Updated on 12/13/2010 1:14PM

New York City OTB's closure will have wide impact

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The ramifications of the closing of New York City Off-Track Betting Corp. on the state’s racing industry likely won’t be known for weeks or months, but racing and legislative officials are anticipating significant financial pain.

“They say dropping a pebble in water causes a ripple, this is like dropping a boulder in a pond,” said John Sabini, chairman of the New York State Racing and Wagering Board. “If anyone thinks this is not going to change the framework of the business, they’re kidding themselves.”

Intrastate handle on Aqueduct’s nine-race card was $862,361, down 46.9 percent when compared to Nov. 24, which was the last time Aqueduct raced on a Wednesday. The Dec. 1 card was canceled due to weather as was the corresponding Wednesday in 2009.

Total handle Wednesday was $5,385,884, down 17.6 percent from the Nov. 24 program.

“This is going to have an impact on the entire state of New York, not just the impact of 1,000 people losing their jobs,” said Larry Schwartz, chairman of New York City OTB and Gov. David Paterson’s chief of staff. “This is going to have a tremendous impact on the racing industry. I believe that upstate tracks will close, horse farms will have to shut down, breeders will be moving out of state, many businesses that support the racing industry will have to lay off people or shut down their operations.”

In 2009, New York City OTB reported to the State Racing and Wagering Board that it handled $840 million. Of that, $243 million was wagered on races conducted by the New York Racing Association, which operates Aqueduct, Belmont, and Saratoga. NYRA held its monthly board of directors meeting Wednesday in Manhattan but did not come out with an official statement regarding the impact of the closing of OTB.

In an e-mail to Daily Racing Form on Wednesday, NYRA’s president and CEO, Charles Hayward, said neither the possibility of purse cuts at the current Aqueduct meet nor a reduction of racing dates was discussed.

Hayward wrote that because NYRA was uncertain how much revenue it would make up from increased ontrack business and account wagering, “we cannot project the impact on NYRA finances and purses. Clearly, whatever revenue we cannot replace will have an impact on purses in 2011.”

Sabini said Wednesday that some racetracks “made informal inquiries” regarding a reduction in racing dates, though he would not say which ones.

NYRA tried to recoup some of its lost business by offering free bus service from selected OTB locations in Manhattan, Queens, Brooklyn, and Staten Island. However, only 48 people took advantage of that free service – none from Staten Island.

There was a longer-than-usual line at NYRA Rewards Customer Service at Aqueduct on Wednesday - when 61 new NYRA One accounts were opened - as presumably New York City OTB customers came to the track to open NYRA One accounts. NYRA reported that 56 new NYRA One accounts had been opened from Friday through Monday.

For its part, the state Racing and Wagering Board held an emergency meeting Wednesday at which it loosened restrictions for customers to open phone and Internet wagering accounts with regulated New York-based entities such as NYRA or a regional OTB. Customers can now open and fund accounts online as opposed to onsite at NYRA, Nassau OTB, Catskill OTB, and Yonkers Raceway.

The board also approved an application for a special NYRA Rewards promotion that will double incentive points for new NYRA Rewards account holders for three months.

“Our goal is to prevent the potential migration of betting dollars to out-of-state and unregulated entities by allowing in-state account-wagering operations to quickly process applications for Internet and telephone betting accounts,” Sabini said.

New York City OTB officially closed at midnight Tuesday after the state Senate failed to pass legislation that would have approved OTB’s bankruptcy reorganization plan. The bill was passed in the Assembly and had the support of Paterson and many in the racing industry.

Though the Senate vote was 29-21 in favor of the plan, it needed 32 votes to pass. Twelve senators did not place votes, including five who were actually in Albany at the time of the vote.

When it failed, Schwartz, the OTB chairman, proceeded with the suspension of all wagering operations as of midnight at all OTB branches and teletheaters and the closing of its phone account operation.

“NYCOTB is shut down, and there is no plan to reopen it,” Schwartz said on a radio show Wednesday morning. “This is not a light switch, you can’t flick it on and off.”

New York City OTB will keep three branches open – one each in Brooklyn (West 8th Street), Queens (Forest Hills), and Manhattan (38th Street) – through Monday for customers to cash outstanding tickets and settle their accounts. No wagers will be accepted.

The future of New York City OTB’s phone and Internet wagering platforms – which accounted for approximately 20 percent of its handle in 2009 – is uncertain. As part of the reorganization plan that failed, a new entity known as the New York Racing Network – made up mostly of OTB’s in-state creditors such as NYRA and Yonkers Raceway – would have taken over the operation. It could be sold to a private entity, but Greg Rayburn, the CEO of New York City OTB, said it has already lost its value because many customers have already or will close their accounts.

“Once you go dark on an ADW, they’re gone, they’re not coming back,” Rayburn said.