Updated on 09/15/2011 2:10PM

NYC-OTB won't take Keeneland with lower takeout


NEW YORK - The New York City Off-Track Betting Corporation demanded on Thursday that Keeneland Racecourse raise its takeout rate or face being shut out of New York City's wagering outlets, the country's largest betting market for horse racing.

Keeneland officials said the demand would not be met. Joseph Magnani, chief financial officer for New York City OTB, said that none of the state's five other off-track betting companies would take the Keeneland signal unless the takeout was increased.

New York City OTB made its demand just one day after 10 Thoroughbred racetracks in the mid-Atlantic region told Keeneland that they also would not take the track's signal because the reduced takeout will have a negative impact on their revenues. The racetracks are in Virginia, West Virginia, Maryland, Delaware, Pennsylvania, and New Jersey.

Keeneland, which recently reduced its takeout to 16 percent across the board, was scheduled to open its three-week, 17-day meet on Friday

In New York, the only public place for racing fans to watch and wager on the Keeneland signal will be at Belmont Park. Fans in New York or elsewhere could receive the signal in their homes through Youbet.com, the computer-based account-wagering operation, or on Television Games Network, the interactive horse race broadcast and wagering channel that is available nationwide on the Dish Network.

"We're disappointed, and we hope they change their minds," Nick Nicholson, Keeneland's president, said of the decision by New York City OTB. "We think that if they want to present quality racing to their customers, they should offer our product."

Keeneland, which will distribute more than $600,000 a day in purses, the highest of any meet in the country, announced a month ago that it would lower its takeout as a reward to racing fans and to gather data on how takeouts impact overall handle. Bettors welcome lower takeouts because they result in higher payouts, but simulcast sites favor higher takeouts because they produce more revenue.

Magnani, New York City OTB's financial officer, said Thursday that the corporation, which is owned by the city, could not afford to take the Keeneland signal when other available signals, such as Arlington Park's, would provide more revenue. OTB is limited by law to two daytime out-of-state Thoroughbred signals when the New York Racing Association is running live

"If we had the ability to do more tracks, we could let the bettors choose," Magnani said. "I understand the needs of the fans, but we have to weigh that against our fiduciary responsibility to raise revenue for governments."

The decisions to withhold the Keeneland signal were sharply criticized by several racing officials, notably those at the New York Racing Association. The NYRA operates Aqueduct, Belmont, and Saratoga and will be host to the World Thoroughbred Championships on Oct. 27 at Belmont. This summer, NYRA reached an agreement with Keeneland to coordinate post times and avoid overlapping races so that handicappers could focus on the two tracks.

"It's just so disappointing to see this happen, as someone who is interested in what is best for the industry," said Bill Nader, a NYRA senior vice president.

Marty Lieberman, the executive director of the cooperative that represents the mid-Atlantic tracks, said Thursday that the tracks' positions had not changed. Lieberman reiterated that Keeneland should reduce the rate it charged to the tracks as a way of "sharing the risk" of the reduced takeout as one of the options to bring the mid-Atlantic tracks back on board.

"The way this works is that Keeneland still gets paid its money from simulcast sites no matter how far they lower the takeout," Lieberman said. "We think this should be more of a partnership."

Bruce Garland, the vice president of racing for the New Jersey Sports and Exposition Authority, which is part of the mid-Atlantic cooperative, defended the authority's decision by saying that there were "about 20 easy solutions to this if [Keeneland] wanted to share the risk." Garland said the authority had received a number of complaints from racing fans on Thursday.

While the mid-Atlantic tracks said they wanted to renegotiate the price that they paid for the Keeneland signal - currently 3 percent on the betting dollar - the New York betting companies told Keeneland that the track would not be carried in the state unless the takeout was restored to its previous levels, according to officials for both sides. New York City OTB is believed to pay the lowest rate in the country for the Keeneland signal, at just 2 percent, compared with an industry standard of 3 percent or more for a premium signal like Keeneland's.

Total handle through New York City OTB's 75 outlets was more than $1 billion last year, or 7 percent of the national Thoroughbred racing total.