OFFTRACK BETTING NEEDS A SHIFT IN FOCUS REVISITED

The following assessment of the New York City Off-Track Betting Corporation was published in the Blood-Horse magazine in July 2010 and on its website.  In view of the shut-down of the NYCOTB, the article is republished by permission.

The New York City Off-Track Betting Corp. launched the first legal off-track betting operation in the United States in 1971 and took in $66,091 in opening-day handle. It had only two branches and a telephone betting center.

NYCOTB eventually grew to 60 full-service branches, plus restaurants and teletheaters. Currently, it employs about 1,500 people at its headquarters, branches, and support services. The corporation took in the most handle ever in 2006 when it processed $1.071 billion in bets.

In the pre-Internet era, NYCOTB’s branch network, spanning five boroughs, was an immense customer convenience. Bettors didn’t have to travel to a racetrack and, with the rapid growth of simulcasting, they could wager on races around the globe.

Today, the convenience factor has lost much of its appeal because of customer access to advance deposit wagering, nearby casinos, and illegal online gambling.     

NYCOTB itself has 17,000-18,000 active ADW customers who need not set foot inside an actual facility to place a bet.

NYCOTB’s brick-and-mortar predicament is not unusual. For example, in 2010, the number of branch banks in the U.S. is declining after a 15% increase since 2002. The Wall Street Journal wrote: “Say goodbye to the decade-long building boom that made it seem like there was a branch bank on every corner.” The economy, ATMs, and online banking are beginning to take their toll on the branch system.

Movie-rental stores such as Blockbuster have seen their walk-in traffic fall victim to other delivery technologies. Likewise, the music industry has been turned upside down by Apple’s iPod, and music retailers carrying extensive physical inventories are becoming vestiges of a bygone era.

NYCOTB, in response to its increasingly bleak financial situation and technological challenges, states on its web site that it “will reduce its brick-and-mortar operations by two-thirds” and “take full advantage of available technology by installing low-cost, self-service Internet Access Terminals in sports bars in the city.”

NYCOTB has no choice, other than to go out of business entirely. The competitive realities necessitate a vastly downsized branch system and, even then, can the streamlined version be profitable?

Whether OTB outlets across the U.S. can continue to do enough business to be viable is problematic given any service, such as bet-taking, can be more easily transacted by consumers on the Internet or via telephone. OTB systems are in worse shape than racetracks in that regard because the former doesn’t offer live racing.

Copyright © 2010 Horse Racing Business

Comments

  1. Professor Shanklin wrote:

    >> NYCOTB, in response to its increasingly bleak financial situation….
    ____________________________

    How can we be sure of that?
    What is “problematic” is that the NYC OTB still owes the NYRA $25 million at this point in time.

    Senator Lanza’s bill would allow the NYC OTB to take the NYRA signal without cost.

    How is that fair to New York racing?
    Good riddance!

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