07/30/2009 11:00PM

New York's offtrack betting setup a fine mess

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SARATOGA SPRINGS, N.Y. - Next to the weather, perhaps the dominant topic of non-racing discussion during this opening week of Saratoga has been the offtrack betting system in New York. It remains to be seen whether the latest round of talking about OTB will do anything more to change it than complaining about the weather will produce a fast track, but the debate is heating up:

* On the eve of the meeting last Tuesday, the top officials of the New York Racing Association made their most withering public comments to date about OTB.

"Racing in New York could be profitable if we just solved the OTB problem," Charlie Hayward, the New York Racing Association's chief executive, told The Saratogian in a front-page interview. "They really have become places where good local politicians are sent to max out their pensions."

Steve Duncker, the NYRA chairman, quickly added, "Unless you're Rudy Giuliani's cousin - then you get there a lot sooner."

(Duncker presumably was referring not to Regina Peruggi, the second cousin that the former New York City mayor married, but to Raymond Casey, another Giuliani cousin, who is the president of New York City OTB.)

* On Wednesday, opening day, NYRA announced it was restoring the in-home simulcast signal to Nassau County OTB after a seven-week shutoff prompted by a dispute over Nassau's broadcasting the signal on its website last winter. NYRA and Nassau are suing each other not only for damages but also for defamation - NYRA's accusing Nassau of "pirating" its signal, and a Nassau official's calling Hayward "a thief and a liar."

* On Thursday, The New York Post reported that an as-yet unpublished state audit of New York City Off-Track Betting found that the company, which is nearing bankruptcy and owes NYRA over $10 million, has 87 private vehicles for employees, including 22 new sport utility vehicles used to ferry executives.

And that was all before the Thursday morning meeting at Saratoga Raceway where representatives of NYRA and the state's six offtrack betting corporations gathered for the third meeting of the New York State Task Force on the Future of OTB, a five-man committee chartered by the state to issue a report by October.

The committee is composed of knowledgeable veterans, but as they pointed out themselves at a previous meeting, the history of such advisory groups is a litany of warehoused and ignored reports. The 1973 Delafield Commission recommended a single statewide offtrack betting system instead of six duplicative regional bodies, as did a 1978 Joint Legislative Task Force. The 1993 Cuomo Commission (of which this writer was a member) proposed a joint venture between NYRA and New York City OTB that would eventually fold in the five other outfits.

Sixteen years later, there are still six regional OTB corporations, providing a bonanza of duplicative services and patronage jobs, with 2,903 employees, 273 brick-and-mortar locations, and 26 presidents and vice-presidents earning a combined $2.8 million in base salaries. Meanwhile, betting at OTBs is declining 45 percent faster than it is nationwide during the current recession.

All the potshots and statistics boil down to two possible paths: Maintain the current system or blow it up. Guess which side favors which option? Offtrack betting representatives argued Thursday that they just need more money to maintain and improve the status quo, and proposed cutting their payments to the racing industry and barring New York bettors from using out-of-state wagering services such as TVG and YouBet. (Good luck regulating the Internet.) NYRA would like to see the six offtrack betting companies become a single entity as part of a combined on- and off-track statewide system. Unsurprisingly, the OTBs have not volunteered to put themselves out of existence.

"The system is relatively entrenched," said Jon J. McCloskey, a Task Force member and longtime legislative aide, "so practically speaking it would be very difficult to perform major surgery on OTB, in my opinion, without causing a lot of chaos. So it's never happened."

Last year, New York City Mayor Michael Bloomberg threw a fit over New York City OTB and threatened to shut it down because he doesn't like gambling. The state took over the company and appointed Meyer "Sandy" Frucher, a former Nasdaq vice-chairman, as its chair. Frucher brings a fresh eye and no legacy of animosity to the situation and is reportedly exploring a Chapter 9 bankruptcy filing that would allow New York City OTB to reorganize and perhaps join forces with NYRA, which emerged from its own bankruptcy last year. New York City OTB accounts for more than half the statewide offtrack betting business, having handled $940 million last year.

The rift between NYRA and the OTBs has not been healed in 35 years of blue-ribbon panels and advisory groups, and a round of beers at the White House wouldn't budge either side. Maybe the answer is bankruptcy and a fresh start. After all, that's the American way.