New York City Off-Track Betting Corporation

Financial Condition and Governance

The New York City Off-Track Betting Corporation is a public benefit corporation that was created in 1970 pursuant to State legislation which allowed local governments to begin operating systems of off-track pari-mutuel betting. Under the legislation, the Corporation is required to distribute certain portions of its betting revenue to New York City and other local governments, to the Stateís horse racing industry, and to New York State. The remaining revenue is to be used to cover the Corporationís operating expenses. However, in recent years, the Corporation has been unable to cover its operating expenses. It has avoided bankruptcy by spending its cash reserves and deferring payments on certain of its obligations. The Corporation was on the verge of being shut down in June 2008, when it was taken over by the State.

We assessed the Corporationís financial condition upon its acquisition by the State. We found that the Corporation was unlikely to avoid financial insolvency if its current financial trends continued. We further found that, while management had attempted to contain the Corporationís operating expenses, additional cost-saving opportunities needed to be pursued. For example, the Corporation had not conducted a staffing study since 1981, prior to its initiation of telephone and internet betting and prior to the installation of automated betting terminals at its branch locations. We recommended that such a study be conducted and staffing levels be adjusted accordingly. We also identified opportunities for possible cost reductions in the areas of administrative staffing, consultant contracts and simulcast contracts, and questioned whether the Corporation needed all 87 of its sedans, vans and sports utility vehicles for business purposes.

For a complete copy of Report 2008-S-147 click here.