Veto may help NYRA move into New York City

Wednesday, December 19, 2012
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— Gov. Andrew Cuomo may have opened the door this week for the New York Racing Association to expand its operations in New York City.

On Monday, the governor vetoed legislation that would allow the Catskill Off-Track Betting Corp. to fill the void left by the New York City Off-Track Betting Corp, which went bankrupt and stopped operating in December 2010. This means NYRA could step in with expansion plans they’ve been formulating since 2011.

“I think it’s a wide-open market, and I think it makes sense for NYRA to get involved in a major way,” said John Hendrickson, a special adviser to the new NYRA board.

When NYCOTB went under, NYRA began to move in on the territory. Its efforts included taking over the NYCOTB television broadcast of races and aggressive promotion of the NYRA Rewards program as a betting alternative.

In written testimony from October 2011, then-NYRA President and CEO Charlie Hayward said NYRA hoped to expand into New York City with restaurants and wanted an exclusive off-track franchise for the five boroughs.

NYRA’s current management declined comment for this story and Hendrickson said he wasn’t sure what their expanded presence should look like.

NYRA has looked into adding betting machines in existing bars and restaurants in New York City, which would be a completely different offering than the betting parlors formerly run by NYCOTB.

In 2010, a task force on the future of OTBs in the state recommended against NYRA taking over any of the OTB outlets because of its poor financial condition. In 2012, though, NYRA is poised to turn a profit for the first time in years.

The decision by Cuomo isn’t necessarily a green light for NYRA, though, as his veto message essentially complains that Catskill OTB doesn’t have an expansion plan. In February, once the state Gaming Commission is created by consolidating the state’s Racing and Wagering Board and Division of Lottery, Cuomo said a comprehensive plan can be devised for all of the state’s gambling issues.

“This is another ad hoc gambling expansion,” he wrote about the Catskill OTB proposal.

One reason NYRA wants to take over the New YorK City market is because it benefits more from processing bets directly, as opposed to through a third party, like an OTB. Even third-party, out-of-state bet processors give a higher percentage of their take to NYRA than OTBs do.

Because of this, by capturing only a small portion of the NYCOTB market, NYRA has made up for the annual revenue it lost out on with the collapse.

 

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