said recently that the present economic and political climate have made conditions ripe for an overhaul of the system, where five other regionally owned corporations, in addition to New York City OTB, compete with NYRA for customers.
Patrick Kehoe, the legal counsel for the NYRA, said at a racing law conference on Tuesday that he believed approval for major changes in New York City OTB’s operations was more likely now that the state was facing the likelihood of having to subsidize the company to keep it afloat.
"It does take a crisis, and I think we have a crisis teed up here," Kehoe said. "So we’re working in that direction. Something is going to have to be done here. The fiscal health of New York City OTB is important to all the players, to NYRA, to the other OTB’s, and to the sport in the state."
The issue has been drawing renewed attention during the last month, even by the standards of August in upstate New York, where the high-profile Saratoga race meet encourages discussion on how to fix racing. The Tuesday edition of the New York Times included an editorial calling for a state investigation into "how operations that should be able to help keep the state afloat manage to lose so much money instead."
A legislative task force charged with issuing recommendations on the state’s offtrack betting operations has met three times this year, with a fourth and final meeting expected late in August. The task force, which was appointed by Paterson, is expected to issue a report. Nothing in Albany’s past-performance history, however, suggests the report will result in significant change: The reports issued by three other task forces over the past 25 years have been ignored.
Frucher, a former member advisor to Gov. Mario Cuomo, said that his ultimate goal was to create a "leaner, meaner OTB."