Phone Betting Gets Ringing Endorsement in New York

“I’m the only guy around who has a bookie joint that’s losing money,” Rudolph W. Giuliani, mayor of New York, said several years ago after looking at the books of the New York City Off-Track Betting Corp.

But that was before 1995, when New York OTB’s telephone-betting system, which was 25 years old and doing minimal business, was turned into a cash cow. The law was changed, races from New York’s tracks were televised into living rooms and phone betting became a bonanza.

“It’s changed us from a multimillion-dollar business into a billion-dollar business,” said Maury Satin, president of New York OTB, which also runs 68 betting parlors and three racing tele-theaters.

In the early 1990s, Satin said, you could have hung a for-sale sign on New York OTB and no one would have made an offer. But last year, when Giuliani announced that the city wanted to sell OTB, the country’s two biggest horse-racing companies--Frank Stronach’s Magna Entertainment Corp. and Churchill Downs Inc.--got into a fierce bidding war that’s still not over. Earlier this year, saying that the decision was a “no-brainer,” Giuliani awarded OTB to Stronach and his partners, whose down payment could be in the $250-million range, but legislative approval--which could be problematic--is required before they can take over. The New York Racing Assn., which operates Aqueduct, Belmont Park and Saratoga, and was a partner with Churchill Downs in the bidding for OTB, questions whether Stronach’s offer will ever get enough votes. With the issue still not resolved and Giuliani leaving office at the end of December, the suitors for OTB appear to be in store for another round.

In 1994, the year before races were first televised into New York homes, the city’s OTB handle was $742 million. Last year, that total swelled to $1.01 billion, the city’s share coming to more than $39 million.

Satin said that $1 of every $5 bet at OTB is over the phone. There are 45,000 people with phone accounts, about 90% of them New Yorkers.

A system that once got by with 20 phone operators now needs 150 a shift to handle all the calls. Overall, OTB employs 1,700.

By one accounting, cannibalization of on-track attendance has been negligible. Since 1994, crowds at the three NYRA tracks have dropped 21%, to 2.4 million last year. But if the emergence of phone betting at OTB is responsible for some of that erosion, analysts point out that NYRA attendance was already in free fall before 1995, when full-card, in-home racing telecasts started. From 1988 to 1994, attendance at the tracks dipped 22%, at a time when New York OTB was still in the doldrums.