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May 21, 2010 - 9:58am

Comptroller expresses concern about financial stability of OTBs

posted by Howard B. Owens in batavia, Batavia Downs, business, Western OTB.

In an audit of New York's five regional off-track betting operations, Comptroller Thomas DiNapoli warned that OTB wagering has dropped precipitously over the past five years, threatening the viability of the OTBs.

Western OTB comes off a little better in DiNapoli's audit, primarily because the gains in video slot operations are more than offsetting the declines in horse wagering (full Western OTB report (pdf)).

Western OTB Corporate and Branch Operations has experienced a 10-percent ($15.6 million) decline in net handle (total amount bet) over the past five years. And through May 2009, its net handle was down over $5 million compared to the same time the previous year. In addition, live racing and inter-track wagering at Batavia Downs were down 7.6 percent in 2008 from the prior year and have decreased 25 percent since 2005.

However, the corporation’s new video-gaming facility has generated additional revenue for the OTB. As a result, operating revenues increased to more than $21 million in 2008 compared to nearly $17.6 million in 2004, a 19-percent hike. These increases have significantly affected revenue distributions to local governments, which have grown from almost $3.9 million in 2004 to more than $4.9 million in 2008.

In the report on Western OTB, DiNapoli expresses concern that VTL gaming could level off or decline, depending on the economy or changing competitive issues.

The Buffalo News received a written response from OTB President Martin Basinait, who said WOTB is "somewhat more optimistic."

But he said a number of changes can be made in state law to make the OTBs more competitive, such as changing the formula by which revenues are shared with tracks.

Basinait noted other past warnings from the state comptroller's office, including a 2005 report that found the OTB did not properly plan for the possibility of failure of Batavia Downs and the casino. He said the success of the casino has shown it was "not due to happenstance."

Basinait said DiNapoli's red flags about the future economic health of the OTB's casino are "unwarranted."

Lincoln DeCoursey
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With the proliferation of native and government casinos, instant lottery products & online sports betting and poker games, a gambler has many more options today than he ever did in the past. I suspect that a considerable part of the reason why harness racing is on the decline today and hence viewed as somewhat old fashioned is because it faces a lot of competition today that it never knew in the past.
Bea McManis
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Lincoln, the irony is that harness racing, as well as flat tracks, were hurt by the same entity that now owns them, OTB.
Jeff Allen
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Given the obscene amounts of money flowing through Las Vegas, Native American Casinos, and the gambling industry in general, only New York State could screw it up and make it a unstable venture. Don't blame decreased revenues, blame the fact that the most inept public agency in the country is behind the wheel.

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