Race to Salvage OTB Enters Deep Stretch With Jobs Riding on It; Union May Ask Court To Bar Mayor's Closing Up Shop Minus Deal

Race to Salvage OTB Enters Deep Stretch With Jobs Riding on It; Union May Ask Court To Bar Mayor's Closing Up Shop Minus Deal


State legislators, Governor Paterson's Office and the Bloomberg administration continuing intensive discussions on possible changes in the financial formula that has placed the Off-Track Betting Corporation on the verge of insolvency and prompted Mayor Bloomberg to threaten its closing at the beginning of next week.

LENNY ALLEN: Will fight in court if necessary.

"Everybody wants OTB to stay open, but for that to happen, someone's going to have to lose some money that they've been getting," State Sen. John Sabini, the ranking Democratic member of the Senate Racing and Wagering Committee, said during a June 4 phone interview.

Bruno Scuttled Deal

Two other sources said that a proposal made by the Governor's Office to allow OTB to keep more of the betting revenue it collects fell apart two days earlier because Senate Majority Leader Joseph L. Bruno, acting on the objections of racetrack interests, refused to sign off.

Lenny Allen, the president of OTB Local 2021 of District Council 37 - most of whose 1,400 members received layoff notices early last week in anticipation of a possible disbanding of operations - said he was cautiously optimistic that a deal could be reached but ready to seek a court injunction if there was no solution by the June 15 deadline set by Mr. Bloomberg.

JOHN SABINI: 'Someone's got to give up money.'

"I would say we'd keep that open as an option," Mr. Allen said in a June 5 phone interview. "We didn't get to that yet, and hopefully it won't come to that, but we'll do whatever we need to do to protect the rights and benefits of our members."

New Proposal Considered

Later that afternoon, mayoral spokesman John Gallagher said in an e-mail that talks between the Governor's Office and legislative officials "have resulted in a bill draft, which we have just received and are reviewing." No details were available on its provisions.

The tension-fraught wrangling over OTB's fate had a somewhat incongruous backdrop, coming as New York celebrated its biggest racing day of the year, June 7, when the ultimately unsuccessful quest of Big Brown to become the first Triple Crown winner in 30 years drew a crowd of more than 94,000 to Belmont Park.

Mr. Allen said he shared the optimism of several officials involved in the talks that an agreement will be reached in time to keep OTB operating. But he also remarked June 9, "We have people who don't want to retire prematurely, and they're getting very nervous about their futures."

The toll the uncertainty is taking was spelled out vividly by one longtime Betting Clerk who spoke on condition that he not be identified.

'Stressing Out'

"This really sucks," he said in the Manhattan parlor where he works. "It's stressing everybody out - it's all we talk about all day."

Two bills were introduced earlier in the legislative session in the Senate, Mr. Sabini said, that could address OTB's problems. One, sponsored by his Republican colleague, Martin L. Golden, would reduce what OTB remits to the state and the tracks by basing those payments on net, rather than gross, revenues. His own bill would remove the holds-harmless provision from the legislation governing the distribution of those revenues.

That provision was implemented five years ago to protect harness-racing tracks throughout the state from losses in business they might incur when OTB was given the right to accept wagers on night thoroughbred racing. OTB officials, as well as Mr. Allen, have since complained that OTB was forced to pay hundreds of thousands of dollars to Yonkers Raceway even while that track suspended its racing operations so its physical plant could be converted to install Video Lottery Terminals.

Keep It Where It's Needed

Mr. Sabini said that several other harness tracks have also become prosperous since then because of their VLTs, and that they nonetheless continued to drain revenue from OTB at a time when it is struggling.

"The [extra money received] under the holds-harmless is really pretty small, but it's enough to matter to OTB," he said.

The surge in betting that OTB officials had anticipated from night thoroughbred racing, including the major tracks in southern California, did not materialize, leaving the betting corporation short at that end while forced to make greater payments to the racetracks on the other. Mr. Bloomberg said after OTB's Board of Directors in February endorsed his plan to cease operations unless the state provided relief that OTB would be losing money by this month. He insisted that he would not subsidize the betting corporation with money that could otherwise be used for essential city services.

Would Hit Bettors, Owners

Among the proposals under consideration to provide relief are an increase in the money deducted from winning wagers, both on-track and off. This has been criticized by some racing officials as a deterrent to bettors. Racetrack operators and horsemen's groups have objected that a reduction in what they receive from OTB could force a lowering of the purses awarded to the owners of winning horses, which they believe could hurt the quality of racing in New York.

Richard A. Violette, a prominent horse-trainer who is president of the New York Thoroughbred Horsemen's Association, criticized a proposal put forth by the Bloomberg administration, saying, "OTB was created in part to support the racing industry. Now it proposes to become a drain on it." He called for absorption of OTB by the New York Racing Association, which operates the state's three biggest tracks: Aqueduct, Belmont and Saratoga.

The Daily News reported that some legislators were talking about imposing temporary measures that would keep OTB profitable while more permanent solutions could be studied.