The corporation is statutorily obligated to send a portion of its winnings to support municipalities and other racing causes in the state, obligations which remained in place as operating costs rose. Earlier this year, Mayor Bloomberg recommended shutting the corporation down; Paterson stepped in and took it over, appointing Sandy Frucher to lead the state-sponsored turnaround effort.

Frucher said such a shut down would have been "unthinkable," citing some $500 million of pension and other costs that would have been unfunded in the event of closure. Frucher and Paterson estimated that roughly $250 billion would have to be bonded for as part of the eventual restructuring deal, which would also close some branches, result in fewer workers and change the statutory obligations for payout. That last part, of course, would require approval by a state legislature not known for rubber stamping anything.

Paterson was asked why this was allowed to fester for so long. "I don't understand." Frucher offered a quip from Stanley Steingut, the former speaker of the Assembly, who noted that "Rome wasn't burnt in a day."

Both men talked about the need to reinvent off-track betting for a new age, noting that OTB was established to counter local bookies in the mid 20^th century, and is now flawed and outdated.

"We can do virtual racing," Frucher said, even envisioning a way for people to bet from hotel rooms.

"We can go nose to nose with pornography and win."

"New York City OTB is on very shaky financial ground," DiNapoli said in a statement. "Even if cost-savings measures are implemented, it's unlikely that it will remain financially solvent for long. This is a serious problem that needs in-depth examination. If the goal is to keep OTB viable, serious consideration must be given to changing the mandated state formulas and restructuring operations to coordinate different aspects of the racing industry.

He added: "Inaction will mean insolvency."

The State took over New York OTB--the off-track betting corporations are regional, independent entities--in 2008. Paterson installed Sandy Frucher to lead the corporation earlier this year.