10/21/2007 11:00PM

N.Y. looks at OTB changes

EmailNew York City Mayor Michael Bloomberg is "exploring the options" for the city's financially strapped New York City Off-Track Betting Corp., which has posted a loss in each of the last four years of operation, a spokesman for the mayor said Monday.

During a press conference on Thursday and again on a radio show on Friday, Bloomberg said that the city should consider closing the offtrack betting corporation because of its persistent operating losses. In his comments, Bloomberg contended that the state was at fault for the company's financial problems, and that without changes to the way the company's revenue is distributed, the operation could not be made profitable.

"The state uses it as a cash cow, and it has been subsidizing the state, and we are not going to continue to do that," Bloomberg said.

John Gallagher, a spokesman for Bloomberg, declined to comment specifically on the changes that would be necessary to make the offtrack betting company profitable.

Since being elected in 2001, Bloomberg has questioned whether the city should operate a gambling business. Under former Mayor Rudolph Giuliani - who was credited with turning around the business in the 1990s - the city held an auction for the company in 2000, but the plan was scuttled when the legislature would not agree to enabling legislation.

On Wednesday of last week, the chairman of New York City Off-Track Betting, David Cornstein, told the New York Post that the company would be out of money by the end of the current fiscal year, June 30, 2008, if it was not allowed to retain more of its revenue. The company operates approximately 60 OTB parlors in New York's five boroughs, and last year took in about $1 billion in bets.

Cornstein made the comments on the same day that the state Senate's Republican leadership announced a plan to award elements of the franchise held by the New York Racing Association through a bidding process overseen by a new state agency. During the announcement, the Senate's majority leader, Joseph Bruno, said that the state agency would be responsible for considering new ways to run offtrack betting in New York.

New York has six offtrack betting companies that are owned by the counties in which they are located. The model has long been criticized by racing officials as being inefficient, but the political strength of the OTBs has been an impediment to change.

The offtrack betting companies are required to distribute much of their revenue to the racing industry, the state, and the counties under an extremely complex matrix of laws. In 2006, according to the annual report by the New York City offtrack company, those payments were $115 million.

Four years ago, state legislators passed a bill that allowed offtrack betting companies to import unlimited nighttime Thoroughbred simulcasts in exchange for imposing a 0.39 percent tax on the companies to fund the New York State Racing and Wagering Board. In 2005, that tax was raised to 0.5 percent, and since then, New York City Off-Track Betting managers have complained that the fee - $5.3 million in 2006 on handle of $1.06 billion and revenue of approximately $218omillion, according to the 2006 report - has put an unfair burden on the company.