2007-11-28 / Editorials

Mayor Must Fight Harder With Albany To Fix OTB


Let us make it perfectly clear at the outset: the Gazette recommends that the city Off Track Betting Corporation (NYC OTB) should remain in business because it has proven in the past that it can make money for the city and it can continue to do so if most of its profits are not diverted.

As Mayor Michael Bloomberg pointed out last week, OTB brings in over $1 billion annually in wagers and generates an annual operating profit of approximately $125 million. So there should be some money in it for the cash strapped New York City government.

But, says the mayor, "The legislative mandates imposed by Albany have forced NYC OTB to make significant and increasing distributions to the racing industry- with the amount of these distributions based not on NYC OTB's profit, but on gross revenues."

According to mayor, since 2001 the additional requirements that have helped to put NYC OTB in a hole have been caps on customer charges, new regulatory fees, $54 million to the New York Racing Association, which operates the state's three thoroughbred tracks, and- get this- "the requirement to continue to pay fees to harness tracks, even if they are not operating".

The upshot of this sad story is that NYC OTB may run out of cash by June 2008, says the mayor, and he will not inject additional funds into its operation because he is having enough problems funding essential services. It is not surprising to us that Bloomberg, given his superior private sector financial successes and his management skills, would be the first to comprehend this broken business model that NYC OTB is forced to operate under.

The situation is so dire for NYC OTB, says the mayor, that if it runs out of cash by next June, he is not going to pump any city funds into a dead horse, and NYC OTB will just go out of business.

The mayor says frankly he's no great fan of OTB and has always had reservations about city government being involved in gambling. Since the city cannot and will not subsidize OTB, the state must provide the solution if OTB is to remain in business, the mayor said.

While we respect the mayor's honesty on this issue, and while we agree the city should not subsidize NYC OTB operations, given all the leaks in this sinking ship- which were caused by conditions beyond its control- we still believe he should be putting up a stronger fight against Albany to make NYC OTB solvent.

It's clear that, given a chance to do its job, the beleaguered agency can make money and New York City government can benefit from it, as it did in times past before forces in Albany started to cripple its operations.

Since Albany created all the problems that are now plaguing OTB, it is up to the state legislature and Governor Eliot Spitzer to get at the root of the problem and put the program on a right course.

Officials at City Hall acknowledge that Ray Casey and his management team at NYC OTB have performed well in difficult circumstances. The mayor and his cabinet members point out that now is a propitious moment for Albany to place NYC OTB on a straight course because the legislature and the governor are presently deciding the future of racing in New York state and the future of NYC OTB must be a part of the discussions going on in the state capital.

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