New York City Comptroller William C. Thompson, Jr. issued the following statement today regarding Mayor Bloomberg’s comments about the future of New York City Off-Track Betting Corporation:

“OTB’s fiscal picture has been bleak for some time and highly unlikely to improve,” Thompson said. “As a result, New York City has repeatedly been shortchanged by the OTB’s payments to the racing industry and to the state, which are mandated by the State legislature. Consistently, the legislature has allowed increased monies to be siphoned OTB proceeds off to areas other than New York City, and this must stop.”

“I agree with Mayor Bloomberg and would gladly work with him and others to ensure that New York City gets its fair share because this fiscal imbalance should not continue. For the last several years, the city in fact has received little to no benefit whatsoever from this arrangement.”

“OTB’s failing fiscal health will continue to mean a loss of funds for the City unless timely action is taken.”

In July 2006, Thompson issued a report finding that OTB’s payments to the racing industry and the State were absorbing a growing portion of its revenues, squeezing out revenues for the City.

Between Fiscal Years 1997 and 2001, the City received an average of $11 million in residual revenues from OTB. The number fell to just $1 million in FY 2002. The City did not receive any residual revenues in FY 2003, FY 2005 and FY 2006 (FY 2004 revenues were minimal).

Thompson’s report found that, at the same time, the surcharge paid to the City declined as a share of OTB’s statutory distributions, although these distributions were 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.

At the time Thompson issued the report, he indicated that OTB projected operating losses of $8.2 million in FY 2006 rising to $22.6 million by FY 2010 – sending a message that the City likely would not receive any residual revenues during those years.

In FY 2005, OTB ended with an operating deficit of $9.6 million dollars, marking the fourth consecutive fiscal year in which OTB ended with an operating deficit. The Modified FY 2007 budget and FYs 2008 to 2011 Financial Plan released in May 2007 project operating losses of $13.5 million in FY 2007 growing to $23.1 million in FY 2011 ($19.4 million FY 2008, $20.8 million FY 2009, $22.1 million FY 2010).

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 said.

###