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Study Recommends Legislative Reforms and Organization Restructuring to Ensure Economic Viability and Promote Growth Opportunities in New York’s Racing Industry

New York City, April 2, 2007– New York City Economic Development Corporation (NYCEDC) today announced the findings of a strategic study of New York City Off-Track Betting Corporation (NYCOTB) that provides a path for reform and restructuring of the racing industry in New York. The study, entitled “NYCOTB – A Plan for Transformation and Growth,” finds that there are several critical issues facing the New York racing industry today, including declining consumer interest in the sport of horse racing, new sources of competition and an arduous regulatory environment. The study also finds that changes in the New York racing law have negatively impacted NYCOTB operations and underscores the need for the City, the State and the New York racing industry to come together to address the difficult operating environment to revive interest in the sport and develop strategies for growth. The study follows preliminary findings used in a paper entitled “A Call to Reinvigorate Racing in New York” released by Deputy Mayor for Economic Development and Rebuilding Daniel L. Doctoroff in November of 2006.

“NYCOTB is an underutilized asset for New York City as it exists today, but through the adoption and implementation of innovative reform measures, we have an opportunity to set it on a course for growth,” said Deputy Mayor Doctoroff. “Since its inception in 1971, NYCOTB has provided the City with more than $1.4 billion in revenues and the New York racing industry with nearly $2 billion, but the future of the industry is very much in jeopardy unless we take reform measures now. The study released today provides a path to restructure the racing industry in New York to position it for long-term growth and continue to serve as a revenue generator for New York City.”

“Although racing in New York City today faces a number of obstacles, there exists genuine opportunity to help the industry overcome them,” said NYCEDC President Robert C. Lieber. “By implementing the recommendations of the report released today, we can generate additional revenue for New York City while helping the industry succeed and supporting its 1,500 New York City employees.”

The study sets out recommendations to ensure the sustained economic health of the racing industry. The recommendations include:

• Reforming New York State racing industry economics by enhancing and rededicating a small portion of video lottery terminal (VLT) revenues from racetracks to create financial sustainability for NYCOTB and better alignment among New York racing entities;
• Increasing consumer access to horse racing wagering through multiple, convenient platforms, by deploying new technologies, such as the internet, mobile wireless wagering and interactive TV;
• Attracting specific new gambling consumer segments to NYCOTB from other gaming options by providing inviting social betting environments, and
• Improving operational efficiency to maximize potential from the current business model.

“We believe that BCG’s findings support what we knew about NYCOTB, that NYCOTB is a tremendous asset to NYC and that it holds great potential as an entertainment alternative for those who currently enjoy other forms of gaming,” said NYCOTB President and CEO Raymond V. Casey. “In recent years, NYCOTB has shattered many of its previous wagering records, and we now have the potential to far exceed those records. The sport of horseracing, especially horseracing in the Empire State, is thrilling and exhilarating, and more people need to know that. With the support of the City and State, we will be a part of turning this industry around, but if action on long overdue reforms is postponed another year, the cutbacks NYCOTB will be forced to implement may very well damage the racing industry in New York permanently.”

Boston Consulting Group was retained by NYCEDC to provide a comprehensive assessment of NYCOTB’s operations and business model, including a diagnosis of the overall racing landscape in New York in order to better understand the contribution a stronger and more innovative racing entity might yield for both the City and New York State.

“The simple fact is that NYCOTB generates a 50% operating profit on its wagering revenues; but notwithstanding this, the State Executive and Legislative branches mandate that the Corporation distribute all of it and then some, to government entities and the racing industry, NYRA in particular,” said NYCOTB Chairman David Cornstein. “What the Boston Consulting Group report highlights is that if NYCOTB were permitted to hold onto just some of its profits, we would then be in the position to invest in new product marketing, branch refurbishing and innovative methods of distribution. The outcome would be to increase the NYCOTB customer base, give customers the products and environment that they deserve and, at the end of the day generate even more money for the City, the State and the racing industry.”

Download the report: NYCOTB - A Plan for Transformation and Growth (PDF 1.84 MB). 

To learn more about NYCOTB, visit www.nycotb.com.