New York's OTBs May Stop Taking Bets on Racing

Under the 2019-2020 state budget proposed by New York Governor Andrew Cuomo, the state's OTBs would have the option to drop betting on horse racing entirely or merge with another OTB district.

There are five distinct OTB districts in New York, which cover the entire state with the exception of New York City. New York City OTB ceased operations in 2010.

It appears that the primary reason Cuomo would allow the OTBs to stop taking bets on horses is because most of the districts have been losing money on racing and some have branched out into the slots business. Nassau OTB is the recipient of revenue from 500 slot machines at the Resorts World Casino at Aqueduct Racetrack, money that goes neither to NYRA nor purses. Suffolk OTB operates 1,000 machines at a casino in Suffolk County, Long Island. Western OTB also operates the Batavia harness track, which has slots.

The OTBs are also candidates to take sports betting once laws on that are formulated in the state.

New York's OTB network was established in the 1970s, when horse racing and the lottery were the only legal forms of gambling in the state. But the landscape has changed dramatically over the last 40 odds years, and the OTBs have found it harder and harder to make a profit on racing as casinos began to proliferate in the state and racing's popularity has declined.

According to Newsday, Suffolk OTB went bankrupt in 2011 and has about $41 million in debt. The paper also reported that Nassau OTB is about $8.8 million in debt.

“The agencies have not turned a profit on horse betting in over a decade as racing has become a losing proposition throughout the country,” Nassau OTB president Joe Cairo told Newsday.

According to multiple sources, Cuomo put the OTB language into his budget proposal as a way not only to free some OTBs of a financial drain, but to benefit Capital OTB, which covers the Saratoga-Albany area. Unlike Nassau and Suffolk, Capital has no connection to slot machines and is also widely viewed as the most successful OTB in the state. Should Cuomo's budget pass as is, Capital would be in position to take over the racing portion of the business from any of the other OTBs who want out of the horse business.

It was not immediately clear if Capital or any other OTB district could re-open OTBs in New York City.

“It depends on what other OTBs decide,” Capital OTB President and CEO John Signor said when asked if his company would look to take over other OTB districts. “Other OTBs have VLTs and Western has VLTs and a racetrack. At Capital, we have just come off a profitable year. I think one of the reasons is horse racing is the only product we have, so we really focus on it and try hard to make it profitable for us. If any opportunities come about to branch out and expand our OTB operation, we'd certainly be interested in talking to people about it, analyzing it and reviewing it. There is no doubt about it that we support what the Governor has put in his budget.”

Should Capital take over more of the off-track betting in the state, the prize would be the customers who have ADW accounts with the other regions. However, Signor said that with any merger of OTB districts, the new operator can keep the bricks-and-mortar facilities open if they chose to do so.

“We do that all the time,” he said. “We look at all our branches to make sure they are as profitable as can be. We look at handle, expenses, the rent. The ones that are profitable obviously stay open. If an individual branch is not making money we have to look to see if it makes sense to keep it open.”

The fact that New York is not only the only state that has more than one OTB operator but has five has been a controversial subject for years and many believe the system was set up that way to provide as many patronage jobs as a possible. For that reason, a consolidation of OTB operations will likely be welcomed in many corners of the industry.

If OTBs handle does not significantly decline if and when changes are made, NYRA's purse account should not be affected. However, one person close to the situation wondered why Cuomo did not open the doors to allowing NYRA and its NYRA Bets ADW the option to take over some of the OTB districts.

“Really, that's what would be best for racing,” the source said. “NYRA is good at what they do, especially with NYRA Bets and they should have been given the chance to throw their hat in the ring. That's what would have been best for New York racing.”