Updated on 12/10/2010 12:24PM

Getting rid of New York OTB would only create a bigger mess

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NEW YORK – By the time you read this, New York City Offtrack Betting may or may not have shut itself down, whether for a few days or longer, or it may have extended its latest closure threat until the state Senate returns to Albany on Tuesday. The possibility of a permanent shutdown is already prompting approving cries of “good riddance” from newspaper editorialists and some within racing who have long considered OTB a blight upon the sport.

While such hostility is understandable given NYCOTB’s decades of dismal performance and service as the nation’s largest bet-taker, the blood lust for its demise is poorly timed and based on persistent misconceptions about how racing works. Even if you have no sympathy for the 1,000 employees who would be thrown out of work (happy holidays!), the fact remains that shutting down NYCOTB now would be counterproductive and leave an even bigger mess than the one that currently exists.

It would be bitterly ironic if this were the one among many shutdown threats to be real because NYCOTB is on the verge of a semblance of short-term stability. A reorganization plan to emerge from bankruptcy has been approved by its creditors and passed the state Assembly last week, but has yet to be put up for a vote by the state Senate, which has agreed to reconvene Tuesday to consider the matter. Not surprisingly, not every faction of the industry is holding hands and singing “Kumbaya” over the plan, with other regional OTB’s and some harness tracks leading the opposition.

Opposing the bill is a negotiating ploy by these opponents to get some better terms for themselves, but it’s a dangerous game of chicken. Simply abandoning OTB will create a free-for-all for its customers, which can’t possibly end well for the state. It’s nice that the operators of Aqueduct were planning to provide free bus service to the track, hot dogs, and soda for OTB customers if the parlors went dark starting Dec. 4. The reality, however, is that far fewer OTB customers will become regular trackgoers than will give their business to out-of-state national bet-takers or simply find a new and more convenient hobby.

Much of the appetite for letting OTB expire is fueled by the constant refrain from the general press that OTB is a money-losing proposition that is being propped up with “taxpayer money” that would otherwise be feeding the hungry or repairing schools. The New York Post, in an editorial last Wednesday eloquently titled “Let This Nag Die,” said “Lawmakers should just let it die. . . . The sooner OTB is shuttered, the sooner the bleeding will stop.”

NYCOTB is funded entirely by its commissions taken from horseplayers, not by any government support. The company’s creative accounting, designed to make it look perpetually impoverished, has always ignored mandated direct payments to state and local government and given rise to the falsehood that it loses money and is being propped up at taxpayer expense. A premature shutdown will cost government and the industry millions in lost revenue, not stop any bleeding.

The New York Daily News, which has long complained about the “subsidies” to racing that it claims have impoverished OTB, said the next day that “This OTB meltdown must finally force a fundamental rethinking of horse racing in New York [which] should start from the premise that state government should no longer be directly involved in taking bets on ponies. . . . Put the OTB franchise up for bid.”

That may all sound especially good in the current anti-government, tea-partying atmosphere, but it’s a pipedream. The state government will remain bound to racing for decades if not forever – the New York Racing Association is in only the third-year of a 25-year franchise.

Selling NYCOTB to private interests has been tried several times and there has never been a real offer because potential buyers quickly realize they’re bidding on a phantom. What are you really buying if you buy NYCOTB, given that the state government regulates everything from hours of operation to which signals you’re allowed to take, and the rules change with each election cycle.

Neither the state nor the racing industry can afford to let NYCOTB simply shut its doors and disappear, scattering badly-needed customers and revenue to the wind. The State Senate instead should pass the current bill, whatever its shortcomings, while a better and more permanent long-term plan is developed.