SARATOGA SPRINGS, NY, January 28, 2010--In the long history of the racing industry in New York, never before have the stakes been so high. At issue is the game’s existence, and the stars are beginning to align.

In 2009, eight years after enabling legislation permitted VLTs at the state’s tracks, there were interminable delays in announcing the winner of the VLT franchise race. The Governor’s office announced a handful of dates throughout the year, none of which materialized.

In a closely related development Monday, a state task force released a report recommending how to overhaul the state's six regional off-track betting corporations, including New York City OTB, which has threatened to close its doors permanently following a March 30 deadline.

Among the task force’s many recommendations was a proposal that account-wagering operations outside New York, known as ADWs, be required to pay the same amount to horsemen's organizations and local governments via licensing fees that OTBs do.

The report further suggested that the state's six OTB regions consolidate its business and marketing functions and streamline its management. There also were references to having the New York Racing Association and the OTBs merge under one umbrella. Nothing new there.

Given these machinations, however, the franchise-naming delay by the current sitting Governor, David Paterson, is beginning to make sense. Efforts of conflicting lobbyists notwithstanding, the VLT decision might finally come only after the OTB situation is resolved in some meaningful way. OTBs want into the VLT business, also not a new development.

The interminable VLT-franchise delay doesn’t make sense unless one considers the NYC-OTB situation that necessitated Chapter 9 bankruptcy protection. Given there are 62 counties in New York that depend on OTB revenues, it is no wonder Albany’s eyes haven’t been focused on VLTs.

Whatever is decided relative to these issues, it will have a profound effect on the industry and its customers. And it is those fans, like taxpayers everywhere, who could wind up footing the bill. One involves the ADW scenario. The other, parimutuel takeout.

If the trifecta of legislators, racetracks and OTBs decide that raising takeout and requiring out-of-state ADWs companies to pay licensing fees are the only ways to go, it will hasten racing’s demise in this state. If you don’t believe a revolt is going on in this country, ask Martha Coakley.


There’s a recent example of the debilitating effects of takeout on handle that New Yorkers should heed. Two weeks ago, HorseRaceInsider, backing the play of the Horseplayers Association of North America, implored readers to e-mail the California Horse Racing Board requesting it not raise takeout on races from Los Alamitos.

According to HRI sources, the CHRB received 169 e-mail responses. Apparently horseplayers didn’t take the request or the threat seriously enough, and so neither did the CHRB. By a vote of 6-1, a takeout increase was passed to bail out struggling satellite betting shops in California, the Golden State’s OTB equivalent.

Four days of results is in no way a defining measure, but it is indicative of a trend. The numbers were nothing short of alarming. Comparing handle figures from January 21 through January 24 to Thursday-through-Sunday receipts from the previous week, handle was down $644,240, according to HANA President Jeff Platt.

Platt and fellow board members are unpaid individuals in a grass roots organization dedicated to fighting for horseplayer’s rights. Aware that torrential rains probably were a contributing factor, Platt also compared numbers with corresponding dates from a year ago to gain more perspective. Those figures were worse; the shortfall was $868,171.

A 20.75 percent drop year over year and a 16.27 percent loss suffered the week after a tax increase is enacted is significant. Poor weather is one thing but these numbers are indicative of something else.

Because of the work done by the Horseplayers Association of North America and other Internet sites that post takeout rates from tracks throughout the country, today’s educated horseplayers are aware of the inequities of takeout and have been betting their money at venues where dollars go farther.

It should be clear to those who control New York’s destiny that horseplayers no longer can be taken for granted. The player is voting with his dollars, concentrating on tracks with a good product at a fair price. Still others are voting with their feet and walking away for good. This on top of a demographic that skews older by the minute.

In his e-mail to HorseRaceInsider, Platt recalled that the CHRB promised tracks and the legislature that handle would remain flat. In the long term, a higher takeout NEVER does, although generally it takes time to make an impact. That’s what makes the Los Alamitos numbers so startling.

At whatever price point horseplayers are taxed out of the game, that consequence is a day-to-day reality. Whatever short term fixes worked in the past will destroy what’s left of the industry if repeated today. Past performances are not promising.

Anyone with sense agrees that the OTBs and tracks need to streamline operations and eliminate redundancies in bet-taking and marketing. Time has come to eliminate measures such as “dark-day payments” that reward tracks for not opening their doors. Unrestricted in-home simulcasts are long overdue.

There should be no restrictions on Internet video streaming, and counties should provide public access cable stations for horse racing broadcasts. Again, none of this qualifies as new ground but the time to act is now.

Harness tracks should compete for market share, just like flat tracks do, and they no longer should enjoy protectionist status to the further economic detriment of the OTBs and taxpayers. OTBs and tracks must, of course, reduce overhead and market creatively in tandem.

The current simulcast-rates model is broken and an attempt must be made to fix it. But ADWs shouldn’t be confused with the majority of rebate shops. Racing and Gaming Services is an example of a rebate shop that gives back to the industry, big-time.

And how were their contributions to NYRA purses in the form of simulcast fees rewarded in the past? NYRA responded by cutting its signal to RGS when putting on its dog and pony show while efforting to retain its own franchise. That’s not the kind of transparency anyone needs.

If the state demands licensing fees from out-of-state ADWs that take bets on New York racing, propping up OTBs by restraining trade, the tack is odds-on to backfire. Don’t legislators read newspapers?

Don’t they know that if fees are increased significantly many tracks and ADWs might not want to pay for New York’s races? Don’t they realize that interstate wagering is where the money is? Has anyone seen the New York product recently? Would you pay a premium for it?

Does the New York trifecta think protectionism will help corner the betting market within the state? Are they not aware that’s what New Jersey did when it enacted off-track betting, but recently reversed course after realizing it was a handle killer?

But what if you did this and made New Yorkers criminals by forcing them to bet illegally with their preferred ADW should that company fail to pay New York State a licensing fee? Don’t they realize that bettors will better-deal them, possibly betting offshore or leave the game completely?

There was a word for this early in the last century. It was an impetus for criminals to organize and syndicate their activities. It failed and eventually was repealed because it proved impractical and ineffectual, turning citizens into resentful “criminals.” Prohibition didn‘t work. Neither will protectionism and higher taxes in the new order of world class racing.