06/17/2008 12:09PM

Another Legislative Disgrace


The bill passed Monday by state legislators will raise the parimutuel takeout on New York races by one percent beginning Sept. 14, an unnecessary and punitive increase that was not sought by anyone except the New York City OTB corporation, which the same bill basically put out of its misery after nearly 40 years of operation.

The bill also appears to raise the takeout on at least some bets on out-of-state races made in New York, a highly unorthodox surcharge, though it is unclear exactly how this would work or which races would fall under its scope.

As per the usual clueless reporting on racing matters in the general press, the passage of the bill is being widely hailed as a plucky 11th-hour piece of public service by the Mayor and the Governor to save jobs and avoid cuts in social services. It was nothing of the kind.

A quick recap: NYC Mayor Mike Bloomberg earlier this year said he would close down NYCOTB on June 15 unless the state threw another $20 million or so a year its way because he claimed the city would start losing money on OTB. This was possible only if you ignored that the city was making $19 million a year on OTB through its unique, regressive "surcharge" on winning bets, which reduces winning payoffs by 5 to 50 percent for the lowest economic tier of bettors, those who play at shabby storefront "parlors" instead of teletheaters or through phone accounts.

Last week, the state called Bloomberg's irresponsible bluff, saying it would happily take OTB's profitable operation off Bloomberg's hands, and announced Friday it had a deal. Then Bloomerg said wait, not so fast, I still want that $19 million a year in profits. The same profits whose existence he ignored in claiming he would have to start laying off cops and firemen. He ended up settling for $4.5 million in ongoing annual payments, plus three years of annual $3.25 million payments to keep the races on the two city-owned public-access cable channels.

So how did the takeout increase survive? Well, someone had already drafted a bill, and the state's five other OTB's weren't going to take a pass on millions in free money, so nobody bothered to whack it out. The increase supposedly sunsets in two years, by which time a supposedly slots-rich racing economy will allow lawmakers to let it expire. Breath-holding is not recommended.

On the brighter side, the state takeover of NYCOTB at least raises the possibility of some sort of consolidation of the state's crazy and wasteful OTB system. And Bloomberg's appalling behavior throughout this episode -- from his tonedeaf bashing of wagering to his duplicitous and inept negotiating -- has cost him plenty of political capital and exposed his supposed sharp business acumen as a fraud.