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Monday, March 29, 2010

The NY OTB Mess

What to do about NYCOTB? Will this parasite, who has done much to harm New York racing, once more seriously wound New York racing or is there a way out of this mess the bankrupt corporation has wrought? And what about all the other OTBs in New York State; what is to become of them?

OTB needs to go away. The question is how should it be liquidated in a manner which does not cripple racing? The immediate goal is to have an orderly shutdown of NYCOTB instead of an immediate liquidation in bankruptcy court which has been threatened as of the close of business on April 11. Were NYCOTB to just close up, a significant amount of wagering on Yonkers would vanish and quite honestly, the damage to NYRA would be so extreme that Finger Lakes may be the only thoroughbred track left running in New York.

I am not going to go into what OTB has done to New York racing, standardbreds in particular. This is well documented. The question is what should be done now?

The OTB storefront model is outdated and should be retired. The State of California is presently dealing with the problems of trying to sustain their satellite wagering model which is obsolete thanks to account wagering. The amount of money being wagered at storefront units simply does not cover the costs involved with operating them. The proposal to open kiosk operations in bars, restaurants, and bowling allies in lieu of storefronts is an expansion of gambling which most politicians in New York don’t want to see.

The assets worth anything are the OTB cable channels, their account wagering accounts, and their teletheatre network. These assets should be transferred to the racetracks where they should have been all along. The key is who gets what? Of course, many people want to hand the whole NYCOTB franchise to NYRA. This can’t be allowed to occur. If you think harness racing gets shortchanged now, can you imagine what would happen if the thoroughbred interests were given the assets of NYCOTB? To protect both breeds, there needs to be a fair and equitable distribution of the assets.

With Yonkers Raceway and NYRA both offering account wagering, the NYCOTB account wagering accounts should be transferred to the two racing associations in a fair and equitable manner. Since state and local governments are depending on fees from OTB, a percentage of the handle from these legacy accounts can be given to state and local governments for a phase out period of three years to allow the government time to wean off this revenue. The two tracks can jointly operate the OTB cable channels by showing all New York racing as primary signals and mutually agree on the other racing signals to be shown secondarily. As for the teletheatres, they should be auctioned off to whichever racing association wishes to take them over. If no one wants to take over the teletheatres, they should be closed. The storefront locations should be phased out over a three to six month period so the tracks off-track handle doesn’t drop immediately; hopefully these customers will transition over to account wagering or return to the track. If this means some of the statutory payments owed both breeds needs to be used to fund this transition period, so be it. After all, they stand to lose more if the wagering just disappears completely.

The other OTBs should follow a similar path. In the case of them, if there is only one racing association in their geographic area, the account wagering accounts should be transferred to them. Where there is more than one track operating in the area, the accounts should be split between those tracks. In the event there is an OTB region without any active racetracks, the tracks nearest to them should be given those accounts.

Of course, this is what should happen. Politics will probably dictate otherwise. Racing interests, regardless of breed need to work together to make sure no further harm occurs to racing as a result of these political decisions.

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