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Put a cap on Nassau OTB’s take from video lottery terminals

People swarm Nassau OTB's Race Palace in Plainview

People swarm Nassau OTB's Race Palace in Plainview to bet money on their horse picks for the Belmont Stakes on Saturday, June 7, 2014. The president of OTB says he's considering layoffs. Photo Credit: Steve Pfost

The Nassau Regional Off-Track Betting Corp. missed a $3 million loan payment last month. That’s not surprising: Nassau OTB is at least $12 million in debt. It lost about $7 million last year. Its business model no longer works, thanks to competition from other forms of gambling, the declining popularity of horse racing, and payments it’s forced to send to the horse industry and racetracks. Nassau OTB has cut its payroll and expenses, but it’s unlikely it can make money on horse betting again.

But the state has wrongly decided Nassau OTB should be allowed to stay afloat. How? By sucking away the proceeds from video lottery terminals, money that should go directly to pay the county’s bills and lessen the burden on its taxpayers.

Now it’s up to the New York State Gaming Commission, Nassau County and the Nassau Interim Finance Authority to work together to make sure the taxpayers come first. The best way to do that is to put a cap on what OTB can siphon off.

Nassau OTB was granted the right to host up to 1,000 of the video slot machines in a murky Albany deal in 2013. The plan was that OTB would run the slot parlor and pass on money to the county once OTB paid its bills. That was not a great idea: The state’s five still-open OTBs have been known to overspend in ways that benefit the politically connected. New York City OTB went bankrupt, leaving employees without jobs or benefits.

Now, because Nassau OTB was never able to overcome opposition to sites proposed for its casino, the 1,000 machines are going to the Resorts World Casino at Aqueduct Race Track. In return, Nassau OTB will get $9 million a year for two years and $25 million annually thereafter, with increases for inflation.

So Nassau OTB will be paid to not run a VLT parlor, and is supposed to give the county what it has left after paying its bills, none of which will derive from running VLTs.

Without the VLT money, Nassau OTB would soon be shuttered. So would the OTB in Suffolk, which also has been given state permission to operate 1,000 VLTs. Unfortunately, Suffolk OTB has been in bankruptcy for years and can only hope to survive on revenues from those VLTs.

Avoiding or recovering from bankruptcy is where the politics comes in. State and county politicians, Republicans and Democrats alike, don’t want the OTBs to go bankrupt because it means angry unions, disgruntled workers, and one less place for them and their pals to make a living. The hard political truth is that politicians are not going to put the OTBs out of business or give the New York Racing Association or a private bidder all the state’s duplicative Internet and phone-betting business, even though one of those moves is almost certainly the best answer.

The most that Nassau taxpayers can hope for is a reasonably square deal. Nassau OTB has to put its plan before the state Gaming Commission, outlining how it will cut expenses to give as much money to the county as possible. The commission, NIFA, county officials and state legislators need to force this to happen. Anything else is just ripping off taxpayers. — The editorial board