Off-track betting (or OTB; in British English, off-course betting) refers to sanctioned gambling on horse racing outside a race track.
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Before the 1970s, only the state of Nevada allowed for off-track betting.[1] It became allowed in New York City in 1970, after years of unsuccessful attempts by the city to legalize it.[2] Their success was such that by the 1970s there were a hundred betting parlors in New York City,[1] and twice that number by the late 1980s.[2] In New York City, the thought was that legal off-track betting would increase revenue while at the same time decreasing illegal gambling activity, but one effect of the legalization was the decrease of revenue at the race tracks. The 1978 Interstate Horseracing Act[3] struck a compromise between the interests of horse tracks and owners, the state, and OTB parlors, and stipulated that OTB revenues were to be distributed among the tracks, the horse owners, and the state. Another stipulation was that no OTB parlor was allowed to operate within 60 miles of a track.[1]
Revenues at the track indeed lessened, but rather than fight off-track betting the industry sought to increase its income via new ways of gambling, betting on the OTB potential, and came up with "exotic wagers" such as exacta and trifecta. Thus the industry's revenue increased even as the number of spectators at the track went down.[4]
At legal off-track betting parlors, if bettors win, they have to pay the parlor a surcharge taken directly from the winnings. Bettors in New York can avoid paying the surcharges by placing their bets via an off-track betting corporation's account wagering service or at so-called super branches or teletheatres that charge a daily admission fee. Other jurisdictions such as Pennsylvania do not levy a surcharge on winnings. Most booked bets are now placed with licensed services in the Caribbean and Central America who entice bettors by offering them rebates on their bets.
In December 2010, the NYC OTB closed due to lack of profitability