-- State Legislature Must Act to Prevent Further Loss of Revenue--

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New York City Comptroller William C. Thompson, Jr. speaks at a July 24, 2006 news conference announcing findings that the New York City Off-Track Betting Corporation’s increased payments required by State law are leaving no revenues for the City. Pictured (l to r) are: Leonard Allen, President, New York City Off-Track Betting Corporation Employees Local 2021 and Thompson

A new report by Comptroller William C. Thompson, Jr. finds that the New York City Off-Track Betting Corporation’s (NYCOTB) payments to the racing industry and the State are absorbing a growing portion of its revenues, squeezing out revenues for the City.

“While the State legislature has increased statutory distributions to race tracks and horse breeders, providing them with larger payments, it has not compensated the City and other localities whose OTB revenues have been siphoned away,” Thompson said.

Between Fiscal Years 1997 and 2001, the City received an average of $11 million in revenues from OTB. The number fell to just $1 million in FY 2002; the City did not receive any revenues in FY 2003 and FY 2005.

Thompson’s report found that at the same time, the surcharge paid to the City has declined as a share of OTB’s statutory distributions, even through these distributions are growing overall. In FY 1995 total surcharges due to the City were 24 percent of statutory distributions, but by FY 2005, those surcharges due to the City had dropped to 14 percent. Meanwhile, payments to the racing industry increased from 55 percent of statutory distributions in FY 1995 to 70 percent in FY 2005.

The report states that NYCOTB projects operating losses of $8.2 million in FY 2006 growing to $22.6 million by FY 2010. The expected continuing operating losses imply that the City is unlikely to receive revenues during those years.

Overall, NYCOTB’s fiscal picture is bleak and is unlikely to improve, the report states. In FY 2005, NYCOTB ended with an operating deficit of $9.6 million dollars, marking the fourth consecutive fiscal year in which NYCOTB has ended with an operating deficit.

“For four years in a row, NYCOTB has faced deficits and those are projected to continue through 2010,” Thompson said. “NYCOTB’s failing fiscal health will continue to mean a loss of funds for the City unless timely action is taken.”

At a news conference announcing the release of the report, Thompson was joined by Leonard Allen, President of the New York City Off-Track Betting Corporation Employees Local 2021, which represents NYCOTB workers.

Allen said: “For far too long the State of New York has been siphoning the revenues out of New York City Off-Track Betting. The millions taken by Albany each year would have enabled OTB to solidify its finances, and New York City to improve municipal services. Instead, NYCOTB is faced with chronic deficits, and taxpayers end up footing the bill. If the status quo continues, the State of New York will kill the goose which lays millions of golden eggs each year and endanger the livelihoods of 1,400 union employees.”

This year, several bills were introduced in the State Legislature that sought to stimulate revenue growth and to reduce statutory distributions for the State’s OTBs, which would have resulted in greater revenues for the City. The State Legislature, however, did not act upon these bills.

“Passage of legislation to reduce off-track betting statutory distributions and improve revenues would help address the issues that are posing a serious challenge to the system,” Thompson concluded.

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