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New York OTB: Remembering a city icon
The moment I swore never to return to another offtrack betting parlor in New York City was on the second Saturday of April 2010. I arrived at noon to the tiny OTB in downtown Brooklyn. The parlor was in a squat gray building on a dreary side street around the corner from Brooklyn’s Municipal Building and courthouses, not far from historic and affluent Brooklyn Heights. Its immediate neighbor was Empire Bail Bonds.
Inside was a diverse crowd, but alike in that few had much to bet. Nobody seemed to be handicapping. Most didn’t even have programs. One short, kinetic man bounced around the room rooting for every horse in a race, yet somehow was never happy with the result; he watched the few newcomers suspiciously, as if they were intruding on his social club. A small group of Jamaican men held sway in one corner. Two older women did a crossword puzzle in the back. At 2, a tattered old man finished off a bottle of Colt 45 nestled in a brown bag, set it on the floor, swung his legs around, and stretched his body across three seats and sank into a deep slumber. I looked outside the dust-covered windows and saw the first great sunshine of spring. I left hastily.
Eight months later, on Dec. 7, 2010, New York City Off-Track Betting Corporation closed. The largest bookmaker in the country, dead at the age of 40.
More than two years later, the impact of New York City OTB’s closing is still felt acutely – most of all by former employees, but also by bettors and anyone who came into its orbit during its outrageous lifespan. Their stories reveal an era of New York City that no longer exists, washed away by wealth and the chasm-like gap in it. They speak to a cultural resonance, a grittiness once symbolic of New York that, for all its mishaps, OTB had in spades. When people cared more about horse racing and had a convenient place to share that interest with others.
At the time of its demise, 54 parlors were left, down from more than 150 at its mid-1980s peak. There were also three floors of office space in the old Paramount Pictures building at 1501 Broadway on Times Square. About 1,300 employees lost their jobs, and 900 retirees were stripped of their health insurance.
Mayor Ed Koch said point-blank in 1984: “OTB here in the city of New York is civil service.” Employees were told on their first day that working 25 years guaranteed them a pension and health insurance after retirement. Benefits were paid out of OTB’s profits, but when those profits became losses – something nobody anticipated when drafting its legal framework in 1970 – the retirees were forced into the cold. They have suffered dearly.
Michael Mellon, 58, was one of the longest-serving employees. He managed a parlor in Coney Island for the final eight years of his 36-year career, which began as a part-time cashier at 18. He retired in December 2008 and expected to enjoy retirement with his wife, who worked at OTB for eight years, and his daughter, a recent college graduate and aspiring stage actress.
Mellon didn’t anticipate losing his health insurance. But in the spring of 2011, he received a letter from the city terminating his benefits.
“It felt like a stab in the heart,” he said. “None of us when we were working all those years imagined this would happen.”
Mellon left Brooklyn College in 1972 to work as a part-time cashier. He had aims of playing the guitar on the side, but in his mid-20s he decided to stick it out at OTB. He liked the job, but like other city employees his abiding motivation was the perpetual benefits. He was a cashier for 17 years, night manager for seven, pool manager for three, and finally a branch manager, which made him part of a select group of employees.
Thinking about all he went through, Mellon spoke emotionally: “I felt like they tried to invalidate my life.” His voice cracked, and he paused to gather himself. “I stuck it out there because I knew I’d have health benefits for my family and I.”
Mellon, who lives in Queens near Aqueduct Racetrack, now pays $1,500 per month for insurance for his wife and daughter. Some nights, he dreams that he is called to work the night shift at one of his old branches in Brooklyn’s far-flung Bensonhurt neighborhood. He did not raise the white flag, however. Drumming support from elected officials and his fellow retirees, many of whom were worse off, Mellon led a grassroots campaign to restore their benefits in Albany. Twice Gov. Andrew Cuomo vetoed a bill doing so, most recently in December. Mellon refuses to quit and continues to meet with local politicians and pepper fellow retirees with updates on their Facebook page.
When Mellon retired, Joseph Fusco, then 36, was on his way in. An independent filmmaker and lifelong New Yorker, Fusco was looking for a night job so he could edit his film during the day. He learned of the job through a friend of his mother’s. He joined a sizable 400-person phone betting operation on the 10th floor of 1501 Broadway.
