Gov. David A. Paterson and the leaders of the Legislature announced on Friday a deal under which New York State would take over the financially unprofitable Off-Track Betting operation from New York City, the biggest change in the governance of the state-regulated gambling entity since its creation of 1970. But Mayor Michael R. Bloomberg — who had moved to shut down the operation, saying that it was not profitable and that it was not in the city’s interests to continue running it — said the deal was unfair to the city and immediately vowed to move forward with a plan to close all 71 O.T.B. outposts this weekend. The political dispute meant that the agency’s future remained uncertain. Mr. Paterson said the state takeover would preserve “1,500 jobs and the health of racing in New York State.” The Off-Track Betting Corporation, which was created by the State Legislature in 1970, would be replaced by a new entity, the Empire State Off-Track Betting Corporation. In addition, Governor Paterson said he would nominate State Senator John D. Sabini, a Queens Democrat, to the state’s Racing and Wagering Board and name him chairman of that board.
Mr. Paterson — who has the support of Joseph L. Bruno, the leader of the Republican majority in the State Senate, and of Sheldon Silver, the speaker of the Democratic-controlled State Assembly — said the state would “immediately begin to pursue initiatives to substantially improve the profitability of O.T.B.,” including eliminating redundancies, moving the agency’s headquarters from Times Square to the Aqueduct Racetrack, and exploring public-private partnerships.
The announcement by Albany leaders quickly led to a back-and-forth, reflecting vigorous disagreement over the financial implications of a change in the status of Off-Track Betting.
Mr. Bloomberg’s office issued a statement raising concerns and expressing disappointment about the deal:
The City of New York still has substantial legal and economic issues that need to be settled before the future of off-track betting in the five boroughs is resolved - and it is very disappointing that these concerns have not been addressed. Without a settlement of these outstanding issues, we will have no choice but to go forward with our plan to close the city’s O.T.B. parlors on Sunday. We hold out hope that a satisfactory solution can be reached. But I want to reiterate the City’s position: We will fight to prevent gambling operations in the City unless they provide a public benefit to the City. Every other locality that has O.T.B.’s receives a benefit from them — and our legislative representatives in Albany should ensure we do as well.
Mr. Paterson’s communications director, Risa B. Heller, issued a retort in response to the mayor’s statement:
Earlier today the governor and legislative leaders announced an agreement by which the State will assume both the assets and liabilities of the New York City Off-Track Betting. This agreement was reached in response to the City’s request for state intervention.
The agreement ensures that the 1,500 employees of the New York City O.T.B. will keep their jobs and that the New York racing industry will continue to receive the critical financial support it gets from the New York City O.T.B. It is distressing to hear of the City’s objection to an agreement that will meet the Mayor’s long-stated demand for a permanent fix that would ensure that the City not have to subsidize New York City O.T.B.
Host municipalities who run O.T.B. receive a surcharge for winning bets placed at their O.T.B.’s or at tracks located in their county. The City insists that it should keep the surcharge benefit even when they are no longer running O.T.B. and the state has taken responsibility for all liabilities. It makes no sense for the state to take over responsibility for the operations of New York City O.T.B. and the $201 million of outstanding liabilities on O.T.B.’s books, while allowing the City to continue to collect the roughly $18 million it currently receives from New York City O.T.B.
District Council 37, the city’s largest union of municipal workers, had agitated against the closing of the corporation, and embraced the news of the deal in Albany.
Lillian Roberts, the union’s executive director, said in a statement released by Mr. Paterson’s office: “The winners in all of this are the 1,500 OTB employees who can sleep soundly tonight knowing that they are no longer at risk of losing their jobs and New Yorkers who will continue to benefit from the $1.1 billion generated by the New York City OTB. All of us at DC 37 are appreciative of the work that went into putting together this agreement.”
Under the deal supported by Mr. Paterson, Mr. Sabini, as chairman of the Racing and Wagering Board, would receive a salary of $120,800 per year for a six-year term. The appointment is politically convenient. Mr. Sabini had recently been denied the support of party leaders for re-election this November; instead, Queens party leaders threw their support to City Councilman Hiram Monserrate, another Democrat, to fill the seat.
