Real Estate Weekly: Developer to turn OTB parlors into 'tele-theaters'

OTB is the domain of open containers and sketchy loiterers. Soon, however, it may be a viable alternative to the Ground Round.

Seventy-five city OTB parlors will get cosmetic surgery in an effort to make them less tawdry and more family oriented. The move is part of a new partnership between the Giuliani administration and the Magna Entertainment Corporation, based in Canada.

The city expects to make $389 million from the deal, though several issues must be dealt with before the deal is closed. The partnership would attempt to convert OTB parlors into restaurants featuring televisions showing other sports besides racing. This has already been attempted at three parlors that the city calls "tele-theaters" and also at four restaurants.

There are 67 OTB parlors in the five boroughs, 15 of which are Scattered throughout Manhattan. The parlors themselves are nothing more than wagering stands catering to a steady flow of predominantly male gamblers. Magna hopes to make these parlors into family entertainment sites, however, where the stag element is supplanted by a wider range of clients.

By turning over these OTB parlors to a private sector partner, the move reflects trend by the mayor to privatize many city properties.

"Private enterprise almost always does a better job long term of running a business than the government," said Giuliani, making the announcement at City Hall on Aug. 3.

Case in point: when the mayor first proposed selling OTB eight years ago, it was operating with a $5.3 million deficit.

"It is always good to turn a loser into a winner. In this case, the Giuliani administration and OTB have done a phenomenal job in turning OTB around and securing a great price from a premier racing and entertainment," said EDC president Michael Carey.

New York City's OTB was formed in 1970. Its operations were frequently criticized due to mismanagement and profit, shortfalls. The city has called this announcement "one of the most profitable privatizations in New York City history."