New York OTBs in Jeopardy: Comptroller

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Thomas DiNapoli, New York State comptroller, speaks during an editorial board meeting in New York, U.S., on Monday, June 1, 2009. New York state's pension fund declined 26 percent for the year ended March 31, its worst performance ever, DiNapoli said. Photographer: Daniel Acker/Bloomberg News

New York's Off-Track Betting corporations are at risk of financial insolvency due to major revenue decreases and rising costs, according to a new audit issued by State Comptroller Thomas DiNapoli.

DiNapoli released a report on Sept. 25 showing that OTB wagering was down $1.2 billion, or 24%, from 2009 to 2013 compared to the previous five-year period. The comptroller called on state policymakers to review a number of regulations governing OTBs, including the formula used to calculate their payments to harness tracks. He said the decline in OTB revenue has had a notable impact on distributions to municipalities, which dropped 42% from $17.6 million in 2009 to $10.2 million in 2013.

"The viability of OTBs is in financial jeopardy," said DiNapoli. "Statutory payment requirements, a downturn in racing interest and major fee increases have each contributed to this plight."

The audit is the second consecutive from DiNapoli's office that identified major financial challenges in all five of New York's regional OTBs, which are located on Long Island's Nassau County and Suffolk County, and in the Capital, Catskill and Western regions.

"As competition for gambling dollars intensifies in New York, the state must reexamine the roles of OTBs," said DiNapoli. "Some localities rely on this revenue to help balance their budgets and already feel the effects of this decline."

DiNapoli noted that since his previous audit in 2010, regional OTBs have worked hard to implement several recommendations, including closing 33 branches and expanding online and remote wagering. This resulted in four of the five regional OTBs cutting their operating expenses, including Suffolk by $7.7 million, Capital by $3.5 million, Nassau by over $3.2 million and Catskill by nearly $800,000.

The annual handle collected by these OTBs fell from $817 million in 2009 down to $664 million in 2013, a decrease of $153 million, according to DiNapoli. Suffolk OTB experienced the greatest dip at 29%.

DiNapoli's report comes on the heels of the 2013 Upstate New York Gaming Economic Development Act, which allowed the Nassau and Suffolk OTBs to operate video lottery terminal parlors at non-racing facilities. A VLT parlor opened by Western OTB in 2013 brought in $566 million in revenue, according to DiNapoli.

Nassau OTB had planned a mini casino in Westbury, N.Y., but withdrew plans due to community opposition and is now eyeing a temporary facility that would generate an estimated $20 million in revenue for the county's 2016 budget. Suffolk OTB is planning to open a new electronic slot machine casino in Meford in the wake of exiting Chapter 9 bankruptcy.

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New York
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