More Than Ever, New Yorkers Eat Up Off-Track Betting

On most nights, O’Neill’s restaurant in Queens is a popular spot for juicy T-bone steaks, pitchers of ice-cold beer and loud sports chatter at the bar. It’s also a good place to make a bet.

Under a new city program, the 67-year-old sports pub is one of four restaurants where patrons can wager on horse races while they dine. O’Neill’s long has been a magnet for families, but nowadays its walls are lined with 100 TV screens--many showing local horse races plus action from California, Australia and other distant tracks.

“We’re trying to change the image of horse racing,” said David Cornstein, chairman of New York City’s Off-Track Betting Corp. “If I had my way, you’d be able to place a bet in every bar in town. The money we’d generate for the city could be enormous.”

The marketing of OTB in restaurants is the latest expansion of gambling in New York City, which already has off-track betting at 68 storefront parlors, lotteries and Quick Draw video games in neighborhood bars, plus home telephone betting on horse racing. In recent months, city officials have floated proposals to rake in additional millions with a casino in Manhattan and a sports betting palace on Governors Island in the East River.

But the OTB push into venerable restaurants--and its campaign to attract more upscale customers, especially women--also is designed to revive an industry that has faltered while other forms of gambling thrive. Horse racing business interests are closely watching New York City’s experiment; they are well aware that from 1975 to 1998 the industry’s share of national gambling revenue fell from 14% to 7%.

So far, restaurant gaming in the Big Apple has been a financial success. Yet some worry that New York City officials are going too far and have failed to address troubling moral and ethical questions.

“Where do we draw the line at this kind of activity?” asks Heiko Ganzer, a Long Island therapist who deals with compulsive gambling and is a national expert on the problem. “Do we let organized gambling spread wherever and whenever somebody wants, just so they can make a buck?”

Although there is nothing comparable to OTB in California, such wagering is now permissible in Indian-run casinos, since voters approved Proposition 1A earlier this year. In October, however, Gov. Gray Davis vetoed a bill allowing telephone and Internet bets on horse racing, saying they would aggravate the problems of compulsive and underage gambling.

New York officials are keeping their eyes on the bottom line. There are plans for eight more OTB restaurants--including the first in Manhattan, set to open next year at a TriBeCa sports bar. The agency also operates three new Tele-Theatres, where patrons bet in “high roller” rooms, and the expectation is that off-track betting eventually will be just another form of entertainment in New York City.

Indeed, Mayor Rudolph W. Giuliani touts OTB’s growth in recent years as one of his biggest success stories. City officials are trying to sell the agency to private owners, and bids are expected to top $400 million for an organization that now pumps $40 million annually into New York coffers.

When Giuliani took office in 1993, the troubled organization was running a deficit, prompting him to call it “the only bookie joint in New York that loses money.” He pledged reforms, urging Cornstein and other new appointees to run the agency more like a private business and eliminate a host of abuses--including widespread patronage jobs--that had become legendary.

Unforeseen Problems in Early Stages

Originally formed in 1971 to generate city and state revenue, New York state’s OTB was the nation’s first such operation run as a quasi-governmental agency. While many other states now have off-track operations, they generally are run by the horse racing industry, which can keep a much greater share of the profits than their counterparts in New York. The Empire State’s OTB program is split into six geographic regions, including a separate agency run by New York City.

“At first the idea was that we would simply be tapping into existing betting action and taking it off the streets, away from bookies,” said author Ken Auletta, who was OTB’s first executive director. “But the reality was that we encountered problems almost immediately. We were mainly luring a lot of low-income people into gambling, plus hard-core gamblers.”

The agency opened storefront betting parlors throughout the city, and many became havens for drunks, transients and petty criminals. As New York’s fortunes sagged, OTB became a symbol of that deterioration: In a memorable “Seinfeld” episode, Kramer wins a huge bet in a grimy OTB parlor and is instantly pursued by a gun-wielding robber.

Amid the decline, politicians filled OTB’s vast administrative ranks with patronage appointments. In 1997, former city OTB chief Hazel Dukes--who also headed the New York chapter of the National Assn. for the Advancement of Colored People--pleaded guilty to embezzling $13,201 from a cancer-ridden OTB employee who had entrusted the funds to her. Dukes used the money to furnish her office, pay off personal expenses, buy flowers and make political contributions.

Cornstein, a jewelry magnate appointed by Giuliani, is credited with turning OTB around. “What’s happened to the image of horse racing is unacceptable, and you need to give it new life,” he said. “What other sport puts on its main event in the afternoon, Monday through Friday, when people are at work? And how can you survive when so few people go to tracks these days?”

