The state takeover of the financially beleaguered New York City OTB has failed to stop the hemorrhaging, the Daily News has learned.

“New York City OTB experienced significant fiscal challenges prior to the state takeover, and many of these challenges are continuing,” said state budget division spokesman Jeffrey Gordon.

NYC OTB reported a whopping $76.5 million operating loss in its audited financial statement for fiscal year 2008, the last year the city ran the operation.

Gordon couldn’t say exactly how much NYC off-track betting lost in its first year of state control pending an independent audit.

But a 10% in the betting handle, coupled with rising costs, has darkened the outlook.

Gov. Paterson is creating a task force on OTB to develop “an action plan” to stabilize the operation, Gordon said.

Administration officials say there has been no talk of shutting down the city OTB.

“NYC OTB was clearly facing serious fiscal challenges when New York took over last year,” Paterson spokesman Morgan Hook said. “Gov. Paterson’s goal is to return NYC OTB to a strong financial footing.”

“The administration is reviewing the entire OTB system and through this analysis, future steps to address OTB’s financial stability will be determined and implemented.”

The cash-strapped state last June took over the city OTB operation after Mayor Bloomberg threatened to shut it down because of losses to the city.

Despite handling more than $1.1 billion in bets every year before the recession hit, city OTB lost millions because of required payouts of the gross handle to the state and racing industry.

Most of the mandated payouts remain, keeping the operation from making money.

Some changes in the law transferring ownership to the state were meant to help NYC OTB keep more of its revenue.

NYC OTB has 68 betting parlors and about 1,500 employees.

State lawmakers say they are also studying ways to make OTB profitable.

“We really need to reexamine it,” said Sen. Eric Adams (D-Brooklyn), chairman of the Racing & Wagering Committee. “Is it they’re not making money or are we overtaxing them?”

Source: NY Daily News