New York City Comptroller William C. Thompson, Jr. – who has consistently reported on New York City Off-Track Betting’s bleak fiscal picture – today supported Mayor Bloomberg’s efforts to cease the entity’s operations if the State doesn’t provide a fairer share of funding.

“The Mayor is correct that the current structure of NYC OTB, in which the State siphons off the profits, is untenable,” Thompson said. “I call on the State Legislature to fix this irrational system so that NYC OTB can continue to operate. If that does not happen, then there may be no other alternative than to shut down NYC OTB.”

“I will gladly work with Mayor Bloomberg to make sure that New York City gets its fair share because this fiscal imbalance should not continue,” Thompson said. Thompson stressed that any dissolution plan must ensure the needs of workers who would be displaced.

Today, Mayor Bloomberg announced that the City would not provide additional funds to NYC OTB despite its persistent fiscal woes (the entity likely will run out of money by June 2008). As a result, the Mayor predicted that NYC OTB would be forced to cease its operations, and OTB’s Board Chairman asked NYC OTB to draft a closure plan.

In July 2006, Thompson issued a report finding that NYC 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 NYC 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 NYC 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 NYC 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, NYC OTB ended with an operating deficit of $9.6 million dollars, marking the fourth consecutive fiscal year in which NYC 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).

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