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Let OTBs go out of business

The Racing Forum in Hauppauge, operated by Suffolk

The Racing Forum in Hauppauge, operated by Suffolk OTB. Credit: Suffolk OTB

If off-track betting in the state of New York were a horse, we would shoot it.

Interest in horse racing is plummeting, and the tracks and OTBs with it. The sport of kings won't fade in Queens but it will never again be a defining sport for the state. Or a winning ticket for taxpayers. The sooner that's acknowledged, the sooner a smarter bet can be made: The racing industry must thrive or wither on its own. The state's handouts must end.

With the failure of the New York City OTB last year (it owed $300 million when it was shuttered), five regional OTBs remain statewide. Suffolk OTB is in bankruptcy court. Nassau OTB is profitable, but officials say it's on the same path as Suffolk. All five have seen massive declines in racing profits, and the revenue they provide local governments. Let the situation deteriorate too long, and it's a good bet they'll deliver the counties big losses when they must be shut down.

OTBs were created as public benefit corporations, starting in 1971, to achieve three goals: Curtail illegal bookmaking, support the racing industry and provide revenue to the state and local governments. Early on, the organizations did these things reasonably well, though not as profitably as promised, because they were hubs of inefficiency and egregious political patronage for both main political parties. Now the organizations are better, but the finances are worse.

The OTBs no longer curtail illegal bookmaking. Bookies now focus on other sports, because gamblers do. Sports betting and poker are legal in some places and available everywhere online. In addition, bets on horses racing in New York can be made on offshore and out-of-state Internet sites.

The OTBs do support New York's racing industry, one of the prime reasons the OTBs are struggling. Over the years, Albany cut more and more sweet deals, diverting OTB's huge payouts to harness and thoroughbred track operators. Lately, though, the racing industry and OTB interests are colliding. Consider the betting on the flats at Aqueduct, Belmont or Saratoga. This can be done at five different websites or on the phone lines owned by the five OTBs (maddeningly inefficient), or those run by New York Racing Association, the operator of those three tracks.

When the OTBs close, their bettors should be redirected to the sites and phones owned by the tracks. The racing industry should get that revenue, but receive no further subsidies from the state ($25 million last year alone). If New Yorkers don't want to visit tracks or wager on races, why prop up the industry? Horse racing in New York should find its natural level, with prize money, horse values, track profits and all the economics based on how much money people devote to it.

As for the third reason justifying OTBs -- funding government -- those payouts peaked in 1988, and have declined steadily since 2003 and sharply since 2008. They will soon disappear. If we allow these OTBs to run past their last day of profitability, as we did in New York City, we'll see massive debts.

 

Even when the OTBs were healthy, payments to local governments were all but consumed over time by grabs from Albany and the tracks. The Suffolk OTB, between 1976 and 2008, increased its payments to the racing industry 500 percent and those to the state 125 percent, but the money it funnels to Suffolk County dropped 60 percent, numbers similar to those of the other OTBs.

So why not let the state's racing industry run all betting on horses in whatever form it takes? It should tithe to the governments and get nothing from the taxpayers. The OTBs should, in an orderly fashion, close up shop.

The time when bettors flocked to tracks has gone. The era when they frequented parlors is now passing. We soon won't need five public benefit corporations, or even one, to run a website and a phone bank. It's time to rip up OTB's losing ticket and walk away. hN

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