Jun 15, 2008 11:20 pm US/Eastern
NYS Takes Over City's Off-Track Betting Operations
NEW YORK (AP) ―
The city's financially troubled Off-Track Betting horse racing operations are being taken over by the state, the mayor and governor said Sunday.
Under an agreement between the city and the state, a newly formed state corporation takes over OTB while the city continues to receive part of a surcharge related to wagers placed on races at tracks within city limits, which last year amounted to $4.25 million.
Mayor Michael Bloomberg had said before announcement of the deal that the city was ready to shutter its 60 OTB parlors on Sunday. About 1,500 jobs had been on the brink of elimination.
Gov. David Paterson said he'd welcome those OTB employees back to work Monday.
"The finalization of this agreement is a win for the state, a win for the city of New York and a win for the people whose livelihoods depend on a well-run OTB," he said.
Under the deal, the city will postpone its layoff notices pending completion of the takeover and then will rescind them, Paterson said.
The city also will continue to broadcast horse races on behalf of OTB for three years on two television channels, and OTB will pay the city $3.25 million per year, he said. After the three years, the city and state will negotiate the possible continuation of the broadcast agreement.
Legislation related to the OTB deal was scheduled to be taken up Monday by the Legislature, and approval was expected.
The new state entity will retain the 1,500 OTB employees in the city and will assume OTB's financial liabilities, Bloomberg said.
The Off-Track Betting Corp. technically made a profit, but it was legally obligated to hand over so much money to the state that it ran a deficit. OTB, created in 1970 to generate public money and thwart private bookies, takes in about $1 billion a year in bets but has been struggling for years.
Bloomberg had said he didn't want to spend scarce city resources to keep a "bookie" operation in business. He said he was pleased with Sunday's deal with the state.
"Although the negotiations went down to the wire, they produced an agreement that truly belongs in the winner's circle," Bloomberg said. "Working with state leaders, we have put out to pasture a fiscally flawed arrangement with OTB—one that threatened to divert city funds from police and fire protection, public schools and other essential services."
Between 1997 and 2001, the city received an average of $11 million a year from OTB. That number fell to $1 million in 2002, and the city got no money in 2003 and 2005, a report by the city comptroller said.
Last year, the city OTB reported a $13 million shortfall. Its directors, appointed by Bloomberg, voted in February to close it down.
Assembly Speaker Sheldon Silver said Friday the state comptroller's office would audit OTB's operations while streamlining its management.
(© 2008 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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