NYC OTBs Face Shutdown

How is it that the off track betting parlors operated by the City of New York cannot turn a profit? What exactly is going on with OTB that they cost more to the City than they bring in? On $1 billion in bets cast last year, they turned in a $13 million shortfall. If a deal is not in place by Sunday, the 60 New York City OTB would be forced to shutdown.

A state takeover would cost $90 million. That's $90 million the state doesn't have.

What does that say about the government's capabilities to manage what should be a rather profitable business enterprise?

If the NYC OTBs do get shut down, it would cost 1,500 people their jobs. All the current plans floated involve some form of continued government operation, even though OTB has been mismanaged for years and can't turn a profit under government operation.

Here's a novel idea for the NYC OTB situation. Privatize it. Let the marketplace handle the betting operations rather than the government. They certainly couldn't do any worse, and they might actually increase revenues to the State in the process.

UPDATE:
There were reports that a deal had been struck to save the OTB business and all those jobs, but those reports may be premature because Mayor Bloomberg is looking to grab more revenue from the horse racing betting revenues.

Gov. David Paterson had announced the plan earlier in the day, pledging to save 1,500 jobs on the brink of being eliminated this weekend. But Bloomberg responded that unless certain ``outstanding issues'' were settled, the city would go ahead with its plan to shutter the city's 60 OTB parlors on Sunday.

Paterson's office called the city's objections ``distressing,'' saying the plan addressed Bloomberg's desire to stop subsidizing a gambling operation that has lost millions of dollars a year.

The agreement with state legislative leaders was hammered out in the shadow of Sunday's deadline, which Bloomberg had imposed.

After Paterson's announcement, the mayor issued a statement saying ``substantial legal and economic issues'' still needed to be resolved. The mayor said that unless those issues were settled, the city would have no choice but to go forward with its original plan to close OTB on Sunday.

However, he said, ``We hold out hope that a satisfactory solution can be reached.''

The unresolved questions include whether the city or state would collect a surcharge on OTB bets, and how OTB's bills would be paid during the 90 days the state plans to spend creating a new entity, according to a City Hall official who spoke on condition of anonymity because the negotiations were continuing.

Paterson's office said it wasn't reasonable for the state to take over the city OTB's expenses but still send the surcharges to the city.

The bigger question remains why the City and State are even in this line of business and the failure to turn profits suggests that privatization is the route that ought to be considered.