New York City Off-Track Betting Corporation
Staff Study: Allocation of
Administrative Overhead and Its Effect on Branch Profitability Off-track
betting in New York State is authorized at locations administered by regional public benefit
corporations. Revenue from these operations is distributed to the State's racing industry as
well as to local governments. Off-track betting in New York City is administered by the New
York City Off-Track Betting Corporation. At the time of our study, more than 70 branch
offices were operated by the Corporation.
We reviewed the procedures used by the Corporation to allocate administrative overhead
expenses to these branch offices. We found that while an acceptable methodology is used
(overhead is allocated to each branch office in proportion to the branch's operating revenue),
it tends to mask the performance of unprofitable branches. If overhead were allocated instead
on the basis of branch expenses, management would be more likely to be alerted that certain
branches might be unprofitable and in need of greater management attention. When we
allocated the Corporation's 1995 overhead on the basis of branch expenses rather than
revenue, we found that 16 additional branches were unprofitable. We suggest that
Corporation officials consider allocating overhead to branches on the basis of branch
For a complete copy of Report 96-N-10 click here.
For a copy of the associated follow-up report click here.
For a copy of the 90-day response click here.