Wednesday, December 08, 2010

New York State Scratches OTB

The State Senate did not ride to the rescue of the beleaguered OTB. It failed to approve a reorganization of the official betting parlors that operate around New York City by a 29-21 vote.
The 29 to 21 voted proceeded mostly on party lines, as leaders of the Senate Democratic conference pushed approval the bill, which was drafted by Gov. David Paterson and passed the Assembly late last month. The bill failed because it did not have 32 yes votes, the bare majority needed for passage.

But due to the absence of some Democratic senators -- one, Sen. Kevin Parker, was not immediately at the Capitol because he was hearing a jury convict him of misdemeanor criminal mischief charges in Brooklyn -- and the reluctance of most Republicans, the bill failed.

Immediate consequences were not clear. The OTB currently owes creditors $67 million, including millions to the New York Racing Association that runs tracks at Belmont Park and Saratoga. Under the failed bill, NYRA and the Yonkers race track would have assumed control of telephonic and Internet betting worth millions in exchange for forgiving OTB's debt.

"A no vote on this bill lights the wick to a stick of dynamite that will blow up our racing industry," said Sen. Eric Adams, D-Brooklyn and chairman of the chamber's racing and wagering committee. "Today it's New York City OTB, tomorrow it's Nassau, Monticello and other regions. We owe this to the employees of OTB."

The bill would also have exempted New York City OTB from several provisions that other OTBs in the state, including the Capital Region's OTB, say puts them at a disadvantage.

Senate Republican Leader Dean Skelos said his party offered legislation that would offer a "global" solution. He said Democrats controlling the Senate and Assembly met this proposal, sponsored by Sen. Andrew Lanza, R-Staten Island, with deaf ears.

"I don't see why everybody is just saying no. The Democrats love to blame the Republicans as being the party of 'no.' We're saying 'yes, we want to negotiate and get something reasonably done,'" Skelos said.

One rare Republican who voted yes was Sen. Roy McDonald, R-Saratoga, whose district includes the Saratoga Race Track. He called this bill the "worst of the evils," but said it was now or never.
I'm not sorry to see them go. The City and State never managed to turn a profit on the operation, and throwing still more money at the project made no sense given that the operations had little chance of turning a profit anytime soon. While it's unfortunate that several hundred people will lose jobs as a result of this, the long term benefit is that the state and city will not lose tens of millions of dollars on its gambling operations.

Horse racing has a long and storied history in New York, and two of the most prestigious racing events of the year are held in the state - the Belmont Stakes, held at Belmont Park on Long Island and the Travers Stakes held at Saratoga Raceway. Those events are huge draws, and it's baffling how the OTB could not even break even. The problem is that there were tremendous sunk and capital costs that led to ongoing debt. More than 50 locations around New York City will close.

The New York Racing Association will be offering free bus rides to gamblers to its race tracks on Long Island so that they can get their fix.

Then, there's the issue of how reports are claiming that the GOP shot down the rescue plan, when it was the failure of several Democrats to even show up for the vote that meant that the plan died. There is bipartisan opposition to gambling operations and bipartisan opposition to reorganizing a longtime money-losing operation for the state.

A better solution may be to privatize the gambling operations - allowing private franchises to bid for the right to operate the OTB operations, allowing the state to finally break even or turn a profit on the operation. This way, customer service could be put to the forefront to upgrade its reputation and take advantage of the fact that the OTB operations managed to have the largest handle in the nation.

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