Oct 26, 2011

Fixing the OTB Mess

Privatize all the parlors / franchise the service to tracks

The Problem:

NYC OTB is closed. No longer can people walk to the neighborhood parlor to place a bet on the ponies running at the three NYRA tracks, Finger Lakes, the in-state harness tracks and out-of-state races. As a result, the handle (the amount of money wagered)is negatively effected to all those racing operations. Of importance to New Yorkers is the in-state tracks. In addition, funding to the New York State racing breeding programs are negatively effected.

Granted, NYRA immediately stepped-up with proactive initiatives after the NYC OTB doors closed. The result has been an uptick in on-track attendance and handle, which is a good thing.

But much like the old Sales School 101 rule to "never leave any money on the table" when closing a deal, the fact remains that a significant amount of wagering money is being lost to the state racing coffers as a result. This is not to wax nostalgic for the old OTB, by any means. On the contrary: the business model on which OTB operates (and arguably: was founded on) is a total mess.

Various plans are being floated as to "what next?" for NYC OTB. Given that at least two of other regional OTB corporations are in poor financial health as well, the question becomes a statewide concern. Suggested options include:

- Do nothing and operate without an OTB framework in NY
- Re-open NYC under a new efficiency model
- Re-open NYC and merge the separate OTB corp's into a single entity
- Allow NYRA to operate its own OTB operation in NYC

The Fix-It Man has a better idea...

The Solution:

The State / the OTB's / NYRA / whoever does not need to be in the business of operating OTB parlors.

Instead: open the opportunity for doing so to the private sector.

Setting: stop into any "neighborhood" type of bar or restaurant some weekday at lunch time and what do you see? Answer: a bunch of locals hanging out, with many of them occasionally buying a Keno/Lottery ticket from the barkeep. Come Sunday, that same crowd is gathering to watch NFL football, often tossing a few bucks at the "$10/square" grid behind the bar or making sneaky bets with fellow fans.

In other words, there are thousands of gambling dens already operating all across NYS, and they are all owned and operated by private business men and women. Horse racing needs to become embedded into these facilities.

How? That part is easy to answer. All we need to do is pick up a self-service betting machine from one of the race tracks, put it in a truck and deliver it to a bar that has paid to have one. Hook it up to the AC and the internet, and it's ready to go. OK, maybe not that simple, but it's awfully darn close! The machine vendors will gladly get involved in making the necessary firmware modifications, given the bonanza they are now sitting on.

So there you have it: walk into a bar, and there is a NYRA machine. Right next to the jukebox and the terminal that tells you that lottery ticket you bought last week is worth nothing. The bar gets a piece of the action.

Next comes the question of "who maintains the machines?" That answer is easy as well: the nearest race track. Take a map of NY, plot out the existing thoroughbred and harness tracks, and draw a circle around each one. That becomes their franchise area. The tracks already have the expertise in the care & feeding of the wagering terminals--now they just need to buy a few trucks to service their partners in the field.

But how does the money get divvied up among all the players -- the originating track, the private facility, the local franchise track, the breeding industry, the state?

Someone else figure all that out. I've just outlined the new paradigm. Details are not my forte.

Now, let's get on with it!


Pepe said...

It would be interesting to see someone develop the numbers on this, to see if they work for all parties

Anonymous said...

Makes too much sense. Will never fly for that reason. NYS can't think it that sort of game-change mentality.

Anonymous said...