Fusco was a per-diem employee, the first rung of three leading to full-time status. He knew nothing about horse racing, but two weeks of intensive training prepared him. Like a stevedore, he would call the scheduling manager every day and request a shift. He rarely had trouble getting one until OTB entered bankruptcy.
Fusco relished the experience. He joined a workforce in phone betting that epitomized the diversity of New York in terms of race, age, and ethnicity. There were octogenarians and twenty-somethings, people who had worked there decades and rookies who were students or recent graduates. He found other artists, students, and musicians, similarly drawn to OTB for its flexibility.
“OTB was a fantastic place to work if you are interested in the human condition, as I am,” he said with a laugh. “It was as much there for the employees as well as the customers.
“When I started it really was the perfect scenario for me,” he continued. “The job for me was fairly easy; I knew what was expected of me. I sat down, I took bets, I left. There was no emotional baggage attached to the job. The worst part really was fighting your way through Times Square to get to the subway.”
Returning home, he would edit until eight in the morning, sleep, wake up and edit some more, and go to work. He was close to becoming full-time when, a week shy of his two-year anniversary, his manager told him to forget coming in. It was swift and decisive.
OTB had been to the brink so many times before that, like the boy who cried wolf, nobody thought it would actually close. There was no farewell party, no good-byes, no chance to exchange phone numbers with colleagues.
This angered Fusco, and he responded in the way he knew how. With Matthew Flannery, co-producer and director of photography, he is making a documentary on the subject entitled “Finish Line: The Rise and Demise of Off-Track Betting.” He has started editing and is currently holding a fund-raising campaign. Tragedy motivated him: two former colleagues and friends he interviewed – Patti McCole and Barbara Sweeting – died from health complications after losing their insurance.
Looking at the fate of its blue-collar employees, Fusco said he saw an American story that reaches Wisconsin and other places where unions have come under attack. It also reveals the changes in New York over the last 30 years.
“OTB was the last bastion of the pre-gentrified New York City,” he said. “Its loss takes away another place where poor and working-class folks could go and hang out.”
OTB intended to provide revenue to localities and clean the streets of organized-crime bookmaking. Little care was afforded to the street-front parlors, or their patrons; they were designed spare and greenish, shorn of amenities. Their trademark was convenience. They were community centers of a sort, and almost admirable in their stubborn seediness. This was New York after all, not Tucson.
Some parlors remain undisturbed. One of the most popular, on Chatham Square in Chinatown, endures like a museum exhibit. The doors were padlocked on a recent visit but otherwise everything remains the same outside and inside, except with two years of dust collected. Chinese letters hang below the OTB signage. Untouched are two walls of Plexiglass-protected teller windows.
It was always crowded, and until the citywide ban you could barely see through clouds of cigarette smoke. Before the races, Chinese men used to sit at the counter of the greasy dim-sum restaurant next door, examining the entries while eating Frisbee-sized pork buns. Flyers notifying patrons where to cash their remaining tickets are still stuck on the dirty windows. Standing there, you half expect somebody to walk up and unlock the door, open the register and begin taking bets.
OTB still handled approximately $750 million a year upon its death – nearly 40 percent of the state’s parimutuel handle. Of the total, about $140 million was bet through its advance-deposit wagering operations. So how did it lose money?
Simple, says Sandy Frucher, the former chairman who was appointed in 2009: All of its contractual obligations, to the city and state and the racetracks, came off the top of revenue instead of profits. Then came rent on their many parlors and millions in benefits to their employees and retirees. Unfunded post-employment retirement benefits bulged its deficit.
“The fundamental problem with OTB was not management or the running of OTB,” said Frucher, now the vice chairman of the NASDAQ OMX Group. “All of the payments required by the Legislature of OTB put our distributions ahead of expenses.”
Frucher, who worked for free for OTB, quit after a year. He had offered a plan that would have cut staff in half, closed most parlors, and installed self-service kiosks in dozens of bars and restaurants. Much of his plan, which ended up before the state Senate, would have allowed the operation to downsize significantly but stay in business.
