OTB set to pull the plug

BY VICTOR G. MIMONI

Tuesday, January 26, 2010 4:22 PM EST

Call it a bad news perfecta for horse racing fans.

The state’s Task Force on the Future of Off-Track Betting (OTB) has issued a 200-page report on the state’s six regional OTBs – including the bankrupt New York City operation – and according to the chair, it’s a crisis that could bring down racing in New York.

The report, filed on Monday, January 25, warns that horse racing in New York will be in peril if the study’s recommendations are not followed quickly.

According to John Van Lindt, who headed the task force, “We’re reaching a crisis that involves [the] New York Racing Association (NYRA).”

Lindt pointed out that, “The six OTBs together give NYRA $100 million per year; New York City OTB $55 million alone. If OTB fails, NYRA fails.”

To make the point crystal clear, the same day, city OTB chair Sandy Frucher made a legally-required notification in advance of dismissing 1,500 betting parlor employees.

The announcement was made during a web cast OTB board meeting. The city’s OTB filed for Chapter 9 bankruptcy – the part of the federal bankruptcy code that covers municipalities – late last year to avoid being forced to liquidate.

It is currently undergoing court-supervised reorganization.

Among the report’s recommendations, it’s against a NYRA takeover of any OTB outlets because of its own precarious financial condition. NYRA has said it needs revenue from OTB – and from a Video Lottery Terminal (VLT) Racino at Aqueduct race track to stay in operation.

There are currently eight “Racinos” at New York race tracks and the report found that Racino wagering totals $12 million a year – compared to $2.4 million in horse bets.

The task force suggests that:

● OTB should not have to make payments to tracks that have Racinos.

● All six OTBs should have a single negotiated contract with the tracks with a cap on payments, consolidate their marketing and TV operations – though they should not be merged.

● That out-of-state betting firms should have to be licensed and or regulated and pay licensing fees – they currently do not.

OTB officials have held that the operating framework established when it was created in 1970 to handle pari-mutuel betting on horse races is a recipe for failure – with the city, the state and the industry getting percentage “off the top.”

Unless the parties can come up with a plan to make OTB solvent, at the end of the fiscal year on March 31, only a “mop up” group of employees will be kept – to shut down the operation, OTB officials have said.