04/15/2010 11:00PM

Could be the last call for New York City OTB


NEW YORK - If you Google "New York City OTB closing," you will get "about 152,000" search results, seemingly one for each time the beleaguered and now bankrupt bet-taker has threatened to close its doors for good. The latest such deadline is Sunday, though by the time you read this it may have been pushed back yet again. That's the way it has always worked in the past - but maybe, just maybe, it's time to let it shut down, 39 years and 10 days after it started.

Such a thought is not intended to be either hardhearted toward the outfit's 1,300 employees or reckless in regards to the industrywide importance of an entity that handles an astounding $800 million a year on Thoroughbred racing - one out of every 15 dollars wagered on the entire sport in this country. It has become increasingly clear, however, that NYCOTB in its current form is an unfixable relic of another era, and that racing in New York might ultimately be better served by starting fresh with a 21st century approach to offtrack betting.

When OTB started in New York in 1971, the New York Racing Association foolishly declined to operate OTB, haughtily saying it was in the racing and not the bookmaking business. That led to one of the great governmental boondoggles in the state's history: the creation of six redundant regional public-benefit corporations that quickly became jobs programs and patronage mills. Preserving those jobs became more important than preserving horse racing, and that's how we got to where we are today: An infrastructure so bloated and antiquated that NYCOTB is virtually out of money and is in debt to NYRA alone for $15 million that the track needs to keep running.

The solution proposed by OTB is to reduce its payments to the industry even further, which - like the takeout increases it has repeatedly gotten to avert previous crises - would only continue the downward spiral of racing. The game is still treated by government as if it were 50 years ago and racing had a monopoly on legal gaming, when in fact it is fighting for survival in a new world of multiple gambling options. The system just doesn't work anymore - not only because of its inherent structural flaws, but also because the game and the world have changed so much in OTB's four decades of existence.

When OTB began in the bricks and mortar world of 1971, more than 90 percent of racing's business came from handle at the racetrack on a live product, and there was no model for offtrack betting except for the illegal bookie joints that were already dying out in the face of sports betting and the first state lotteries. So NYCOTB set up more than 150 charmless storefronts, many of them involving overpriced leases with politically-connected landlords, and built a huge, unionized workforce to operate them.

That model is now obsolete in a world where people can watch the races live at home and bet from their couches. Bets can be far more efficiently made and processed via telephone and the Internet, and there's no need for more than a handful of teletheaters for the dwindling number of bettors who want a place other than the racetrack to congregate and socialize. The state currently has seven competing phone-betting operations that could and should be merged into a single entity.

If NYCOTB does simply close shop this Sunday, its phone and online betting accounts could be seamlessly transferred to the NYRA. There would be initial confusion and a loss of handle from disenfranchised customers, but eventually a lot of the business would come back and with a higher proportion of commissions being paid as a fair price for the racing product, and a massive amount of overhead removed. Either the state or NYRA could continue to operate a few strategically-placed and improved teletheaters, which could not help being profitable if detached from the current OTB system.

Forty years ago, no one knew what they were doing when New York pioneered offtrack betting. The tracks and the state made just about every wrong choice at every turn, and it's no accident that every other racing state learned from the disastrous examples and ran away from the New York model. Now, on top of all those bad individual decisions, the entire idea of a massive offtrack betting apparatus has been overtaken by progress - and perhaps the only way to capitalize on that progress is to not resuscitate the patient.