State Considers Horse Racing's Future Without Off-Track Betting

Racing industry leaders and New York lawmakers are trying to seize the opportunity to consolidate and modernize horse racing in the panic following the closing last week of New York City Off-Tracking Betting Corp., the nation's largest betting operation.

Assembly Racing Committee Chairman J. Gary Pretlow, a Westchester Democrat, convened a hearing Wednesday to consider merging the state's five remaining upstate and Long Island off-track betting corporations into a single entity, possibly with track owners and horse breeders and owners.

Among the proposals discussed at the hearing were a statewide off-track betting TV channel, replacing corner betting parlors with more hotels and sports bars to place bets, and seeking young gamblers who would bet on races viewed on their smart phones.

As has always been the case in New York racing, however, tracks, OTBs and the horse owners and breeders can't agree on how to jump-start off-track betting or who should run a consolidated, streamlined operation.

Track owners and horse owners and breeders urged consolidation under their control so they could collect the bets while eliminating the costly OTB middle man. Off-track betting corporations said that would leave out taxpayers; OTBs are government-created entities required to provide revenue to local governments for property tax relief.

"We can't get along," said Jeff Cannizzo of the New York Thoroughbred Breeders Fund. "Times have changed, and we really haven't adapted to be more efficient. If one of us fails, we all fail. We're all interconnected."

At stake, he said, are more than 35,000 jobs supported by the state racing industry under threat by offshore and illegal bookmakers, casinos and other competitors.

"Something has to be done," Pretlow said. "This infighting within this industry really has to stop."

The closing of New York City OTB after years of threats and bankruptcy is forcing the consolidation question. New York City OTB's doors closed Dec. 7, ending an operation that collected more than $750 million in horse bets a year, or about 45 percent of off-track betting statewide. Much of that betting, or handle, apparently is headed to illegal bookmakers and online bookmakers based outside the U.S., which don't provide cuts to the racing industry or governments.

Charles Hayward, president of the New York Racing Association, which operates thoroughbred tracks, urged an independent review to come up with recommendations because "there are a lot of embedded interests."

He called New York's racing industry fractured, despite having the best racing the nation.

"New York City OTB's predicament gives New York state a chance to end the Band-Aid approach," said Don Groth of the Catskill Regional OTB.

Tracks that are benefiting from lucrative video slot machines shouldn't require such large revenue distributions from OTBs because that limits the revenue sent to local governments, said John Signor of Capital OTB, based in the Albany area. Signor said only OTBs are beholden to taxpayers by law.

"The racing industry is doing very well," Signor said. "The property taxpayers need help."

Pretlow said he will continue to explore consolidation in the legislative session beginning in January.

Meanwhile, New York City's attorney is warning that with New York City Off-Track Betting Corp. trying to close permanently, its retirees face the loss of medical benefits that were reimbursed by OTB unless the state steps in.

The city cannot be called on to bail out the state's public benefit corporations, Corporation Counsel Michael Cardozo said. The OTB filed a motion Wednesday to withdraw its bankruptcy reorganization petition.

About 900 retirees would be affected, city officials say. Their insurance costs about $6 million a year.

Cardozo said retiree benefits could end Jan. 1.