We also released five letter reports to the following Off-Track Betting (OTB) Corporations: Capital OTB [pdf], Catskill OTB [pdf], Nassau OTB [pdf], Suffolk OTB [pdf], and Western OTB [pdf].
Purpose of Audit
The purpose of our audit was to assess the financial condition of the five regional OTB Corporations to determine if it has continued to deteriorate and whether officials have developed and implemented plans to benefit the Corporations’ financial condition for the period January 1, 2009 through August 31, 2014.
Background
Five regional OTB Corporations, formed pursuant to New York State Racing, Pari-Mutuel Wagering and Breeding law, are in operation in New York. Each OTB Corporation is a public benefit corporation governed by a Board of Directors. The OTB Corporations offer off-track pari-mutuel wagering on thoroughbred and harness horse races held at various racetracks in the State, as well as at racetracks located outside the State that have simulcast contracts with the Corporations. The Corporations accept wagers at branch locations, remote wagering locations, over the telephone and via the Internet. For the five-year period from 2009 through 2013, the five OTB Corporations collected almost $3.7 billion in handle.
Key Findings
- The five OTB Corporations have experienced an overall decline in handle over the five-year period 2009 through 2013, which collectively amounted to a decline of approximately $153 million, or nearly 19 percent.
- The five OTB Corporations’ total operating revenues decreased by $28.6 million (24 percent) from 2009 through 2013.
- The net operating revenue – operating revenues less expenses – decreased by $12.4 million over the five-year period for the five OTB Corporations, even though they reduced total operating expenses.
- There have been dramatic increases in the fees the OTB Corporations have to pay racetracks to simulcast races – as much as 300 percent.
Key Recommendations
- Explore cost-cutting measures and negotiate collectively for track rates.
- Increase revenues through innovative marketing.
- Analyze the cost/benefit of branch and remote locations.
- State policymakers should review and examine the formulas in statute that are used to calculate payments the OTB Corporations have to make.