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.

Gov. Christie Proposing Major Changes To Atlantic City and Meadowlands

Coming off the budget battle to start righting the New Jersey fiscal ship, Gov. Chris Christie has set his sights on the horrible governance at the Meadowlands and Atlantic City. He's proposed a state takeover of the casino and harbor gaming districts and disbanding the New Jersey Sports and Exposition Authority, which oversees the Meadowlands racetrack, IZOD Center, and the stalled Xanadu project.

The key points are as follows:

 The state would seek to transform Atlantic City into a convention and family friendly resort, including a major expansion of the boardwalk that would include amusement rides. The entertainment areas would be placed under the control of a new state authority, essentially turning it into an independent city within a city.

• Money from the Casino Reinvestment Development Authority, now shared throughout the state, would stay in Atlantic City for projects and improvements there.

• The Meadowlands Racetrack could be sold for a token $1, or turned into an off-track wagering facility without live horse racing.

• The New Jersey Sports and Exposition Authority would be all but disbanded, becoming simply a landlord for the facilities it now operates. The Izod Center arena in the Meadowlands could be privatized or sold.

• The state would help re-finance the long-stalled Xanadu project in the Meadowlands, enabling a new developer to take control of the garish, high-visibility retail and entertainment complex alongside the New Jersey Turnpike that many consider an embarrassment.

Atlantic City has fallen well behind other casino destinations, particularly Las Vegas in attracting business. It couldn't keep up with the glitz and glamor and local corruption didn't help. Mismanagement in the local government meant that money that should have gone to improving the city ended up in the pockets of bureaucrats. Yet, the fault isn't solely on the city's political structure. The casinos themselves bear culpability too. They've failed to entice customers to Atlantic City in a way that can compete with Foxwoods, Mohegan Sun and other nearby casinos. When was the last time you saw advertisements for Caesars Palace or the Borgata? Combine that with paltry comps and excessive pricing for rooms and you end up with daytrippers who aren't going to spend a whole lot of time or money on the casino floor.

The casinos themselves need to rethink how to better market themselves just as surely as the city and casino district have to clean up their act. A state takeover may help accomplish this, but it should never have come to that sorry state in the first place.

Eliminating the public authorities is a good first step to cutting down the bureaucracy and cronyism that dominates the local politics in the state. Yet, the Meadowlands portion of the proposal is troublesome because of how it might refinance the Xanadu project, leaving taxpayers on the hook for the tab even as it was a project that should have kept the risk on the developers - not taxpayers.

So, according to the Record, who wins with this proposal?

Winners
The casino industry: Casino owners believe anything that increases state investment in Atlantic City is good for business.
Gamblers: Atlantic City becomes more inviting.
State Sen. Stephen Sweeney and South Jersey legislators: Held the line on gaming outside of Atlantic City.
Xanadu: Gets a new lease on life.
Stephen Ross: New York real estate developer could get state financing.
Construction industry: Proposals could lead to massive construction in Atlantic City and Xanadu.
Prudential Center: Arena in Newark could see less competition from Izod Center.

Who loses?

Sports and Exposition Authority: To close up shop.
Atlantic City Convention and Visitors Authority: Also would close.
Harness racing: Would no longer be state-subsidized. The Meadowlands Racetrack could close.
Monmouth Park: Track attendance is up with new shortened race schedule, but state may privatize track, leaving its future uncertain.
Atlantic City municipal government: Gets a vote of no confidence. Loses control of the casino and entertainment district to the state.
Xanadu: If no deal is reached, the state will foreclose.

It isn't clear whether the Bergen County political delegation wins or loses since it depends on how much money ends up being generated from the rejiggering of the Meadowlands enterprise (the racetrack, IZOD Center, and Xanadu). While some people are critical of the racetrack venture and think it may end up shutting down the track along with the loss of jobs, the state needs to seriously consider whether horse racing is a venture that it should be spending and losing money on when there are more critical needs. Bear in mind that the NJSEA was meant to generate money for the state through investing in the sports venues in the Meadowlands and around the state. It's turned into a money-losing operation that can't sustain itself. That has to change.

UPDATE:
To prove my point about the casinos themselves being part of the problem, note that Travelzoo has a list of hot deals. Among them is a deal to get a room at the Luxor for all of $38 bucks for a room on the Vegas Strip. That's significantly cheaper than comparable rooms in Atlantic City's casinos and it can potentially be cheaper to fly to Vegas than to drive to Atlantic City. Airfare from NYC can run $350 or so to Vegas. If you plan on going for a week, you could end up spending less for a room in Vegas. The cheapest rooms in an Atlantic City casino are from $115 a night at the Trump Marina. That doesn't compare favorably to Vegas casinos on the strip at all.

NYS Budget Woes May Force Cancellation Of Belmont Stakes

Only in New York kids. New York State is facing a huge budget crunch, and one of the victims may be the New York State Racing Association, which operates the Belmont racetrack, where the third (and longest) leg of the Triple Crown is held every June.

"If we can't make payroll, we have to shut down," Hayward said. "There is certainly a possibility that Belmont may not open and there will be no third leg of the Triple Crown." The racing group is waiting for cash that would come from a plan to install video slot machines at the Aqueduct Racetracks in Queens — which would net an estimated $1 million per day in revenue that would allow the Belmont, Saratoga, and Aqueduct tracks to stay open, while providing long-term cash to the state and $200 million in licensing fees that is needed to close this year's budget in Albany.

But legislators haven't been able to agree on which of the five private firms should run the lottery terminals. The first winning bidder withdrew when the state demanded $370 million upfront instead of in quarterly payments, then casino mogul Steve Wynn backed out because the state demanded that the winning bidder pay at least $200 million within 30 days of signing a contract.

The state needs the money up front to help close a huge budget deficit, and the ongoing revenues will help fill the gaping maw of spending excess.

Part of the problem comes from the fact that the Legislature hoped to access those revenues, and they have yet to materialize.

New York City is also hoping to generate revenues from video terminals at Aqueduct, which could fund 848 teachers or the MTA student transit pass discount program. If it doesn't materialize, the City will have to find the revenue elsewhere.