Frucher apparently had the best interests of employees in mind. At the first DC-37 union rally after OTB closed, he told employees that he wished he could have done more. He feels the employees were made scapegoats and then victims.
“During the creation of OTB or the transition to the state,” he said, “it was never fully disclosed to the employees or retirees what a shut down would mean.” He called this “unethical and immoral.”
After Frucher left, Greg Rayburn, a corporate “turnaround expert,” was hired on a $125,000 a month salary – 10 times more than his predecessor. There was no turnaround. Rayburn soon took his talents to Hostess Brands, which had strong unions like OTB. Three months ago, the Twinkie died.
OTB couldn’t resurrect itself because it never had a real business plan. The first chairman, Howard Samuels, staffed upper management with people who would work on his campaign for governor while thousands of applications from people with racetrack backgrounds went unopened, according to Irving Rudd, the famous sports publicist who worked for OTB in its early years.
So it grew haphazardly. In 1974, the state and city added a 5 percent surcharge on all winning bets despite bitter opposition from OTB. It no longer had to maximize its revenue but only increase handle to pay localities from the increased surcharge. More branches were opened. Over time OTB horse-traded with the racing industry for more signals, live calls, the display of live odds.
Oversaturation became the norm. Simulcast theaters were opened in restaurants, places like the Inside Track on the East Side, the Winner’s Circle near Penn Station, and the Yankee Clipper across from South Street Seaport. The Yankee Clipper was on the ground floor of a beautiful old ship chandlery built in 1840, the only surviving granite Greek Revival building in the city.
If OTB couldn’t make it there, then where could it?
Kevin Depew, 44, was a Clipper habitué during its final 3 1/2 years. A native of Lexington, Ky., who bought his first house there using his track winnings, Depew had moved to New York in 2004 with his family to become the editor of a financial news website. Settling above the legendary Paris Café on Peck Slip in 2005, he went looking for the nearest OTB.
He bounced around to the Financial District, Tribeca, and Chinatown, before one day realizing that the Yankee Clipper, only a few blocks south, was more than a fancy looking restaurant. It was not clearly marked; only white print on small blue awnings over each window revealed its nature. The first awning read: NYC OTB. Yankee Clipper on the second. Teletheatre. Restaurant. Then repeated. The clever advertising was intentional, so tourists might wander in from the Seaport. The food was lousy.
In the rear of the windowless restaurant was the bar, which is where Depew commanded a booth most weekends. There were three tellers in the place. There was also a basement room, with self-service machines, where a familiar Asian-American crowd resided. They were serious bettors and often had laptops out. There were also two high-roller rooms upstairs. On an ordinary weekend, 60 people might show up.
It was a minor, but perhaps vital part of the residential community. Depew said he and friends used to watch the Triple Crown at the Paris Café, and they would draw straws to see who had to run bets to the Clipper. Most people kept to themselves at the Clipper, which as a serious horseplayer Depew appreciated. Like all OTBs, however, there was one tragic figure who showed up regularly. He worked in the Financial District and lived nearby.
“You would hate to see him,” Depew said, “because you know money is being lost and lives ruined. He showed up most weekends. He’d say, ‘I’m not here to gamble. I’m just here to have a beer. Going to pick up the kids soon.’ Then you’d see him two hours later having gone to the ATM twice and sitting at the bar with a load of tickets.”
It was a strange place, and as grim as any other OTB in its twilight years, Depew said. “The only difference is, it looked good on the outside.”
As OTB went, so did the Clipper. A new law in 2003 allowed OTB to stay open later to show evening Thoroughbred racing. Thinking this expansion would be a gold mine, OTB had to compensate harness tracks for the supposed competition. Expenses and overtime pay skyrocketed, but additional handle never materialized, leaving OTB locked into even more expensive contracts. Its image was not helped by profligate spending: It had a fleet of 87 cars, and employed 22 executives.
OTB was a sinking ship, but not only metaphorically. The parlors became even more bare bones in a self-destructive cycle. In the final months, the Clipper, with its lack of windows and nautical theme, grew to resemble a sunken cruise ship. It took on water until it scared everybody away. The restaurant had ceased to function, leaving only a nearly empty bar. Depew remembers watching the Breeders’ Cup there one month before it closed.
