What if a bankrupt General Motors, shortly after receiving a massive taxpayer-funded bailout, said they were now the “New General Motors” and recommended that they operate all the automotive companies in Michigan?
The response, I assume, would be disbelief. Why would anyone give a company that went bankrupt and needed a massive taxpayer bailout any more responsibility? That fact is, you wouldn’t and you shouldn’t.
This now takes us to the racing industry in New York state. The New York Racing Association or “the New NYRA” is asking the state to do something similar. NYRA is trying to convince the state to allow them to take over the six regional Off-Track Betting Corporations.
Some background here. Last year NYRA was bankrupt, and for years prior they were losing tens of millions of dollars annually. Despite that, NYRA was once again given the franchise, and a boatload of taxpayer money, to run the tracks in New York state. And even with the taxpayer bailout, no one, not even NYRA, can predict this year if they will be profitable.
So, who would recommend such a consolidation? The racing industry, for one, has for a long time wanted to get their hands on the money the OTBs generate for the counties and taxpayers, and apply it toward racing. Never mind that since the inception of OTB, the six corporations have provided $4 billion dollars in monies to city, county and state taxpayers, and another $3 billion to the racing industry.
This brings us to The Daily Gazette editorial [Restructure N.Y’s archaic horse racing industry, Aug. 2.]. Why would the Gazette, the hometown paper of Capital OTB and the city of Schenectady, suggest that NYRA take the corporation over? I don’t know the answer. What I do know is that the municipality that would be hurt the most is the city of Schenectady.
Capital OTB’s corporate headquarters are here and we employ 300 people regionwide, with most, 125 employees, being from the city of Schenectady. OTB occupies four branch locations in the city and partners with two businesses for EZ Bet sites.
Consolidating with NYRA, as recommended by the Gazette, would result in massive job losses, including AFSCME union jobs, empty storefronts in downtown Schenectady, and the loss of millions of dollars in revenues for the city that would result in higher property taxes. Capital OTB shows up only as a revenue on the participating city and county budgets, as there is no expense to either for participating in the OTB system.
Capital OTB’s board of directors and management have been aggressive in cutting spending and trying to find new ways to grow business.
— Capital OTB has cut spending the past five years by $3 million, and cut spending this year alone by $800,000.
–Corporate salaries are at their lowest level in 22 years. The Capital OTB executive vice president position was not filled, saving the corporation $100,000.
–Innovations, bringing $15 million in handle through Capital OTB’s Internet wagering platform, were implemented.
–Capital OTB created EZ Bets and self-service branches to save money and get racing to more casual fans.
As a result of these actions, Capital OTB remains a profitable, viable corporation in upstate New York.
The six OTB corporations in New York generate more than $1.8 billion dollars in wagers on races. We are the largest collective pari-mutuel apparatus in the nation.
The following changes can help the OTBs. First, continue local control of the OTBs. The counties depend on the revenues and jobs in their community. Consolidation would exacerbate an already-struggling upstate economy.
The OTBs and tracks should enter into shared joint services agreements to include a single Internet platform, phone system, TV station and marketing plan and statewide totalizator system, which would benefit all parties. NYRA and Capital OTB agree on these initiatives.
State officials need to clamp down on out-of-state Internet wagering sites, which are poaching bettors from both tracks and OTBs to the tune of more than $250 million annually. These sites should be regulated and required to pay the same fees that the OTBs pay.
Moreover, state laws that require OTBs to pay excessive taxpayer money to regional harness tracks must be curtailed. Over the past six years, county taxpayers have subsidized privately owned Saratoga racino with $24 million while only generating $6 million in revenue from their races. This amounts to corporate welfare, where county taxpayers are making rich racino owners richer with money that should be used to lower property taxes.
Lastly, OTBs should be allowed to operate video lottery terminals at a single teletheater site. This would provide hundreds of millions of dollars for the state and provide tens of millions of dollars for county and city governments that are struggling with high property taxes.
The racing industry in New York needs some help. NYRA will soon have VLTs, making it a profitable organization. By keeping the OTBs under local control it will ensure a steady stream of revenues to participating localities, including Schenectady.
And if the changes outlined above are implemented, the OTBs and NYRA will have a lasting positive relationship with structural changes that will benefit both entities, making the industry more customer-friendly and more efficient. The other changes outlined will make the racing industry stronger and provide critical resources to state and local taxpayers.
John Signor is president and CEO of Capital District Regional Off-Track Betting Corporation. The Gazette encourages readers to submit material on local issues for the Sunday Opinion section.
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