02/07/2011 3:51PM

Racetracks, OTBs clash at Senate hearing in Albany


Representatives of New York’s racing industry who testified before a state Senate committee Monday in Albany continued to clash over whether the state’s beleaguered offtrack betting companies need to be consolidated.

Officials who represent the state’s racetracks and horsemen argued that the racing industry would be better served by a single offtrack betting company, with some suggesting that the company should be run by the racetracks themselves. However, three representatives of the state’s five offtrack betting companies pushed back against the suggestion, arguing instead that their problems could be solved if the legislature changed state laws to reduce the amount of money the companies pay to racetracks and horsemen.

The debate over whether offtrack betting in New York should be restructured reaches back more than a decade, but the issue has taken on a greater sense of urgency since the closing of New York City Off-Track Betting Corporation in December. New York City OTB’s bankruptcy and subsequent dissolution has renewed urgent calls for a restructuring from both the racing industry and the state legislature, but it was clear from the remarks made in front of the Senate’s Racing, Gaming, and Wagering Committee on Monday that a consensus will be difficult to achieve.

The committee’s new chairman, John Bonacic, called the hearing to explore issues related to racing’s myriad problems. The future of the state’s offtrack betting system dominated most of the discussion. Although Bonacic made several statements in support of a consolidation of the companies, committee members did little to tip their hands about any legislation that they may be considering to address the issues.

Richard Violette, president of the New York Thoroughbred Horsemen’s Association, urged the committee members to force the companies to operate under one roof or hand over the operations to the racetracks. At one point, he vented frustration at the unwillingness of the OTB companies to combine on their own.

“Waiting for leadership by the OTBs to decide that this is the one solution is a waste of time,” Violette said.

“Somebody needs to take charge and lead the way here,” he added later.

But OTB executives defended their turfs, claiming that their margins are being squeezed by onerous payments to racetracks required by state laws that were drafted in a different business environment. All of the executives, which included Don Groth of Catskill OTB, John Signor of Capital OTB, and Arthur Walsh of Nassau OTB, took specific aim at so-called dark-day and maintenance-of-effort payments the companies make to harness tracks that are flush with cash from slot machines at their facilities, saying those payments need to end.

In addition, the OTB companies urged the legislature to pass laws that would prohibit out-of-state companies from accepting Internet and phone wagers from New York residents, a measure that could rub against constitutional protections of interstate commerce. Signor claimed that a prohibition could return “$40 million” to the racing industry in the state.

Walsh took aim at the New York Racing Association for opening an OTB at Belmont in the wake of New York City OTB’s closing, claiming that the Belmont OTB had stolen customers from Nassau’s nearby parlors. He also said that the state should authorize slot machines at OTBs.

“We need the revenue and we have a right to be treated fairly,” Walsh said.

Sen. Martin Golden of Brooklyn suggested that the state should issue a request-for-proposals to run offtrack betting in New York City, a recommendation that met with opposition from Charles Hayward, president of the New York Racing Association.

“If you have a third party come in to operate the OTBs, we’re going to be in the same mess we’re in right now five years down the road,” Hayward said.

Hayward also said he supported the elimination of the statutes governing distributions from OTB, if the OTB companies were forced to sign contracts with racetracks in the state for the rights to their live racing signals.

“I’d be thrilled to do that,” Hayward said.

Casino operators also appeared before the committee, with Michael Speller, president of Resorts World, the company that is building a casino at Aqueduct, recommending that the state pass legislation putting a referendum on the ballot that would ask voters to approve table games at state casinos. New York’s constitution requires two successive legislatures to pass such legislation before it can be put on the ballot, and Bonacic said he supported the effort.