As the US Treasury made public who received emergency financial assistance amid the COVID-19 pandemic, some revelations prompted negative reactions. That’s recently been the case in New York in regard to Paycheck Protection Program (PPP) loans and off-track betting (OTB) sites.
Federal records show that several OTBs in the state secured millions of dollars from the program. The status of the businesses and the relative struggles of others have resulted in an inquiry.
Several OTBs receive millions in PPP loans
In the federal legislation that authorized the PPP loans, the language clearly stated that only privately-owned, small businesses were eligible. The funds’ purpose was to help such companies stay afloat while government orders limited or suspended their normal revenue channels.
So it struck some as odd, then, when New York OTBs secured loans. OTBs in the state are “quasi-government” operations. State officials appoint their executives, and OTB employees receive pensions from the state.
Nonetheless, $2.5 million in loans went to OTBs in Nassau and Suffolk counties. The same amount went to the Western Regional OTB. The Capital District and the Catskill regional OTBs secured between $350,000 and $1 million in funds.
While they are loans and each site will have to repay them, the terms are very friendly. The interest rate is a mere one percent, for example. Among the questions about this situation is how these operations secured the loans while others in the state struggled.
Other NY businesses report difficulties
Eligible businesses in New York largely ended up disappointed when they applied for PPP loans. Documents show that only 12% of the state’s businesses who fit the criteria actually received funds from the program.
The answer to the question of how this happened seems to be the OTBs’ connections in Washington, DC. US Rep. Peter King and a lobbying firm that the OTBs retain both helped push for the OTBs to get the loans despite their public status.
Because of the incongruency in access, US Rep. Carolyn Maloney has promised to push for answers.
“The loans are supposed to go to small businesses. I’m going to question the appropriateness of the OTB loans,” Maloney said. “The loans are only supposed to go to private employers, not public.’’
How far an inquiry into the Small Business Administration’s decision-making process will go remains to be seen. It’s possible such an investigation could require the OTBs to repay the funds on a more aggressive timeline.
Another fact that may not work in New York OTBs’ favor if an inquiry does linger, is the fact that horse racing in the state wasn’t as affected by the pandemic as other industries. New York horse tracks resumed racing late in May.
For the sake of comparison, commercial casinos in New York are going on four months of a shutdown and employ far more people than OTBs. Those enterprises are truly private as well.
For the time being, however, millions in taxpayer dollars buoy the coffers of the state’s off-track betting sites. Accepting the loans is a decision that the involved individuals may soon have to answer for.
