Horse Racing; New York City Off-Track Betting in turmoil
The state Senate has rejected legislation that would have kept NYC
Off-Track Betting’s (OTB’s) open. In response, almost all of the OTB’s in New York have or will be shut down. The OTB’s started the closure process on Wednesday, 8th December because it is not financially viable for them to keep on doing business
any more. More than 60 OTB’s shut down over the weekend due to reasons of bankruptcy. For a long time, politicians were avoiding to deal with the problems the OTB’s were facing. These have now hit them in the face and they have failed to devise a rescue plan
in order to save them
Even though horse racing industry has decreased in popularity over the years, it still contributes a sizable amount to the economy of Saratoga. The NYC OTB’s earned a sum of one billion dollars the year before. However, the OTB’s are required by law to give
a share of their earnings to the government and to the horse racing industry as well. This has been the prime cause of the deficit that the OTB’s have been facing in recent years.
The demise of the OTB’s in Saratoga will cause serious financial and economical repercussions for the people. There is going to be a significant amount of loss to the economy in financial terms, as a considerable portion of revenue will no longer be earned.
Also, unemployment will largely increase as over a thousand workers will lose their jobs. The NYC OTB’s are obliged to pay their customers the money they owed them which they are paying in full. They are clearing out all the leftover balances of customers
and paying back the scratch, which is the money given back to the person who made a bet on a horse that is no longer running in a race. The OTB’s are also obliged to pay money to back the bigger creditors, something the OTB’s are not in a position to do.
One of NYC OTB’s major creditors is Yonkers Raceway. It was NYC OTB's second-biggest creditor, after the New York Racing Association, to which the OTB owes $20 million in unpaid rebroadcast fees. 15 per cent of Yonkers Raceway revenue came from the OTB.
General Manager Robert Galterio said,
"We don't know how we're going to be able to recoup any of it, because they don't have any money and they have no assets. So basically, we've lost everything that they owed us."
An eminent danger that the horse racing industry faces with the closure of the OTB’s, is the revival of the illegal betting system. The major reason behind the implementation of the OTB’s 40 years ago was to eradicate the black market. This step made the
betting system above ground in addition to providing revenue to the horse racing industry as well as the local government. However, with OTB’s gone, the black market may re-surface. This is because the people who want to place bets will not be able to stop
with the OTB’s gone and illegal bookies will find themselves a vibrant market of ready bettors.
OTB board member, David Cornstein shares, believes that bettors will soon find themselves an outlet through which they could place bets. Cornstein expressed,
“It'll be a local bookmaker or, from what I understand, they now have a lot of places offshore. But it's not gonna go away,"
According to the supporters of the OTB’s, the immediate action that the state government should take is to come up with a workable rescue plan that would re-open the NYC OTB’s. This is crucial for the Saratogian economy.
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