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Saturday, April 10, 2010

Getting the Shaft in New York?

Politics are in play in New York and once again, it appears racing is about to get the shaft. Harness and Thoroughbred interests appear to be losing out for the benefit of bankrupt NYCOTB. After all the bravado of the legislators vowing not to allow OTB to use bankruptcy as a means to hurt the New York racing industry, current discussions which have allowed OTB to postpone their deadline to shut down for a week are now centered on not only cutting the commission OTB pays in and out of state racetracks for their signal by as much as 25%, but it also appears to let OTB off the hook for some or all the fees it already owes the tracks while not mandating NYCOTB to adopt a New York first policy where New York thoroughbred and harness signals must be shown on television first before showing an out of state signal.

I have a better idea. Shut NYCOTB down. Even if you bail OTB out now, it is inevitable that they will fail again. The OTB model is a fatally flawed model. Ask California about their failing satellite wagering system. With account wagering now being offered and widely accepted, the demand for standalone OTB offices is constantly shrinking. OTW facilities like in Pennsylvania and New Jersey make sense as they offer more than just gambling, but continuing to offer OTB offices where you add an onerous 5% surcharge on any winning wagers makes no sense, especially with customers continuing to be more sophisticated. Close OTB down and transfer their telephone and internet wagering accounts to either a joint harness-thoroughbred partnership, or if you must, to NYRA (with a requirement for them to offer wagering on harness signals). NYCOTB is the first to go. It is inevitable the other regional OTBs are destined to fail as account wagering becomes more popular.

Unfortunately, I doubt the New York legislature will do the right thing. The ability to give out patronage jobs as well as the reliance of local and county governments who depend on fees from OTB will win out. Racing will always lose in the battle of racing versus government. This is one of the reasons why racing has a hard time to compete.

What can racing do? In New York, they can't do much. The government gets to set the rates they pay the tracks and the tracks have to provide their signal regardless. Out of state tracks are free to do what they want. Should OTB reduce the fee they are willing to pay, the out of state tracks can pull their signals. Under the Interstate Gambling Act, horsemen groups have the right to pull their signal out of NYC OTB if they chose. If the state won't close down a failed OTB, the out of state tracks should stand in solidarity with their New York counterparts and pull the plug on their signals until New York harness and thoroughbred horsemen are treated fairly.

Unfortunately, these horsemen and track operators will be unwilling to take a hit on their handle for the benefit of their New York counterparts. This is why racing is in the situation it currently is. All for one and no one for all. Until horsemen in both breeds think nationally instead of locally, racing will continue its decline.


Scott Jeffreys said...

Allowing NYC OTB to "go under" is the only logical path that will lead us to a different outcome. Restoring NYC OTB with a bailout simply maintains the status quo.

On Down the Stretch on Sirius/XM this weekend, Bill Finley had a great piece during the final half hour about the need for the NYC OTB functions to be turned over to NYRA for account wagering and the store fronts to close. Allow NYRA to operate the platform and run the OTB business to the benefit of racing, once and for all.

Pacingguy said...

I agree having NYRA run the account wagering platform for old OTB accounts is preferable to letting OTB continue but I do wonder why the thoroughbreds get to keep the business. Why not Yonkers Raceway? Will the accounts being moved over to NYRA get access to harness signals?

Were Catskill OTB to run into the same problem, would they then let Yonkers take over those accounts? Probably not. This is a problem to me. Why not give the standardbreds equal opportunity.

I have a better idea. Keep the OTB account wagering system going for three months *ketting NYRA manage it) and let NYRA and Yonkers send out promotional material why their account wagering system should be selected and let the account wagering customers from OTB decide which track they want their account taken over by.