New York OTBs Avoid April 18 Shutdown

New York OTBs Avoid April 18 Shutdown
Photo: Courtesy NYCOTB

Seeking to avoid a “profound” impact on the state’s racing industry, New York City Off-Track Betting Corp. will not shut down April 18 as planned.

The OTB’s board, in an emergency meeting April 17, rescinded layoff notices set to take effect at the close of business April 18 that would have closed the nation’s largest off-track betting entity.

But the board, which has been relying on state officials for a rescue plan, appears to now be putting much of its future on a bankruptcy creditors committee to help restructure its finances. NYCOTB filed for Chapter 9 bankruptcy reorganization protection last year.

Meyer Frucher, chairman of the NYCOTB, said he has been encouraged that state officials in the past week were close to approving a deal to lower its statutory payments to racetracks. That, he said, has never received serious consideration at the Capitol after years of requests from the money-losing operation.

The chairman said the only immediate legislation needed by the OTB is a bill to provide an early retirement incentive to employees so it can trim its workforce.

“The corporation has arrived at a critical crossroad,” Frucher said.

While the clock had been ticking and Frucher said the shut down threats were real, the new plan approved by the board envisions the OTB remaining open another year, during which time a long-term plan can be ironed out.

While the OTB is “fixing” its operations, Frucher said the New York Racing Association’s fiscal problems also need to be repaired. An OTB bailout bill last week also included a $17 million borrowing plan for NYRA to help with its cash flow problems that has cast a cloud over its future; NYRA has said its financial issues would not be present had the state approved an operator for the long-delayed casino at Aqueduct.

“New York City OTB hopes to continue to make significant contributions to the state economy and position itself for future growth without using taxpayer dollars,” Frucher said during the board meeting.

In a briefing with reporters, Frucher revealed more of how the OTB, which officials in Albany were led to believe was out of money after this weekend, would be able to stay afloat. The OTB head said statutory payments to tracks and others will be delayed – not reduced.

“We can’t be forced to pay money we don’t have,” Frucher said. “We’re simply exercising our administrative prerogatives.”

The plan on the table last week at the Capitol would have let the OTB reduce its various statutory payments to tracks and others in the industry by 15% for one year.

Frucher said he could not say how long payments to tracks will be delayed, but insisted no obligations, over time, will be reduced.

But he called for the industry, through the bankruptcy creditors committee, to quickly resolve the situation. “I can’t quantify the extent of pain we’re going to inflict on the industry. There certainly will be pain,” Frucher said. But the faster the bankruptcy creditors committee comes up with a rescue plan “the shorter the period of time of that pain.”

The OTB is also going ahead with installing as many as 600 “quick bet” machines in sports bars. The Assembly killed an idea pushed by Frucher to open as many as 1,600 betting kiosks, with automatic teller machines, in bars and other places across the city. But OTB officials were told by negotiators last week that there is nothing stopping the corporation from installed the kinds of unstaffed betting devices already in use by OTBs on Long Island and in the Albany area.

“As usual, the Speaker prevailed,” Frucher said of Assembly Speaker Sheldon Silver, who blocked the OTB from installing the machines in far more settings.

The new machines would not include the ATM features, and Frucher said they would be limited to sports bars. The state Racing and Wagering Board would have to approve every device installed.

Frucher said the devices are necessary if the OTB is to cut its costs by closing betting parlors. He said within a year two-thirds of the 66 parlors now spread through the five boroughs will be shut down. The devices will help replace betting revenues that now stream from the parlors, which account for about two-thirds of the NYCOTB’s revenues.

A spokesman for Gov. David Paterson said he supports Frucher’s efforts.

But in the Legislature, there was a good bit of skepticism over OTB leaders who have been threatening for weeks that they needed a legislative fix to the fiscal crisis or they would shut down the operation.

“It’s a magical organization," said Assembly Racing Committee chairman Gary Pretlow.

The surprising developments that saw the cash-empty OTB announce a way to stay open “demonstrates an overwhelming need for a clear and honest accounting of its finances and operations," said Austin Shafran, a spokesman for Senate Democratic Conference Leader John Sampson.

“Last week they were saying that they were going to close their doors, 1,300 workers were going to be laid off, and they didn’t even have enough money for a shut-down operation. Then, on the even of having to shut down they’re able to come up with what I can only call a very vague plan to keep them open until the next fiscal year," Shafran said.

Pretlow said he’s happy the OTB is not closing and is hopeful the corporation can achieve true cost savings in the next year. But he said the crisis state over the past weeks was not needed, and was caused by the OTB. The OTB talks dominated the Capitol last week, at a time when the state budget, facing a soaring deficit, is nearly three weeks late.

Pretlow questioned the motivations of the OTB’s betting kiosk plan, saying he believes they had “ulterior motives" to bring other forms of gambling to the devices besides just pari-mutuel wagering. He also said the OTB pledge to submit its budget came after years of him asking.

Pretlow said he does not know why the OTB did not come up with this plan weeks or months ago. “I think Mr. Frucher wanted it his way and was unbending in anything. He was told last year that his plan was not going to happen, and he continued on the course he did thinking that we would change our minds. And we didn’t," Pretlow said.

Frucher had proposed a widespread installation of kiosks, shutting down parlors and replacing them with five, sprawling entertainment complexes and a $250 million borrowing plan.
 

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