nassau otb exists so al can collect too much for doing too little
Editorial: OTB bailout a bad bet
Published 5:28 pm, Wednesday, October 19, 2016
THE ISSUE:
State legislation will allow the racino in Queens to bail out Nassau County's OTB.
THE STAKES:
Using one betting operation to bail out another is a losing proposition.
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Off Track Betting branches are closing all over New York, victims of increased competition for gambling dollars. One solution, hatched by lawmakers and Gov. Andrew Cuomo to help the struggling Nassau County OTB, looks like a bet on a horse that's already lost the race.
The state established OTBs in 1970s as public-benefit corporations, requiring them to turn their profits over to local governments. In their heyday, they were bloated bastions of patronage and excess spending. But in recent years, they have been in trouble. Facing bankruptcy, Nassau County's OTB convinced the state Legislature to allow it 1,000 video lottery terminals to boost sagging revenues and stay in business. Then came a new problem: No communities in the county wanted a VLT operation.
So another solution was approved in April in the rush to the state budget deadline: Those 1,000 VLTs will now go to the Resorts World Casino at Aqueduct, the huge, extremely profitable VLT operation in Queens. Under the deal approved this month by the state Gaming Commission, Genting New York LLC, which operates Resorts World, will "host" the Nassau OTB's 1,000 betting terminals and in turn pay the OTB $26 million over the next three years. Thereafter, Genting will give the Nassau OTB payments of up to $25 million annually. This will help Nassau's OTB to remain open.
In return for this sweet deal for Nassau's OTB, Resorts World, which already has about 5,500 terminals at the Queens site, will get to divert more of its profits for an expansion, including a hotel complex. When New York gets around to awarding its three remaining commercial casino licenses, Resorts World would be poised to receive one and become a full-fledged casino, with table games. Industry watchers say that will be especially likely should New Jersey's voters pass a referendum next month allowing a full casino to open at the Meadowlands, just across the river from the lucrative New York City market.
OTBs are bleeding and it's likely to get worse. An audit by the state comptroller last year warned the state's five regional OTB corporations were experiencing rapidly declining profits, diminishing the funds they give to local governments.
Meanwhile, competition is growing. The four upstate licensed casinos, including Schenectady's, will start opening next year. Online fantasy sports betting is gaining popularity and the New York Racing Association now has its own online betting site and smartphone app.
All of which leads us to ask: What's the point of propping up OTBs any longer? Their decline seems irreversible. If New York wants to keep a hand in what off-track horse betting remains, it's time to look at a more up-to-date solution, perhaps dramatically scaled down OTBs, or something entirely new.
Whatever the solution, it's clear that when one gambling operation has to subsidize another, taxpayers are not winning.
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