The financial condition of the State’s five regional Off-Track Betting Corporations has substantially deteriorated over the course of the last several years. Total handle (the total amount wagered on horse races) for the five Corporations declined by 10 percent in this five-year period; further, in the first five months of 2009, handle fell by 10 percent when compared to the same period in 2008. Various factors account for the significant and continuing downturn in handle, including a diminished interest in horseracing, competition from unregulated internet gambling sites, and restrictions on the siting of new remote wagering locations. After the Corporations pay bettors, they pay out a large portion (56 percent over the five-year period) of the remaining handle to the racing industry, the State, and local government. Operating revenues – what remains after Corporations make these payments - declined by an average of 13 percent at four of the five Corporations between 2004 and 2008. Although most of the Corporations have reduced their operating expenses, the Corporations’ net operating revenues - their collective bottom line – declined by 67 percent during this period. Given the significant amount of the "up front" payments the Corporations must make to the racing industry and government, and the extent to which these payments reduce operating revenues, we believe that Corporations will be unable to cut expenses fast enough to continue as financially viable entities if no action is taken to reduce these required payments.
Financial Condition of New York State Off-Track Betting Corporations [complete audit - pdf]