11/16/2007 12:00AM

Bloomberg way off base on OTB

EmailNEW YORK - In six years as the mayor of New York City, Michael Bloomberg has been remarkably silent on matters pertaining to horse racing and offtrack betting, issues which he clearly knows or cares little about. Unfortunately, he undid all that admirable restraint in a single statement Thursday, violating the old saw that it is better to keep one's mouth shut and appear ignorant than to open it and remove all doubt.

Bloomberg snared his desired headlines by saying he will unilaterally shut down the entire New York City Off-Track Betting Corporation next summer because it supposedly is losing money and city taxpayers are subsidizing the racing industry. These preposterous claims not only demean Bloomberg but also perpetuate longstanding falsehoods about how racing operates in New York, which will only muddy current efforts to resolve longstanding industry problems through the resolution of the New York Racing Association franchise issue.

First of all, New York City OTB never has and never will actually lose money. Despite its massive and unnecessary overhead, and the staggering inefficiency of having six OTB companies within the state rather than one, OTB still can't help generating revenue. It may not be generating as much money as it used to or as much as officials would like, but claiming that it is in the red or costing taxpayers money is nonsense produced by creative accounting.

Just as disturbing was Bloomberg's blaming OTB's performance on "Years of state legislative schemes that favored racing interests over NYCOTB," as if "racing interests" is some sort of competing bureaucracy or jobs program that is posing a hardship on city taxpayers. Bloomberg appears not to understand that horse racing is financed by takeout from the betting dollar, and that OTB, like the track itself and every other simulcast customer, pays a share of that takeout to purses and track operations.

There is nothing unfair or unreasonable about this, but when the mayor makes it sound like there is, it is accepted and repeated as truth. In its reporting on Bloomberg's remarks in Friday's editions, The New York Times blithely stated as fact that OTB's "payments to the state go in large part to support the beleaguered racing industry," as if some sort of unjust welfare program is in effect. Of course OTB pays a share of its takeout to racing, because without such payments there would be no racing to generate revenue.

Closing down New York City OTB is a completely empty threat. It makes money for the city, employs more than 1,500 municipal workers, and provides valuable patronage appointments to city politicians. And what are the people who bet $1 billion a year through New York City OTB, the nation's largest single bet-taker, supposed to do if Bloomberg shutters the operation? He might as well have said he was going to shut down every movie theater in New York because he doesn't think the city's getting enough tax revenue out of them.

What Bloomberg is really up to here is trying to get a couple of legislative breaks for New York City OTB in order to undo a miscalculation the company made four years ago when it instituted nighttime simulcasting. OTB officials overestimated the business they would do on evening Thoroughbred simulcasting, which previously had been prohibited in deference to the harness industry. They negotiated a deal where in exchange for this expanded menu, they would pay a subsidy to the harness tracks and pick up the cost of funding State Racing and Wagering Board regulatory services.

As it turns out, night Thoroughbred simulcasts have been a massive disappointment and are not covering the new costs. An adjustment may well be justified, but not under the pretense that OTB is "draining essential city services," as Bloomberg claimed, or paying an unfair share of its handle to NYRA.

The real disappointment here is that Bloomberg has always seemed like the one mayor who might actually do something intelligent to reverse the 36-year embarrassment that is New York's OTB system, a dysfunctional model that has been been rejected by every other state that followed it into the offtrack betting business. Having built his own Bloomberg News into a multibillion-dollar concern, Bloomberg should understand how streamlining the operation, consolidating it on a statewide basis, and eventually selling it to racetrack operators is the only way out of the mess.

Instead, he is taking the same low road that his predecessor, Rudy Giuliani, staked out 14 years ago when he called New York City OTB "the only bookmaker in the history of the world to lose money." It wasn't true then, and it isn't true now.