Ironically, off-track betting operations in New York and 36 other states may be the industry’s biggest enemies. Several studies suggest that more than 75% of racing revenue is generated from off-site programs, instead of the tracks themselves. Eager to spiff up racing’s tired image, other states are watching New York’s OTB restaurant initiative.

“Put your money where your mouth is!” booms a TV commercial for the new OTB restaurants. It shows young, fashionable couples dining out in swank nightspots, excitedly placing bets.

And, a popular OTB operation increases profits for restaurant owners, because they are guaranteed 2% of the monthly “handle,” or total amount wagered. In Bay Ridge, Brooklyn, Hunter’s Steak and Ale House has opened a thriving OTB parlor, and even though owners insist they have maintained their longtime family image, changes were inevitable.

On a recent weekend, while people dined in a wood-paneled room out front, the mood in a smoky back lounge was raw: Clusters of men, many in black leather jackets, pored over racing forms. They stared hard at 10 TV screens beaming action from Aqueduct Raceway, and froze as horses broke from the gate.

Then, like popcorn popping, the men began to stir, first muttering encouragement, then rising to their feet and finally shouting at the horses in English, Russian and Chinese. When it was over, curses filled the room and losing tickets were tossed on plates of half-eaten cheeseburgers.

“Georgie’s gonna quit--he’s never coming back!” cracked one man as his pal stormed out of the room after losing a bet. “He’ll come back,” rasped an elderly woman at the darkened bar. “He always comes back.”

For every Georgie, there’s a Gary Gennetti, a large, friendly man sitting at the bar in O’Neill’s restaurant. He’s a full-time handicapper who swears he won $6,000 this very afternoon at Belmont Park. His cellular phone constantly is ringing with people seeking tips, which he whispers into the phone.

The new OTB restaurants are a success, Gennetti said, because “they keep the bums, derelicts and beggars out. It’s not like the old OTB parlors on the streets, which nobody liked. If you come here, you gotta be serious.”

Worries About Health Dangers

But it’s this intensity--and the lure of upscale surroundings--that has experts such as Ganzer worried. When you make gaming more accessible, the therapist said, those prone to serious gambling problems are more vulnerable than ever.

“In New York state, 7.3% of our population are either problem gamblers or pathological gamblers,” said Ganzer, who runs a special clinic to deal with the problem. “We’ve got 100 clients, active gamblers, in the program now and my unofficial guess would be 40% to 50% of them are OTB bettors.”

It’s perfectly legal to bet on horse racing, he adds, but “where’s the responsibility to warn people that this kind of gambling, especially if it gets out of hand with liquor, can be very dangerous to your health?”

George O’Neill says he is getting more publicity since his restaurant linked up with OTB. But he also gets headaches. Recently, he said, some shady types have dropped counterfeit $20 and $100 bills at his tavern. Meanwhile, some bettors have lost control, exploding with anger in the restaurant and lashing out when their horses lose.

“The other night, a guy came in here, a regular, and when he lost a bet he threw a plastic baseball bat at a waitress standing behind the bar, and then he spit on her,” the owner said, shaking his head. “When people gamble, it can get rough. I really can’t let this stuff get out of hand.”

Similar fears surfaced last summer, when a community board debated whether the Sporting Club should be Manhattan’s first OTB restaurant. The proposal passed, with a majority saying sponsors had addressed concerns about litter and rowdiness. They added that it would have been inappropriate to dictate morality, said Paul Goldstein, the board’s district manager.

Yet some members were not convinced that the popular bar is a good place for an OTB parlor. The problem, board member James Gallagher said, is that “they’ll want to keep going into more and more restaurants. And soon it won’t stop with horse racing. Slowly, all this gambling becomes a part of our culture. We’ll wake up one day to find that it’s everywhere.”

We should be so lucky, a chorus of OTB officials answers. The agency constantly is looking for new restaurant clients, but doesn’t always get a friendly response. Cornstein initially tried to lure the famed 21, but owners said no dice, in part because of OTB’s image. Officials now focus on more modest establishments.

In a new marketing video, O’Neill and other owners rave about the benefits of having an OTB operation under their roofs. The film shows happy diners, including children, while gambling goes on in a separate room. One by one, the owners say their profits are going up--along with customer satisfaction. Nowhere, however, is there a cautionary note about problem gambling.

“New Yorkers love watching a race and making a wager,” said Ira Block, OTB’s acting president. “With this new restaurant program, we’re building on that success and opening up a whole new market for people to enjoy.”