“They didn’t have soda guns anymore,” he recalled. “They had two-liter bottles of Coke and 7-Up for making mixed drinks. I don’t think they had beer on tap, only domestic bottles.”
Still, Depew remembered, “There was a sense everybody had that you can’t close the OTBs. You can’t have New York City without the OTBs.”
The bets found their way into the pools, even though bettors scattered. The New York Racing Association profited from the fallout. They got OTB’s ADW operation for free; a majority of its 20,000 accounts migrated to NYRA Rewards, which has seen that same number of accounts added in two years. For months after OTB closed, NYRA bused bettors from a dozen city parlors to Aqueduct. You get the sense that the tracks were happy to see NYCOTB and its seedy parlors go.
In 2011, NYRA’s ontrack handle – which includes phone and Internet wagering – rose $219 million, which works out to 36 percent of the $616 million wagered on Thoroughbreds at NYCOTB in its final 11 months and one week. NYRA draws about four times as much revenue from each ontrack bet as it did from one placed at OTB.
NYRA has proposed installing self-service terminals in existing bars and restaurants, beginning with 10 and growing to 40 in five years – a low-overhead model, short on staff. But its own instability since being taken over by the state has put this plan on hold.
Something will replace OTB, but whatever does will look nothing like it. Few people will protest one way or another. New York City is a wrecking ball, but maybe the Landmarks Commission can offer historic status to one parlor, like the one in Chinatown.
What was the stupid question every genius would ask, "how can a bookie operation lose money?" As mentioned in the article, payouts off the top to city, state and the tracks, parlor rents. It was never mentioned at the time that another reason OTB existed was to provide much needed job opportunities to Vietnam veterans.
Reading the above news article is significant to one who worked for the NYC OTBC, 32 years. During that time, OTB was a typical Govt. public-benefit corporation. The business aspect of the OTB was second to NYC politics. Employees would be promoted to key positions based on who rather than what they knew. It is astonishing how the OTB survived 40 years. In that sense, the OTB was a dismal failure, and in the end, a viable company was broken to pieces.
Ryan thanks so much for the accurate portrayal of what went wrong. Many reply that workers were rude and uncaring. The majority were not and felt fortunate to have those pensions and healthcare. I was one of them and going forward we all are cognizant that healthcare costs for future public employees can't just be given away. But it is morally wrong and mean spirited to strip seniors of this care they were promised 40 years ago. I loved my job, wonderful give and take with my customers, and I never took anything for granted (except those promised health benefits). I know I was lucky and I'm thankful. The closure hurt many innocent workers who also felt fortunate to be employed. Not everyone there was nasty, and I for one in management would never tolerate disrespect from either side of the window. RIP to those we have lost winging it W/O healthcare they worked for.
Thanks for the very first ACCURATE UNBIASED article on OTB and what caused the demise I have seen in print anywhere.
Where the horse players supposed to pay for their pensions out of the "take". The hosreplayers are supposed to support everyone on earth.
Good article Ryan but I'd be interested to know, do the former employees still have their pensions? Personally, I find it hard to get nostalgic about dumpy OTB parlors. As for the health insurance, in the private sector no one gets health insurance after they stop working, it would destroy business just as these lifelong benefit programs are destroying municipalities.
Three reasons OTB finished up the track; Patronage , Politicians, and Technology.
OTB was a parasite. Who puts a business in direct competition with the host product. NYS that's who. Jobs for their relatives. All you that complain about NYRA, well you didn't have to deal with the state trying to close you down and keep you from prospering for 40 years.
The pension and retirement health plans have placed a heavy burden on the NYRA's bottom line. Without slots revenues the NYRA would be in deep hole.
Jeff...How about a Amercia that no longer exist!!!...If you really love "The Game" OTB's (when done right) are a great place to hang out with other Horse racing Freaks & be able to pick up some extra Bread... The State/New York City/ NYRA are losing a ton of handle every day they keep them shut down...Will the powers that are suppose to be ever going to wake up???...Don't hold your breath...ty...