PEP, February 2005: Union battles to save OTB

"Don’t kill the horse
that lays golden eggs"

By DIANE S. WILLIAMS

Four years ago the union and others locked Mayor Giuliani’s attempt to sell the Off-Track Betting Corp. in the starting gate. Then in 2003, upstate lawmakers passed a plan that raised the New York Racing Association’s share of the take to 75 percent and drove the guaranteed moneymaker into the red.

“This is a recipe for disaster,” said Local 2021 President Lenny Allen. “Without a fair share of the pie, OTB could shut down.”

The new formula starves New York City of much needed funding and threatens the jobs of the 1,700 members of OTB Employees Local 2021. The legislators unfairly favored upstate New York, the home of the state’s racing industry, when they redistributed OTB profits at the expense of OTB and New York City.

The worst case scenario of closing OTB would eliminate the jobs, erase an agency that generates $130 million a year in revenue, and dry up the stream of OTB profits that funds vital services in the Big Apple, such as the Police and Fire departments.

As PEP went to press, OTB is expected to close three leased betting parlors in Brooklyn, Staten Island and Manhattan.

“The formula is unacceptable,” said Mr. Allen. DC 37 and Local 2021 are lobbying Albany to correct the laws and regulations that govern OTB revenue distribution. “The regulatory fees that have been tacked onto the state’s nighttime racing laws make it impossible for OTB to turn a profit,” Mr. Allen said.

A 2003 law that let OTB take bets on thoroughbred races from 7:30 p.m. to midnight also reapportioned profits among OTB, the city, the state and the racing industry. NYRA is in the winner’s circle with a whopping 75 percent, 6 percent more than before. The state placed with a 3 percent increase. But New York City and OTB finished out of the money.

“DC 37 is fighting for a fairer formula,” said Political Action Director Wanda Williams. “The legislators need to replace what they passed in 2003 with a more sensible distribution of OTB money.”

“Giving NYRA money that OTB needs for operating costs and employees’ salaries is bad business,” Mr. Allen said. A draft internal memo obtained by the Daily News outlined options for OTB: One would eliminate half its betting locations, all but one of 10 restaurants and 325 workers.

Implementing this plan would require action from state lawmakers, DC 37 and other unions. A second option would have OTB lay off 140 employees, reduce payments to the racing industry, cut pension contributions by $4 million and use $4 million set aside for capital improvements to pay for operating expenses.

As OTB’s future hangs in the balance, the troubled NYRA has spurs in its side. Debate rages on the legality of the video lottery terminals at several racetracks. If VLTs are seen as slot machines, the racing industry would be out of pocket for millions of dollars.

If a looming investigation by State Attorney General Elliot Spitzer finds that jockeys’ weights have been deliberately falsified, it would taint NYRA with a felony, tampering with a sporting event, in violation of state law.

“We desperately need a change in the racing laws and the funding formula,” said Mr. Allen. “The only way OTB can survive is if lawmakers give it and the Big Apple a fairer share of the profits.”