The decision outlined in the state budget approved this week could help ease the Hudson Valley betting corporation of some of its most acute financial pains, but may not change the direction of the company’s years-long decline.

Independent auditors recently studied the OTB’s 2022 finances and concluded that there was “uncertainty about the corporation’s ability to continue” as a business due to its declining revenues, according to a copy of the report that was submitted to the state comptroller's office this week.

“I am thankful that the governor and the Legislature saw fit to continue the operations of a 50-year industry leader,” said Wanda Williams, president and CEO of Catskill OTB. “Historically, prior to the incursion of other gaming, Catskill Off Track Betting was notably the most efficient and profitable OTB, returning the greatest percentage of sales back to member counties. We will continue to advocate for expanded and enhanced products and modernization of an industry in need of multiple reforms.”

The budget did not include Gov. Kathy Hochul’s proposal to shut down Catskill OTB. It also did not approve a legislative proposal to allow the corporation to expand its business to New York City, where another off-track betting company once operated and went bankrupt.

In the budget, the state did act to end the appointments of every commissioner of Western Regional Off-Track Betting Corporation, after audits and media reports detailed misspending by the public benefit corporation. 

OTBs were established decades ago to take wagers on horse racing and distribute any profits to local governments and horse racing groups. Now they compete with other betting options like sports betting, casinos, Lottery games and mobile wagering. 

Catskill OTB has struggled to make any profits for years. Except for kiosk betting terminals, it’s kept its operations mostly shut down since the pandemic.

The state Gaming Commission has expressed concerns about the OTB’s ability to continue operations due to its “lack of a viable business model,” according to a letter obtained by the Times Union.

In 2018, Catskill OTB requested permission from the Gaming Commission to file for bankruptcy. The OTB said in its audit report it is still awaiting a determination from the agency. The report said if the commission forbids the corporation to file for bankruptcy protections, management is authorized to “develop and implement a closure plan.”

The Gaming Commission said via a spokesman the commission determined in 2018 the corporation was not financially insolvent and therefore declined the request. The commission said it informed the OTB of that decision.

While betting revenues increased slightly from 2021 to 2022, they’ve been steadily declining for years and are down roughly 80 percent from 2009 levels, a 2022 Catskill OTB financial report shows. The corporation has cut expenses significantly, but it still ended 2022 and 2021 with net losses, owing money to counties and racing entities.

With the capital funds the state budget recently authorized the OTB to use, Catskill must pay its debts to the state and various horse racing entities, according to Gaming Commission spokesman Brad Maione. The OTB will be required to precisely document how it uses the money and may be subject to an audit.

Last year, the state released a 2018 audit by the inspector general’s office that found Catskill OTB spent millions of dollars to rent warehouses and properties that were “largely utilized for the storage of worthless items and garbage.” The inspector general also found the corporation’s former president, Donald Groth, collected both a state pension and salary, failed to properly report the use of a company car and engaged in a longtime relationship with a subordinate employee. In previous interviews with the Times Union, Groth denied any wrongdoing.

By Emilie Munson