The New York City Off-Track Betting Corporation (NYC OTB) was created in 1970 to close a New York City budget gap, and to provide a continuing source of revenue for the City while eliminating illegal gambling on horse races. The NYC OTB was the first of its kind in the United States.

It has become popular for editorial writers, the press generally and, accordingly, the public at large, to believe that NYC OTB is the “only bookie that loses money”. That is simply not true. The fact is that NYC OTB actually makes a profit of millions of dollars every year, and has since it started. The misconception arises from the inability of the corporation to live within the amounts of revenue remaining after it distributes portions of that profit to statutorily designated recipients in the racing industry and government.

The failure of NYC OTB to live within its means has presented a significant—actually, huge—problem for me to attempt to solve as the Chairman of the New York State Assembly Committee on Racing and Wagering, especially since the State has taken over the operation of the corporation, which otherwise might have been forced out of business.

Shutting down NYC OTB would have been catastrophic for its 1,500-some employees, the City of New York, the State, our entire horse-racing and breeding industry, as well as tracks and horsemen in other states. NYC OTB is one of the largest horse-betting venues in the world, literally. It takes in bets of approximately $1 billion per year. On average, about 79 percent of that betting handle is returned to the bettors. The balance, or 21 percent, is “profit” retained by the corporation for redistribution among interests specified in law, after which the amount remaining is to be used for the expenses of the corporation. For the last full year of its operations, NYC OTB expenses exceeded that remainder by about $18 million. Accumulated shortfalls have prevented the OTB from making its required distributions. That must not continue.

Without reviewing here the specifics of a plan to restore NYC OTB to solvency, my purpose is to provide The Capitol readers with a general idea of what is being considered.

First, of course, is to reduce operating expenses. I recommend a significant downsizing of person-power, from the top to the bottom.

Then consider that betting at OTB branches accounts for almost two-thirds of its immense total betting handle. Obviously, we can’t close all the places where most patrons gather to play horses. But we can identify those parlors for closure that are not cost effective, based on handle, the retention from that handle and the real costs of operating the facility. We’ll take a look at payrolls, leases and extraordinary expenses to determine which branches should be closed. Consolidation of locations is a distinct possibility, while trying not to destroy the neighborhood-friendly nature of so many of the parlors.

Management is bloated and significant savings can be made there, as well as in consolidation of back-office operations. We need to review the use of automated betting machines to determine whether expanding their numbers will reduce costs while increasing handle and potential profit. Furthermore, we’ll look for locations that are less expensive for back office space and reevaluate car assignments to employees that are excessive.

Currently NYC OTB anticipates being depleted of funds by May 2010. It’s incumbent upon the State Legislature to produce a plan that will make NYC OTB whole, as well as other OTB locations around the state. 


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Gary Pretlow, a Democrat representing parts of Westchester County, is the chair of the Assembly Racing and Gaming Committee.

I'm not convinced Pretlow hasn't provided any explanation as to why horse race gambling is a compelling state interest that should be subsidized any more so than any other industry. Why should I, a taxpayer who has no interest in horse racing or gambling, want my money spent on it? I have a friend who works in a bar. Should we throw tax money at bars to ensure his continued employment? No. Other states and cities don't operate large OTB schemes. The profits go to statutorily designated recipients in the racing industry and government? Again, why do I want the profit from these government-sanctioned gambling dens propping up the racing industry? And who are the designated recipients in government? I understand that when NYC OTB was established, the agreement was created that a portion of the OTB profit had to be given to racetrack operators to offset the fact that legal OTB made gambling at the track less popular. But do race tracks have some right to a certain percentage of profit from off-track

Comment By: tacony palmyra on April 14th, 2010

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