Odds On Racing - Harness Racing

NY Horse Breeders Warn of Risk if OTB Funds Out

March 19, 2010

The entire racing season at the fabled Saratoga stadium in upstate New York is at risk if lawmakers fail to find a way to keep the OTB going and preserve the funds it provides to the racing and breeding industry, the New York Thoroughbred Breeders (NYTB) said in a statement.

"Unless the state of New York addresses the collapse of NYC's OTB ... the cupboard will be bare and Saratoga will go dark this season," said NYTB director Jeffrey Cannizzo.

The state-owned OTB made a rare Chapter 9 filing in December, using the part of the U.S. bankruptcy code that applies to municipalities.

The move came after years of operating deficits amid declining betting revenue and high overheads at shabby parlors in dire need of renovation and modernization.

As part of its reorganization, the OTB has lobbied for changes to the state racing law regarding the distribution of funds. At present, the OTB is obliged to pay the state, city and horse racing industry a percentage of gross wagers that has effectively wiped out a large portion of its income.
Chairman Meyer Frucher has argued that the OTB should make these disbursements only after taking all of its costs into account. He has also warned that without corrective measures, it will have to close its doors.

The racing industry is concerned that it will also suffer without the funds it receives from the OTB, which accepts wagers via a network of 57 full-service branches throughout the five boroughs of New York City.

"The state needs to keep NYC OTB on life support so that it can continue funding the New York racing and breeding industry while a sensible plan is developed to eliminate the destructive competition in the distribution of the NYRA racing product between NYRA and NYC OTB," said Barry Ostrager, president of the NYTB.

The plan should consolidate overlapping functions performed by the OTB and NYRA as well as cutting overhead. Thousands of jobs in multiple sectors of the state's economy are at risk, he cautioned.

The OTB was set up as a public benefit corporation in 1970 to raise money from pari-mutuel betting for New York City, the state and the horse-racing industry. In pari-mutuel betting, all bets of a specific type are pooled, with the house subtracting its "take" before paying the winners. The state assumed control of it in June 2008